NC medical supplies company fighting to regain state contract
Posted December 2, 2011 6:00 p.m. EST
Updated December 2, 2011 7:03 p.m. EST
Raleigh, N.C. — A medical equipment company that won a controversial state Medicaid contract has been the focus of a two-year WRAL investigation. Prodigy Diabetes Care lost that contract last month. Now, the company is fighting to get it back.
Prodigy is a Charlotte-based company that broke onto the Medicaid scene in 2009 with a no-bid state contract. That led to questions about the company and its diabetes testing equipment. After two years on the defense, Prodigy is now on the attack, protesting the state's decision to choose another company for the contract.
Prodigy corporate counsel Andy O'Hara argues it's more than lost revenue that's driving his company's protest against the North Carolina Department of Health and Human Services’ decision to drop the product.
“Ultimately, what we want is a full and fair process,” O’Hara said. “That didn't occur in this case, and that's what we're asking, is reconsider this contract.”
When scoring the bids, O'Hara contends the state gave Roche Diagnostics, which won the new contract, and other companies, an unfair pass on portions of their bids. He says other bidders weren't penalized for leaving out things like U.S. Food and Drug Administration safety communications, litigation and physician payment information regarding diabetes testing equipment.
Right or wrong, Prodigy may not be the only loser in the process.
Durable medical equipment providers gathered at a Durham seminar recently said they welcome Roche and its brand name meters back into the North Carolina Medicaid market. However, they warn the low bid shaves so much off their profit margins that some providers may have to lay off workers or even shut their doors. Some say they will stop home delivery of the product, leaving patients with fewer options.
“It's a huge patient access issue,” said medical equipment provider Marcia Ladd. “If the DMEs can't do it anymore, this is a very vulnerable population.”
Prodigy's protest over the bid process is a new turn in the controversy, dating two years when the new company surprised many by signing a $30 million no-bid contract with DHHS.
“It wasn't some behind-the-doors dealings, and there wasn't anything untoward or improper associated with that,” O’Hara said.
When Prodigy hit the Medicaid market, the little-known meters and test strips drew some criticism.
“We heard rumblings about the quality of that meter, yes, absolutely,” Ladd said.
“I think that was a big issue because patients didn’t know what that product was like," diabetes equipment supplier Kim Brummett added.
There were also questions about Prodigy's owners, who are still in the middle of a bitter bankruptcy battle in Florida tied to previous companies that also sold diabetes supplies. O'Hara downplays that legal battle.
“Having a bankruptcy is not an indicator that somebody should be marked for life for failure,” he said.
O'Hara does admit Prodigy was too optimistic on local production and job creation promises. WRAL saw the elaborate production machine at the company’s Charlotte factory, which isn't ready yet to churn out original product. Prodigy still imports the testing supplies it packages and ships.
Several providers say they're happy to have the better known Roche meters back for patients, but they remain frustrated by the state's bare bones bidding process.
“I think it's just the state's mentality to do it in a vacuum,” Brummett said.
Shut out of the state Medicaid market, Prodigy is fighting for another shot.
“Our product is just as good as, if not better than, the rest of those products,” O’Hara said.
O’Hara says the state contract represents less than 12 percent of the company’s revenue. There’s an impact, he said, but the company will continue working to grow and provide equipment across the country.
In response to the Prodigy protest, DHHS released a statement, saying the award was made in accordance with the evaluation criteria stated in the request for proposal. DHHS says it will review the vendors' specific reasons listed in their protest letters about the award and either prepare a response denying a protest meeting or schedule a protest meeting.