Medicare Market Shares of Mail Order Diabetes Test Strips From April to June 2016

WHY WE DID THIS STUDY

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 (DMEPOS). Under this program, suppliers compete to become Medicare contract suppliers for selected DMEPOS items, including diabetes test strips provided via mail order. Additionally, the Medicare Improvements for Patients and Providers Act (MIPPA) requires mail order suppliers to demonstrate in their bids that they can provide at least 50 percent, by volume, of the types of diabetes test strips provided to Medicare beneficiaries. MIPPA requires OIG to determine the market shares of the types of diabetes test strips before each round of competitive bidding. CMS uses OIG's data to help ensure contracted suppliers' bids adhere to the 50-percent rule.

This is the first 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. This first report fulfills CMS's request for market share data for the 3-month period before implementation of the current round of the National Mail Order Program (i.e., the National Mail Order Recompete), which started on July 1, 2016. The other two reports will help CMS assess contractors' bids for the next round of the National Mail Order Program, which begins after December 31, 2018, and learn more about the types of diabetes test strips provided to Medicare beneficiaries via mail order.

HOW WE DID THIS STUDY

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 April to June 2016, 3 months before the start of the National Mail Order Recompete that began on July 1, 2016. Our sample of 1,210 claims was drawn from a population of exactly 682,000 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.

WHAT WE FOUND

From April to June 2016, sampled suppliers provided 30 types of diabetes test strips via mail order. Of these strips, two types accounted for about half of the mail order market. Therefore, a supplier's bid would meet the MIPPA 50-percent rule if the bid declared that the supplier intended to provide either (1) both of these 2 types of strips or (2) at least 1 of these 2 types of strips and a combination of certain subsets of the other 28 types of strips sufficient to reach 50-percent. Further, we found that five types of diabetes test strips accounted for 81 percent of the Medicare mail order market share, and ten types accounted for 93 percent.