Diabetes and Medicare Competitive Bidding: The "Perfect Storm" for Patient Harm

May 22, 2016
Jaime A. Davidson, MD, FACP, FACE

Christopher Parkin, MS

Evidence-Based Diabetes Management, May 2016, Volume 22, Issue SP7

A recent Diabetes Care study found flaws in Medicare's competitive bidding program for diabetes test strips. Two of that study's co-authors discuss the findings and why CMS should suspend the bidding program.


Given the growing epidemic and rising financial burden of diabetes in America, clinicians and payers are challenged to strike a balance between effectiveness and cost-efficiency in the allocation of healthcare resources. Achieving this balance is especially critical among patients with diabetes within the Medicare population. These patients now make up 29.9% (11.1 million) of the estimated 29.1 million Americans with diabetes.1 The latest reports estimate that beneficiaries with diabetes consume approximately 30% of total Medicare expenditures.2

Clearly, there is a need to improve how we deliver the necessary medications, glucose monitoring products, and healthcare services to our older diabetes patients. However, the approach chosen by CMS, through its competitive bidding program (CBP), has created a perfect storm of increased costs and adverse health outcomes among Medicare beneficiaries.



In January 2011, CMS initiated its CBP in 9 test markets, which included approximately 444,000 fee-for-service Medicare Part D beneficiaries with insulin-treated diabetes. The goal of the program is to reduce beneficiary out-of-pocket expenses and save Medicare money while ensuring beneficiary access to quality items and services. In April 2012, CMS reported that there had been no disruption of access to diabetes testing supplies and that no negative healthcare consequences to beneficiaries were seen as a result of CBP.3

In March 2016, we reported findings from our own analysis of competitive bidding as it relates to beneficiaries with insulin-treated diabetes.4 Contrary to CMS’s report of no disruption and no adverse health outcomes, we found that acquisition of supplies for self-monitoring of blood glucose (SMBG) was disrupted within the test markets, leading to increased percentages of beneficiaries who migrated from full SMBG acquisition in 2010 to partial/no SMBG acquisition in 2011. The populations most affected were females and African Americans. Migration to partial/no SMBG acquisition was significantly associated with increases in mortality, inpatient admissions, and costs.

Significance of Disruption

A key finding of our analysis was the relationship between SMBG acquisition and mortality. As presented in our report, survival was negatively associated with partial/no SMBG acquisition in both the test market and non—test-market populations (P <.0001).4 One possible explanation for this finding is the increased risk for hypoglycemia within the Medicare diabetes population or significant hyperglycemia by not knowing glucose levels and not taking the recommended insulin dose.

We know that elderly diabetes patients treated with insulin or insulinotropic agents are at significantly higher risk for severe or fatal hypoglycemia than younger patients.5-8 Although much of this is due to the increased prevalence of hypoglycemia unawareness within the elderly population,9 the risk of hypoglycemia-related mortality increases significantly among patients with cardiovascular disease.10 As reported, almost half of the beneficiaries included in our analysis had a diagnosis of heart failure at baseline.4 Because frequent use of SMBG enables patients to detect hypoglycemia in its early stages and take immediate action to prevent it from progressing,11 it is understandable that when access to SMBG supplies is disrupted, testing frequency decreases (or disappears altogether) and hypoglycemia increases. When hypoglycemia increases among patients with existing heart disease, we would expect to see increased mortality,

increased hospitalizations, and increased costs.


Inaccurate SMBG Systems

A factor that must be considered when exploring the link between competitive bidding and the increased mortality and hospitalizations observed in our study, is the questionable accuracy of many of the SMBG systems provided to beneficiaries. Because SMBG data are used in clinical decision making, obtaining accurate glucose data is critical. As reported by Breton and Kovatchev, inaccurate information on glucose levels can lead to severe, even deadly, consequences, either by failing to detect hypoglycemia or by prompting patients to overcorrect with insulin based on an erroneous high glucose result.12

Several recent studies have revealed significant inaccuracy and lot-to-lot variability in up to 45% of the SMBG systems currently marketed.13-16 Among these is the Prodigy Autocode system, which made up 26.9% of the Medicare claims for mail order test strips from October through December 2013.17 In our review of the FDA’s MAUDE (Manufacturer and User Facility Device Experience) website, we found 202 event reports pertaining to the Prodigy Autocode, a vast majority of which describe events that involved the need for emergency medical assistance and/or hospitalization due to meter inaccuracies.18

Although it is troubling that the FDA allows the manufacturer to market its meters to beneficiaries, we are puzzled as to why 83 of these events, which date back to 2010, were not reported to the FDA until November 2013—almost 2 years after implementation of competitive bidding for test strips. This suggests a lack of oversight by the FDA in protecting Medicare beneficiaries, making the agency complicit in the increased mortality and hospitalizations reported in our study.

Interference With the Patient-Clinician Relationship

When competitive bidding was implemented, many beneficiaries were “switched” from their current SMBG system to a lower-cost system, according to a survey by the American Association of Diabetes Educators.19 This may explain why a significant percentage of beneficiaries discontinued their mail order acquisition and began purchasing their supplies from retail pharmacies.4 However, many beneficiaries continued with their new, lower-cost systems, and, in many cases, their physicians were unaware that switching of systems had occurred. This “disconnect” between clinicians and patients increased the potential for inadequate patient training and may have resulted in even greater and more frequent SMBG inaccuracies due to user error.

Because diabetes is a lifelong, self-managed disease, patients require ongoing support and encouragement from their healthcare team to stay actively engaged with their treatment regimens. If patients lack the confidence to properly use their SMBG meters and/or are discouraged (or have experienced harm) due to receiving inaccurate results, they will stop testing. Having proper monitoring technology is a right for patients with diabetes. Patients have significant problems, and we should do our best to make their lives easier, not more difficult. Government initiatives that interfere with the patient—clinician relationship are detrimental to patient outcomes and, ultimately, raise costs.

Inadequate Monitoring of Patient Safety

In December 2015, the National Minority Quality Forum (NMQF) published a 37-page report sharply criticizing the scientific methodology CMS used to monitor patient health and safety.20 According to the report, findings of “no disruption of access” and “no adverse health outcomes” are not supported by the data and methodology descriptions presented in CMS’s reports. The reported concluded that CMS’s approach to monitoring health status raises concerns about safety monitoring of the CBP and should be suspended until CMS can demonstrate that adequate safeguards have been adopted.

CMS’s apparent lack of “transparency” in reporting their findings is also troubling. According to the official statement from the American Diabetes Association (ADA), “The Association has met numerous times with CMS staff, including the Medicare Competitive Acquisition Ombudsman, to discuss issues involving beneficiaries with diabetes and to advocate that the beneficiary protections in the program be implemented in a meaningful way.”21 If the ADA has been working with CMS to resolve identified issues, why does CMS continue to report that there are no issues? This, alone, raises significant concerns about the trustworthiness of CMS.

Unsupported Claims of Cost Savings

In March 2014, the US Government Accountability Office (GAO) reported that “the number of beneficiaries furnished DME (durable medical equipment) items included in the CBP generally decreased more in the competitive bidding areas than in the comparator areas” during the first 2 years, and that, according to CMS, competitive bidding “may have reduced inappropriate usage of DME, and these decreases do not necessarily reflect beneficiary access issues.”22 The GAO report also states that competitive bidding achieved “cost savings of about $400 million as estimated by CMS.”22

How do we know this is true? As discussed earlier, CMS’s flawed methodology in monitoring beneficiary access makes it impossible to accurately assess the impact of competitive bidding on acquisition behaviors and costs. And, as reported in our study, hospitalizations and associated costs more than doubled.4 Given that the 9 test markets represented only 10% of Medicare beneficiaries, and that competitive bidding now includes SMBG supplies acquired through both mail order and retail channels, we find it highly unlikely that any cost savings have been achieved. Moreover, the impact of competitive bidding on other affected products (eg, oxygen, enteral) has yet to be studied. Although anecdotal reports suggest that significant harm has occurred among patients who use these products, we will never know the full extent to which competitive bidding has impacted patient lives and healthcare costs until studies similar to ours have been conducted.


Our study demonstrated that the initial implementation of competitive bidding in the 9 test markets disrupted beneficiary access to needed SMBG supplies, resulting in increased mortality, hospitalizations, and costs.4 The NMQF report articulated numerous reasons why CMS’s claims of no disruption, no adverse outcomes, and cost savings are unsubstantiated and should be questioned.20

As clinicians, we have an ethical obligation to our patients to, first, do no harm. Moreover, as with any clinical trial that involves human subjects, CMS has an ethical obligation to terminate competitive bidding now that harm has been detected. We do not know the full extent of the harm being done to beneficiaries by the national implementation of competitive bidding. However, we do have enough evidence to support suspension of competitive bidding until CMS can prove its ability to monitor patient safety. Dr Davidson is clinical professor of internal medicine in the Division of Endocrinology, Touchstone Diabetes Center, The University of Texas Southwestern Medical Center in Dallas, Texas. He reports no conflicting interests.

Mr Parkin is president of CGParkin Communications, Boulder City, Nevada. He reports consulting fees from Animas Corporation, CeQur SA, Dexcom, Inc, Insulet Corporation, Roche Diabetes Care, and Sanofi US.


1. National Diabetes Statistics Report, 2014. CDC website. http://www.cdc.gov/diabetes/pubs/statsreport14/national-diabetes-report-web.pdf . Accessed January 10, 2016.

2. Medicare Health Support (formerly CCIP). CMS website. https://www.cms.gov/Medicare/Medicare-General-Information/CCIP/index.html?redirect=/CCIP/. Accessed March 7 2016.

3. Competitive bidding update—one year implementation update. CMS website. http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSCompetitiveBid/Downloads/ Competitive-Bidding-Update-One-Year-Implementation.pdf. Published April 17, 2012. Accessed August 1, 2014.

4. Puckrein G, Nunlee-Bland G, Zangeneh F, et al. Impact of CMS Competitive Bidding Program on Medicare beneficiary safety and access to diabetes testing supplies: a retrospective, longitudinal analysis [published online March 18, 2016]. Diabetes Care. 2016;39. doi:10.2337/dc15-1264.

5. Meneilly GS, Cheung E, Tuokko H. Counterregulatory hormone responses to hypoglycemia in the elderly patient with diabetes. Diabetes. 1994;43(3):403-410.

6. Meneilly GS, Tessier D. Diabetes in the elderly. Diabet Med. 1995;12(11):949-960.

7. Geller AI, Shehab N, Lovegrove MC, et al. National estimates of insulin-related hypoglycemia and errors leading to emergency department visits and hospitalizations. JAMA Intern Med. 2014;174(5):678-686. doi:10.1001/jamainternmed.2014.136.

8. Donnelly LA, Morris AD, Frier BM, et al; DARTS/MEMO Collaboration. Frequency and predictors of hypoglycaemia in type 1 and insulin-treated type 2 diabetes: a population-based study. Diabet Med. 2005;22(6):749-755.

9. Bremer JP, Jauch-Chara K, Hallschmid M, Schmid S, Schultes B. Hypoglycemia unawareness in older compared with middle-aged patients with type 2 diabetes. Diabetes Care. 2009;32(8):1513-1517. doi:10.2337/dc09-0114. 10. Frier BM, Schernthaner G, Heller SR. Hypoglycemia and cardiovascular risks. Diabetes Care. 2011;34(suppl 2):S132-2137. doi:10.2337/dc11-s220.

11. Strachan MW, Malloch K, Frier BM. Self monitoring of glucose by people with diabetes. Self monitoring is vital for people with impaired awareness of hypoglycaemia. BMJ. 1997;315(7101):185.

12. Breton MD, Kovatchev BP. Impact of blood glucose self-monitoring errors on glucose variability, risk for hypoglycemia, and average glucose control in type 1 diabetes: an in silico study. J Diabetes Sci Technol. 2010;4(3):562-570.

13. Brazg RL, Klaff LJ, Parkin CG. Performance variability of seven commonly used self-monitoring of blood glucose systems: clinical considerations for patients and providers. J Diabetes Sci Technol. 2013;7(1):144-152.

14. Baumstark A, Pleus S, Schmid C, Link M, Haug C, Freckmann G. Lot-to-lot variability of test strips and accuracy assessment of systems for self-monitoring of blood glucose according to ISO 15197. J Diabetes Sci Technol. 2012;6(5):1076-1086.

15. Freckmann G, Schmid C, Baumstark A, Pleus S, Link M, Haug C. System accuracy evaluation of 43 blood glucose monitoring systems for self-monitoring of blood glucose according to DIN EN ISO 15197. J Diabetes Sci Technol. 2012;6(5):1060-1075.

16. Freckmann G, Baumstark A, Jendrike N, et al. System accuracy evaluation of 27 blood glucose monitoring systems according to DIN EN ISO 15197. Diabetes Technol Ther. 2010;12(3):221-231. doi:10.1089/dia.2009.0128.

17. Memorandum report: Medicare market shares of mail order diabetes test strips 3-6 months after the start of the national mail order program. HHS website. http://oig.hhs.gov/ oei/reports/oei-04-13-00682.pdf. Nov 25, 2014. Accessed March 28, 2016.

18. MAUDE - manufacturer and user facility device experience. FDA website. https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfmaude/results.cfm?start_search=1&searchyear =&productcode=&productproblem=&devicename=&modelNumber=&reportNumber=&manufacturer=&brandname=Prodigy%20Autocode&eventtype=&reportdatefrom=01%2F01%2F2011&r eportdateto=02%2F29%2F2016&pagenum=100. Accessed March 29, 2016.

19. Competitive Bidding Program for mail-order diabetes testing supplies: product availability survey. American Association of Diabetes Educators website. https://www.diabeteseducator. org/docs/default-source/legacy-docs/_resources/advocacy/aade_study_on_suppliers_2014.pdf?sfvrsn=2. Accessed April 20, 2015.

20. CMS Competitive Bidding Program: assessment of impact on beneficiary acquisition of diabetes-testing supplies and durable medical equipment prosthetics orthotics and supplies— associated health outcomes. National Minority Quality Forum website. http://www.nmqf.org/wp-content/uploads/2015/11/National-Minority-Quality-Forum-Report-on-CMS-Competitive- Bidding-Program.pdf. Published November 13, 2015. Accessed February 18 2016.

21. The American Diabetes Association responds to Puckerin et al, “Impact of CMS Competitive Bidding Program on Medicare beneficiary safety and access to diabetes testing supplies: a retrospective, longitudinal analysis [press release]. Alexandria, VA: American Diabetes Association; March 31, 2016. http://diabetespac.org/wp-content/uploads/2016/03/Official_ Statement_Puckrein_DCare_031816.pdf. Accessed March 28, 2016

22. Medicare: second year update for CMS’s Durable Medical Equipment Competitive Bidding Program round 1 Rebid. US Government Accountability Office website. http://www.gao.gov/ products/GAO-14-156. Published March 7, 2014. Accessed April 25, 2015.