A whiteboard at The Diabetes Store in Memphis, Tenn., displays
comments from diabetic patients who have attended the provider's
free, three-hour Diabetes 101 education classes, which are held
seven times a week and sometimes attract up to 35 attendees.
"You're a lifesaver," reads one of the comments scrawled on the
board. "You are my angel sent from God," says another.
The comments are typical of feedback The Diabetes Store gets
after its classes, which sometimes end with a standing ovation,
says Greg Nuckles, COO. "It's horrible to have diabetes, to go to a
class, to sit through it. But it's rare at the end of a class that
they don't stand up and clap."
Attendees are provided a blood glucose meter during the class
and are trained to use it, but it is the education that appeals to
diabetic patients because it offers them hope. "It's very
clinical," says Nuckles, who has owned The Diabetes Store with his
wife Charlotte since 2006. "We don't do a sales pitch."
Even so, reading the messages, Nuckles reflects on the state of
the business of providing diabetes supplies to patients. "If I
wasn't a glass-half-full kind of person, I would be looking for a
way out as fast as I could," he admits. "It's the toughest business
I ever thought about being in."
Medicare developments including Round 1 of competitive bidding
and the prospect of a nationwide mail-order bid promise to strip
margins from the category and push providers such as Nuckles toward
lower-cost products and less service.
Sidebar:
Diabetic Supplies National Mail-Order Bid On the Way
"Today, our education is free and our product sales fund it," he
says. "In the future, we may have to charge for it or bill
insurance. We'll keep from doing that as long as we can." The
provider also operates locations in Southaven, Miss., and Homewood,
Ala. (near Birmingham), and offers diabetes classes in the
Chattanooga, Tenn., market.
The need for diabetes care and education is increasing even as
the government looks to decrease the money it spends on the
disease. According to the latest CDC report, diabetes affects 25.8
million people — about 8.3 percent of the U.S. population
— including 18.8 million people who are diagnosed and another
7 million who are undiagnosed. Among those 65 and older, 26.9
percent, or about 10.9 million, had diabetes in 2010. It is the
leading cause of kidney failure, non-traumatic lower-limb
amputations, new cases of adult blindness and a major cause of
heart disease and stroke.
The CDC estimated the direct medical costs of diabetes at $116
billion in 2007, with another $58 billion in indirect costs
including disability, work loss and premature mortality.
Tough Times for Reimbursement
In the Round 1 rebid, mail-order pricing for diabetic supplies
averaged 56 percent lower than former reimbursements. Test strips
fell to a range between $13.88 and $15.62, leaving providers
wondering who could supply the products at rates so low.
A study by University of Maryland economist Peter Cramton shows
that 87 percent of existing providers in mail-order diabetic
supplies lost contracts in the rebid, with 100 percent losing out
in five of the nine competitive bidding areas. According to
industry estimates, that means more than 90 percent of Medicare's
diabetic beneficiaries will be forced to find new providers because
the nation's top diabetic supply companies — including giant
Liberty Medical — and other established diabetic providers
did not win contracts.
Given the typical 90-day supplies and that the bid contracts
began in January, the problem is expected to emerge even more
clearly this month.
Nuckles says he is sometimes getting 15 calls a day from
beneficiaries who can no longer get their brand-name supplies and
are looking for a less expensive alternative. The Diabetes Store
was not a Round 1 bidder and can only offer the alternative of a
cash-pay product.
"We tell them to contact their representatives and their
senators and to call Medicare," says Nuckles.
Under the Medicare Improvements for Patients and Providers Act
(MIPPA), contract suppliers are mandated to carry 50 percent, by
volume, of all types of test strips. But the reimbursement levels
make the majority of the top products too costly for bid winners to
provide. The law also requires a nationwide bid for mail-order
diabetic supplies, but the timeframe is still uncertain.
Sidebar:
Top 19 Medicare Mail-Order Diabetic Test Strips
Like many other providers, Nuckles says Medicare makes up about
40 percent of his business, which is now at risk and represents a
loss that would have a "devastating effect."
"We have taken the position that we provide education and have
always provided brand-name products. But those products are 30 to
40 percent above the bid," he says. Historically, the company has
offered Roche's Accu-Check and Aviva products.
Now Nuckles is looking to improve processes to help lower costs,
but "it's impossible to lower costs enough to offset a product that
costs more than it sells for," he points out. He's also expanding
lines to include products such as diabetic shoes, and to emphasize
products that are not part of competitive bidding.
At the end of the day, patient well-being is at stake,
emphasizes Nuckles. "I don't ever want an insulin-dependent person
to look at a [low-cost] meter and inject themselves and then the
meter be inaccurate," he says. "Everybody wants to reduce health
care costs. Unfortunately, lowering the quality of the product
won't get you there, and this could have a devastating effect on
overall health care costs."
Do More than Provide Products
Bryan Sowards, CEO of Infopia USA, agrees. "In the competitive
bidding environment, suppliers eventually won't have the luxury of
paying close attention to their customers' needs and concerns," he
warns. "They are going to have to focus all of their attention on
acquisition costs and crunching numbers. This will lead to sifting
through cheap products that may lack the quality their customers
deserve."
Like others in the industry, Sowards is concerned competitive
bidding will have such a negative impact that smaller providers may
eventually have to close their doors if they are not able to
adjust. He's urging his customers to continue to fight the bidding
program before its effects are irreversible.
Along with blood glucose meters and test strips, Infopia offers
the Ecocene Remote Home Patient Monitoring System, a telehealth
platform. The system utilizes the components of health management
through a line of glucose monitors, blood pressure cuffs and weight
scales.
Infopia's new Element with Voice blood glucose meter offers a
three-second test time, requires 0.3 microliters of blood, uses
light reflective technology and is now available with a talking
feature. Used with the Eocene Remote Home Companion, the results
are transferred from the meter across the patient's home telephone
line to the Eocene system, and the data is compiled into patient
logbooks, reports and graphs that can be viewed by the patient's
care team.
Providers can also use the logbooks to obtain claims
documentation; they can simply log-in and print the documentation
they need from their customer.
"To sell more [in the diabetic sector], you have to do more than
just provide products. You must identify, create and promote the
differentiating aspects of your diabetic supply services," Sowards
says.
He also recommends continuously evaluating competitors' tactics
and using them as a stepping stone for a more proactive marketing
approach. "Upgrade your product line and get out of the rut of
selling by just a brand name and start selling with features and
benefits to your customers," he suggests.
Helping Providers through the Hurdles
Arkray USA's Randy Turpin, senior marketing manager, says his
company is concentrating on helping its customers "through the
hurdles. We are flexible. We can customize programs to retain
customers and customize pricing to help them with their
margins."
Regarding price, Turpin says "we can't go below profitability,
but we can figure out how to live in the [competitive bidding]
arena if that arena stays around."
Arkray, which offers the Glucocard family of products, is
working with providers in marketing efforts and to set up business
models to help them shift their costs.
"We have positioned our pricing in case competitive bidding goes
national," Turpin says. "We're like every manufacturer; we are
looking to position ourselves well, building strong partnerships
with suppliers." The company is working to bring more awareness to
diabetic end-users through Glucocard YouChoose educational
programs, a sales support team and in-service assistance, Turpin
says, because HME providers need partners who can help them
maneuver through the changing market.
Will lower prices limit service? Turpin says no. "We can't allow
it to limit our service," he contends. "We still have to be able to
service that diabetic patient, and giving them a meter and strip is
not enough. At the end of the day, it's about the patient, and we
have to find a way to get around [cost pressures].
"I don't think anybody in the industry looks at competitive
bidding as a user-friendly program, but our government thought it
was necessary," he says. "We just need to make sure that survivors
provide the patient what they need, when they need it."
Needed: New Technologies
Wes Morrison, vice president of marketing and sales, VPI
Diabetes Management, which distributes Infopia's products, rejects
the idea that increases in regulatory demands and better patient
care must have a negative correlation with profitability. With
remote home patient monitoring and new diabetes technology,
providers can supply more for their customers and actually increase
their profits, he says.
Too many providers, he says, are using "inefficient and
expensive methods for collecting the documentation they need for
reimbursements."
Some providers may just decide not to deal with it at all,
Morrison says. "They will not accept customers who are
high-frequency testers and require more documentation for
reimbursements." If that happens, he says, "they are decreasing
patient care and leaving money on the table."
Stay Ahead of Changing Dynamics
Here are some factors to consider about today's diabetes market,
says Wes Morrison of VPI Diabetes Management:
- Understand the limitations and regulations that currently
exist. - Educate yourself on the conditions and products necessary to
manage diabetes. There are more items available to your customers
than just blood glucose meters and test strips. - Have an understanding of your patients' needs and the
guidelines that managed care organizations and Medicare have
defined. - In order to be successful you can no longer exclusively promote
more expensive name-brand products. However, the products you carry
are a reflection of you and your company, so it's important to keep
quality in mind when looking for a lower cost. - Keep your business well-rounded and become your customers'
"diabetes one-stop shop."
Don't Overlook Diabetic Shoes
Tom Derrick, C.Ped, a pedorthic footwear consultant, advised
Medtrade 2010 attendees on various aspects of providing diabetic
shoes. Here are some of his insights:
Medicare regulations require providers to be educated, trained
and accredited specifically for diabetic footwear. They must
resubmit a CMS 855S form indicating diabetic footwear services and
must adhere to state licensure guidelines, if applicable. Laws in
Alabama, Arkansas, Florida, Illinois, Ohio, Oklahoma, Tennessee and
Texas require a specific state license for all diabetic footwear
providers.
Industry certification is highly recommended, and may be
required by accreditation agencies; it also improves marketability
and helps gain referrals. Accreditations are Certified Fitter of
Therapeutic Shoes (CFts) and Certified Pedorthist (C.Ped). For
information: American Board for Certification in Orthotics,
Prosthetics, & Pedorthics (www.abcop.org)
When choosing among the dozen or so shoe manufacturers, look for
quality, style, selection and simplicity. Be aware that prices
vary. Ask what else the company offers and how they can help you be
successful.
Medicare's therapeutic shoe benefit provides for one pair of
extra-depth shoes (A5500) each year, as well as three pairs of heat
moldable or custom inserts (A5512 or A5513). Documentation from a
physician is needed to support the use of custom inserts.
Diabetic patients must be receiving active diabetic treatment,
and shoes must be needed for the treatment plan.
Paperwork requirements include a certifying statement signed by
the physician treating the patient's diabetes (not a podiatrist) in
addition to a prescription.
Medicare rules require trained, educated providers to be present
for both initial evaluation of a diabetic's feet and the fitting
and delivery of footwear.
