NCPA: Medicare Cuts Would Limit Independents' Role in Diabetes Care

Competitive bidding for diabetes supplies gives mail-order and large chain pharmacies an unfair advantage, advocates say.

Seniors with diabetes who rely on their local independent pharmacy for test strips and other self-care essentials may soon have to meet their needs elsewhere. As Congress weighs changes to Medicare Part B’s reimbursement policy, the National Community Pharmacists Association (NCPA) says one proposed reform would force most independent pharmacies to stop offering the supplies to Medicare beneficiaries.

By 2016, Centers for Medicare & Medicaid Services (CMS) will impose competitive bidding pricing on all diabetes testing supplies (DTS). Supplies delivered to patients’ homes—whether by mail or by a retail pharmacist—face an earlier deadline of 2013. Because smaller pharmacies lack the purchasing power of large chains and mail-order operations, NCPA says requiring them to accept low-bid prices for DTS would likely end in a mass exodus independent pharmacies from the program.

Data presented by NCPA in an October 2011 report supports the prediction. In its survey of 800 member pharmacies, 84% said they would likely drop out if faced with a reduction in Medicare payments for DTS. The same number said patient care would suffer—seniors with diabetes would no longer have access to the counseling, monitoring, home delivery, and other personalized services that are hallmarks of the independent pharmacy business model.

Source: NCPA Survey, October 2011

“The message from our survey is clear: applying competitive bidding prices for diabetes testing supplies to independent community pharmacies is financially unsustainable for these pharmacies and will hurt seniors,” said NCPA’s executive vice president and chief executive officer Douglas Hoey, RPh, MBA.

The difference between average retail payments and competitively bid prices is significant, NCPA noted. Whereas the average retail payment for DTS was $37.67 in July 2011, the competitive bidding payment for January 2011 was $14.62. The pricing structure is one that “only a large warehouse can make work,” according to Hoey.

NCPA also reported the following key findings from the survey:

• 81% of independents said the average Medicare patient with diabetes visits their pharmacy at least 2 times per month for counseling and supplies.
• 81% of independent pharmacies deliver DTS to patients at home, and nearly one-third (28%) make 30 or more deliveries per month.
• 65% predict an end to home delivery would have a “significant impact” on care for their patients, many of whom are homebound.

NCPA is presenting the results to Congress as evidence to support HR 1936, legislation that would permanently exempt DTS supplied by independent community pharmacies from the competitive bidding process. Called the Medicare Access to Diabetes Supplies Act, the bill would also permit retail pharmacies to continue home delivery of DTS without facing payment cuts due to competitive bidding.

Asked how the proposed pricing structure for DTS could affect patients nationwide, NCPA's government affairs lead John Coster, PhD, RPh, said in a press conference Tuesday that the program’s limited launch this year provides some clues. In the 9 regions where competitive bidding has been implemented since January 1, 2011, the majority of complaints and questions CMS has received from patients relate to diabetes testing supplies, according to Coster.

He said problems have ranged from patients’ confusion about where to get supplies to complaints about the customer service they receive from mail-order suppliers. “CMS is trying to downplay the complaints,” he added.