From: Home Care Magazine
ATLANTA — A tidal wave of trouble is on the way for those in the mail-order diabetic supply market as thousands of beneficiaries attempt to find new providers under competitive bidding, stakeholders predicted last week.
Some estimate that more than 90 percent of the Medicare diabetic beneficiaries in the nine competitive bidding areas will be forced to find new suppliers because the nation’s top four diabetic supply companies — including giant Liberty Medical — and other established diabetic providers did not win contracts.
In fact, according to an analysis of the bid winners by University of Maryland economist Peter Cramton, an average 87 percent of existing providers in mail-order diabetic supplies lost contracts — with 100 percent losing out in five CBAs.
“It’s going to be a huge problem,” said Wayne Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers. “It is going to get bigger and bigger over February and into March.”
Why March? Diabetics generally get 90-day supplies, and it is likely that in most cases the last shipment of supplies went out in December, just before competitive bidding was implemented, Stanfield said.
Tom Milam, former COO of AmMed Direct, a diabetic supply company based in Nashville, and now a partner in Atlanta-based Tatum LLC, estimated that more than 200,000 Medicare beneficiaries in the CBAs will need to shop for new providers and new equipment, as well. They are likely to find that both are in short supply, he said.
“There have been multiple reports of people calling [Medicare’s help line] about not being able to get the Johnson & Johnson or Abbott or Bayer products that they use,” said Milam. “I think we are at the tip of the iceberg.”
Under the Medicare Improvements for Patients and Providers Act (MIPPA), contract suppliers are mandated to carry 50 percent, by volume, of all types of test strips. But the reimbursement for mail-order diabetic supplies was slashed by an average 56 percent in the Round 1 rebid, falling to a range of $13.88 to $15.62. That means the majority of the top products are too costly for bid winners to provide.
In addition, said Stanfield, there is another problem. “The four nationals, including Liberty Medical, did not win contracts. The companies that did win contracts do not have the ability to cope with the amount of patients, in my view,” he said. “These smaller companies are going to be totally overwhelmed trying to get the products. I don’t think people realize how big Liberty and the other companies were.”
“We have seen a definite increase in new diabetic patients. They are prior customers of national companies who did not win contracts,” confirmed Chris Rice of Diamond Respiratory Care in Riverside, Calif., which won a bid in the category. “I wouldn’t call it ‘overwhelming,’ but there has been a lot. We’ve streamlined our intake process just for them and have assigned specific personnel to diabetic intake.”
Milam estimated that Liberty Medical by itself would be sending 70,000 patients in the CBAs to other providers. Such numbers are already taking their toll.
“There have been reports of winning contract suppliers not being able to handle the orders,” said Esta Willman of Medi-Source Equipment & Supply in Yucca Valley, Calif.
“Twenty-one of 32 [winners for mail-order diabetic supplies] have never done this before,” Milam added. “There have been multiple reports of these small start-up companies receiving phone calls, and they have inadequate credit lines and they run out of products.”