Pharmacy Benefit vs. DME Benefit Economics

Two Coverage Paradigms

The economics of CGM access are split between Durable Medical Equipment (DME) and Pharmacy Benefits.

DME Coverage

Standard for Medicare Part B, DME coverage:

How It Works

• Treats the device as hardware
• Uses HCPCS codes
• Requires specialized DME suppliers
• Typically involves 20% coinsurance
• Requires rigorous medical necessity documentation

Challenges

• Administrative barriers
• Limited supplier networks
• Complex prior authorization

Pharmacy Coverage

Increasingly common for commercial insurance:

How It Works

• Treats sensors as recurring prescriptions
• Uses NDC (drug) codes
• Available at retail pharmacies
• Real-time adjudication at point of sale
• Predictable flat copays

Advantages

• Easier access
• Faster fulfillment
• Patient-friendly experience

Economic Drivers

Why the Shift to Pharmacy?

• PBM rebates: Pharmacy Benefit Managers negotiate manufacturer rebates
• Copay assistance: Manufacturer programs (not available for government DME)
• Lower patient out-of-pocket costs

The Medicare Exception

Medicare beneficiaries remain restricted to the DME channel with its fee schedules and supplier networks (the "medical firewall").