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Report (OEI-04-11-00330)

Inappropriate and Questionable Medicare Billing for Diabetes Test Strips

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In 2011, Medicare allowed approximately $1.1 billion to 51,695 suppliers for diabetes test strips (DTS) provided to 4.6 million beneficiaries. Recent investigations and prior OIG studies have found that DTS is an area vulnerable to fraud, waste, and abuse. CMS implemented the Competitive Bidding Program in 2011 to reduce payments for durable medical equipment, prosthetics, orthotics, and supplies and help reduce fraud and abuse. Mail order DTS is included in the Competitive Bidding Program, but non-mail order DTS currently is not.


We analyzed Medicare-allowed 2010 and 2011 DTS claims and inpatient claims from hospitals and Skilled Nursing Facilities for beneficiaries associated with allowed 2010 and 2011 DTS claims. In addition, we identified suppliers that billed amounts that were unusually high-according to at least one of six measures of questionable billing-that were subsequently allowed by Medicare, and we determined the geographic areas for these questionable-billing suppliers. Finally, we determined the extent of questionable billing before and after implementation of the Competitive Bidding Program.


In 2011, Medicare inappropriately allowed $6 million for DTS claims billed (1) for beneficiaries without a documented diagnosis code for diabetes, or that inappropriately overlapped with (2) an inpatient hospital stay, or (3) an inpatient Skilled Nursing Facility stay. Further, we found that $425 million in Medicare-allowed claims-made by 10 percent of DTS suppliers-had characteristics of questionable billing. Suppliers in 10 geographic areas nationwide were responsible for 77 percent of questionable billing. However, the Competitive Bidding Program appears to have reduced questionable billing for mail order DTS in Competitive Bidding Areas (CBA). Similar reductions in questionable billing did not occur in non-CBA areas or for non-mail order DTS.


CMS partially concurred with two of our recommendations: CMS should enforce existing edits (system processes) to prevent inappropriate DTS claims, and CMS should increase monitoring of DTS suppliers' Medicare billing. CMS concurred with two other recommendations: CMS should provide more education to suppliers and beneficiaries about appropriate DTS billing practices, and CMS should take appropriate action regarding inappropriate Medicare DTS claims and suppliers with questionable DTS billing.

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