DEPARTMENT OF HEALTH AND HUMAN SERVICES 
OFFICE OF INSPECTOR GENERAL 
WASHINGTON, DC  20201 
NOV 26 2014 
TO: 	 Marilyn Tavenner 
Administrator 
Centers for Medicare & Medicaid Services 
FROM:  Suzanne Murrin 
Deputy Inspector General 
for Evaluation and Inspections 
SUBJECT: 	 Memorandum Report:  Medicare Market Shares ofMail Order Diabetes Test 
Strips 3-6 Months After the Start ofthe National Mail Order Program , 
OEI-04-13-00682 
This report provides information on the types of mail order diabetes test strips associated with 
Medicare claims for the 3-month period of October to December 2013 (i.e. , the 3-month period 
beginning 3 months after July I, 2013 , the start of the National Mail Order Program for diabetes 
test strips).  The Centers for Medicare & Medicaid Services (CMS) asked the Office of Inspector 
General (OIG) to conduct this study to determine Medicare market shares of diabetes test strips 
for this 3-month period. 
SUMMARY 
Medicare covers diabetes test strips provided by mail order suppliers and local pharmacies or 
supplier storefronts.  The Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 (MMA) requires CMS to phase in, with several rounds of bidding, 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.  The payment amounts resulting from the competition replace the Medicare fee-schedule 
amounts for these items. 
The Competitive Bidding Program includes diabetes test strips provided by mail order but does 
not include diabetes test strips purchased at a local pharmacy or supplier storefront 
(i.e., non-mail order).  Under the program, "mail order" includes diabetes test strips shipped or 
delivered to the beneficiary's home, regardless of the method of delivery.  Non-mail order 
diabetes test strips are those that a beneficiary or caregiver picks up in person at a local 
pharmacy or supplier storefront.  The American Taxpayer Relief Act of2012 (ATRA) 
established equal Medicare payment amounts for mail order and non-mail order diabetes test 
strips purchased on and after the date of implementation of a national program for mail order  Page 2  Marilyn Tavenner 
diabetes testing supplies (hereinafter referred to as the National Mail Order Program).1  CMS 
implemented the National Mail Order Program on July 1, 2013. 
 
The Medicare Improvements for Patients and Providers Act (MIPPA) prohibits CMS from  
awarding Competitive Bidding Program contracts for mail order diabetes test strips to suppliers  
who do not demonstrate that their bid covers at least 50 percent, by volume, of all types of 
diabetes test strips. (This is referred to as the MIPPA 50-percent requirement.)  Section 
154(d)(3)(B) of MIPPA requires OIG to complete a study to determine market shares of diabetes 
test strips in the Competitive Bidding Program before each round of competitive bidding 
following the repeat of Round 1, known as the Round 1 Rebid.  By issuing a report in June 2014 
covering the period of JulySeptember 2013, OIG fulfilled this mandate for the upcoming 
recompete of the National Mail Order Program, scheduled to begin on July 1, 2016.2   
Additionally, CMS requested two other reports so that it could have market share data from  
different 3-month time periods in 2013 for informational purposes.  OIG released one of these 
reports, covering the period of AprilJune 2013, in June 2014.3  The current report covers the 
period of OctoberDecember 2013 and will be the final report on the Medicare market shares of 
diabetes test strips that OIG releases in 2014. 
 
We determined the Medicare market shares for diabetes test strip types associated with a random  
sample of Medicare claims for the 3-month period of October to December 2013, 3 months after 
the start of the National Mail Order Program.  Our sample of 1,210 claims was drawn from a 
population of 1,031,913 claims for mail order diabetes test strips provided to beneficiaries during 
this period. We projected our sample data to the population of mail order diabetes test strips to 
estimate the Medicare market shares.    
 
We found that for the 3-month period of October to December 2013, suppliers submitted claims  
for at least 41 types of mail order diabetes test strips.  Two types of diabetes test strips accounted 
for 44 percent of the Medicare mail order market share.  Three types of diabetes test strips 
accounted for 58 percent of the Medicare mail order market share, and 10 types accounted for 
91 percent. 
 
We are providing this information for CMSs use in evaluating the effect of the National Mail 
Order Program on the types of diabetes test strips available to beneficiaries.  CMS may also find 
this information useful in assessing whether bidders have met the MIPPA 50-percent 
requirement.  
 
BACKGROUND 
 
Diabetes is a chronic disease in which a person has a high blood sugar (i.e., glucose) level either 
because the body does not produce enough insulin, or cells do not respond properly to the insulin  
                                                 
1  ATRA, P.L. No. 112-240  636 (adding  Social Security Act,  1834(a)(1)(H), 42 U.S.C.  1395m(a)(1)(H)). 
   
2 OIG,  Medicare Market Shares of Mail Order Diabetes Test Strips From JulySeptember 2013 (OEI-04-13-00680), 

June 2014. 

3 OIG,  Medicare Market Shares of Mail Order Diabetes Test Strips Immediately Prior to the National  Mail Order 
 
Program (OEI-04-13-00681), June  2014. 

 
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that the body does produce.4  Diabetes may be managed through a variety of methods, including 
healthy eating, physical activity, and insulin injections.5  If people with diabetes do not properly 
manage their glucose levels, medical complications (e.g., hypoglycemia, cardiovascular disease, 
or renal disease) may occur.   
 
Diabetes disproportionately affects older adults.  Approximately 27 percent of individuals ages 
65 and older report having diabetes, whereas the reported percentage in the overall population is 
8 percent.6  Medicare covers services and testing supplies to help beneficiaries with diabetes 
manage the condition.   
 
A person with diabetes may use a hand-held meter to test the concentration of glucose in his or 
her blood. To do so, the individual inserts a diabetes test strip into the meter.  A diabetes test 
strip is a small, thin, one-time-use piece of plastic on which a sample of blood is placed after 
pricking the skin with a lancet. The meters reading of an individuals glucose level provides the 
information required for that person to manage his or her diabetes.  People with diabetes may 
need to perform glucose tests several times a day to assist them in maintaining appropriate 
glucose levels. 
 
To be eligible for Medicare coverage of diabetes test strips and other diabetes supplies, Medicare 
beneficiaries with diabetes must be under the treatment of a physician for the condition.7  The 
physician must prescribe the frequency of use for diabetes test strips.8  Because some  
beneficiaries should test their glucose more frequently than others, the number of boxes of 
diabetes test strips per Medicare claim varies.9  Each box contains 50 strips. 
 
Suppliers submit one Medicare claim for a beneficiarys supply of diabetes test strips for up to 
3 months at a time.  Each claim indicates the number of boxes provided to the beneficiary for the 
applicable time period.  Suppliers submit claims using Healthcare Common Procedure Coding 
System (HCPCS) codes to receive Medicare reimbursement.  Medicare claims for diabetes test 
strips are billed using HCPCS code A4253.  For diabetes test strips provided by mail order, the 
HCPCS code A4253 must use the KL modifier (A4253 KL).10     
 
                                                 
4  National Institutes of Health (NIH), Diabetes Overview:  What is Diabetes?   Accessed at 
http://www.diabetes.niddk.nih.gov/dm/pubs/overview/index.htm on April 17, 2014.  
5 NIH,  Diabetes Overview:  How is Diabetes Managed?   Accessed at 
http://www.diabetes.niddk.nih.gov/dm/pubs/overview/index.htm#managed on  April 17, 2014.  
6 The Centers for Disease Control and Prevention,  Diabetes Self Management Overview. Accessed at 
http://www.cdc.gov/diabetes/pubs/pdf/ndfs_2011.pdf on April 15, 2014.   
7 Other diabetes testing supplies may include  batteries and control solution.  
8 Medicare Local Coverage Determinations (LCDs) for Glucose Monitors (L11530, L27231, L11520, and L196 for  
Durable Medical Equipment Medicare Administrative Contractor  Jurisdictions  A, B, C, and D respectively).   
9 CMS, MLN Matters Number SE1008. An Overview of Medicare Covered Diabetes Supplies and Services. 
Accessed at http://www.cms.gov/MLNMattersArticles/downloads/SE1008.pdf on  April 22, 2014.  Medicare covers  
up to  100 testing strips  per month (i.e., two 50-count  boxes) for insulin-dependent beneficiaries with  diabetes and up  
to 100 testing strips every  3 months for noninsulin-dependent beneficiaries with  diabetes.   Medicare allows 
additional testing strips if deemed medically necessary and documented in physician records.  Medicare LCDs for 
Glucose Monitors (L11530, L27231, L11520, and  L196).  
10 Medicare Claims Processing  Manual, Pub.  No.  100-04, ch. 36,   20.5.4.1 and 50.6.  A  modifier is a code on a 
Medicare claim  that further describes the services performed or supplies provided to a beneficiary.  
 
Medicare Market Shares of Mail Order Diabetes Test Strips 36 Months After the Start of the National Mail Order Program  
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Medicare beneficiaries may purchase their diabetes test strips via mail order from suppliers in the 
Competitive Bidding Program or via non-mail order from local pharmacies or supplier 
storefronts. Mail order applies to diabetes test strips shipped or delivered to a beneficiarys 
residence.11  For both mail order and non-mail order, Medicare pays 80 percent of allowed 
charges for diabetes test strips and the beneficiary is responsible for the remaining 20 percent.   
 
The Competitive Bidding Program and National Mail Order Program for Diabetes Test 
Strips  
MMA required CMS to phase in, with several rounds of bidding, the Competitive Bidding 
Program for selected DMEPOS items, including mail order diabetes test strips.12  The selected 
DMEPOS items are generally high-cost and high-volume items that have a high savings potential 
under the Competitive Bidding Program.13  CMS uses bids submitted by DMEPOS suppliers to 
determine the competitive bidding payment amounts.  Bids are evaluated based on suppliers 
eligibility, their financial stability, and the bid price.14  Contracts are awarded to the suppliers 
that generally offer lower prices and meet applicable quality and financial standards.15  The 
Round 1 Rebid of the Competitive Bidding Program began on January 1, 2011.  Round 2 began 
on July 1, 2013. See Appendix A for more information about the Competitive Bidding Program. 
 
MIPPA required thatafter the Round 1 Rebid of the Competitive Bidding Programmail 
order suppliers must demonstrate in their bids that they provide at least 50 percent, by volume, of 
all types of diabetes test strips.16  Further, MIPPA section 154(d)(3)(B) requires OIG to complete 
a study to determine market shares of mail order diabetes test strips in the Competitive Bidding 
Program before each round of competitive bidding following the Round 1 Rebid.17    
 
MIPPA authorized a National Mail Order Program, expanding the Competitive Bidding Program  
for mail order diabetes testing supplies to all U.S. States and Territories.  Additionally, ATRA 
established equal Medicare payment amounts for mail order and non-mail order diabetes test 
strips provided on and after the date of implementation of the National Mail Order Program.   
                                                 
11 42 CFR   414.402 (defining mail order item).   

12 MMA, P.L. No. 108-173    302(b)(1)  (amending Social Security Act,  1847, 42  U.S.C.   1395w-3). 

13 CMS, General Overview of the Final Rule for Competitive Acquisition for Certain  Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies.  Accessed at https://www.cms.gov/DMEPOSCompetitiveBid/Downloads/ 

DMEPOSRegSumm.pdf on April 24, 2014;  73  Fed.  Reg. 17992, 18010 (Apr. 10, 2007).  

14 Palmetto GBA, Overview of the DMEPOS  Competitive Bidding Program.  Accessed at 

http://www.dmecompetitivebid.com/palmetto/cbic.nsf/vMasterDID/79NTSG0132  on April 23, 2014. 

15 Palmetto GBA, How a Bid is Evaluated. Accessed at http://www.dmecompetitivebid.com/Palmetto/cbicrd2.nsf/  

files/Webcast_Transcript_Bid_Evaluation.pdf/$File/Webcast_Transcript_Bid_Evaluation.pdf  on February 24, 2014; 
 
CMS, Medicare Claims Processing Manual,  Pub.  No.  100-04,  ch. 36,  40.1.  The payment  amount for an item 
 
furnished  under the competitive  bidding  program is equal to the median of the bids submitted by qualified suppliers 

whose composite bids are equal to or  below the pivotal bid for that product category.   42 CFR   414.416(b).  The 

pivotal bid is the lowest composite bid based  on bids submitted by suppliers that includes a sufficient number of 

suppliers to meet beneficiary  demand for the items in a product category.  42 CFR   414.402.
     
16 Specifically, MIPPA stipulates that suppliers provide at least 50 percent (or such  higher  percentage as the 

Secretary may specify) of all diabetes test strips in the aggregate and taking into account volume for the different 

products.  MIPPA, P.L. No. 110-275,  154(d)(3)(B) (adding  Social Security Act,  1847(b)(10)(A), 42 U.S.C. 
 
 1395w-3(b)(10)(A)). 
  
17  MIPPA,  P.L. No. 110-275  154(d)(3)(B)  (adding  Social Security Act,  1847(b)(10)(A), 42  U.S.C. 
 
 1395w-3(b)(10)(A)). 
  
 
Medicare Market Shares of Mail Order Diabetes Test Strips 36 Months After the Start of the National Mail Order Program  
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CMS implemented both the National Mail Order Program and Round 2 of the Competitive 
Bidding Program on July 1, 2013.18  Thus, under Round 2 of the Competitive Bidding Program, 
both mail order and non-mail order diabetes test strips are reimbursed at the same competitive 
bidding payment rate, $10.41 per 50-count box.   
 
Related OIG Work  
In December 2010, OIG completed the first report to fulfill its MIPPA requirement to determine 
market shares of diabetes test strips before 2011.  CMS used this report to evaluate bids for 
Round 2 of the Competitive Bidding Program.  In this 2010 report, OIG found that suppliers 
submitted claims for at least 75 types of mail order diabetes test strips for the 3-month period 
ending December 2009.19  Of these strips, two types accounted for approximately 26 percent of 
the Medicare mail order market share, seven types accounted for approximately 50 percent, and 
19 types accounted for approximately 81 percent. 
 
OIG released two additional reports that determined the Medicare market shares of diabetes test  
strips for two different 3-month periods in 2013one immediately preceding and one 
immediately following the implementation of Round 2 of the Competitive Bidding Program and 
the National Mail Order Program, i.e., the periods of AprilJune 2013 and JulySeptember 2013, 
respectively. CMS asked OIG to produce the report for the period of April to June 2013 so that 
it would have benchmark market share data for the period immediately prior to the 
implementation of the National Mail Order Program.  OIG found that for this 3-month period, 
suppliers submitted claims for at least 62 types of mail order diabetes test strips. 20  Two types of 
diabetes test strips accounted for 34 percent of the Medicare mail order market share.  Four types 
of diabetes test strips accounted for 51 percent of the Medicare mail order market share, and 
10 types accounted for 75 percent. 
 
In the other report, OIG reviewed claims for the 3-month period of July to September 2013, 
immediately following the start of the National Mail Order Program.  OIG found that suppliers 
submitted claims for at least 43 types of mail order diabetes test strips.21  Two types of diabetes 
test strips accounted for approximately 45 percent of the Medicare mail order market share.  
Three types of diabetes test strips accounted for 59 percent of the Medicare mail order market 
share, and 10 types accounted for 90 percent. The report covering the period of July to 
September 2013 fulfilled OIGs MIPPA requirement to complete a study to determine market 
shares of mail order diabetes test strips in the Competitive Bidding Program before each round of 
bidding following the Round 1 Rebid.  We are also providing this information for CMSs use in 
evaluating the effect of the National Mail Order Program on the types of diabetes test strips 
available to beneficiaries.    
                                                 
18 CMS, Contract Suppliers Selected Under Medicare Competitive Bidding  Program. Accessed at 
http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2013-Press-releases-items/2013-04-092.html  
on February  19, 2014.   Eighteen contracts were awarded to  suppliers to  provide diabetes testing supplies through the 

National Mail Order Program.  
  
19 OIG,  Medicare Market  Shares of Mail Order Diabetic Testing Strips (OEI-04-11-00130), December 2010.  

20 OIG,  Medicare Market Shares of Mail Order Diabetes Test Strips Immediately Prior to the National  Mail Order 
 
Program (OEI-04-13-00681), June  2014. 

21 OIG,  Medicare Market Shares of Mail Order Diabetes Test Strips From JulySeptember 2013, 

(OEI-04-13-00680), June  2014. 

 
Medicare Market Shares of Mail Order Diabetes Test Strips 36 Months After the Start of the National Mail Order Program  
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METHODOLOGY 
 
Data Collection  
We identified the population of Medicare mail order diabetes test strips claims with a beginning 
date of service from October 1 to December 31, 2013 from CMSs National Claims History file.  
There were 1,031,913 claims submitted by 74 suppliers in this file.  We then selected a simple 
random sample of 1,210 of the 1,031,913 Medicare claims for mail order diabetes test strips 
within our range of dates of service.  To identify the beneficiaries associated with each claim in  
our sample, we matched them with the CMS Beneficiary Enrollment Database.   
 
We sent a documentation request to 22 suppliers associated with the claims in our sample.  For 
each claim, we asked the supplier to indicate the type (model and manufacturer) of diabetes test 
strips that it provided to the Medicare beneficiary associated with the claim and to submit 
relevant documentation, (e.g., packing slips, invoices for the strips).22  We received responses 
from 21 suppliers associated with 1,190 of 1,210 claims in our sample, a 98-percent response 
rate for these claims.23   
 
Data Analysis 
We reviewed claims data and supplier documentation and responses to determine the quantity 
and type of mail order diabetes test strips associated with each claim in our sample.  Each claim  
in our sample contained between 1 and 18 boxes, and data for the 1,190 claims provide 
information for a total of 4,696 boxes of diabetes test strips.24  
 
We categorized types of diabetes test strips by model and manufacturer.  We accounted for the 
volume of each type by determining the total number of 50-count boxes of each type of diabetes 
test strip and the percentage of each type across all boxes.  We projected our sample data to the 
population of mail order diabetes test strips during our time period to estimate the Medicare 
market shares of mail order diabetes test strip types.   
 
Limitations  
Suppliers have 1 year to submit claims to CMS.  Our study did not include diabetes test strips 
that were provided during our time period (i.e., those with beginning dates of service in the 
months of October through December 2013) but for which claims were not submitted until after 
March 1, 2014, the date we collected our Medicare claims. 
 
Standards 
This review was conducted in accordance with the Quality Standards for Inspections approved 
by the Council of the Inspectors General on Integrity and Efficiency. 
 
                                                 
22  We contacted  suppliers up to  three times to obtain this information.  
  
23 One supplier  went  out of  business in fall 2013 and  did  not respond to  our information request, despite repeated 
 
attempts to reach this supplier. 

24 Most claims (91 percent) were for 1 to 6 boxes. 
 
 
Medicare Market Shares of Mail Order Diabetes Test Strips 36 Months After the Start of the National Mail Order Program  
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RESULTS 
 
Suppliers Submitted Claims for at Least 41 Types of Mail Order Diabetes Test Strips for 
the 3-Month Period of October to December 2013.  
For the 3-month period of October to December 2013, suppliers submitted claims for at least 
41 types of mail order diabetes test strips.  Two types of diabetes test strips accounted for 
44 percent of the Medicare mail order market share.  Three types of diabetes test strips accounted 
for 58 percent of the Medicare mail order market share, and 10 types accounted for 91 percent.    
 
Table 1 lists the top 10 types of mail order diabetes test strips associated with Medicare claims  
for the 3-month period of October to December 2013.  See Appendix B for a complete 
alphabetical listing of all 41 types. Appendix B also provides the model, manufacturer, 
percentage of market share, and 95-percent confidence intervals for market share for each type of  
diabetes test strip.  
 
Table 1: Top 10 Mail Order Diabetes Test Strips Types Associated With Medicare Claims for the 
3-Month Period of October to December 2013  
Model   Manufacturer   Percentage of  
Market Share  
Prodigy Autocode   Prodigy Diabetes Care   26.9%  
TRUEtest    Nipro DIagnositcs, Inc.  16.9%  
OneTouch Ultra Blue  LifeScan, Inc.  14.3%  
Embrace   Omnis Health   11.4%  
Gmate   Philosys, Inc.  10.6%  
OneTouch Ultra   LifeScan, Inc.  4.0%  
Advocate Redi-Code +  Diabetic Supply  of Suncoast Inc.  2.3%  
SolusV2  BioSense Medical Devices   2.1%  
CONTOUR  Bayer Healthcare  LLC   1.6%  
Clever Choice Voice  Simple Diagnostics  1.3% 
 Total   91.4%  
 
Source:  OIG analysis of  supplier documentation and Medicare claims containing HCPCS code  A4253 KL   
for the 3-month period of October to December 2013. 
 
 
 
 
 
 
 
 
 
 
 
 
 
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CONCLUSION 
 
This is the third of three reports OIG has released in 2014 that determine the Medicare market 
shares of diabetes test strips for three different 3-month periods in 2013.  One of these reports 
fulfilled OIGs reporting requirement to assist CMS in ensuring that winning bidders meet the 
MIPPA 50-percent requirement.  CMS requested the other two reports so that it could have 
additional market share data from different 3-month periods of service for informational 
purposes. Across all three reports, OIG found that a total of 15 diabetes test strip types 
accounted for the majority (i.e., 75 percent or greater) of the Medicare mail order market share.   
 
The first requested report found that for the 3-month period immediately prior to the start of the 
National Mail Order Program, two types of diabetes test strips accounted for 34 percent of the 
Medicare mail order market share.  Four types of diabetes test strips accounted for 51 percent of 
the Medicare mail order market share, and 10 types accounted for 75 percent.   
 
The second required report found that during the first three months of the National Mail Order 
Program, two types of diabetes test strips accounted for approximately 45 percent of the 
Medicare mail order market share.  Three types of diabetes test strips accounted for 59 percent of 
the Medicare mail order market share, and 10 types accounted for 90 percent.   
 
Finally, data from the current requested report show that the percentages of market share for the 
top 2, 3, and 10 types of strips each changed by approximately 1 percent between the  
JulySeptember and the OctoberDecember reporting periods.  We are providing this 
information for CMSs use in evaluating the effect of the National Mail Order Program on the 
types of diabetes test strips available to beneficiaries.  CMS may also find this information useful 
in assessing whether bidders have met the MIPPA 50-percent requirement.    
 
OIG will conduct future reviews of the market share of mail order diabetes test strips as required 
by MIPPA and/or requested by CMS. 
 
This memorandum report is being issued directly in final form because it contains no 
recommendations.  If you have comments or questions about this report, please provide them  
within 60 days. Please refer to report number OEI-04-13-00682 in all correspondence. 
 
 
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Appendix A 
 
The Competitive Bidding Program, Establishment of Competitive Bidding Areas (CBAs), 
and Reduced Reimbursement for Mail Order Diabetes Test Strips 
The MMA required CMS to phase in, with several rounds of bidding, a Competitive Bidding 
Program for DMEPOS.  Suppliers began submitting bids for Round 1 of the Competitive 
Bidding Program on May 15, 2007.  Contracts between CMS and suppliers became effective in 
selected CBAs on July 1, 2008.25  
 
Two weeks after the Round 1 contracts between CMS and suppliers became effective, Congress 
enacted MIPPA, which mandated the following changes to the Competitive Bidding Program:  
 
 	  the termination of contracts awarded to suppliers in Round 1;  
 
	   the requirement for CMS to repeat the Round 1 competition in 2009; and  
 
	   the institution of the MIPPA 50-percent requirement for mail order diabetes test strips in 
all rounds following the repeat of the Round 1 competition. (The repeat of the Round 1 
competition is known as the Round 1 Rebid.) 26  
 
MIPPA also reduced the 2009 fee-schedule amounts by 9.5 percent for all DMEPOS included in 
Round 1 to offset the estimated cost savings lost by the delayed implementation of the 
Competitive Bidding Program.27  This reduction resulted in an average 2009 fee-schedule 
amount of $32.50 per box of mail order diabetes test strips. 
 
The Round 1 Rebid began in October 2009 and included the previously selected CBAs, except 
for San JuanCaguasGuaynabo (Puerto Rico).28  CMS announced the winning contract 
suppliers on November 3, 2010, and the suppliers began providing competitively bid DMEPOS 
items to beneficiaries in nine selected CBAs on January 1, 2011.  Before 2011, Medicare 
reimbursed all diabetes test strips suppliers on the basis of fee-schedule amounts, which were 
updated annually and varied by State. As a result of the Round 1 Rebid, the average Medicare  
                                                 
25 CMS, MLN  Matters Number SE0805.  Overview of New Medicare Competitive Bidding Program for Durable 

Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). Accessed at http://www.cms.gov/Outreach-
and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE0805.pdf on 
  
October 1, 2014.  Selected CBAs in Round 1  were CharlotteGastoniaConcord (North Carolina and 
 
South Carolina), CincinnatiMiddletown (Ohio, Kentucky, and Indiana), ClevelandElyriaMentor (Ohio), 
 
DallasFort WorthArlington (Texas), Kansas City (Missouri and Kansas), MiamiFort  Lauderdale
 
Pompano Beach (Florida), OrlandoKissimmee (Florida), Pittsburgh  (Pennsylvania), RiversideSan Bernardino
 
Ontario (California), and San JuanCaguasGuaynabo  (Puerto Rico).  CBAs are defined  by specific ZIP Codes 

related to Metropolitan Statistical Areas (MSAs).   

26 The 50-percent requirement did not apply to  suppliers  bids  in Round 1 or the Round  1 Rebid.  

27 CMS, MLN Matters Number MM6270:  Fee Schedule Update for 2009 for Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies (DMEPOS). Accessed at http://www.cms.gov/Outreach-and-
Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM6270.pdf on  April 11, 2014.   

28 CMS, Competitive Bidding Areas. Accessed at http://www.dmecompetitivebid.com/Palmetto/Cbic.nsf/files/ 

Fact_Sheet_Competitive_Bidding_Areas.pdf/$File/Fact_Sheet_Competitive_Bidding_Areas.pdf`  on  April 11, 2014.   

 
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payment for 2011 mail order diabetes test strips provided to beneficiaries in CBAs was $14.62 
per 50-count box.29  In contrast, the national average Medicare payment for mail order strips in 
non-CBAs was $32.47, and the national average payment for non-mail order diabetes test strips 
was $37.67. CMS reported that the Competitive Bidding Program saved the Medicare program  
nearly $202.1 million in the first year of implementation.30  
 
Round 2 of the Competitive Bidding Program and Expansion of CBAs 
MIPPA required competition for Round 2 of the Competitive Bidding Program to occur in 2011 
in 70 additional CBAs.31  The Patient Protection and Affordable Care Act further expanded the 
number of CBAs to 91 and required CMS to expand the DMEPOS competitive bidding program  
nationwide or to adjust payments to suppliers using competitively bid rates by 2016.32  Round 2 
of the Competitive Bidding Program began on July 1, 2013, in 100 CBAs.33  
 
Round 2 Recompete of the Competitive Bidding Program and the National Mail Order 
Program To Begin July 1, 2016 
On July 15, 2014, CMS announced that it will recompete contracts awarded to suppliers in 
Round 2 of the Competitive Bidding Program and National Mail Order Program, which are set to 
expire on June 30, 2016.  The Round 2 Recompete will occur in the same  geographical locations 
as Round 2; however, the boundaries of some CBAs will be revised to account for large MSAs 
and to ensure there are no multi-State CBAs.34  The bidding schedule for the Round 2 
Recompete was slated to be announced in fall 2014, and contracts for the Round 2 Recompete 
will become effective on July 1, 2016.   
 
 
 
                                                 
29 During the Round 1 Rebid,  42 CFR   414.402 defined mail order contract supplier to  mean a contract supplier 

that furnishes items through the mail . . . .  See 72  Fed. Reg. 17992, 18085 (Apr. 10, 2007).  However, CMS 

deleted that definition and added new definitions  for  mail order and non-mail order, effective after the Round  1 
 
Rebid.   See 75 Fed.  Reg. 73170, 73570, and 73623 (Nov. 29, 2010).  
  
30 CMS, Competitive Bidding UpdateOne Year Implementation Update  April  17, 2012. Accessed at
  
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSCompetitiveBid/Downloads/ 

Competitive-Bidding-Update-One-Year-Implementation.pdf on  April 17, 2014.   

31 MIPPA, P.L.  No. 110-275,  154(d)(3)(B) (adding Social Security Act,  1847(b)(10)(A), 42  U.S.C. 
 
 1395w-3(b)(10)(A)). 
  
32  P. L. No. 111-148,   6410. 

33 MIPPA allows for MSAs that have populations over 8 million to  be subdivided into multiple CBAs.  Most 

Round  2 MSAs contain only one CBA;  however, the three largest MSAsChicago, Los Angeles, and  New York
 
are subdivided into multiple CBAs.  Therefore, Round 2 was implemented  in 100 CBAs.  CBIC, Round 2  &  Mail 

Order Home. Accessed at http://www.dmecompetitivebid.com/palmetto/cbicrd2.nsf/vMasterDID/8TARZW7500 on 
  
April 17, 2014. 

34 As a result, the number of CBAs will rise to  117, an increase of 17 from Round  2.  CMS, Round 2 Recompete and 

National Mail-Order Recompete. Accessed at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/Round-2-Recompete-and-National-Mail-Order-Recompete/Overview.html on 

July 17, 2014. 

 
Medicare Market Shares of Mail Order Diabetes Test Strips 36 Months After the Start of the National Mail Order Program  
(OEI-04-13-00682) 
  Page 11  Marilyn Tavenner 
Appendix B             
 
Market Share Estimates and Their 95-Percent Confidence Intervals for 41 Types of Mail Order 
Diabetes Test Strips for the 3-Month Period of  October to December 2013  
Model   Manufacturer   Percentage  95-Percent 
of Market   Confidence Interval 
Share   for Market Share 
ACCU-CHEK Aviva   Roche  0.04%   0.010.17%   
ACCU-CHEK Aviva Plus  Roche  1.21%   0.941.57%   
ACCU-CHEK Compact   
Roche  0.83%   0.611.13%  
Plus  
ACCU-CHEK Nano   
Roche  0.38%   0.240.61%  
Smartview*  
 
Advocate  Diabetic Supply  of Suncoast, Inc.  0.98%   0.731.31%  
 
Advocate Redi-Code +  Diabetic Supply  of Suncoast, Inc.  2.34%   1.952.82%  
 
BREEZE 2   Bayer HealthCare  LLC   0.09%   0.030.23%  
 
Care Sens   i-Sens  0.17%   0.090.34%  
 
Care Sens N   i-Sens  0.17%   0.090.34%  
 
Clever Choice Pro  Simple Diagnostics  0.04%   0.010.17%  
 
Clever Choice Voice  Simple Diagnostics  1.28%   0.991.64%  
Clever Choice Voice   
Simple Diagnostics  0.13%   0.060.28%  
Plus  
 
CONTOUR  Bayer HealthCare  LLC   1.55%   1.241.95%  
 
Easy Plus II   Home Aide Diagnostics  0.09%   0.030.23%  
 
Easy Step   Home Aide Diagnostics  0.09%   0.030.23%  
 
Easy Talk  Home Aide Diagnostics  0.13%   0.060.28%  
 
Easy Trak   Home Aide Diagnostics  0.13%   0.060.28%  
 
Element  Infopia USA  0.09%   0.030.23%  
Element Compact  Infopia USA  0.09%   0.030.23%   
 
Embrace   Omnis Health   11.37%   10.4912.31%  
 
FreeStyle Lite   Abbott Diabetes Care   0.13%   0.060.28%  
GLUCOCARD   
ARKAY   0.17%   0.090.34%  
Expression  
 
GLUCOCARD Vital  ARKAY   0.30%   0.180.50%  
 
GM100   BIONIME USA Corporation   0.04%   0.010.17%  
 
Gmate   Philosys, Inc.  10.63%   9.7811.54%  
 
GS300   BIONIME USA Corporation   0.77%   0.551.06%  
 
INFINITY   US Diagnostics  0.26%   0.150.45%  
 
Liberty Autocode   AgaMatrix, Inc.   0.13%   0.060.28%  
 
                                                                                                                                            continued on next page 
 
Medicare Market Shares of Mail Order Diabetes Test Strips 36 Months After the Start of the National Mail Order Program  
(OEI-04-13-00682) 
  Page 12  Marilyn Tavenner 
Appendix B               
Market Share Estimates and Their 95-Percent Confidence Intervals for 41 Types of Mail Order 
Diabetes Test Strips for the 3-Month Period of  October to December 2013 (continued)  
Model   Manufacturer   Percentage  95-Percent Confidence 
of Market   Interval for Market 
Share   Share  
 
NovaMax  Nova Biomedical  0.77%   0.551.06%  
 
On-Call Vivid   ACON Laboratories, Inc.  0.04%   0.010.17%  
 
OneTouch Ultra   LifeScan, Inc.  4.02%   3.504.63%  
 
OneTouch Ultra Blue  LifeScan, Inc.  14.31%   13.3415.34%  
 
OneTouch Verio   LifeScan, Inc.  0.28%   0.160.48%  
 
Perfect 3   Gluco Perfect   0.43%   0.270.66%  
 
Prodigy AutoCode   Prodigy Diabetes Care   26.92%   25.6528.19% 
 
Solo V2  BioSense Medical Devices  0.47%   0.310.71%  
 
SolusV2  BioSense Medical Devices  2.13%   1.752.58%  
 
TRUEtest   Nipro Diagnostics, Inc.  16.91%   15.8618.01%  
 
TRUEtrack  Nipro Diagnostics, Inc.  0.04%   0.010.17%  
 
V10/D20   ForaCare, Inc.   0.04%   0.010.17%  
 
WaveSense Presto  AgaMatrix, Inc.   0.04%   0.010.17%  
100.00%**    
Total    
Source: OIG analysis of supplier documentation and Medicare claims containing HCPCS code  A4253 KL  for the 3-month  

period of October to December 2013. 

*This diabetes  test  strip may also be listed as  the ACCU-CHEK Nano SmartView. 
 
**Because of rounding, the percentages in  this column  do not sum  to  the total. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare Market Shares of Mail Order Diabetes Test Strips 36 Months After the Start of the National Mail Order Program  
(OEI-04-13-00682)