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Building a Patient Bridge

Growth opportunity in diabetes products extends beyond the uncertainties of competitive bidding to help patients manage the disease.
by Larry Anderson
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Like his company, Binkley points out, there are thousands of local and regional diabetic providers that use the professional referral model in contrast to the direct-to-consumer model used by national companies such as Liberty Medical or CCS Medical. Their fate, just like his, hinges on the outcome of the rebid.

Valentines' bids in the Charlotte, Cincinnati and Columbus CBAs represent only 10 to 15 percent of the company's business, so its entire future is not at stake. But if they lose, the company will need to diversify into non-Medicare products (such as incontinence aids, wound care, etc.) to remain in those MSAs, Binkley says. And if drastic Medicare cuts extend nationwide, he says the company will have to "change our business model some if we want to stay around."

While Binkley does not expect the rebid rates to be as "severely reduced" as they were in the original Round 1 — payments for mail-order diabetic suppliers were as much as 43 percent lower than then-current reimbursements — he predicts the range will be lower than the 9.5 percent across-the-board decrease CMS imposed when the first Round 1 was abandoned.

"That's the problem with it: It's like throwing at a dartboard," he says.

"We like our business and believe it is a very good business model for patients. The mail-order model is very efficient, and a lot of our patients have transportation issues. Think about your grandmother at home who lives alone. How is she going to get to the drug store?" Binkley says.

He questions the wisdom of CMS exempting drug stores and pharmacies from the 9.5 percent decrease, in effect favoring a less cost-effective solution to providing diabetic supplies to home care patients. "It's unfair and doesn't make any sense," he says.

Another result of competitive bidding will be that patients with diabetes won't have a choice, which was a basic tenet of Medicare — to provide a choice of suppliers, says Binkley. He notes that elderly patients who have to use a different provider aren't going to be happy.

"They don't handle change very well," he says.

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