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Evidence-Based Diabetes Management March 2019
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Three Years After Advocates Report Flaws, Medicare Diabetes Test Strip Bidding Program Nears Collapse

Samantha DiGrande and Mary Caffrey
Three years after results from a study in Diabetes Care revealed how flaws in CMS’ Competitive Bidding Program endangered Medicare patients who rely on supplies to test their blood glucose, the federal government has allowed contracts to expire for the dwindling number of suppliers, raising fears that the program for seniors with diabetes has reached the point of collapse. 
Three years after results from a study in Diabetes Care revealed how flaws in CMS’ Competitive Bidding Program (CBP) endangered Medicare patients who rely on supplies to test their blood glucose,1 the federal government has allowed contracts to expire for the dwindling number of suppliers, raising fears that the program for seniors with diabetes has reached the point of collapse. 

Self-monitoring of blood glucose (SMBG) is one of the fundamentals of diabetes care, and to do this, patients need test strips—the short, chemically treated pieces of plastic that are used just once to capture a drop of blood, then inserted into a meter to read the glucose level and offer guidance for dietary or medication adjustments. For individuals with diabetes who are treated with insulin, monitoring glucose levels is vital to maintaining health and determining the proper insulin levels to be administered. According to the American Association of Clinical Endocrinologists and American College of Endocrinology, SMBG should be performed by all patients using insulin at least twice daily. More frequent SMBG after meals or in the middle of the night may be required for insulin-taking patients with frequent hypoglycemia.2 

“Blood glucose testing for patients on insulin is critical to help them manage their diabetes effectively and remain safe. Access to glucose testing is critical in this population, foremost for their health but also given that hospital admissions for hypoglycemia have climbed and the highly effective way to prevent this is to ensure adequate home blood glucose monitoring,” said Robert Gabbay, MD, PhD, FACP, editor-in-chief of Evidence-Based Diabetes Management™ (EBDM) in an email to the journal. 

Even before the CBP launched in 2011, patients and advocates questioned Medicare’s limits on how many strips patients could have per day, given that frequent testing is particularly recommended for seniors who use insulin.3 However, critics of the CBP said instead of savings for the government and consumers, the program created a “race to the bottom” in both price and accuracy, as low-quality test strips flooded the market, resulting in poor health consequences for seniors.

In the initial implementation of the program, SMBG products were affected if they were obtained by mail order; single payment rates were reduced from $34 to $14 per vial of test strips.1 A report from November 2017 found that the prices for the mail-order program had fallen 71%, to $8.32 since the program began in 2011.5 

A 2016 study by Puckrein et al, presented evidence that a CBP pilot for test strips had caused disruptions to the supply chain, and that changes were needed to protect patients.1 However, CMS took the program nationwide anyway,6 and recent events show that problems with the CBP have continued: 
  • Researchers and advocacy groups say in interviews that payments for test strips are so far below market value that there is no incentive to participate in the CBP, except to gain access to patients for other products. A CMS rulemaking last year brought an end to diabetes supply contracts on January 1, 20197; the mail-order market has essentially bottomed out, and experts predict some retail suppliers may walk away, too. The advocacy group Diabetes Patient Advocacy Coalition reported in September 2018 that 98% of the program’s mail-order suppliers have been eliminated.
  • Data provided to EBDM by Tom Milam, founder and president of TrueLifeCare, show a 35% overall decline in test strip suppliers from 2013 to 2017, and a 47% decline in claim lines (Table 1). The data align with a follow-up study from Puckrein et al, who reported in May 2018 that CMS’ decision to take the CBP nationwide meant disruption to SMBG supplies has “persisted and worsened.”9 
  • An arrest in February 2019 of a former CVS employee exposed an apparent control problem in the CBP supply chain; CVS is revising prescribing protocols in a move it said is unrelated to the arrest.10 
  • Dan Patrick, a patient with type 1 diabetes (T1D) living in Ohio, told EBDM in an interview that he is required to bring his test results to his pharmacist in order to continue receiving test strips, but he has no idea what happens to his data. According to Christopher Parkin, MS, a coauthor on both Diabetes Care studies1,9 and the president of CGParkin Communications, this requirement affects patients who are prescribed to test more than 3 strips per day, which is the minimum amount that Medicare will cover. However, other experts told EBDM that sometimes when data are presented to a pharmacist, they do not reach physicians. 
  • On March 8, 2019, when CMS issued its updated proposal for durable medical equipment (DME) suppliers—which will address those contracts currently expired—diabetes supplies were left out.11 A CMS spokesman told EBDM in an email that more time is needed to meet requirements imposed by Congress in February 2018. 
When asked for comment on the effect of the gap period on patients with diabetes, CMS pointed only to the digitally available “Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program (DMEPOS): Temporary Gap Period Fact Sheet,” which includes instructions for patients ordering many types of supplies.12 

The implementation of the CBP brought about consolidation in the marketplace. Where there were once dozens of suppliers with a share of the Medicare test strip market, a report published by the Office of the Inspector General in January 2019 found that “the top 2 test strips [types] accounted for 53% of the Medicare mail-order market,” and “the top 10 strip types accounted for 98% of the Medicare mail-order market.”13 

New contracts are not expected before the end of 2020. According to a CMS statement, during this gap period, “People with Medicare may have to switch to another supplier if their current supplier isn’t willing to continue to provide the items on or after January 1, 2019.”12 

Saving Money Was the Goal, but Stakeholders Found Flaws 

In 2011, CMS launched the CBP in 9 test markets that included 2.3 million beneficiaries enrolled in fee-for-service Medicare across the United States.1 The aim of the program was to lower the cost of diabetes testing products for both consumers and Medicare, and CMS quickly declared the pilot a success with plans to expand.1 CMS published a report based on Medicare claims data from 2009 to 2012 that found that “the…competitive bidding program has reduced overall Medicare spending without any negative effects on access to necessary supplies or beneficiary health indicators.”

But critics of the program, including the National Minority Quality Forum (NMQF) and the American Association of Diabetes Educators (AADE), challenged CMS based on reports of patients’ inability to access supplies. Led by Gary Puckrein, PhD, president and chief executive officer of NMQF, in April 2016, they published a study in Diabetes Care that found not only had the pilot program disrupted patients’ ability to acquire the test strips they had been prescribed, but their inability to test as often had led to increased death rates, inpatient admissions, and higher costs.1 

“Their study [CMS] wasn’t good. It sure wasn’t science, I’m not sure what they’re doing. The [Government Accountability Office] took a look at that study and agreed that it wasn’t measuring what they [CMS] said it was measuring,” Puckrein told EBDM

Parkin explained to EBDM that “CMS failed to establish (or report on) baseline values for DMEPOS acquisition behaviors and health status, thus making it impossible to determine whether changes in either measure occurred. CMS also failed to construct a ‘matched’ control group, which would have allowed them to determine whether changes in acquisition and health status was, in fact, the result of the CBP, and the significance of any changes seen compared to beneficiaries who were not affected by the CBP.” 

Former US Representative Nancy Johnson of Connecticut, a Republican who was a cosponsor of the law that created the CBP,14 said the effects of the CBP on beneficiaries were immediately clear, and stakeholders came forward quickly. “People came to us [Congress] to get it stopped,” she said in an interview with EBDM. “Congress forced CMS to stop after 2 months. That’s unheard of, but the impact was so negative that there were 6 or 8 things we wanted to change, so we put in 1 or 2 [into a bill] and they only addressed the 1 or 2.” 

“The program is now so complicated that you can break the law and not be held accountable,” said Johnson. Predictions of the race to the bottom were coming true. “The theoreticians were right, and we’re seeing the impact on patients,” she said. 

Milam supplied data to EBDM (Table 1), which was obtained through a Freedom of Information Act request, that showed the number of claim lines for test strips have declined in utilization from 2013 to 2017 by 47%, and the number of available suppliers for test strips also saw a significant decline, from 12,183 in 2013 to only 7977 in 2017. This represents substantial consolidation in the marketplace, as several suppliers have simply left the Medicare marketplace or been forced out. 

Milam, said for some, letting the contract lapse was the last straw—it means there is no immediate hope that below-market prices will increase. Although the program is technically open to “any willing supplier,” none are willing to lose money at the prices Medicare will pay.8 At the start of the Trump administration, former HHS Secretary Tom Price, MD, who had served in Congress, had backed legislation to correct the problems, but once he resigned it languished. According to Milam, “[Price] had an interest in getting it fixed. His departure left things in limbo for quite some time. As a result, the gap was created, and the ‘improvements’ will certainly not be what he had envisioned and hoped for.” 

“I can tell you, we worked with suppliers who were in the Medicare program providing SMBG to beneficiaries, and what they told us is that ‘we have no interest, there’s no money in this and we can’t provide the products at that price, we’d lose money and we’ll never participate again.’ Those were some large suppliers saying that.” 

Cuts to Test Strip Payments Eliminate Other Services 

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