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Audit (A-09-11-02073)

Neighborhood Diabetes, Inc., Submitted Claims for Diabetic Testing Supplies Without the KL Modifier in Accordance With Medicare Billing Requirements

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For calendar year 2010, Neighborhood Diabetes, Inc. (Neighborhood), submitted claims for diabetic testing supplies without the KL modifier in accordance with Medicare billing requirements. Medicare guidance requires suppliers to use the KL modifier on all claims for mail-order diabetic testing supplies, which are reimbursed at a lower amount than supplies provided at local supplier storefronts.

Of 100 sampled line items, 99 were properly submitted without the KL modifier because Neighborhood used company-owned vehicles to deliver diabetic testing supplies to Medicare beneficiaries. Under Medicare requirements in effect until CMS implements the revised definition of a mail order item, supplies delivered by company-owned vehicles are not considered mail-order items. Therefore, claims for these supplies do not require use of the KL modifier. The remaining sampled line item should have been submitted with the KL modifier because Neighborhood had delivered the diabetic testing supplies by mail. Neighborhood discovered this error during our audit and resubmitted the claim with the KL modifier. Consequently, this report has no recommendations.

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