Teststripz Blog Series
Part 1: From Self-Monitoring to State-Monitoring
“The 9 most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’”
The DMEPOS Competitive Bidding Program was mandated by Congress under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). The statute required the Center for Medicare and Medicaid Services (CMS) to replace their current fee schedule methodology for certain durable medical equipment (DME), including diabetes testing supplies.
By improving the system for setting DME payment amounts, CMS would cut Medicare costs and reduce out-of-pocket expenses for beneficiaries, while ensuring the same access to quality supplies and services.
Under the program, suppliers competed for the right to continue providing DME to Medicare. They submitted online bids for various types of equipment (i.e. test strips). Bids were evaluated based on the supplier’s eligibility, its financial stability, and the bid price. Contracts were awarded to those Medicare suppliers that offered the best price, while meeting the applicable standards.
Contract Suppliers must accept assignment on all claims for Medicare supplies, which will be reimbursed at the new rates. The reimbursement rates were derived from the median of all winning bids for an item. For Mail Order Diabetic Test Strips, the reimbursement rate was reduced from $34 to $10.41 per box (a 72% reduction).
That’s a very basic explanation of the program as it’s explained on the Medicare website. And like most government programs, it fails to mention the rationale behind the design or the impact it will have on the market, patients, and physicians. Everything about this program is a lie.
CMS and the President insist it will expand access to quality supplies, reduce Medicare spending, help small business, and create a more efficient market. Personally, I don’t care what CMS or the President think. They’re not economists or healthcare professionals.
After reviewing the design of the program, 244 noted economists (including several Noble Prize winners) sent a letter to the President, addressing their concerns:
The CMS competitive bidding program violates all of the principles of President Obama’s Executive Order on regulation, especially the principles of transparency and of basing regulations on the best available science. Indeed, the current program is the antithesis of science and contradicts all that is known about proper market design. The Competitive Bidding Program is fatally flawed and destined to fail and will result in increased prices to Medicare.
No wonder it’s not on Wikipedia.
“We have to pass the bill so you can know what’s in it.”
Congratulations… you passed the bill… and we’re still waiting to figure out what the hell is going on. Americans deserve to find out ‘what’s in it.’ Our goal is to expose it. All of it. Starting with the Competitive Bidding Program. Let’s explore.
Under the Competitive Bidding Program, you must use a Contract Supplier to receive test strips and other supplies. 9 of 10 providers have been eliminated from the market, stifling competition and concentrating power. The 10% of suppliers that received contracts are forced to sell at unsustainable prices for 3 years. These policies will have devastating repercussions for suppliers, doctors, and patients.
Across the country, unsuspecting Medicare Beneficiaries are suddenly receiving unfamiliar products from new Contract Suppliers. In many cases, these suppliers are misleading patients into switching to cheaper testing systems. This issue must be addressed immediately – it’s already undermining self-monitoring and creating health complications. I wanted to address this issue sooner, but it seemed irresponsible until I understood the program. Now I do.
While there’s no excuse for this behavior, there’s a reasonable explanation. The new reimbursement rates have been decreased too much (many Physicians are running into the same problems). The artificial rates imposed by the government don’t represent the actual cost to manufacture the items. Medical equipment suppliers are forced to find other ways of reducing prices… the easiest way is to sell cheaper brands.
Regardless of the reason, it’s illegal for providers to coerce or trick beneficiaries into switching brands. They must find a way to get you the brand you prefer… it only took about a year, but we managed to dig up two provisions that offer some safeguards to protect patients rights:
1. The Anti-Switching Rule
2. The Physician Authorization Process
We’ll be going over these safeguards in detail in the next blog. Since it’s not something you can afford to wait on, check-in again soon. The Competitive Bidding Program is confusing and the repercussions are extensive. Please ask any questions or submit topics you want to know more about.