This final report points out that proposed payment rates established for diabetes self-management training (DSMT) for both individual and group sessions are inflated because the proposed rates include calculation errors. In addition, it appears the group session payment rate is substantially higher than that being charged in the marketplace. As a result, Medicare could make improper payments for DSMT training totaling $50 million for Fiscal Years 2000 through 2003. Also, Medicare beneficiaries could be adversely affected by the inflated payment rates in the amount of $12.5 million for co-payments during the same period. We recommended that the Health Care Financing Administration (HCFA) further review the rates contained in the proposed rule. At a minimum, the rates should be adjusted downward to correct the calculation errors noted by our review. We plan to expand our work in this area into a national study of the training services being rendered. If HCFA finalizes the proposed rates before our work is completed, then we suggest that HCFA acknowledge in the final rule that the Office of Inspector General is performing additional work and the rates may be modified at a later date.