Three Years After Advocates Report Flaws, Medicare Diabetes Test Strip Bidding Program Nears Collapse

March 29, 2019
Samantha DiGrande , Mary Caffrey
Volume 25, Issue 4

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.4

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.8
  • 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.”6

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

Robert Salmon, RPh, tried as long as he could to make the CBP work, but in August he left the program due to CMS rejecting his bid more than 20 years after he began a mail-order business as a small sideline run from the back of his Charleston, Mississippi, pharmacy. The Diabetic Shoppe, now a separate business, is located in the state’s Delta region, an area with one of the highest diabetes rates in the country.15 Salmon sees the effects of the disease play out across generations. “What you have is socially, educationally deprived people who are also not eating right and doing the right things, and getting sick and overweight and handing that down through the children, and then the children are given to the same set of circumstances,” he said.

Treating diabetes is one thing, but Salmon aimed to teach his clients to break the cycle. At its peak, the Diabetic Shoppe employed 70 people— including diabetes educators, a certified disease state manager, and a dietitian. He ran seminars called Diabetic Days, “but that’s all gone by the wayside,” because he could no longer make it all work financially as payment for test strips went lower and lower.

Salmon said the CBP as designed works against clients like his, whom he described as some of the sickest in the country and least equipped to navigate Medicare without help from a prescriber. “I have a college education and I couldn’t figure out how to get supplies off the internet,” he said. “Everyone in Medicare is over 65 and has a flip phone, so if I couldn’t do it, neither could they.”

“If you want to save money, the cheapest thing you can do is make sure they have enough testing supplies,” he said. It’s in CMS’ interest to make sure suppliers are legitimate businesses, “that have infrastructure and are not just trying to make money off [patients], but making relationships.”

Salmon said he still serves Medicare clients since the program lapsed in December, but he did not increase prices. “We lose money when we do it,” he said. His pharmacy continues to serve existing Medicare clients but doesn’t seek new ones. CMS has not weeded out reselling test strips as it has reduced claim lines. Instead, Salmon said, seniors became frustrated and stopped trying to get their supplies through Medicare. Thus, they are either getting test strips elsewhere, or testing less frequently, if at all. Puckrein et al reached a similar conclusion in their 2018 follow-up study in Diabetes Care, as they noted a 59% jump in beneficiaries who are full-time insulin users but only use SMBG part time or not at all. The authors wrote, “…we now have a large percentage of our cohort calculating their insulin dosages with inadequate (or no) SMBG to guide their therapy decisions.”9

“Although we no longer had a ‘control group’ (comparator population) due to the national rollout, there is every reason to believe that the increased hospitalizations, mortality, and costs shown in our first report were experienced throughout the entire insulin-treated beneficiary population,” Parkin told EBDM.

“The older people and the poor people—the people less likely to do what it takes and fend for themselves—these are the populations that have been mistreated and have had services taken away from them,” Salmon said. The worst part, he added, is that many commercial insurers are taking their cues from CMS on supply reimbursement. “Yeah, they pay for it, but they don’t pay as much as the product costs. In effect, they don’t pay for it. It’s too frustrating for patients, so they just give up and quit. I’m hoping someday CMS will see the light, but I don’t know what it would take.”

An Arrest Draws Attention to the Secondary Market

Many diabetes supply manufacturers make proprietary strips that only work with their meter, and if a patient changes meters (eg, because of a doctor’s recommendation or a change in insurance), a patient may have a supply of unused strips. The practice of reselling unused test strips has created a so-called “gray market,”16 which Medicare has tried to subvert. One recent high-profile account did not involve a beneficiary, however. In February 2019, federal officials charged a former CVS employee, Antonio Rivera, with stealing diabetic test strips. Rivera, a former senior purchasing associate for CVS Pharmacy, is accused of ordering excessive amounts of test strips, intercepting the shipments and selling them to third-party retailers for personal gain.

According to an internal audit by CVS, the company could not account for 20,203 boxes of diabetic test strips ordered by Rivera, which amounts to a financial loss of $2,535,307.63 for CVS.5 The charges—theft of preretail medical products, trafficking in stolen pre-retail medical products, and wire fraud—carry a maximum sentence of 20 years in prison and a $250,000 fine.

EBDM reached out to CVS for comment on the arrest, to which CVS replied that it is “committed to supporting the health needs of patients who have diabetes while also complying with applicable requirements and guidelines.” Just before Rivera’s arrest, on January 29, 2019, CVS Pharmacy began limiting the quantities of diabetes testing supplies (DTS) covered under Medicare Part B to Medicare’s standard utilization guidelines in order to comply with medical necessity requirements.

“Under these guidelines, CVS will dispense DTS—including test strips and lancets—to non—insulin-dependent Medicare Part B patients for testing no more than once per day; and to insulin-dependent Medicare Part B patients for testing no more than 3 times per day,” Gary Serby, director of corporate communications at CVS Health, told EBDM in an email.

Serby also explained that leading up to the January 29 deadline, CVS contacted its Medicare Part B patients with diabetes and their prescribers to inform them of the change in guidelines. It is unknown how far in advance patients and prescribers were notified; however, importantly, “Medicare Part B patients with current DTS prescriptions that exceed the guidelines will require a new prescription that meets Medicare’s standard utilization,” he said.

This new requirement could affect patient access to DTS, as it will demand some current patients obtain new prescriptions from providers.

Rivera’s arrest illustrated demand for DTS on the secondary market, which is something stakeholders say exists in part because of challenges in the CBP. With the contract lapse and no date certain for a replacement, there are concerns that seniors who rely on Medicare for DTS will face fewer options.

Stakeholders Call for Changes to the CBP

As recently as September 2018, the AADE sent a letter to CMS stating, “AADE has expressed serious concerns with the CBP since its implementation in 2011. We continue to urge CMS to address the many flaws inherent to this program. The CBP, as currently designed and functioning, limits choice of testing systems for Medicare beneficiaries and reduces access to safe, effective, and high-quality products. This has resulted in diabetes-related complications, negative health outcomes, and healthcare costs.”17

In February 2018, after CMS had failed to act on earlier concerns about the program, Congress included language from the Protecting Access to Diabetes Supplies Act in the fiscal year (FY) 2018 to FY2019 budget. The language made several changes to the CBP, including strengthening the 50% rule, which requires suppliers to provide at least half the brands that beneficiaries use, and the anti-switching rule, which indicates that suppliers cannot entice beneficiaries to switch brands.

Specifically, the bill required the following18:

  • Bidding suppliers must demonstrate an ability to obtain an inventory of strips consistent with the inventory mix provided in that supplier’s bid
  • A surveillance program to be established to ensure the rules of the program, specifically the 50 Percent Rule, are followed
  • CMS to use multiple data sources to measure compliance
  • Codifying the anti-switching rule
  • Allowing beneficiaries to interrupt the claims cycle by requiring suppliers to contact and receive a refill order not more than 14 days prior to dispensing a refill
  • Suppliers to verbally provide beneficiaries with an explanation of their rights

However, despite these changes implemented by Congress, there was not enough time to evaluate the benefit before CMS allowed the CBP contracts to lapse.

“AADE has been closely tracking Medicare beneficiary access to safe, effective, and high-quality DTS. Since 2013, we have seen a marked decrease both in the number of Medicare claims submitted for DTS and in the number of suppliers (mail order and retail),” said Kate Thomas, director of Advocacy at AADE, in an email to EBDM. “This has created significant safety and access issues for Medicare beneficiaries trying to get the supplies they need.”

Patrick, the patient with T1D who spoke with EBDM, said CMS must do more than address availability of test strips—to keep patients safe, bids must be evaluated not just on price, but also on strict standards for accuracy and precision in measuring an individual’s blood glucose. “If they did that,” he said, “the program would look very different.” REFERENCES:

  1. Puckrein GA, 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. Diabetes Care. 2016;39(4):563-571. doi: 10.2337/dc15-1264.
  2. Handelsman Y, Bloomgarden ZT, Grunberger G, et al. American Association of Clinical Endocrinologists and American College of Endocrinology—clinical practice guidelines for developing a diabetes mellitus comprehensive care plan—2015. Endocr Pract. 2015;21(suppl 1):1-87. doi: 10.4158/EP15672.GL.
  3. American Diabetes Association. 12. Older adults: standards of medical care in diabetes—2019. Diabetes Care. 2019;42(suppl 1):S139-S147. doi: 10.2337/dc19-S012.
  4. Davidson JA, Parkin C. Diabetes and Medicare competitive bidding: the “perfect storm” for patient harm. Am J Manag Care. 2016;22(spec no. 7):SP252-SP253.
  5. Flaherty T. Mail-order market for diabetes on precipice of disaster. HME News website. hmenews.com/article/mail-order-market-diabetes-precipice-disaster. Published November 10, 2017. Accessed March 12, 2019.
  6. Competitive bidding update—–one year implementation update. CMS website. cms.gov/medicare/medicare-fee-for-service-payment/dmeposcompetitivebid/downloads/competitive-bidding-update-one-year-implementation.pdf. Published April 17, 2012. Accessed March 12, 2019.
  7. Durable medical equipment, prosthetics/orthotics, and supplies fee schedule. CMS website. cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSFeeSched/index.html. Updated February 5, 2019. Accessed March 15, 2019.
  8. Proposed Medicare Competitive Bidding Program rule would hurt patients. Diabetes Patient Advocacy Coalition blog website. diabetespac. org/cbp-proposed-rule/. Published September 4, 2018. Accessed March 15, 2019.
  9. Puckrein GA, Hirsch IB, Parkin CG, Taylor BT, Xu L, Marrero DG. Impact of the 2013 national rollout of CMS Competitive Bidding Program: the disruption continues. Diabetes Care. 2018;41(5):949-955. doi: 10.2337/dc17-0960.
  10. McShea K. CVS employee from Williamsville arrested for thefts worth $2.5 million. The Buffalo News website. buffalonews.com/2019/02/13/ cvs-employee-from-williamsville-arrested-for-thefts-worth-2-5-million/. Published February 13, 2019. Accessed March 12, 2019.
  11. DMEPOS competitive bidding round 2021. CMS website. cms.gov/ newsroom/fact-sheets/dmepos-competitive-bidding-round-2021. Published March 8, 2019. Accessed March 8, 2019.
  12. Durable medical equipment, prosthetics, orthotics, and supplies Competitive Bidding Program: temporary gap period. CMS website. cms.gov/Outreach-and-Education/Outreach/Partnerships/Downloads/ DMEPOS-Temporary-Gap-Period-Fact-Sheet.pdf. Published March 7, 2019. Accessed March 12, 2019.
  13. Medicare market shares of mail-order diabetes test strips from April through June 2018. Office of the Inspector General website. oig.hhs.gov/ oei/reports/oei-04-18-00440.pdf. Published January 2019. Accessed March 12, 2019. Today’s Delta: a research tool for the region [second edition]. Delta Regional Authority website. dra.gov/images/uploads/ content_files/Todays_Delta_FINAL_print-w-borders.pdf. Published February 2015. Accessed March 12, 2019.
  14. Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Congress.gov website. congress.gov/108/plaws/publ173/PLAW-108publ173.pdf. Published December 8, 2003. Accessed March 12, 2019.
  15. Today’s Delta: a research tool for the region [second edition]. Delta Regional Authority website. dra.gov/images/uploads/content_files/ Todays_Delta_FINAL_print-w-borders.pdf. Published February 2015. Accessed March 12, 2019.
  16. Alcorn T. The strange marketplace for diabetes test strips. The New York Times website. nytimes.com/2019/01/14/health/diabetes-test-strips-resale.html. Published January 14, 2019. Accessed March 12, 2019.
  17. Macfarlane C. CMS-1691-P: Medicare program: end-stage renal disease prospective payment system, payment for renal dialysis services furnished to individuals with acute kidney injury, end-stage renal disease quality incentive program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program (CBP) and fee schedule amounts, and technical amendments to correct existing regulations related to the CBP for certain DMEPOS [Letter to recipient]. American Association of Diabetes Educators website. diabeteseducator.org/docs/default-source/advocacy/final-aade-comments-on-dmepos-cbp-proposed-rule.pdf?status=Temp&sfvrsn=0.2853845935641637. Published September 10, 2018. Accessed March 12, 2019.
  18. Congress passes major fix to CMS Competitive Bidding Program for diabetes testing supplies [press release]. Chicago, Illinois: American Association of Diabetes Educators; February 9, 2018. diabeteseducator. org/news/aade-blog/aade-blog-details/press-releases/2018/02/09/ congress-passes-major-fix-to-cms-competitive-bidding-program-for-diabetes-testing-supplies. Accessed March 12, 2019.