Medicare Mail Orders

As we noted in a recent post, Medicare spending is projected to grow enormously in coming years as the baby-boom generation ages and becomes eligible for the program. Major changes to Medicare may be necessary, including possibly replacing the current fee-for-service system with one in which health-care providers are paid for outcomes rather than for each procedure they perform. But several cost-saving changes are already under way, including the rollout of a new mail-order system for diabetes testing supplies (blood glucose meters and test strips) that was authorized by Congress back in 2003.

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As noted last week in an article at Healthcare Finance News, starting on July 1, a nationwide mail-order system based on competitive bidding will go into effect. This means that instead of simply paying mail-order suppliers a set amount for each product, as it currently does, Medicare will solicit bids from mail-order suppliers and let only those with the lowest bids participate in the program. In exchange for offering lower prices, mail-order suppliers that participate in the program will get more business, and other mail-order suppliers will lose the business that Medicare currently offers them.

According to a fact sheet from Medicare, the new program is expected to slash the prices of mail-ordered diabetes testing supplies by 72%, with the savings shared between Medicare and participants in the program. However, as noted in a separate article last year at Healthcare Finance News, that number may turn out to be an illusion. According to Peter Cramton, an economics professor quoted in the article, a person who can no longer buy test strips from his preferred mail-order supplier may switch to a local pharmacy, in which case Medicare would end up paying about 260% more. And according to Andrea Bergman, a representative for a coalition of product manufacturers, pharmacies, and other groups that take issue with the new program, the bidding process may lead suppliers to narrow their offerings under the new program, possibly making certain types of test strips unavailable by mail order through Medicare.

What do you think — are you sold on the virtues of mail-ordering supplies or prescription drugs in the first place? If you currently receive your diabetes testing supplies by mail order, will you continue to do so after July 1 even if you must switch to a different supplier? Do you support efforts like these to save the Medicare program money, or are you concerned that delivery of mail-order supplies could be disrupted? Leave a comment below!

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