Time to accept reality
According to a press release from the National Community Pharmacists Association (NCPA); “results from a survey of over 800 independent community pharmacists about the negative consequences for their patients and their businesses if diabetes testing supplies under Medicare Part B are subjected to competitive bidding prices.
The U.S. Centers for Medicare and Medicaid Services (CMS) has indicated that by 2016 providers of these supplies (including testing strips, monitors, lancets, glucose control solutions) will either have to accept prices established under the mail order competitive bidding process or competitively bid in order to continue participating in the Durable Medical Equipment, Orthotics, Prosthetics and Supplies (DMEPOS) program. In July 2011, the average retail single payment amount for diabetes testing supplies was $37.67, whereas the Round 1 Competitive Bidding Program single payment amount for was January 2011 was $14.62.” (Bold and underlining added by Diabetic Investor)
The release also states; “Eighty-four percent of community pharmacists surveyed said they would likely drop out of the program if forced to take reduced payments or competitively bid.” While this may be true and could force seniors to find alternate methods for getting their diabetes testing supplies, one fact is indisputable; competitive bidding and lower reimbursement rates for diabetes testing supplies are a reality.
Although not yet a fact, the strong possibility exists that besides lower prices pharmacy chains, mail order houses and durable medical equipment (DME) providers will also be forced to deal with changes to reimbursement structure as it would not surprise Diabetic Investor when insurers stop providing reimbursement for non-insulin using patients.
The key question is; will the government through Medicare initiate this change or will private insurers take the lead? As Diabetic Investor has noted there is a growing body of evidence that indicates non-insulin using patients do not see improved outcomes from regular glucose monitoring. While Diabetic Investor believes much of this research is flawed as it oversimplifies the role glucose testing plays in diabetes management and overlooks the fact that the majority of these patients do not understand what these numbers mean or how to use them to better manage their diabetes; the fact remains there are numerous studies that have drawn this conclusion.
It’s also somewhat surprising to Diabetic Investor that many of the leading diabetes experts we have spoken with agree with the conclusions drawn by these studies. The general sentiment of these experts is that glucose monitoring could be beneficial IF these patients were educated as to what they mean and how to use them, but given the dismal state of diabetes education it makes no sense for any patient to perform a test when they have no idea what action to take based on the result of that test.
Equally, if not, more important than the study results is another harsh set of facts; our government is going broke and healthcare costs continue to rise. The government also sees the handwriting on the wall and knows that Medicare will see a major increase in costs for diabetes testing supplies as aging Baby Boomers become eligible for Medicare. Adding fuel to this raging fire are more indisputable facts; diabetes is growing at epidemic rates and diabetes disproportionally impacts seniors. According to National Institute of Health (NIH) in 2010 among U.S. residents ages 65 years and older, 10.9 million, or 26.9 percent, had diabetes. Put another way seniors account for nearly half of the total diabetes population which the NIH estimates to be 25.8 million people in the US. Finally the NIH estimates that 72% of all patients either use oral medications or no medications at all to treat their diabetes.
Add it all up and what you have is the perfect storm of events and data that will bring about this change to how or if diabetes testing supplies are reimbursed for non-insulin using patients. Put more simply, a ton of money can be saved and in this environment saving money is paramount. Especially when you consider that although seniors vote in greater numbers they are more likely to accept changes to Medicare’s reimbursement policies than to see Medicare go broke.
Given the way the competitive bidding is going and how our government functions, Diabetic Investor believes it will take some time before we reach the point when testing supplies are not reimbursed for non-insulin patients. Politicians understand that seniors vote and will likely take the position that there is no reason for these big bad glucose testing companies to get rich on the governments dime and Medicare patients should not have to suffer not being able to get their diabetes testing supplies. Basically they will force these companies to accept lower reimbursement for their products.
Taken as whole one can see why every company in glucose monitoring is chasing the insulin using patient and cutting costs wherever they can. They realize some facts as well. First, there is a finite supply of insulin using patients and competition for these patients is fierce. Second, pricing pressure is really nothing new and in order to maintain profits margins cost cutting is not just essential but a matter of survival. Third, while the market is currently dominated by four major players, there are new players entering the market; new players that have the capital to become competitive in a hurry. Fourth, new technology could shift the balance of power in an instant as insulin using patients are also the primary target for the many new interconnected systems that do more than just deliver a test results and are actually designed to help insulin using patients better manage their diabetes. Fifth, they see new therapy, i.e. GLP-1, gaining traction and these therapy options do not require a patient to regularly monitor their glucose. Finally, they see continuous glucose monitoring systems (CGMS) gaining traction with not just insulin pump patients, the most frequent testers, but also with patients following multiple daily injection(MDI) therapy, the second most frequent testers. While these patients will need a conventional monitor to calibrate their CGM, the fact remains once on a CGM these patients use far fewer test strips.
A Chinese philosopher once said a picture is worth a thousand words and when it comes to the future of conventional glucose monitoring it’s not a pretty picture no matter how you look at it. Or as Philip Dick wrote; “Reality is that which, when you stop believing in it, doesn’t go away.”