United's deal with Medtronic angers diabetics over insurance

Patients with Type 1 diabetes are balking at a new UnitedHealthcare policy that steers them to insulin pumps from just one manufacturer.

The policy wrongly limits choice, they say, by making devices from Medtronic the "preferred" insulin pump in many health plans sold by the nation's largest health insurer.

"To take away the choice of what is essentially an organ — a body part — it's insane," said Jessica Hoffer, a 28-year-old UnitedHealthcare subscriber in Pennsylvania who says she's used a non-Medtronic pump for eight years.

The Minnetonka-based insurer says it's instituting the policy for patient safety reasons, since pumps from Dublin-based Medtronic have a feature that can help prevent complications from low blood sugar.

Choice will remain when doctors show that an exception is warranted for medical reasons, United says. Steering patients to particular medical devices is new, but United says it's like what the insurer already does with incentives for patients to use certain medications or hospitals.

"We've got a device here that's protective, and that capability is unique in the industry," said Dr. Richard Migliori, the chief medical officer at UnitedHealth Group, the insurer's parent company.

The arrangement is a novel collaboration between two of Minnesota's biggest names in health care, since Medtronic's operational headquarters is in Fridley. It could be the first of many such arrangements, as health insurers try to control costs and maintain quality, said Ana Gupte, an analyst who follows managed care companies with Leerink Partners LLC.

"If they can steer to one particular manufacturer, the steerage probably gets them a better discount," Gupte said. "There are probably some system synergies as well. … They may get more visibility into the data and the quality of care and the outcomes."

Even so, the policies could be limited in the near-term to medical devices like insulin pumps where consumers often decide which products to use.

Insurers might be reluctant to develop such programs with devices like artificial knees and heart stents that are implanted in hospitals, because that would be "starting to dictate the practice of medicine," Gupte said.

Device companies have been preparing for a future in which health plans, as opposed to doctors and hospitals, call the shots with purchasing decisions, said Thomas Gunderson, a retired financial analyst in the Twin Cities who followed med-tech firms. By starting with insulin pumps, he said that insurers are dipping a toe into the water.

"It fits into an overall theme of what we've been seeing, and that is: The customer is changing," said Gunderson, who is an executive in residence at the University of Minnesota's Medical Industry Leadership Institute.

The UnitedHealthcare policy makes Medtronic the preferred provider of insulin pumps in many commercial and Medicaid plans, which last year covered about 35 million people. The company didn't say how many Type 1 diabetics currently have coverage through these health plans, but says it receives fewer than 2,500 requests a year for non-Medtronic pumps.

The count doesn't include requests from children age 18 and younger, as well as those in Medicare plans, since those groups are not part of the Medtronic preferred agreement.

"The vast majority of our members already choose a Medtronic device," wrote Daryl Richard, a UnitedHealthcare spokesman, in an e-mail.

After July 1, subscribers who select certain non-Medtronic pumps would not have the costs covered unless doctors obtain an exception to the new policy. Insulin pumps typically cost between $4,000 and $6,000. Financial terms of the deal were not disclosed.

UnitedHealthcare will continue to cover the cost of insulin pump supplies for all brands that subscribers currently use until warranties expire, or the pumps stop working.

About 29 million Americans suffer from diabetes, a disease in which blood sugar levels are above normal.

While people with diabetes account for roughly 9 percent of the nation's population, insulin-pump use is concentrated among those with Type 1 diabetes — a disease that affects about 1.25 million Americans.

People with diabetes need insulin to help them metabolize sugar, and keep glucose levels in the blood within a healthy range. Insulin pumps automatically deliver insulin, and can be paired with sensor systems that can detect when blood sugar readings are going too low.

Medtronic's pump can automatically shut off delivery of insulin so that blood sugar levels don't become dangerously low. United was impressed by data from Medtronic that suggest this feature of Medtronic pumps could prevent low blood sugar episodes and related complications, said Migliori, the insurer's medical director.

"We were able to come to very competitive economic terms in terms of the finances on this," Migliori said. "But the other thing that swayed us is that Medtronic has invested in a very good patient service model to help with the technology."

There's debate among doctors and patients, however, about whether there's an advantage with Medtronic's product. Some patients are fans of a rival continuous glucose monitor from a San Diego-based company called Dexcom that can be paired with non-Medtronic insulin pumps.

The Medtronic pump is, indeed, unique with the automatic shut-off feature, said Dr. Steven Edelman of the University of California San Diego. But the Medtronic sensor is not consistently accurate, Edelman said, so it's "not uncommon" for patients to not use it.

"They often get annoyed by false alarms, and because it turns off their pump when they don't want it turned off," said Edelman, who does consulting work for device makers including Dexcom, in an e-mail.

Medtronic officials defend the accuracy of their sensors, pointing to recent data from both companies that show similar rates of low blood sugar in patients during nighttime hours. That's when the shut-off feature is key, because sometimes patients don't wake to alarms telling them to cut the insulin themselves, said Dr. Fran Kaufman, medical director of Medtronic's diabetes division.

About 80 percent of people with pumps use the feature that automatically stops insulin, Medtronic says, adding that its technology pipeline for sensors has never been stronger.

Rival pump manufacturers have taken exception to the UnitedHealthcare deal. After it was announced in early May, San Diego-based Tandem Diabetes Care saw a sharp decline in its stock price.

Tandem said in a statement that the device maker shipped about 15,500 insulin pumps during 2015. About 1,200 users would not have been eligible for in-network coverage under the UnitedHealthcare policy. The insurer did not confirm the numbers.

Medical device giant Johnson & Johnson, which makes insulin pumps through a subsidiary called Animas, said in a statement that it's looking for ways to "re-establish treatment choices for the patient community."

"Not all insulin pumps are created equal," the company said. "People choose their pumps for very personal and specific reasons."

At the Minneapolis-based Allina Health System, doctors don't recommend the Medtronic pump over competitors, but instead include the company's product alongside all other options, said Dr. J. Ward Godsall, a specialist in diabetes and endocrinology.

At the Rochester-based Mayo Clinic, Dr. Yogish Kudva said there are a variety of reasons patients might select one pump over another. He believes a lot of the assertions about the relative merits of different sensors with insulin pumps are based on perceptions and stories from patients and health care providers — not research.

"I think much more data analysis needs to be done," Kudva said.

Reaction among diabetes patients has been swift this month, with many arguing agreements like the one between UnitedHealthcare and Medtronic could stifle innovation across the device industry by crowding out small firms.

Gunderson, the retired financial analyst, said this is one of the broader issues worth watching. He estimates Medtronic's market share in the insulin pump business is somewhere around 70 percent.

"I would argue that the Medtronic device we see today is probably better than it would be," he said, "if it hadn't had some scrappy competitors pushing them over the last several years."

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck