Scams Everywhere

My stepmother sends along this photo from I-94 service drive and Brush st in midtown Detroit.

No, this isn’t another “destruction porn” article on Detroit. I’d like to draw your attention to the sign. CASH FOR DIABETIC TEST STRIPS.

What. The. Heck?

I’ve heard the stories from many folks regarding the costs related to diabetes, and I know one of these expenses that add up quickly are those little test strips. It can cost hundreds of dollars a month. Unless, of course, you have good insurance, or are on medicare/medicaid. Then, that month’s supply is a $10 co-pay, or free. Mad money.

So, here’s the deal.

A box of those test strips retail for as much as $125 per box. These “Cash for test strips” folks offer $20 for these boxes, sells them to a wholesaler for $40, who then sells them online for around $80.

And the market is fueled by poverty, crime and opportunity.

Commercials: “Ibuydiabeticteststrips.com! I pay cash for your unwanted, unexpired and sealed diabetic test strip boxes.”

“Test strip rescues quick cash calculator. Using the quick cash calculator, we’ll help you calculate how much money you can receive when you package and ship your surplus supplies to our warehouse.”

“Would you like to make some money selling your unused diabetes test strips? Here at CGS, LLC, we make it easy for you to sell your extra, unexpired sealed boxes of diabetes test strips for cash.”

So, why do these folks have unused test strips? Just lying around? Ready to sell?

The FDA says it’s legal to buy and sell test strips because you don’t need a prescription to get them. But if a doctor writes you one, it’s usually covered by insurance or Medicare.

Bourdeau: “Unfortunately, some people will request them just to sell. I might as well get that out in the open. They call their doctor and say, I need some more in order to get money to buy food and whatever.”

Medicare paid out more than $1 BILLION dollars for test strips in 2009.

Mail–order pharmacies specifically target senior citizens on Medicare. But these companies, advertised as convenient service for diabetics, are often the subject of complaints. One of the most frequent from customers is that they send way too many test strip refills. The result is a steady product stream for people like John Bourdeau.

Bourdeau: “Most of these people are on a set program with their insurance companies to receive a set amount of boxes every month whether they use them or not.”

Surprisingly, it’s not easy to determine the price of these things online at any of the big diabetic suppliers. The prices are mysteriously missing. At Wright and Phillips – you cannot even view the products unless you register as a customer. Prices are available at other sites (drugstore.com, for example) , but I’m more interested in the insurance reimbursement rates.

“DiabeticSupplies.com” makes you enter whether you are a medicare/medicaid recipient or traditional health care insurance customer, at which point it sends you to different locations to view products, and I imagine an entirely different price structure.

The Daily Beast had this article about it last year:

Jerry Koblin, who runs a family pharmacy in Nyack, N.Y., says many of his customers complain that their auto-fill programs send far too many boxes of test strips. Online resellers are aware that the strips expire, of course, and constantly run newspaper and Internet ads screaming, “WE BUY TEST STRIPS! $20-$30 FAST CASH!” For diabetics with an oversupply of strips, it is a tempting offer, even though it is against the law to resell supplies subsidized by Medicare or Medicaid.

Koblin says lower-income diabetics also sometimes make the difficult decision to pay for groceries instead of medical supplies. “Some patients who are supposed to test themselves three times a day may only test once, or skip a day here and there,” Koblin explained. “The leftover strips add up quickly.”

More here:

A lucrative market exists because those with test strips to sell got them at no charge or for a small co-pay through Medicaid, Medicare or private insurance and fraudulently continue to reorder in large quantities and people without insurance can buy them from black market resellers on eBay and Craigslist at a deep discount. It seems like a win-win situation, except for taxpayers, who are on the hook for those entitlement programs and employees and companies who have seen insurance costs rise due to spiraling medical costs.

And there are folks who are making a career of this. Eric Asai created “Affordable Diabetic Test Strips Inc.”

He typically moves about 600 boxes of test strips a month. He pays $25 a box for premium brands. He sells the most popular, 100-count One Touch Ultra Blue, on eBay for $72 to $75 a box. One Touch almost always sells the same day he lists it. He sells to diabetics who live around the country.The people he buys from are phantoms. He drives from the Catskills to the Adirondacks to make buys. It’s a first-name, cash, grab-and-go operation. About 300 of his customers are regulars who sell him boxes of test strips every month. He’s got regulars who live in what he describes as mansions in Loudonville and Guilderland.

There are a LOT of these things for sale on Ebay.

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