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Medicare Market Shares of Mail Order Diabetes Test Strips From October Through December 2016


The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires CMS to phase in a Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies. In July 2013, the program was expanded to include a National Mail-Order Program for diabetes testing supplies. The Medicare Improvements for Patients and Providers Act (MIPPA) prohibits CMS from awarding a contract to a supplier of diabetes test strips if the supplier's bid does not cover at least 50 percent, by volume, of all types of diabetes test strips on the market. (This is known as the "MIPPA 50 percent rule.") MIPPA requires OIG to determine the market shares of the types of diabetes test strips before each round of competitive bidding.

On July 1, 2016, CMS began accepting claims for the current round of the National Mail-Order Program, which ends on December 31, 2018. This is the third of three OIG reports to determine the Medicare market shares of diabetes test strips for the periods April through June 2016, July through September 2016, and October through December 2016, respectively. CMS will use the results from the second OIG report (OEI-04-16-00471, February 2017) to determine bidders' adherence with the MIPPA 50-percent rule for the next round of competitive bidding. The first and third reports provide CMS with additional information on the market shares of diabetes test strips supplied through the National Mail-Order Program.


We determined the Medicare market shares for diabetes test strip types associated with a simple random sample of Medicare claims for the 3-month period of October 1, 2016, through December 31, 2016 (i.e., the second 3 month period after the July 1, 2016, start of the current round of the National Mail-Order Program). Our sample of 1,210 claims was drawn from a population of 438,872 claims for mail-order diabetes test strips provided to beneficiaries. To estimate the Medicare market shares, we surveyed suppliers and projected our sample data to the population of diabetes test strips provided by mail-order during the timeframe we reviewed.


From October through December 2016, sampled suppliers provided 19 types of diabetes test strips via the Medicare National Mail-Order program. The top 2 strip types accounted for 53 percent of the Medicare mail-order market, and the top 10 strip types accounted for 97.5 percent.