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Review of Medicare Claims for Home Blood-Glucose Test Strips and Lancets-Durable Medical Equipment Medicare Administrative Contractor for Jurisdiction C

Based on our sample results, we estimated that CIGNA Government Services, LLC (CGS), and Palmetto Government Benefits Administrators, LLC (Palmetto GBA), the durable medical equipment (DME) Medicare contractors for Jurisdiction C, inappropriately allowed for payment approximately $125 million in claims for calendar year (CY) 2007 for home blood glucose test strip and/or lancet supplies (test strips and/or lancets) that we identified as high-utilization claims. Of this amount, we estimated that CGS and Palmetto GBA inappropriately paid approximately $96.6 million to DME suppliers. CGS and Palmetto GBA could have saved Medicare an estimated $96.6 million for CY 2007 if they had had controls to ensure that claims for test strips and/or lancets complied with certain Medicare documentation requirements.

Medicare Part B covers test strips and lancets that physicians prescribe for diabetics. Medicare utilization guidelines allow up to 100 test strips and 100 lancets every month for insulin-treated diabetics and every 3 months for non-insulin-treated diabetics. Additional requirements apply for reimbursement of a claim for a quantity of test strips and/or lancets that exceeds the utilization guidelines (high-utilization claim).

To help achieve potential savings for the Medicare program in future years, we recommended that CGS, as the current DME Medicare administrative contractor for Jurisdiction C, (1) implement system edits to identify high-utilization claims for test strips and/or lancets and work with CMS to develop cost-effective ways of determining which claims should be further reviewed for compliance with Medicare documentation requirements; (2) implement system edits to identify claims for test strips and/or lancets that have overlapping service dates for the same beneficiary; and (3) enforce Medicare documentation requirements for claims for test strips and/or lancets by identifying DME suppliers with a high volume of high utilization claims, performing prepayment reviews of those suppliers, and referring them to the Office of Inspector General or CMS for further review or investigation when necessary. In response, CGS concurred with our recommendations and provided information on actions that it had taken or planned to take to address the recommendations.

Filed under: Center for Medicare and Medicaid Services