Medical Devices

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

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.