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Audit (A-05-11-00098)

03-13-2012
Ohio Medicaid Costs for Home Blood-Glucose Test Strips Could Be Reduced by Approximately 50 Percent

Executive Summary

The Ohio Medicaid program could have achieved savings of approximately $8 million for the period July 1, 2010, through June 30, 2011 (State fiscal year 2011), for test strips by establishing a competitive bidding program or through the use of manufacturer rebates. We determined that Medicare payment rates obtained for mail-order test strips through competitive bids in two Ohio competitive bidding areas (CBA) and Medicaid payment rates that the Indiana Medicaid program obtained through manufacturer rebates were significantly lower than the Ohio Medicaid maximum reimbursement rate. The average Medicare payment rate for a 50-pack of test strips from the two Ohio CBAs in 2011 was $15.42, the net cost after rebate in Indiana was $17.72 and $14.70, and the Ohio Medicaid maximum reimbursement rate was $35.00. Establishing a competitive bidding mail-order program similar to the Medicare program or using manufacturer rebates could result in an approximately 50-percent reduction in the cost of test strips.

We recommended that Ohio (1) establish a competitive bidding program similar to Medicare for the purchase of test strips under the Ohio Medicaid program or develop a Request for Proposal to obtain manufacturer rebates on test strip purchases and (2) implement competitive bidding or use manufacturer rebates, which could have saved approximately $8 million in State fiscal year 2011 alone. Ohio's actions were compatible with those recommendations.

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