Hear that sound? That’s everyone in the diabetes medical industry slowly letting out a collective breath.
Earlier this year, the U.S. Centers for Medicare and Medicaid Services announced that it would alter the way it reimburses for diabetes test supplies by opening more of the process up to competitive bidding. The move is expected to slash the federal government’s reimbursement rate for most diabetes test supplies by 72 percent.
Those cuts took full effect on July 1st, so now we get to see the new landscape for diabetes supply providers take shape before our eyes. Will these providers head to the exits, or will they get innovative, both in their product offerings and their advertising? The Government Accountability Office has been called on by members of the House of Representatives to study the impact of the new bidding process, but it’s already visible. The policy has winnowed the number of Medicare-approved suppliers down to 18, when there used to be hundreds.
Ideally, this move could lead companies to encourage tech innovation that streamlines and improves care. The reimbursement cuts seemed to spark a spirit of collaboration between diabetes companies and a tech startup called Glooko, as we recently reported in Insulin Nation. But many fear the move will cause huge upheaval in the short run, as smaller diabetes supply operators will be forced to shutter their businesses, unable to compete against big-time suppliers who can outbid them.
Time will tell. One thing is certain: There no longer is such a thing as business as usual.