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Medicare and Medicaid Waste in Focus as CMS Administrator Departs Position

|Includes: ALR Technologies, Inc. (ALRT), PSID, XRX
The New York Times published an article this past weekend titled, “Health Official Takes Parting Shot at Waste.” Written by Robert Pear, the article focuses on commentary from Dr. Donald M. Berwick, the newly departed former administrator of the Centers for Medicare and Medicaid Services (NYSE:CMS).
Of particular interest is Dr. Berwick’s opinion that, “Twenty percent to thirty percent of health spending is “waste” that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by his agency.” The doctor’s estimates of this “waste” amounts to between $150 billion and $250 billion per year -- monies that are desperately needed in reducing our country’s enormous debt problem and that could also go toward providing better health care service.
Where does this waste come from? Examples of excessive waste abound in the Medicare and Medicaid system. Just one example: the multitude of unused diabetes test strips prescribed for patients to self-monitor their blood glucose levels. Even though they are paid for by CMS, many of these strips are never used. More outrageously, some of the unused test strips are even “resold” on the gray market. This waste and even outright abuse of the system are enabled because CMS does not require adequate accountability of if these test strips are used before paying for refills.
We as a nation simply can’t afford to continue spending like this without better accountability and reform. Given the state of the healthcare system and the well-publicized needs for reform, change will inevitably happen; it’s just a matter of when. Investors will be glad to know that there are countless junior companies well-positioned to capitalize on fundamental shifts in healthcare. ALR Technologies Inc. (OTCBB: ALRT) provides a chronic disease management technology, the Health-e-Connect System, which could provide measurable benefits to CMS and those it covers in the near term. ALR received FDA 510(k) clearance for its Health-e-Connect System for remote monitoring of patients in support of effective diabetes management programs in October 2011. 
Specifically, ALR Technologies manufactures a chronic disease management system – Health-e-Connect – that allows sharing of blood glucose data between patients and their providers. The platform is intended to improve patient outcomes, when used as part of an effective diabetes management program, by enabling providers to make immediate medication and lifestyle adjustments and to address patient barriers to diabetes care plan adherence. Improved patient outcomes equate to less health care spending. Health-e-Connect also tracks diabetes test strip utilization – information that could be used by dispensers to curb rampant test strip waste currently contributing to the squandering of millions of CMS dollars annually.
Possessing a similar technology, but possibly carrying upfront costs with it, PositiveID Corporation (OTCBB: PSID) received FDA clearance for its iglucose™ mobile health system for diabetes management in mid-November 2011.
The electronic medical record arena has many firms vying for space. According to Millennium Research Group, the electronic medical record market is projected to grow from less than $1 million in 2009 to more than $8.3 billion by 2016. Software and office equipment maker Xerox Corp. (NYSE: XRX) reported last week that its ACS subsidiary bought cloud-computing company The Breakaway Group to grow its electronic medical records capacities. At the ground-level price point, MMRGlobal Inc. (OTCBB: MMRF) is a leading junior in the electronic medical records space. The company is conducting business with several household names to expand their products including Eastman Kodak (NYSE: EK), Alcatel-Lucent (NYSE: ALU) and privately-held Chartis, Inc.
The original NY Times article can be viewed at:

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