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Medicare Market Shares of Mail Order Diabetes Test Strips From April Through June 2018


The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required CMS to phase in a Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies. In July 2008, mail-order diabetes test strips became part of the Competitive Bidding Program in certain limited areas, and in July 2013, this was expanded to include a National Mail-Order Program for diabetes testing supplies. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) prohibits CMS from awarding contracts in the National Mail-Order Program 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 provided to Medicare beneficiaries. (This is known as the "50 percent rule.") MIPPA requires OIG to determine the market shares of the types of diabetes test strips before each round of bidding to assist CMS in ensuring that bidding suppliers meet the 50-percent rule.

Initially, OIG based its calculations of the Medicare market shares on claims data for diabetes test strips supplied via mail order by Competitive Bidding Program suppliers. The Bipartisan Budget Act of 2018 amended the 50-percent rule by requiring analysis of diabetes test strips supplied via mail order as well as via non-mail order for bids to furnish diabetes test strips after December 31, 2018. A second report, anticipated in early 2019, will determine the market shares for diabetes test strips provided via non-mail order (i.e., from local pharmacies or supplier storefronts). These evaluations will inform future round(s) of the Competitive Bidding Program for diabetes test strips. All Competitive Bidding Program contracts expired on December 31, 2018, and new contracts are not expected before December 31, 2020.


We determined the Medicare market shares for diabetes test strips types associated with a simple random sample of Medicare claims for the 3-month period of April 1, 2018, through June 30, 2018. Our sample of 1,210 claims was drawn from a population of 313,704 claims for diabetes test strips provided by mail order to Medicare 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 April through June 2018, sampled suppliers provided 17 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 98 percent of the market.