Medicare Market Shares of Mail Order Diabetes Test Strips From July Through September 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. Initially, under this program, suppliers competed to become Medicare contract suppliers for diabetes testing supplies provided via mail order in select areas. In July 2013, the program was expanded to include a National Mail-Order Program for diabetes testing supplies.

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. (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. CMS uses OIG's data to help ensure that contracted suppliers' bids adhere to the 50 percent rule.

This is the second 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 second report fulfills MIPPA's mandate for OIG to assess the market shares of diabetes test strips for the 3 month period after 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 further evaluate the effect of the National Mail-Order Program on the types of diabetes test strips available to beneficiaries.

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 July 1, 2016, through September 30, 2016 (i.e., the 3 month period after the start of the National Mail-Order Recompete, which began on July 1, 2016). Our sample of 1,210 claims was drawn from a population of 456,784 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 July through September 2016, sampled suppliers provided 18 types of diabetes test strips via mail order. The top strip type accounted for 43 percent of the mail-order market, and the top 10 strip types accounted for 98 percent. A supplier could comply with the MIPPA 50-percent rule by committing to provide two strip types.