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Transcript for audio podcast: Medicaid Costs for Home Blood-Glucose Test Strips Could Be Significantly Reduced

From the Office of Inspector General of Department of Health and Human Services

[Sheri Fulcher] I'm Sheri Fulcher, Regional Inspector General for Audit Services in Chicago, speaking with Mike Barton, an Audit Manager in our Columbus, Ohio office. Mike, your audit team recently completed several audits where you reported that State Medicaid programs could significantly decrease the payments for test strips. Can you provide some background about the use of home blood-glucose test strips and test strip prices?

[Mike Barton] Yes, I'd be glad to. Diabetics use test strips to monitor and control their blood sugar levels. A few years ago, I would obtain a prescription for test strips and pay the $25 dollar co-pay. Today, I can walk into a store and purchase test strips off the shelf, without a prescription, for under $10 dollars. Although I saw a dramatic decrease in pricing, similar price reductions were not always available for Medicare and Medicaid patients.

[Sheri Fulcher] What are the current prices or reimbursement rates for test strips provided under the Medicaid program?

[Mike Barton] State Medicaid programs reimburse providers for test strips at varying rates, with a typical payment rate of around $35 dollars for a 50-unit pack of test strips. Some States then collect rebates from test strip manufacturers, which lower the net cost to Medicaid. For example, the net cost to Indiana dropped 50 percent due to the use of manufacturer rebates, and Ohio recently announced a net price reduction of 76 percent with rebates.

[Sheri Fulcher] Those are much lower prices. How much money did States actually save?

[Mike Barton] We estimate that the Federal and State government saved approximately $1 million dollars in Indiana and $8 million dollars in Ohio.

[Sheri Fulcher] Are savings opportunities available in other State Medicaid programs?

[Mike Barton] Definitely. We have audits underway at several additional States, and we are seeing more opportunities for significant savings.

[Sheri Fulcher] Are similar savings opportunities available in the Medicare program?

[Mike Barton] The new nationwide Medicare rate, effective July 1, 2013, will lower the price from approximately $35 dollars for a 50-pack of test strips to $10 dollars and 41 cents. Again, that's almost $25 dollars in savings, per pack.

[Sheri Fulcher] Wow, that's a significant decrease. Do you have information on the dollar savings for the Medicare program?

[Mike Barton] Yes. Medicare provides patients over 11 million test strip packs every year. Assuming the price drops about $25 dollars per pack, this will save $275 million dollars per year, or more than $2 billion dollars over 10 years. Since Medicare patients generally pay 20 percent of the cost of equipment and supplies, our senior citizens, and the Federal Government, will save a lot of money.

[Sheri Fulcher] Can States also lower test strip reimbursement rates or prices to match the new Medicare rate?

[Mike Barton] Well, we can't say for sure if Medicare's low rate is available to all State Medicaid programs. However, this national rate for Medicare patients helps to strengthen the case to reduce Medicaid provider rates or prices, by using manufacturer rebates.

[Sheri Fulcher] Mike, it looks like your audits found a number of great savings opportunities. Are you looking into other areas to find savings?

[Mike Barton] Absolutely. We are currently conducting audits of equipment items provided by Medicaid, like oxygen equipment, CPAP machines and supplies.

[Sheri Fulcher] We look forward to the results of these additional audits. For now, thank you for sharing this important work on home blood-glucose test strips.

[Mike Barton] You are very welcome. I appreciate the opportunity to talk about our audit results and help reduce costs for taxpayers.


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Office of Inspector General, U.S. Department of Health and Human Services | 330 Independence Avenue, SW, Washington, DC 20201