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Medicare Market Share of Mail Order Diabetes Test Strips From July-September 2013

WHY WE DID THIS STUDY

Medicare covers diabetes test strips provided by mail order suppliers and local pharmacies or supplier storefronts. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires CMS to phase in, with several rounds of bidding, a Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Under this program, suppliers compete to become Medicare contract suppliers for selected DMEPOS items. The payment amounts resulting from the competition replace the Medicare fee-schedule amounts for these items.

The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) prohibits CMS from awarding Competitive Bidding Program contracts for mail order diabetes test strips to suppliers that do not demonstrate that their bid covers at least 50 percent, by volume, of all types of mail order diabetes test strips. Further, section 154(d)(3)(B) of MIPPA requires OIG to complete a study to determine market shares of diabetes test strips in the Competitive Bidding Program before each round of competitive bidding following Round 1. This report fulfills the MIPPA requirement for the pending third round of competitive bidding.

HOW WE DID THIS STUDY

We determined the Medicare market shares for diabetes test strip types associated with a random sample of Medicare claims for the 3-month period of July to September 2013. Our sample of 1,210 claims was drawn from a population of approximately 505,000 claims for mail order diabetes test strips provided to beneficiaries during this period. To estimate the Medicare market shares, we surveyed suppliers and projected our sample data to the population of mail order diabetes test strips.

WHAT WE CONCLUDED

Twenty-two suppliers submitted at least 43 types of mail order diabetes test strips for the 3-month period of July to September 2013. Two types of diabetes test strips accounted for approximately 45 percent of the Medicare mail order market share. Three types of diabetes test strips accounted for 59 percent of the Medicare mail order market share, and 10 types accounted for 90 percent. CMS may choose to consider these data when determining whether subsequent rounds of suppliers' mail order diabetes test strip bids comply with the MIPPA 50-percent requirement.