Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Blood Glucose Test Strips: 
Marketing to Medicare Beneficiaries 
JUNE GIBBS BROWN 
Inspector General 
JUNE 2000 
OEI-03-98-00231  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the 
health and welfare of beneficiaries served by them.  This statutory mission is carried out through a 
nationwide program of audits, investigations, inspections, sanctions, and fraud alerts.  The 
Inspector General informs the Secretary of program and management problems and recommends 
legislative, regulatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's Philadelphia Regional Office prepared this report under the direction of Robert A. Vito, 
Regional Inspector General, and Linda M. Ragone, Deputy Regional Inspector General.  Principal 
OEI staff included: 
REGION  HEADQUARTERS 
Robert Katz, Project Leader
 Stuart Wright, Program Specialist

Nancy Molyneaux, Program Analyst
 Barbara Tedesco, Mathematical Statistician

Cynthia Hansford, Program Assistant
 Linda Moscoe, Technical Support Staff

Lauren McNulty, Program Analyst
 Scott Horning, Technical Support Staff

Dave Tawes, Program Analyst

Amy Sernyak, Program Analyst

REGION IV 
John Mejia, Office of Audit Services 
To obtain copies of this report, please call the Philadelphia Regional Office at (800) 531-9562. 
Reports are also available on the World Wide Web at our home page address: 
http://www.dhhs.gov/progorg/oei  E X E C U T I V E   S U M M A R Y  
PURPOSE 
To examine how marketing practices affect Medicare beneficiaries who use diabetic 
testing supplies.  This report serves as a companion to a recently issued draft report, 
Medicare Payments for Blood Glucose Test Strips (OEI-03-98-00230). 
BACKGROUND 
In conjunction with an inspection which examined the propriety of Medicare payments 
for blood glucose test strips, we gathered information relating to the marketing of these 
supplies.  This information encompassed marketing practices targeted to the diabetic 
Medicare population as well as the diabetic community in general. 
We obtained marketing information from a 1997 sample of Medicare beneficiaries and the 
suppliers who provided the diabetic supplies to these beneficiaries.  The information was 
obtained from the beneficiaries through telephone interviews.  We mailed survey forms to 
the suppliers which included questions relating to their marketing practices.  In addition, 
we collected current examples of diabetic supply advertisements in four metropolitan 
areas. 
Marketing of diabetic testing supplies to the Medicare population is of vital interest 
because of sharply increasing payments.  Medicare allowances for test strips more than 
doubled between 1994 and 1997, increasing from about $102 million in 1994 to $220 
million in 1997.  Allowances exceeded $314 million in 1998.  The full impact of an 
expansion of eligibility requirements, which took effect in 1998, could lead to an even 
greater increase in payments in future years. 
FINDINGS 
Diabetic supply advertisements offer inducements and can be misleading. 
Coinsurance information in diabetic supply advertisements can be misleading and we found that 
suppliers did not always collect coinsurance from beneficiaries.  Diabetic supply advertisements 
also offer inducements and beneficiaries reported receiving incentives such as free monitors. 
Beneficiaries receive test strips automatically from mail-order suppliers.  We found 
that many beneficiaries received their test strips from suppliers automatically even after the 
guidelines issued on July 1, 1998 prohibited automatic shipping. 
1 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  RECOMMENDATIONS 
To address the vulnerabilities identified in this report, we recommend that the 
Health Care Financing Administration: 
Issue bulletins reminding suppliers who routinely waive deductibles and/or 
coinsurance or who engage in misleading advertising practices that they may be in 
violation of the Medicare and Medicaid anti-kickback law.  Suppliers should be 
advised to seek legal counsel if they have any questions or concerns regarding waivers of 
deductibles and/or coinsurance or the propriety of marketing or advertising materials. 
Remind suppliers that beneficiaries must specifically request new supplies of test 
strips before they are dispensed.  Suppliers must not automatically dispense new 
quantities of test strips on a predetermined basis even if beneficiaries have authorized such 
procedures previously. 
Promote supplier concurrence and cooperation with the Office of Inspector 
Generals Compliance Program Guidance for the Durable Medical Equipment, 
Prosthetics, Orthotics and Supply Industry.  Suppliers who establish a compliance 
program in accordance with the guidelines should be able to maintain an ethical and lawful 
business operation. 
Advise beneficiaries, as part of its outreach service, to report any instances of 
fraudulent or abusive practices (such as misleading advertising and excessive or 
unrequested deliveries of test strips) involving their home blood glucose monitors, 
test strips, or related supplies to their DMERCs. 
AGENCY COMMENTS 
The HCFA concurred with our recommendations.  As part of an intensive campaign to reduce and 
eliminate fraudulent and abusive supplier practices, including those detailed in our findings, HCFA 
cited a number of ongoing and planned initiatives.  These initiatives included, (1) plans to discuss 
routine waivers of deductibles and coinsurance in addition to misleading advertising at the 2000 
Beneficiary Integrity Conference, (2) reminding suppliers in DMERC bulletins and newsletters 
that they must not automatically dispense new supplies of test strips unless specifically requested 
by beneficiaries or their caregivers, (3) working with the National Supplier Clearinghouse to 
include language in the notifications sent to suppliers awarding them billing numbers to read and 
adhere to the OIGs Compliance Program Guidance for the Durable Medical Equipment, 
Prosthetics, Orthotics and Supply Industry, and (4) continuing beneficiary outreach efforts, which 
include tips on identifying improper practices involving home blood glucose monitors and related 
supplies.  The full text of HCFAs comments can be found in Appendix B. 
2 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  T A B L E  O F  C O N T E N T S  
PAGE

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Misleading advertising  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Automatic mailing of supplies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12

APPENDICES

A: Estimates and Confidence Intervals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

B: Health Care Financing Administration Comments  . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  I N T R O D U C T I O N  
PURPOSE 
To examine how marketing practices affect Medicare beneficiaries who use diabetic 
testing supplies.  This report serves as a companion to a recently issued draft report, 
Medicare Payments for Blood Glucose Test Strips (OEI-03-98-00230). 
BACKGROUND 
In conjunction with an inspection which examined the propriety of Medicare payments 
for blood glucose test strips, we gathered information relating to the marketing of these 
supplies.  This information encompassed marketing practices targeted to the diabetic 
Medicare population as well as the diabetic community in general. 
Marketing of diabetic testing supplies to the Medicare population is of vital interest 
because of sharply increasing payments.  Medicare allowances for test strips more than 
doubled between 1994 and 1997, increasing from about $102 million in 1994 to $220 
million in 1997.  These allowances include the 20 percent coinsurance which beneficiaries 
are responsible for paying.  Allowances exceeded $314 million in 1998.  Preliminary 
figures indicate that allowances will exceed $380 million in 1999.  The full impact of an 
expansion of eligibility requirements, which took effect in 1998, could lead to an even 
greater increase in payments in future years. 
Medicare Coverage of Home Blood Glucose Monitors and Test Strips 
Title XVIII of the Social Security Act prescribes coverage requirements under Part B of 
the Medicare program.  Part B covers services and items including durable medical 
equipment (DME).  Claims for home blood glucose monitors and test strips are covered 
under Part B within the DME benefit.  Suppliers submit claims for reimbursement to 
DME regional carriers (DMERCs).  The four DMERCs process all Medicare claims for 
prosthetics, orthotics, medical supplies, and other DME.  They are under contract with 
the Health Care Financing Administration (HCFA), the agency which administers the 
Medicare program. 
A blood glucose monitor and the supplies needed to use it effectively are covered if the 
beneficiary meets these requirements:  1) the patient is under a physicians care for 
diabetes; 2) the glucose monitor and related accessories and supplies have been ordered 
4 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  by the patients treating physician; 3) the patient (or patients caregiver) has been trained 
to use the required equipment in an appropriate manner; and 4) the equipment is designed 
for home rather than clinical use. 
Prior to July 1, 1998, Medicare coverage for home blood glucose monitors and test strips 
was restricted to beneficiaries with Type 1, or insulin-treated diabetes.  Medicare 
expanded coverage on that date to beneficiaries with Type 2, or non-insulin treated 
diabetes.  Also prior to the issuance of the new guidelines, suppliers could send shipments 
of test strips to beneficiaries automatically.  The new guidelines prohibit this practice. 
Marketing Practices 
Medicare beneficiaries who utilize medical supplies on a repeated basis, such as blood 
glucose test strips, may be strongly influenced by marketing practices.  Manufacturers 
rebates, special dealer sales, coupons, discounts, and similar financial inducements are all 
designed to sway consumer product choice.  Entities interested in reaching diabetics who 
use testing supplies resort to a variety of media to promote their products, including 
radio, television, specialized periodicals, and newspapers. 
Advertising incentives which indicate or imply a routine waiver of coinsurance or 
deductible could be in violation of 42.U.S.C. 1320a-7b(b), the Medicare and Medicaid 
anti-kickback statute.  According to an Office of Inspector General Medicare Fraud 
Alert (94-04), such routine waivers of coinsurance or deductibles are unlawful because 
they could result in (1) false claims, (2) violations of the anti-kickback statute, and (3) 
excessive utilization of items and services paid for by Medicare.  Anyone who routinely 
waives copayments or deductibles can be criminally prosecuted and excluded from 
participating in Medicare and State health care programs. 
In addition, 42.U.S.C. 1320a-7a(a) (5) prohibits a person from offering or transferring 
remuneration to a beneficiary that such person knows or should know is likely to 
influence the beneficiary to order items or services from a particular provider or supplier 
for which payment may be made under a Federal health care program.  Remuneration is 
defined as including a waiver of coinsurance and deductible amounts, with exceptions for 
certain financial hardship waivers, which are not prohibited. 
Beneficiaries choice of test strips and related supplies can also be influenced by non-
economic factors.  Many advertisements stress special supplier services, such as 
overnight delivery, no paperwork, training in the use of blood glucose monitors and test 
strips, and frequent follow-up contacts to ensure that supplies are adequate and operating 
satisfactorily. 
Prior to the completion of this inspection, the Office of Inspector General issued a 
document entitled, Compliance Program Guidance for the Durable Medical Equipment, 
5 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  Prosthetics, Orthotics and Supply Industry.  This document can be located on the 
Internet at http://www.hhs.gov/progorg/oig/modcomp/cpgfinl.htm. The Guidance, which 
was prepared in consultation with health care trade organizations, was designed to 
promote a higher level of ethical and legal conduct among providers of medical 
equipment and supplies.  The Guidance details specific problems which we cite in this 
report, such as providing  routine waivers of deductibles and/or coinsurance. 
METHODOLOGY 
Sampling 
We selected a simple random sample of 555 Medicare beneficiaries with paid claims for 
blood glucose test strips in 1997.  The beneficiaries were selected from a 1 percent DME 
claims file developed from HCFAs National Claims History File.  We defined our sample 
population as those patients whose claims for test strips averaged $50 per month or 
more.  In order to compute point estimates and confidence intervals for inappropriate and 
questionable claims, we treated the beneficiary sample as a single-stage cluster sample in 
which each of the beneficiaries was a cluster and their 1997 claims were the unit of 
analysis.  Estimates were made only for the universe of beneficiaries with claims 
averaging $50 a month or more. 
We checked Medicare records to ascertain if any of our sampled beneficiaries were 
shown as deceased.  We removed these beneficiaries from the sample.  In addition, we 
removed beneficiaries from the sample whose test strips were provided by suppliers under 
investigation.  The remaining sample consisted of 472 Medicare beneficiaries.  In all, 310 
suppliers had submitted 2,184 claims for Medicare reimbursement for these beneficiaries. 
Since many of the 310 suppliers provided test strips for multiple beneficiaries, our unique 
supplier-beneficiary combination totaled 540. 
Data Collection and Analysis 
Our primary data collection sources for this report were our sample beneficiaries and 
their test strip suppliers.  Many of the questions we asked beneficiaries and suppliers in 
our survey instruments were relevant to test strip marketing practices.  Additionally, 
many beneficiaries and suppliers provided comments and information pertinent to 
industry marketing practices.  We did not, as part of this inspection, contact 
manufacturers, wholesalers, distributors, or similar entities.  However, we reviewed 
media sources from four metropolitan areas--Atlanta, GA; Boston, MA; Kansas City, 
MO; and Philadelphia, PA--and we obtained current examples of advertising relating to 
blood glucose test strips and accessories. 
6 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  Beneficiary information.  We collected information from beneficiaries via telephone 
interviews.  Questions included beneficiaries diabetic medical care and treatment, 
frequency of blood sugar testing, how supplies were obtained, and supplier marketing 
practices.  We completed telephone interviews with 313 of the 472 beneficiaries, a 66 
percent response rate.  The interviews were conducted from December 1998 to June 
1999. 
Supplier information.  We mailed 540 survey forms to suppliers, one for each 
beneficiary for whom a claim was filed.  In addition to asking suppliers about the types of 
equipment and supplies provided to beneficiaries, we also included questions about their 
business and marketing practices.  Of the 540 surveys mailed, 469, representing 1,902 
claims, were completed and returned. 
Marketing information.  We obtained marketing information from a 1997 sample of 
Medicare beneficiaries and the suppliers who provided the diabetic supplies to these 
beneficiaries.  The information was obtained from the beneficiaries through telephone 
interviews.  We mailed survey forms to the suppliers which included questions relating to 
their marketing practices.  In addition, we collected current examples of diabetic supply 
advertisements in four metropolitan areas. 
This study was conducted in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
7 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  F I N D I N G S  
Diabetic supply advertisements offer inducements and can 
be misleading 
Coinsurance information in diabetic supply advertisements can be misleading 
During the course of the inspection, we reviewed diabetic supply advertisements in 
Atlanta, GA; Boston, MA; Kansas City, MO; and Philadelphia, PA.  Our review of 
advertisements for diabetic testing supplies revealed examples of misleading wording and 
misinformation.  The two examples below suggest that beneficiaries can get their test 
strips at no cost, including no coinsurance payments. 
DIABETIC PATIENTS!! (Type 1 & Type 2) 
If you have Medicare or Private Insurance, 
You may be eligible to receive your: 
DIABETIC SUPPLIES AT 
NO  COST  TO  YOU! 
F or mo re inf or ma tion c all 
1-800-###-##### 
Diabetes 
Paying for your testing supplies. 
Company name... 1-800-###-#### 
8 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  Deductibles and coinsurance, which beneficiaries are responsible for paying, were rarely 
mentioned in advertisements.  Sometimes, small print carried this terse message:  Deductibles 
and co-pay may apply. 
Suppliers did not always collect coinsurance from beneficiaries 
In our interviews with beneficiaries, we found that some, as stated in the advertisements, 
did not pay anything for their test strips.  Of those who did not pay for their test strips up 
front, about 8 percent said they did not pay any coinsurance and that coinsurance was not 
paid by Medicaid or other insurance.  A copayment for 100 test strips would be 
approximately $14.  A few suppliers surveyed said that they did not collect coinsurance. 
Reasons suppliers gave for not collecting or billing for coinsurance included, patient 
indigent and patient qualifies for financial hardship.  Two suppliers stated simply, We 
did not bill for coinsurance. 
Undoubtedly, cost is an important consideration for many beneficiaries, and if one 
supplier collects coinsurance and another supplier does not, the supplier who does not 
clearly has a competitive edge over rivals.  One supplier complained that most of their 
patients said their previous suppliers had ...automatically waived their co-payments and 
deductibles.  The patient has nothing to lose, the supplier added, indicating that 
patients can simply choose a supplier who will not bill them for these amounts. 
If suppliers use advertising inducements which indicate or imply a routine waiver of a 
coinsurance or deductible they could be in violation of the Medicare and Medicaid anti-
kickback statute, 42 U.S.C. 1320a-7b(b).  This statute makes it illegal to offer, pay, 
solicit, or receive anything of value as an inducement to generate business payable by 
Medicare or Medicaid.  When providers, practitioners, or suppliers forgive financial 
obligations for reasons other than genuine financial hardship of the particular patient, they 
may be unlawfully inducing that patient to purchase items or services from them.  In 
addition, the Health Insurance Portability and Accountability Act (Section 1128A) 
provides civil monetary penalties for anyone offering remuneration, including the 
waiver of coinsurance or deductible amounts as an inducement to use an item or service. 
Such penalties also apply to anyone giving false or misleading information. 
Diabetic supply advertisements offer inducements and beneficiaries reported 
receiving such incentives 
Fifteen percent of beneficiaries reported receiving incentives from suppliers.  The 
incentive most often cited by beneficiaries was a free monitor.  Seven percent of supplier 
survey responses indicated that suppliers had passed on incentives to beneficiaries.  The 
most prevalent inducement mentioned (77 percent) was a free monitor followed by a 
9 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  discount on the test strips (18 percent).  Three suppliers responded that they passed on 
monitor rebates to beneficiaries.  Another two suppliers noted that billings for test strips 
were reduced by the discounted amounts.  One supplier provided a beneficiary with a free 
lancing device and control solution. 
We found that advertisements in newspapers and periodicals, leaflets and flyers located in 
pharmacies, and coupons and discount offers concentrated on putting monitors into the 
hands of diabetic patients.  Since test strips are designed to be used only in monitors with 
the same brand names, these inducements obviously were crafted to generate sales of 
those test strips. 
Some inducements involving monitors may be in violation of the anti-kickback statute. A 
typical inducement relating to a test strip purchase requires the customer to buy 100 test 
strips.  The monitor would then be free.  Other inducements involve a combination 
rebate-trade-in typically ranging from $35 to $85 depending on the type and quality of 
the monitor being offered.  Often, a range of monitors is offered in the inducement.  With 
the trade-in along with the rebate, the monitor would then be free to the customer. 
Other advertisements relating to monitors included coupon offers, free monitors with 
purchase of 50 test strips, and a free monitor, up to $50.  We also encountered an 
advertisement for a diabetic care seminar which featured free attendance at the 
seminar along with a free monitor with a purchase of 50 test strips. 
Beneficiaries received test strips automatically from mail-
order suppliers 
Test strips often sent to beneficiaries automatically 
We found that many beneficiaries received their test strips from suppliers automatically 
even after guidelines were issued prohibiting automatic shipping.  With the onset of the 
expanded coverage policy on July 1, 1998, the DMERCs issued instructions which 
stipulated that suppliers may not automatically furnish repetitive supplies to beneficiaries 
unless the beneficiary or caregiver specifically requested the supplies.  The new guidelines 
further stated that suppliers may not initiate a refill of an order or automatically dispense 
a quantity of supplies on a predetermined basis, even if such action had been authorized 
in advance by the beneficiary or caregiver. 
During telephone interviews, we asked beneficiaries if test strips were currently being 
delivered to them automatically.  At least 6 months after the implementation of the policy 
prohibiting automatic shipment of test strips, 46 percent of beneficiaries who got their 
10 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  strips in the mail stated they were currently receiving their test strips automatically. 
There was no prior authorization.  This does not differ greatly from the 58 percent of 
beneficiaries who received test strips in the mail who said their 1997 supplies were also 
sent to them automatically without a preceding supplier contact to determine the need for 
more strips. 
Many beneficiaries receive test strip supplies via mail or delivery services 
More than half of the beneficiaries in our sample received new supplies of test strips in 
the mail or from delivery services such as United Parcel Service.  Forty percent of 
beneficiaries picked up test strips in person while another 4 percent received delivery 
from a company employee.  This information supports how suppliers characterized their 
companies on supplier survey instruments.  Forty-four percent of supplier surveys 
indicated that supplies were mail-order.  Another 16 percent used a label which did not 
imply an entity which primarily engaged in mail-order services, such as retail pharmacy. 
Other designations commonly cited, such as diabetic supply company and medical 
supply company typically provide both mail-order and pick-up service. 
Another indicator of the dominance of mail-order companies was revealed in a question 
on the supplier survey in which we asked suppliers how they happened to supply test 
strips to the beneficiary.  Forty-four percent of suppliers replied that beneficiaries had 
called them, an indication, we believe, that beneficiaries were responding to toll-free 
telephone numbers typically used by mail-order suppliers in advertisements.  According 
to the responses, only 23 percent of the beneficiaries were walk-ins.  Suppliers had 
serviced 12 percent of the beneficiaries as a result of physician referrals. 
11 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  R E C O M M E N D A T I O N S  
This report identified a number of questionable marketing practices, including 
routine waiver of coinsurance and misleading and deceptive advertising.  To 
counter these practices, we recommend the Health Care Financing 
Administration take the following steps: 
Issue bulletins reminding suppliers who routinely waive deductibles and/or 
coinsurance or who engage in misleading advertising practices that they may be in 
violation of the Medicare and Medicaid anti-kickback law.  Suppliers should be 
advised to seek legal counsel if they have any questions or concerns regarding waivers of 
deductibles and/or coinsurance or the propriety of marketing or advertising materials. 
Remind suppliers that beneficiaries must specifically request new supplies of test 
strips before they are dispensed.  Suppliers must not automatically dispense new 
quantities of test strips on a predetermined basis even if beneficiaries have authorized 
such procedures previously. 
Promote supplier concurrence and cooperation with the Office of Inspector 
Generals Compliance Program Guidance for the Durable Medical Equipment, 
Prosthetics, Orthotics and Supply Industry.  Suppliers who establish a compliance 
program in accordance with the guidelines should be able to maintain an ethical and 
lawful business operation. 
Advise beneficiaries, as part of its outreach service, to report any instances of 
fraudulent or abusive practices (such as misleading advertising and excessive or 
unrequested deliveries of test strips) involving their home blood glucose monitors, 
test strips, or related supplies to their DMERCs. 
AGENCY COMMENTS 
The HCFA concurred with our recommendations.  As part of an intensive campaign to reduce 
and eliminate fraudulent and abusive supplier practices, including those detailed in our findings, 
HCFA cited a number of ongoing and planned initiatives.  These initiatives included, (1) plans to 
discuss routine waivers of deductibles and coinsurance in addition to misleading advertising at 
the 2000 Beneficiary Integrity Conference, (2) reminding suppliers in DMERC bulletins and 
newsletters that they must not automatically dispense new supplies of test strips unless 
specifically requested by beneficiaries or their caregivers, (3) working with the National Supplier 
Clearinghouse to include language in the notifications sent to suppliers awarding them billing 
12 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  numbers to read and adhere to the OIGs Compliance Program Guidance for the Durable 
Medical Equipment, Prosthetics, Orthotics and Supply Industry, and (4) continuing beneficiary 
outreach efforts, which include tips on identifying improper practices involving home blood 
glucose monitors and related supplies.  The full text of HCFAs comments can be found in 
Appendix B. 
13 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX  A 
Estimates and Confidence Intervals

The tables below contain statistical estimates presented in the findings section of this report.  To 
calculate the point estimates and confidence intervals for the percentage of Medicare 
beneficiaries we used the SAS software package.  These estimates are based on a simple random 
sample design and are reported at the 95 percent confidence level.  Estimates were made only for 
the universe of beneficiaries with claims averaging $50 a month or more. 
DIABETIC SUPPLY ADVERTISEMENTS OFFER INDUCEMENTS AND CAN BE 
MISLEADING. 
Table 1. 
Beneficiaries Who Did Not Pay Coinsurance 
Point  95% Confidence Interval 
Estimate 
Percent of Beneficiaries Who Did Not Pay  7.66%  4.27% - 11.05% 
Coinsurance 
Table 2. 
Beneficiaries Who Received Incentives 
Point  95% Confidence Interval 
Estimate 
Percent of Beneficiaries Who Received Incentives  15.19%  11.02% - 19.36% 
from Suppliers 
14 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX  A 
BENEFICIARIES RECEIVE TEST STRIPS AUTOMATICALLY FROM MAIL-
ORDER SUPPLIERS 
Table 3. 
Beneficiaries Who Received Test Strips Automatically in 1998 
Point  95% Confidence Interval 
Estimate 
Percent of Beneficiaries Who Received Test Strips  46.06%  38.44% - 53.68% 
Automatically after July 1, 1998 
Table 4. 
Beneficiaries Who Received Test Strips Automatically in 1997 
Point  95% Confidence Interval 
Estimate 
Percent of Beneficiaries Who Received Test Strips  58.33%  51.35% - 65.31% 
Automatically in 1997 
Table 5. 
Beneficiaries Who Picked Up Test Strips in Person 
Point  95% Confidence Interval 
Estimate 
Percent of Beneficiaries Who Picked Up Test Strips  40.50%  35.01% - 45.99% 
In Person 
15 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX  A 
Table 6. 
Beneficiaries Who Received Strips From a Company Employee 
Point  95% Confidence Interval 
Estimate 
Percent of Beneficiaries Who Received Strips From A  3.92%  1.74% - 6.10% 
Company Employee 
16 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX B 
Health Care Financing Administration Comments

17 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX B 
18 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX B 
19 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX B 
20 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX B 
21 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231  APPENDIX B 
22 
Marketing of Blood Glucose Test Strips  OEI-03-98-00231