Arriva Medical is a major provider of home delivery diabetes supplies. It is owned by Alere (Waltham, Mass.). Arriva distributes Blood Glucose Meters, test strips, diabetic testing lancets, lancing devices, and diabetic control solutions. It is said to have approximately 500,000 Medicare  patients throughout the United States. It is the nation’s largest supplier of diabetes supplies, and has a market share of more than 50%. According to Ed Roberts of CTFN.news, Arriva accounts for around 5% of Alere’s income.

Diabetes is a life-long affliction. Many patients have their diabetes medical supplies paid for by CMS. Unfortunately, in October of 2016, CMS revoked Arriva’s Medicare enrollment, meaning that it no longer could be paid. It had been found that 211 persons receiving diabetes supplies were deceased. Many of the patients had placed the order for their diabetes supplier prior to their death.

Given that Arriva was not notified of the deaths, it continued to ship supplies.

Pending Takeover by Abbott

Alere has entered into an agreement to be acquired by Abbott. But Abbott is considering backing out of the deal because the loss of the diabetes income is a significant and material change to the original deal.

Arriva Medical now is caught in the appeals process at the administrative law level. It is unable to make use of the courts until such time as the administrative law process has been completed. It is unlikely this will happen before the time expires on the takeover deal. All could be lost because the courts are too slow.

CMS Discretion and Over-Reach

Billing for dead patients sometimes happens, because the provider never is notified in a timely manner of the death. It is a common problem, and not only in the diabetes area.

In the normal course of events, the death of a patient is reported to Medicare, which then informs CMS. However, in this case, the database in CMS is not being kept up to date. So Arriva made its mistake by relying on faulty data from CMS itself.

Since the 211 dead patients is such a small percentage of the total patients served, it seems unlikely that this problem is more than a minor administrative matter. This is an error rate on the part of Arriva of 0.04% percent — that is, four one-hundredth of a percent.

Is this a question of administrative over-reach? Why should Arriva not be able to simply pay back what is owed for the 211 beneficiaries? That certainly would be preferable to having its legs chopped off, then causing massive disrupting in the marketplace, and also killing an important merger. Yet even when advised of all of these issues, CMS continued to push its punitive action.