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Audit (A-09-08-00046)

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

Executive Summary

Based on our sample results, we estimated that Noridian Administrative Services, LLC (Noridian), the durable medical equipment (DME) Medicare administrative contractor for Jurisdiction D, inappropriately allowed for payment approximately $40.5 million in claims for calendar year (CY) 2007 for home blood-glucose and/or lancet supplies (test strips and/or lancets) that we identified as high utilization claims. We estimated that Noridian inappropriately paid approximately $30.9 million of this amount to DME suppliers. Noridian could have saved Medicare an estimated $30.9 million for CY 2007 if it 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 lancets that exceeds the utilization guidelines (high utilization claim).

To help achieve potential savings for the Medicare program in future years, we recommended that Noridian (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. Noridian provided information on actions that it had taken to address our recommendations.

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