Medicare Bidding Process Causes Potentially Dangerous Problems

Prescription drugs are often less expensive in Canada than in the United States. One reason is because the Canadian provinces negotiate with the drug companies. The province agrees to place a drug on their formulary list, but only at a volume discount.

We do not that model in the U.S. For the first time this year, however, Medicare has begun competitive bidding for durable medical equipment provided to seniors. In our area of the country, this took effect on July 1, 2013.  Durable medical equipment includes items such as oxygen supplies and equipment, wheelchairs, scooters, and mail-order diabetic supplies. As expected, the price of those items dropped after competitive bidding. The tradeoff  is that seniors ordering these items under Medicare are restricted to the suppliers who won the bids.

Also as a consequence of the new procedures, diabetic Medicare patients are required to purchase diabetic test strips by mail order, unless they can personally visit a pharmacy. They can no longer order for delivery from local pharmacies, but must actually visit the store.  All others must order by mail, from one of the 18 companies that supply the diabetic strips. Some, but not all of the companies that won the competitive bidding for that contract, are based in the United States.

However, unforeseen problems with this new process have posed a danger to seniors. Some companies who won the bids are not maintaining quality control standards. Some test strips are giving inaccurate readings, and that can be very dangerous for diabetics. Other test strips have recently been recalled. In one study of 34 blood glucose systems, more than one-fifth did not meet the minimal accuracy requirements of the ISO standard.

The FDA (Food and Drug Administration) does not have a surveillance system in place to effectively monitor the quality of devices approved for purchase after competitive bidding. To its credit, the FDA has acknowledged the problem, and is working to address it, by developing a guidance document for manufacturers, and strengthening current standards. But this is not enough without surveillance.

What is the solution for seniors in our neighborhood? The easiest solution is to visit a local pharmacy for the test strips rather than order them mail order. At the time Medicare established the mail order system for diabetes test strips, they reduced the amount that local pharmacies can receive for selling them to Medicare patients. Some pharmacies have discontinued selling the strips because they buy them, from reputable suppliers, for more than they can sell them to Medicare beneficiaries. I called some local pharmacies and some stated they are selling the test strips, even at a loss, as a gesture of concern for neighbors. Although Medicare is paying them a lower rate, they are absorbing the loss for local customers, until the confusion and problems can be ironed out.  Also, the owners explained, they may recoup some of their losses by providing other medical needs required by their diabetic Medicare customers.

Do you know a diabetic senior enrolled in Medicare? If so, pass the word. Do you know of a local pharmacy still providing test strips? Let readers know in the comments below.

Stay well until the next post.

Bob Gasparro

Bob Gasparro is an Elder Practitioner (accountant and attorney). He can be reached at Robert.Gasparro@lifespanlegal.com or (484) 297-2050. Comments to this post, and ideas for future posts are welcome.