Fiscal cliff deal may spell bad news for diabetes patients on Medicare

12:16 pm by | 6 Comments

A health policy expert with medical device trade association and lobby group AdvaMed worries that diabetes patients on Medicare may have gotten a bad deal with the recently  passed fiscal cliff bill.

The bill tackles the issue of how Medicare pays for diabetes supplies such as testing strips. Under the terms of Medicare Modernization Act, the Centers for Medicare & Medicaid Services have been developing a competitive bidding program to pay for many products including durable medical equipment and that includes diabetes testing strips. The competitive bidding program is under way in nine areas of the country.

CMS announced a national mail order program for diabetes testing supplies that went out for competitive bidding last year. Payments are set to go into effect July 1.


In announcing the national mail order program and the competitive bidding process related to it, the agency had implied that it was going to pay retail pharmacies at a higher level for diabetes testing supplies than the amount paid to mail order companies that would bid through the competitive bidding process for the national mail order program, explained Richard Price, vice president for Payment and Health Care Delivery Policy at AdvaMed, which represents the medical device industry.

However, CMS’s hand is being forced by the new deal reached New Year’s Day by Congress, which is equating mail order companies with retail pharmacies.

“Now, Congress comes along and includes a provision in the fiscal cliff bill that says that beginning July 1, 2013, CMS will have to pay retail pharmacies the same amount for diabetes medical equipment including testing supplies as the payment amount that they get from the competitive bidding process for mail order.   Congress is saying that mail order prices have to be the same as retail pharmacy prices,” Price said.

He worries that independently owned retail pharmacies that don’t have the scale and volume business like mail order companies or larger counterparts like a CVS, will curtail the range of brand-name diabetes testing strips. And that is bad news for Medicare beneficiaries also because one testing strip isn’t generally compatible with very many glucose monitors. So Price worries that if retail pharmacies stop selling a certain brand of test strip, then the diabetes patient won’t be able to use the monitor they depend on.

But could Congress be equating the two because they feel that all diabetes testing strips are essentially the same and so driving down costs won’t have an effect on accuracy of these test strips?

“I can’t speak to what Congress assumed about this, but the reality is that one diabetes testing strip is not like another and it is critical that the testing strip be compatible with the glucose monitor that beneficiary is using,” he said. “For instance, a beneficiary may have poor vision even with corrective lenses and some of these gm are equipped to provide a larger image. Not all glucose monitors are like that.”

Given the deal, diabetic Medicare beneficiaries may be in for a rude shock when they visit their local pharmacies after July 1.

“They will go to their retail pharmacy to get a new test strip and might learn from the pharmacist  that we can’t afford to carry that brand any more because the amount Medicare is paying is too little to reflect the cost to us for that brand.



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Arundhati Parmar

By Arundhati Parmar

Arundhati Parmar is the Medical Devices Reporter at MedCity News. She has covered medical technology since 2008 and specialized in business journalism since 2001. Parmar has three degrees from three continents - a Bachelor of Arts in English from Jadavpur University, Kolkata, India; a Masters in English Literature from the University of Sydney, Australia and a Masters in Journalism from Northwestern University in Chicago. She has sworn never to enter a classroom again.
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i do not like this.  NO ONE that i can find carries Abbot Freestyle strips.  i was turned over to a new company - and without my even knowing it - they sent out a new meter - which is rated on line as being bad and faulty - testing higher than my freestyle.  are they ripping off medicare by sending out new meters to everyone when our old one is perfectly good?  we throw too much stuff away - there is nothing wrong with my meter - but i can no longer get the test strips.  thanks congress - you all are so smart and helpful to the people you supposedly represent.  yup - i'm angry.


None of what you said makes any sense!!  My mail order pharmacy is no longer participating in Medicare, the local pharmacies here say they aren't selling test strips through medicare any longer.  You should never use test strips in a machine that is not made for those particular test strip.  A new meter to match the strips will surely be available for purchase.  This is all a big, fat mess!!!   I guess they want all the elderly diabetic Medicare recipiants to pass on.  Good job government as always.


I'm the medical biller at a small retail pharmacy in a rural area.  I'm having a difficult time even finding generic strips and meters to fall below the new allowable for July 1.  My patients come from three counties and it is possible that I will not be able to even do diabetic strips anymore and as most have Medicaid they will not be able to go to mail-order. As most will mail-order will not bill Medicaid secondary and the patients get billed for their deductible and copays.  Our Owner and I are sick over the damage it would do to our community.

Rick Puckett
Rick Puckett

I am an owner of a mail-order diabetic supply company with revenues less than $1,000, 000.   Yes, I am a small-business owner and we pride ourselves in the care/service we give both patients and referral sources.  (and I should add, "I built it myself" and contribute to our local economy)


For the record, I applaud Congress leveling the playing field for both mail order and non-mail order providers.  With competitive bid coming, we will be forced to offer only the "value" strips, endangering our customer base as they depart in mass to the pharmacies to get the "big four":  Abbot, Roche, Bayer, Johnson n Johnson. Now at least we all in the same ship sailing in unchartered waters of CMS reimbursements/profitability.  Perhaps, maybe just perhaps, if all are playing on the same field, then it may force the big four to make price concessions or risk losing a significant market share/demand for their product.   To this end, those of us who did bid on the national level may be in a better position to compete with the "big boys". 


One more note: Where was Mr. Price and AdvaMed during the competitive bid battle we DME's have been enduring.  It should would have been nice for someone to express the same amount of concern for we small business owners as the Mega players.



Rick Puckett,Life Source Medical, Greensboro, NC 

MIke 1 Like

 @Rick Puckett I am a owner of a small retail pharmacy. I am not opposed to the leveling of the playing field. (That includes, by the way, mail order having to follow all of the rules we have to follow as well.) What I am opposed to, however, applying the mail order competitive bid to those who were not involved in the bid. Mail order diabetic suppliers generally underbid the category and now I am being forced to either accept the poor  (well below ANY current product available) reimbursement other negotiated or to stop providing. One HAS to make a profit in order to stay in the market. To call the current competitive bidding process anything less than a fiasco would be generous.


It is about time the idiots in Washington start clamping down on the fraud, waste and abuse in medicare and medicaid.  The DME industry has long ridden the coattails of taxpayers and is overdue for some semblance of market competition.