Medicare Cost-Saving Changes for Diabetics

Medicare begins a major change next month that could save older diabetics money and time when they buy crucial supplies to test their blood sugar -- but it also may cause some confusion as patients figure out the new system.

On July 1, Medicare opens a national mail-order program that will dramatically drop the prices the government pays for those products but patients will have to use designated suppliers. The goal is to save taxpayers money but seniors should see their copays drop, too.

Don't care about the convenience of mail delivery? Just over half of the 4.2 million diabetics with traditional Medicare coverage used mail-order last year, but starting July 1 beneficiaries also can get the new lower price at drugstores enrolled in the Medicare program.

"Those who like the face-to-face interaction with the pharmacist have that choice," stressed Jonathan Blum, Medicare deputy administrator. "We want to preserve both options."

It's the biggest expansion yet of a larger, and somewhat controversial, initiative that's predicted to save taxpayers nearly $26 billion over the next decade by cracking down on waste and fraud in the medical equipment industry. Diabetics aren't the only Medicare patients affected. Depending on where they live, patients who rent home oxygen gear and hospital beds, or who need power wheelchairs, walkers and certain other equipment also could see changes in their suppliers and lower prices as a pilot test of this so-called competitive bidding program expands from nine metro areas to a total of 100 on July 1. Medicare is supposed to apply the lower pricing nationally by 2016.

The diabetes initiative is the first to go nationwide -- and Blum said it should put an end to unscrupulous practices such as shipping cartons of supplies to diabetics who haven't run out yet and billing Medicare for the cost.

The concern: Potentially hundreds of thousands of older patients may have to switch mail-order suppliers. The American Diabetes Association worries they won't get the word before their supplies run short -- or might be pressured to switch to a cheaper brand of blood-sugar monitor and the matching supplies even though that's against the rules.

"We're sort of torn, truthfully," said Krista Maier, the association's associate director of public policy. "It will save the Medicare program money, which is good for its sustainability. The challenge is ensuring that beneficiaries' testing of their blood glucose isn't disrupted."

Here are some questions and answers about the program:

Q: What's the big change?

A: Until now, hundreds of mail-order companies could bill Medicare for the test strips, lancets and other supplies that diabetics use to measure and track their blood sugar. Under the new national program, Medicare patients can order from only 18 mail-order companies that won government contracts and will be subject to more oversight. (The change doesn't apply to Medicare Advantage patients.)

Check the list at www.medicare.gov/supplier or by calling 1-800-MEDICARE. Some companies operate under multiple names.

Q: What if the new companies don't sell my brand?

A: Medicare's list shows different suppliers sell a mix of top-selling brands as well as generics -- and you're not required to change your existing monitor. But you may need to shop around or get a doctor's note that specifies you need a specific type, so plan ahead.

Q: What's the price difference?

A: Medicare has paid about $78 for 100 test strips and lancets, just over a month's supply for someone who tests his or her blood sugar three times a day. Remarkably, that rate was higher than other insurers typically pay. Starting July 1, that reimbursement will drop to about $22. The patient copay is 20 percent, so it will drop from about $15 to less than $5.

Q: What if I want to buy at my local drugstore instead?

A: Ask if it accepts "Medicare assignment," meaning it has to honor the July 1 prices. Some large chains are reassuring customers that they're participating. But pharmacies that aren't enrolled in Medicare are allowed to charge patients more.

Q: How did the program work in the nine test cities?

A: Medicare says patients had plenty of supplies. But surprisingly, mail-order claims dropped the first year. The Department of Health and Human Services' inspector general discovered that some suppliers were billing Medicare for drugstore-sold supplies -- which at the time were reimbursed at a higher rate -- even though they actually shipped cheaper mail-order supplies. Congress later closed that loophole, mandating the same reimbursement for drugstores and mail-order starting July 1.

Q: What's happening with other medical equipment?

A: That part of the initiative has hit some bumps. Medicare had awarded contracts to nearly 800 suppliers of those items but it turned out that some didn't have certain licenses required by state authorities. Medicare says it has voided 30 of 96 supplier contracts in Tennessee, but that enough remain to do the job. It is investigating the situation in Maryland.

The home supply industry's American Association for Homecare, which opposes Medicare's competitive bidding program, says the licensing issue is a symptom of broader problems. Members of Congress last week asked Medicare to delay the program's expansion, but that's not expected to happen.