D EPART MENT OF HEALTH A~D HUvl.A::'\ SERVlCES 
0  Ff'ICE OF INSPECTOR G ENERAL 
------------------- ---
NOV  - 7 2012 
TO: 	 Marilyn Tavenner 
Acting Administrator 
Centers for Medicare & Medicaid Services 
FROM:  Stuart Wright 
Deputy Inspector General 
for Evaluation and Inspections 
SUBJECT: 	 Memorandum Report:  Supplier Billing for Diabetes Test Strips and 
Inappropriate Supplier Activities in Competitive Bidding Areas, 
OEI-04-11-00760 
This memorandum report responds to a written request from the Centers for Medicare & 
Medicaid Services (CMS) for the Office oflnspector General (OIG) to determine 
whether an increase in claims for non-mail order diabetes test strips (DTS) between 2010 
and 2011 may be attributed to abusive supplier practices.  These practices include 
(1) improperly billing mail order items as non-mail order and (2) inappropriately waiving 
beneficiaries' out-of-pocket expenses (i.e., copayments).  Under Round 1 ofCMS's 
Competitive Bidding Program, implemented in January 2011, non-mail order DTS in 
Competitive Bidding Areas (CBAs) are reimbursed at a rate more than double that of 
mail order DTS.  This price difference provides a financial incentive for suppliers to bill 
for non-mail order rather than mail order DTS.  In contrast, this price difference provides 
a financial disincentive for beneficiaries because they are responsible for a 20-percent 
Medicare copayment, and the higher price ofnon-mail order DTS thus makes the 
copayment higher.  The Senate Special Committee on Aging also expressed written 
concerns to OIG regarding the price difference between mail order and non-mail order 
DTS. 
In accordance with CMS's request, we determined the extent to which (1) claims in 
CBAs for the more expensive, non-mail order DTS increased between 2010 and 2011; 
(2) suppliers improperly billed Medicare for the more expensive, non-mail order DTS in 
2011; (3) beneficiaries changed from mail order to non-mail order DTS between 2010 
and 2011 because suppliers waived their copayments; and (4) suppliers conducted 
activities that we determined to be inappropriate (i.e., routinely waiving copayments, 
sending unsolicited DTS) in 2010 or 2011.  Page 2  Marilyn Tavenner 
 
SUMMARY 
 
We reviewed 2010 and 2011 Medicare claims data and conducted telephone interviews 
with 211 beneficiaries.  We found that claims in CBAs for the more expensive, non-mail 
order DTS increased by 33 percent from 2010 to 2011, while claims for the less 
expensive, mail order DTS decreased by 71 percent.  Further, for 20 percent of 
beneficiaries in our review, suppliers improperly billed Medicare for the more expensive, 
non-mail order DTS in 2011, but beneficiaries reported having instead received the less 
expensive, mail order DTS.  This improper supplier billing contributed to the increase in 
claims for non-mail order DTS between 2010 and 2011.  Of the beneficiaries in our 
review who reported changing from mail order to non-mail order DTS between 2010 and 
2011, none reported suppliers waiver of copayments as a reason for their change.  
Therefore, suppliers inappropriate waiver of beneficiaries copayments did not appear to 
contribute to the increase in non-mail order DTS claims between 2010 and 2011.  
However, 23 percent of beneficiaries in our review reported supplier activities (i.e., 
routinely waiving copayments, sending unsolicited DTS) that we determined to be 
inappropriate.   
 
BACKGROUND 
 
Diabetes is a chronic disease in which a person has a high blood sugar (i.e., glucose) level 
because either the body does not produce enough insulin or cells do not respond properly 
to the insulin that the body does produce.1  If not properly managed, diabetes can lead to 
a number of complications, including increased risk for heart attack and stroke.2 
Monitoring blood sugar levels is one way that individuals with diabetes can manage their 
disease.  Individuals with diabetes use DTS in small, hand-held blood glucose meters to 
test the concentration of glucose in their blood.  This test, which may need to be 
performed several times a day, can assist individuals with diabetes in maintaining their 
blood glucose at the appropriate level.  
 
DTS Reimbursement Under the Competitive Bidding Program   
Title XVIII of the Social Security Act sets coverage requirements under Part B of the 
Medicare program.  Part B covers durable medical equipment, prosthetics, orthotics, and 
supplies (DMEPOS), including DTS and blood glucose monitors for individuals with 
diabetes.3  Generally, Medicare pays 80 percent of the Medicare-allowed amount for 
DTS, and beneficiaries are responsible for the remaining 20 percent.4   
 
Medicare covers up to 100 DTS (i.e., two 50-count boxes) per month for                
insulin-dependent beneficiaries and up to 100 DTS every 3 months for 
                                                 
1 National Institutes of Health, Diagnosis of Diabetes.  Accessed at 
http://diabetes.niddk.nih.gov/dm/pubs/diagnosis/ on June 20, 2012. 
2 National Center for Biotechnology Information, U.S. National Library of Medicine, Diabetes 
Complications.  Accessed at http://www.ncbi.nlm.nih.gov/pubmedhealth/PMH0002194/ on February 1, 
2012. 
3 Social Security Act,  1832(a)(1), 1861(s)(6), and 1861(n), 42 U.S.C.  1395k(a)(1), 1395x(s)(6), and 
1395x(n).     
4 Social Security Act, 1834(a), 42 U.S.C. 1395m(a). 
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 3  Marilyn Tavenner 
 
non-insulin-dependent beneficiaries.5  Medicare covers DTS that exceed the utilization 
guidelines only if deemed medically necessary.6  Until January 2011, CMS reimbursed 
DTS throughout the country using established fee schedule amounts based on payment 
amounts allowed under the previous reasonable-charge payment methodology.     
 
In January 2011, CMS implemented Round 1 of its Competitive Bidding Program for 
selected DMEPOS, including mail order DTS, in nine CBAs.7  The DMEPOS items that 
were selected for inclusion in the initial Competitive Bidding Program are generally 
high-cost and/or high-volume items with high cost-savings potential.8  CMS estimates 
that the Competitive Bidding Program will save Medicare more than $17 billion over a 
10-year period.9  Under the Competitive Bidding Program, suppliers submit competing 
bids to become Medicare contract suppliers in CBAs.10  In each CBA, the lower-cost 
single payment amount that results from the bidding process replaces the higher-cost fee 
schedule amount.  Contracts to supply DMEPOS in CBAs are awarded to enough 
winning bidders to meet beneficiary demand in each CBA.11   
 
The Competitive Bidding Program currently includes mail order DTS but not non-mail 
order DTS.  Beneficiaries in CBAs must purchase mail order DTS from a winning 
contract supplier for their respective CBAs.  However, any beneficiaryregardless of 
whether he or she lives in a CBAcan purchase non-mail order DTS from any enrolled 
Medicare supplier.     
 
                                                 
5 CMS, Medicare Local Coverage Determinations (LCDs) for Glucose Monitors (L11530, L27231, 
L11520, and L196).   Insulin-dependent beneficiaries (i.e., beneficiaries with type 1 diabetes) depend on 
insulin injections to regulate their blood glucose levels.  Non-insulin dependent beneficiaries (i.e., 
beneficiaries with type 2 diabetes) can manage their disease with lifestyle changes, such as special diets and 
exercise and do not require insulin injections to regulate their blood glucose levels.  National Institute of 
Diabetes and Digestive and Kidney Diseases, Your Guide to Diabetes:  Type 1 and Type 2.  Accessed at 
http://diabetes.niddk.nih.gov/dm/pubs/type1and2/what.aspx on August 13, 2012.  
6 CMS, Medicare Local Coverage Determinations (LCDs) for Glucose Monitors (L11530, L27231, 
L11520, and L196).  See also, CMS, MLN [Medicare Learning Network] Matters, Number SE1008.  
Accessed at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNMattersArticles/downloads//SE1008.pdf on April 24, 2012. 
7 CBAs are defined by specific ZIP Codes related to Metropolitan Statistical Areas.  The nine CBAs 
included in Round 1 were Cincinnati-Middletown (Ohio, Kentucky, and Indiana); Charlotte-Gastonia-
Concord (North Carolina and South Carolina); Cleveland-Elyria-Mentor (Ohio); Dallas-Fort Worth-
Arlington (Texas); Kansas City (Missouri and Kansas); Miami-Fort Lauderdale-Pompano Beach 
(South Florida); Orlando-Kissimmee (Florida); Pittsburgh (Pennsylvania); and Riverside-San Bernardino-
Ontario (California).  Accessed at 
http://www.dmecompetitivebid.com/Palmetto/Cbic.nsf/files/Fact_Sheet_Competitive_Bidding_Areas.pdf/$
FIle/Fact_Sheet_Competitive_Bidding_Areas.pdf on June 20, 2012. 
8 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 February 1, 2012. 
9 CMS, CMS Implementation of Round 1 Rebid of DMEPOS Competitive Bidding Program.  April 5, 
2011.  Accessed at http://www.hhs.gov/asl/testify/2010/09/t20100915a.html on February 1, 2012. 
10 CMS, DMEPOS Competitive BiddingOverview.  Accessed at 
https://www.cms.gov/dmeposcompetitivebid/ on February 1, 2012. 
11 Ibid. 
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In 2010 and 2011, CMS defined mail order as items delivered by a common carrier, such 
as UPS, FedEx, or the U.S. Postal Service.12  CMS intended for this definition to 
distinguish between mail order items and non-mail order items, i.e., items that a 
beneficiary or caregiver picks up in person at a local pharmacy or storefront.13  However, 
some suppliers began using their own fleet of vehicles to deliver DTS to beneficiaries 
homes, allowing the suppliers to bill Medicare for non-mail order DTS.14 
 
In CBAs, Medicare payment for mail order DTS under the Competitive Bidding Program 
is lower than that for non-mail order DTS.  Specifically, under Round 1 of the 
Competitive Bidding Program, the average per-box reimbursement for mail order DTS 
provided to beneficiaries in CBAs in 2011 was $14.62.  In contrast, the average per-box 
fee schedule reimbursement for non-mail order DTS provided to beneficiaries in CBAs in 
2011 was $37.67more than double that of mail order.  Therefore, suppliers have a 
financial incentive to bill for non-mail order DTS rather than mail order DTS for 
beneficiaries in CBAs.  In contrast, this price difference provides a financial disincentive 
for beneficiaries because they are responsible for a 20-percent Medicare copayment, and 
the higher price of non-mail order DTS thus makes the copayment higher.15     
 
To receive Medicare reimbursement for mail order DTS, suppliers must submit claims 
using the Healthcare Common Procedure Coding System (HCPCS) code A4253.16  In 
addition, if the DTS were furnished on a mail order basis, the supplier must use HCPCS 
modifier KL on the claim.17  For beneficiaries in CBAs, claims with the KL modifier are 
reimbursed at the lower Competitive Bidding Program amount.  Claims without the KL 
modifier indicate that the DTS were non-mail order, and the claims are reimbursed at the 
higher fee schedule amount.   
 
Suppliers may refill an order for mail order or non-mail order DTS only when 
beneficiaries have nearly exhausted the previous supply and specifically request that the 
DTS be dispensed.18  Suppliers may not automatically dispense a quantity of DTS on a 
                                                 
12 CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch. 36,  10.2.  Accessed at 
https://www.cms.gov/manuals/downloads/clm104c36.pdf on February 2, 2012.  See also CMS, Mail Order 
Diabetic Supplies Fact Sheet.  Accessed at 
https://www.cms.gov/MLNProducts/downloads/DME_Mail_Order_Factsheet_ICN900924.pdf on June 20, 
2012. 
13 75 Fed. Reg. 73170, 73569-70 (Nov. 29, 2010). 
14 Ibid.  After Round 1 of the Competitive Bidding Program, CMS will expand the definition of mail order 
to include any item (for example, diabetes testing supplies) shipped or delivered to the beneficiarys home 
regardless of the method of delivery.  75 Fed. Reg. 73170, 73570, and 73623 (Nov. 29, 2010) (revising the 
definition of mail order item in 42 CFR 414.402 and explaining why the new definition will not apply to 
Round 1).  The new definition of mail order will include supplier delivery to beneficiary homes. 
15 42 CFR 414.408(a). 
16 CMS, Medicare Local Coverage Determinations (LCDs) for Glucose Monitors (L11530, L27231, 
L11520, and L196). 
17 CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch. 36,  20.5.4.1 and 50.6. 
18 CMS, Medicare Program Integrity Manual.  Pub. 100-08, ch. 4,  4.26.1. See also CMS, Medicare 
Program Integrity Manual, Pub. 100-08, ch. 5,  5.2.6 (effective Aug. 8, 2011). 
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 5  Marilyn Tavenner 
 
predetermined basis.19  Instead, suppliers must contact the beneficiary prior to dispensing 
the refill.  
 
CMS will implement a National Mail Order Competition for diabetes test supplies, 
including DTS.  The National Mail Order Competition will take effect in 2013, 
concurrent with Round 2 of the Competitive Bidding Program.20  The National Mail 
Order Competition will cover DTS that are delivered via any method (i.e., common 
carrier or supplier delivery) to beneficiaries in all parts of the U.S.  As an alternative, 
beneficiaries may still choose to receive the more expensive, non-mail order DTS by 
picking them up in person from the suppliers storefront.   
 
DTS Supplier Practices That Are Inappropriate Under the Federal False Claims 
Act and the Federal Anti-Kickback Statute  
A supplier that knowingly presents to the Federal Government a false or fraudulent claim 
for payment faces liability under the Federal False Claims Act.21, 22  For example, a claim 
for mail order DTS that is submitted without the KL modifier (i.e., indicating incorrectly 
that non-mail order DTS were supplied) would be a false claim under the Federal False 
Claims Act.23  Further, a claim containing a total charge that includes the beneficiarys 
copayment can also be a false claim if the supplier routinely waives the beneficiarys 
copayment.24     
 
Under the Federal Anti-Kickback Statute, it is illegal to knowingly and willfully solicit, 
offer, pay, or receive any remuneration to induce or reward referrals of items or services 
reimbursable by a Federal health care program, such as Medicare.25  Suppliers must not 
                                                 
19 CMS, Medicare Program Integrity Manual.  Pub. 100-08, ch. 4,  4.26.1. See also CMS, Medicare 
Program Integrity Manual, Pub. 100-08, ch. 5,  5.2.6 (effective Aug. 8, 2011). 
20 CMS, National Mail-Order Competition for Diabetic Testing Supplies.  Accessed at 
http://www.dmecompetitivebid.com/Palmetto/Cbic.nsf/files/R2_Fact_Sheet_Mail-
Order_Diabetic_Supplies.pdf/$FIle/R2_Fact_Sheet_Mail-Order_Diabetic_Supplies.pdf on January 30, 
2012.   
21 31 U.S.C.  3729(a)(1). 
22 In fiscal year 2009, $2.4 billion was recovered for Federal False Claims Act cases.  Health care-related 
cases accounted for two-thirds ($1.6 billion) of the money recovered.  Medicare and Medicaid-related cases 
composed the bulk of health care-related cases.  Department of Justice, Office of Public Affairs, Justice 
Department Recovers $2.4 Billion in False Claims Cases in Fiscal Year 2009; More Than $24 Billion 
Since 1986.  November 19, 2009.  Accessed at http://www.justice.gov/opa/pr/2009/November/09-civ-
1253.html on February 1, 2012. 
23 The supplier does not have to deliberately intend to defraud the Federal Government to be liable under 
the Federal False Claims Act; instead, the supplier only needs to knowingly present the false or 
fraudulent claim.  The definition of knowingly includes:  (1) having actual knowledge that the 
information on the claim is false; (2) acting in deliberate ignorance of the truth or falsity of the information 
on the claim; or (3) acting in reckless disregard of the truth or falsity of the information on the claim.  
31 U.S.C.  3729(b)(1). 
24 The Department of Health and Human Services (HHS), OIG Special Fraud Alert, 59 Fed. Reg. 6532 
(December 19, 1994).  Accessed at http://oig.hhs.gov/fraud/docs/alertsandbulletins/121994.html on 
February 1, 2012. 
25 42 U.S.C.  1320a7b(b). 
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 6  Marilyn Tavenner 
 
offer beneficiaries incentives, such as routinely waiving copayments, as a means of 
generating Medicare business.26   
 
Medicare Fraud in South Florida 
In recent years, South Florida has been a focus area of efforts to combat Medicare fraud, 
waste, and abuse.  Additionally, in 2007, HHS and the Department of Justice (DOJ) 
established a joint Medicare Fraud Strike Force (Strike Force) in South Florida to combat 
Medicare fraud.  Strike Forces are teams of Federal, State, and local investigators that 
combat fraud in certain areas of the country by analyzing current Medicare claims data.27  
In July 2010, the Strike Force in South Florida charged 24 defendants in Miami for 
allegedly participating in various schemes that resulted in approximately $103 million in 
false claims.28  OIG has published reports indicating that South Florida is a fraud-prone 
area for Medicare, including home health services, community mental health services, 
and retail pharmacies billing for prescription drugs.29   
 
METHODOLOGY 
 
Scope of Inspection 
We reviewed 2010 and 2011 Medicare claims data and conducted beneficiary telephone 
interviews to determine the extent to which claims in CBAs for non-mail order DTS 
increased between 2010 and 2011.  We also determined the extent to which:  (1) suppliers 
improperly billed Medicare for non-mail order DTS in 2011, (2) beneficiaries changed 
from mail order DTS in 2010 to non-mail order DTS in 2011 because suppliers waived 
their copayments, and (3) suppliers conducted activities that were inappropriate (i.e., 
routinely waiving copayments, sending unsolicited DTS) in 2010 or 2011.  
 
Data Collection and Analysis 
We analyzed 2010 and 2011 DTS claims from CMSs Durable Medical Equipment 
100 Percent Standard Analytic File to identify beneficiaries who received DTS in 2010 
                                                 
26 In addition, Federal law provides for the imposition of civil monetary penalties against any supplier who 
offers or transfers remuneration (which includes waiver of copayments and deductibles) that the person 
knows or should know is likely to influence the individual to order or receive Medicare items or services 
from a particular supplier.  Social Security Act, 1128A(a)(5) and 1128A(i)(6), 42 U.S.C.  1320a-7a(a)(5) 
and 1320a-7a(i)(6). Suppliers may waive copayments on a case-by-case basis if three criteria are met:  
(1) the copayments are not waived in connection with any advertisement or solicitation; (2) the copayments 
are not routinely waived; and (3) the suppliers have made a good faith determination that the beneficiary 
has a financial hardship, or reasonable collection efforts to collect the beneficiarys copayment have failed.  
Social Security Act, 1128A(i)(6)(A), 42 U.S.C.  1320a-7a(i)(6)(A). 
27 HHS News Release, Strike Force Formed To Target Fraudulent Billing of Medicare Program by Health 
Care Companies.  Accessed at http://www.hhs.gov/news/press/2007pres/05/20070509c.html on 
February 1, 2012. 
28 Nationwide Strike Force operations in July 2010 resulted in charges against 94 doctors and over 
$251 million in alleged false billing.  HHS and DOJ, Medicare Fraud Strike Force Charges 94 Doctors, 
Health Care Company Owners, Executives and Others for More Than $251 Million in Alleged False 
Billing.  Accessed at http://www.hhs.gov/news/press/2007pres/05/20070509c.html on February 1, 2012. 
29 HHS OIG, Inappropriate and Questionable Billing by Medicare Home Health Agencies, 
OEI-04-11-00240, August 2012; HHS OIG, Questionable Billing by Community Mental Health Centers, 
OEI-04-11-00100, August 2012; and HHS OIG, Retail Pharmacies With Questionable Part D Billing, 
OEI-02-09-00600, May 2012. 
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and/or 2011.  From these data, we calculated the number of claims, Medicare-allowed 
amounts, and the number of beneficiaries who received mail order or non-mail order 
DTS.   
 
We then identified beneficiaries in CBAs who, according to Medicare claims data, 
received DTS in both 2010 and 2011 (174,243 beneficiaries).  From this, we identified 
3,633 beneficiaries in CBAs who showed a pattern of receiving both mail order DTS in 
2010 and non-mail order DTS in 2011.  We identified beneficiaries as having this pattern 
if they had at least two mail order DTS claims in the last 6 months of 2010 and at least 
two non-mail order DTS claims in the first 6 months of 2011.  We did not include 
beneficiaries who, according to Medicare claims data, received only mail order DTS or 
only non-mail order DTS in 2010 and 2011.   
 
From our population of 3,633 beneficiaries with this pattern, we selected a stratified 
random sample of 500 beneficiaries.  Because prior OIG work has demonstrated that 
South Florida is a fraud-prone area for Medicare, we stratified our sample to include 
250 of the 863 beneficiaries in the South Florida CBA and 250 of the 2,771 beneficiaries 
in the remaining eight CBAs.  This sample represented 14 percent of beneficiaries, 
22 percent of Medicare-allowed amounts, and 19 percent of claims in our population.  
Table 1 provides information about the two strata in our sample compared to the 
population from which we selected the sample. 
 
Table 1:  Sample Compared to Population, Overall and for Two Strata 
 Number of Beneficiaries 
  Medicare-Allowed    Number of DTS Claims 
Sample Versus Population  Receiving DTS in 2010 and 
Amounts in 2010 and 2011  in 2010 and 2011 
2011 
Sample   500  $589,324**  4,324 
   South Florida CBA      250      $313,408     2,111 
   Remaining Eight CBAs      250      $275,917     2,213 
       
Population  3,633*  $2,643,370  22,565 
 
   South Florida CBA      862      $645,009     4,898 
   Remaining Eight CBAs  2,771  $1,998,361  17,667 
       
* Sum of beneficiaries in the two strata exceeds the population of beneficiaries because one beneficiary moved from the 
South Florida CBA to one of the remaining eight CBAs within our timeframe and is counted in both strata.   
** Sum of Medicare-allowed amounts in 2010 and 2011 is less than the sum of the two strata due to rounding. 
Source:   OIG analysis of the 18-month updates of the 2010 and 2011 CMS Durable Medical Equipment 100 Percent Standard 
Analytic Files, 2012.  
 
One week prior to conducting our March 2012 telephone interviews, we sent letters in 
English and Spanish to beneficiaries notifying them that an OIG representative would be 
calling to request their participation in this study.30  We searched online and used a 
                                                 
30 Although 12 letters were undeliverable and marked unable to forward or unidentifiable as addressed, 
we attempted to contact these beneficiaries via telephone to conduct the interview.   
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 8  Marilyn Tavenner 
 
comprehensive database to obtain telephone numbers for the sampled beneficiaries.31  
For the 405 beneficiaries for whom we could locate telephone numbers, we attempted to 
contact them at least three times to ask them to participate in our interview.  We 
conducted interviews in English or Spanish, depending on each beneficiarys preference.  
We completed telephone interviews with 104 beneficiaries in the South Florida CBA and 
107 beneficiaries in the remaining eight CBAs, yielding a total of 211 interviews and a 
42-percent response rate.32, 33   
 
We compared interview respondents to nonrespondents on three variables:  age, gender, 
and the number of Medicare DTS claims for the beneficiaries in 2010 and 2011.34  We 
did not find differences on any of the variables that were significant at the 95-percent 
confidence level.  See Appendix A for beneficiary information on these three variables 
for respondents and nonrespondents in the South Florida CBA, the remaining eight 
CBAs, and all CBAs combined.   
 
We conducted telephone interviews with beneficiaries in our sample to determine how 
they received DTS in 2010 and 2011.  We then determined whether their suppliers 
properly billed Medicare for mail order DTS in 2010 and non-mail order DTS in 2011.  
We determined that supplier billing was proper if beneficiaries reported obtaining DTS        
(1) in 2010 by having the DTS delivered to their homes by a common carrier (i.e., via 
mail order) and (2) in 2011 through beneficiary storefront pickup or supplier delivery to 
their homes (i.e., via non-mail order).  If beneficiaries reported receiving DTS in 2010 
only through non-mail order or in 2011 only through mail order, we determined that their 
suppliers improperly billed Medicare.   
 
If beneficiaries told us that their suppliers provided mail order DTS in 2010 and non-mail 
order DTS in 2011, we asked beneficiaries why their method for receiving DTS changed.  
We also asked these beneficiaries if they were aware of the potential cost savings 
associated with mail order DTS and if they would be willing to switch back to mail order 
DTS to save themselves and/or the Medicare program money. 
 
                                                 
31 We used CLEAR For Law Enforcement & Government Investigators to obtain sampled beneficiaries 
telephone numbers.  CLEAR provides access to a vast collection of public and proprietary records, 
including landline phone and cell phone data.  Accessed at  
https://clear.thomsonreuters.com/clear_home/government.htm on June 20, 2012.   
32 The response rate is calculated out of a total of 498 beneficiaries.  Two beneficiaries out of the original 
500 sampled beneficiaries were not located in either the South Florida CBA or the remaining 8 CBAs.   
33 For the remaining beneficiaries, one of the following situations applied:  the telephone numbers that we 
had were disconnected (80 beneficiaries), we did not have telephone numbers (74 beneficiaries), we had 
functional telephone numbers but could not reach the beneficiaries after at least three attempts 
(73 beneficiaries), the beneficiaries declined to participate in the interview (36 beneficiaries), or the 
beneficiaries were deceased (24 beneficiaries).   
34 Although we also had access to demographic information regarding beneficiary race, this data tends to be 
unreliable.  Therefore, we did not compare respondents and nonrespondents based on race.  For example, 
see CMS, Accuracy and Bias of Race/Ethnicity Codes in the Medicare Enrollment Database.  Accessed at  
https://www.cms.gov/Research-Statistics-Data-and-
Systems/Research/HealthCareFinancingReview/downloads/04-05Winterpg61.pdf on June 20, 2012.   
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Finally, we asked beneficiaries whether suppliers waived their Medicare copayments 
and/or sent them DTS that they did not order (i.e., unsolicited DTS) in 2010 or 2011.  We 
then determined if these actions were inappropriate based on beneficiaries interview 
responses, as described below: 
 
Determining whether suppliers inappropriately waived copayments.  We asked 
beneficiaries how often, in 2010 or 2011, they paid a copayment when they purchased 
DTS.  If beneficiaries responded that they sometimes or never paid a copayment, we 
asked if they had supplemental insurance to Medicare that paid their copayment or if they 
had a financial hardship.  If beneficiaries did not have supplemental insurance or a 
financial hardship, we determined that their suppliers were waiving their copayments 
inappropriately.        
 
Determining whether suppliers inappropriately sent unsolicited DTS.  We asked 
beneficiaries whether, in 2010 or 2011, they received DTS that they did not order.  If 
beneficiaries received DTS that they did not order, we asked them how often this 
occurred and how many unsolicited DTS boxes they received.  We determined that 
suppliers inappropriately sent unsolicited DTS if the beneficiaries reported receiving DTS 
that they did not order.   
 
For the results of our beneficiary interviews, we provide sample statistics, combined, for 
the two strata in our review.  These combined statistics are weighted by each stratums 
proportion of the population from which our sample was selected.  Further, we did not 
find significant differences between the two strata in our review.  Appendix B shows the 
sample sizes and weighted point estimates for all statistics in this report, both overall and 
for the two strata in our review.  We do not project these sample statistics to the 
population from which our sample was selected.   
 
We will forward to our investigators and/or CMS all instances of suppliers improper 
billing and inappropriate activities that we identified, so that they may determine the 
appropriate course of action.  
 
Limitations 
Our results are based on self-reported data from beneficiaries and were not independently 
verified by a review of supplier or physician medical records.  Beneficiaries ability to 
recall events, particularly over a span of 2 years, may affect our data.   
 
Standards 
This inspection was conducted in accordance with the Quality Standards for Inspection 
and Evaluation approved by the Council of the Inspectors General on Integrity and 
Efficiency. 
 
   
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RESULTS 
 
Claims in CBAs for the more expensive, non-mail order DTS increased from 2010 to 
2011, while claims for the less expensive, mail order DTS decreased  
Overall, Medicare claims for DTS in CBAs decreased by 22 percent after CMS 
implemented Round 1 of the DMEPOS Competitive Bidding Program in January 2011.  
Further, the number of claims for the more expensive, non-mail order DTS in CBAs 
increased by 33 percent, and the number of claims for the less expensive, mail order DTS 
in CBAs decreased by 71 percent.  Similarly, Medicare-allowed amounts for non-mail 
order DTS and the number of beneficiaries receiving such DTS in CBAs increased 
between 2010 and 2011, whereas those for mail order DTS decreased.  In contrast, there 
was not a similar pattern in the number of claims, Medicare-allowed amounts, or the 
number of beneficiaries in non-CBA areas between 2010 and 2011.35   
 
Table 2 shows the percentage change in the number of claims, Medicare-allowed 
amounts, and the number of beneficiaries receiving non-mail order and mail order DTS in 
CBAs between 2010 and 2011.  Table 2 provides these data for the South Florida CBA, 
the remaining eight CBAs, and overall.  Appendix C provides the number of claims, 
Medicare-allowed amounts, and number of beneficiaries, as well as the percentage 
change for each of these categories.   
 
Table 2:  Percentage Change in the Number of Claims, Medicare-Allowed Amounts, 
and the Number of Beneficiaries Receiving Non-Mail Order and Mail Order DTS in 
CBAs Between 2010 and 2011 
  Change in 
 Change in Number of  Medicare-Allowed  Change in Number of 
Paid Medicare Claims  Claims Between 2010 and  Amounts Between 2010  Beneficiaries Between 
2011*  and 2011*   2010 and 2011* 
 
Non-Mail Order   + 33%  + 49%  + 46% 
   South Florida CBA  + 19%  + 37%  + 45% 
   Remaining Eight CBAs  + 40%  + 55%  + 48% 
       
Mail Order   - 71%   - 84%   - 61% 
   South Florida CBA  - 83%  - 89%  - 74% 
   Remaining Eight CBAs  - 68%  - 82%  - 59% 
       
Total  - 22%  - 36%  - 18% 
   South Florida CBA  - 18%  - 23%  - 14% 
   Remaining Eight CBAs  - 24%  - 40%  - 21% 
 
* Percentage change includes beneficiaries who switched from mail order to non-mail order DTS, beneficiaries who were 
new to receiving DTS through Medicare in 2011, and beneficiaries who no longer received DTS through Medicare in 2011. 
Source:   OIG analysis of the 18-month updates of the 2010 and 2011 CMS Durable Medical Equipment 100 Percent 
Standard Analytic Files, 2012.  
 
   
                                                 
35 The number of non-mail order DTS claims in non-CBA areas decreased by 3 percent, and the number of 
mail order DTS claims increased by 4 percent.  Medicare-allowed amounts for non-mail order DTS in 
non-CBA areas decreased by 4 percent, and allowed amounts for mail order DTS increased by 1 percent.  
The number of beneficiaries receiving non-mail order DTS in non-CBA areas decreased by 2 percent, and 
the number of beneficiaries receiving mail order DTS increased by 4 percent.   
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 11  Marilyn Tavenner 
 
For 20 percent of beneficiaries in our review, suppliers improperly billed Medicare 
for the more expensive, non-mail order DTS in 2011, but beneficiaries reported 
receiving the less expensive, mail order DTS 
For all 500 beneficiaries in our sample, Medicare claims data documented that suppliers 
billed at least two orders of the more expensive, non-mail order DTS in 2011.  However, 
20 percent of the 211 beneficiaries we interviewed told us they received the less 
expensive, mail order DTS in 2011.  Specifically, these beneficiaries received their mail 
order DTS through common carrier delivery to their homes.  For example, one 
beneficiary in our review from the South Florida CBA stated that he has always had DTS 
delivered to his house through a mail carrier.  He has never had to sign anything and 
[has] never seen a supplier van. 
 
Further, our analysis of beneficiaries interview responses shows that the suppliers that 
provided DTS to these beneficiaries improperly billed Medicare for the more expensive, 
non-mail order DTS and received a higher Medicare reimbursement than they should 
have received.  The average reimbursement rate for non-mail order DTS in 2011 was $23 
per box more than for mail order DTS.36   
 
The remaining beneficiaries in our review fell into four additional categories:   
1.  Beneficiaries whose suppliers properly billed Medicare for mail order DTS in 2010 
and non-mail order DTS in 2011.  For 42 percent of beneficiaries in our review, we 
determined that suppliers properly billed Medicare for mail order DTS in 2010 and 
non-mail order DTS in 2011.37  That is, these beneficiaries received DTS in 2010 and 
2011 in a manner that was consistent with their Medicare claims data.     
2.  Beneficiaries whose suppliers improperly billed Medicare for the less expensive, mail 
order DTS in 2010 while providing the more expensive, non-mail order DTS.  For 
29 percent of beneficiaries in our review, we determined that the suppliers received 
less Medicare reimbursement than they could have received.38  In 2010, prior to the 
implementation of the Competitive Bidding Program, the average reimbursement rate 
for mail order DTS was $5 per box less than for non-mail order DTS.     
3.  Beneficiaries who could not be classified as receiving mail order DTS in 2010 or 
non-mail order DTS in 2011.  Eight percent of beneficiaries in our review reported 
that they either received both mail order and non-mail order DTS within the same 
year (i.e., 2010 or 2011) or they could not recall how they received DTS in 2010 or 
2011.   
4.  Beneficiaries did not have diabetes.  One percent of beneficiaries in our review 
reported that they did not have diabetes, although Medicare paid suppliers for at least 
two mail order DTS claims in 2010 and at least two non-mail order DTS claims in 
                                                 
36 The 20 percent of beneficiaries with improper supplier billing had a total of 133 non-mail order claims in 
2011, resulting in $22,278 in improper Medicare-allowed amounts to suppliers.  In comparison, Medicare 
allowed a total of $113,058 for non-mail order DTS in 2011 for the 211 beneficiaries in our review. 
37 Fifty-three percent of these beneficiaries began picking up non-mail order DTS in person in 2011.  The 
remaining 47 percent received non-mail order DTS through supplier delivery to their homes. 
38 Sixty percent of these beneficiaries had suppliers deliver the non-mail order DTS to their homes in 2010, 
and the remaining 40 percent of beneficiaries picked up non-mail order DTS from the suppliers storefront. 
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 12  Marilyn Tavenner 
 
2011 for these beneficiaries.  These two beneficiaries did not use DTS, did not 
receive DTS, and were not aware that Medicare paid for DTS for them.   
 
Beneficiaries in our review cited several reasons for changing from mail order to 
non-mail order DTS between 2010 and 2011, but no beneficiaries reported 
suppliers waiver of copayments as a reason for their change 
The 42 percent of the 211 beneficiaries in our review who changed from mail order to 
non-mail order DTS between 2010 and 2011 reported changing for four primary reasons.  
Of the beneficiaries who changed methods for receiving DTS, most beneficiaries 
(81 percent) reported doing so because the suppliers they used in 2010 were not selected 
as winning bidders under the Competitive Bidding Program.  Therefore, these suppliers 
could not continue to provide mail order DTS to beneficiaries in CBAs in 2011.  The 
remaining beneficiaries who reported changing from mail order to non-mail order DTS 
between 2010 and 2011 did so for other reasons.  Eight percent of beneficiaries who 
changed methods did so because they were dissatisfied with the suppliers they used in 
2010.  Seven percent changed methods because the brand of DTS that worked with their 
monitors was no longer available through the suppliers they had used in 2010, and 
2 percent changed methods because they did not like receiving DTS through mail order.  
An additional 2 percent changed methods but reported that they did not know why they 
had done so. 
 
None of the beneficiaries in our review reported changing from mail order DTS in 2010 
to non-mail order DTS in 2011 because their suppliers waived their copayments.  
However, 79 percent of beneficiaries in our review who received mail order DTS in 2010 
and non-mail order DTS in 2011 did not pay any copayment for DTS in 2011.  Of these 
beneficiaries, 87 percent had supplemental insurance that paid their entire Medicare 
copayment, and 10 percent of beneficiaries never paid a Medicare copayment for DTS in 
2011 and did not know why.  The remaining 3 percent had their Medicare copayment 
waived due to financial hardship.   
 
Further, of the 42 percent of beneficiaries in our review who received mail order DTS in 
2010 and non-mail order DTS in 2011, 71 percent were not aware of the potential cost 
savings to themselves or the Medicare program associated with mail order DTS.  That is, 
these beneficiaries did not know that the average reimbursement for non-mail order DTS 
in 2011 was more than double that of mail order.  Further, the majority of this group 
(67 percent) reported that they would be willing to switch back to mail order DTS to save 
themselves and/or the Medicare program money.   
 
Twenty-three percent of beneficiaries in our review reported supplier activities that 
were inappropriate 
Based on beneficiaries interview responses, we determined that for 23 percent of the 
211 beneficiaries in our review, suppliers inappropriately waived copayments and/or sent 
unsolicited DTS to beneficiaries in 2010 and/or 2011.  For 1 percent of beneficiaries in 
our review, suppliers conducted both of these inappropriate activities.  DTS suppliers 
who inappropriately waive beneficiaries copayments or send unsolicited DTS to 
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 13  Marilyn Tavenner 
 
beneficiaries may be in violation of the Federal False Claims Act or the Federal 
Anti-Kickback Statute.   
 
For 20 percent of beneficiaries in our review, DTS suppliers inappropriately waived 
beneficiaries copayments in 2010 or 2011.  These beneficiaries did not know why they 
did not have to pay a copayment for DTS, and they did not have supplemental insurance 
or a financial hardship.  Of the beneficiaries whose copayments were inappropriately 
waived in 2010 or 2011, most (89 percent) reported that their copayments were always 
waived.  The remaining 11 percent of beneficiaries reported that they did not pay a 
copayment half or more than half of the time, but not always.   
  
One beneficiary in our review from the California CBA reported that she never paid a 
copayment for her DTS in 2010 or 2011 and believed Medicare covered the full amount.  
She was not aware that she is responsible for a 20-percent copayment for her DTS.  
Further, she stated that she did not choose her DTS supplier; she reported attending a 
diabetes class and was given this company to get supplies from.  
 
Five percent of beneficiaries in our review received unsolicited DTS from suppliers in 
2010 or 2011.  On average, beneficiaries in our review reported receiving unsolicited 
DTS two times in 2010 and/or 2011.  Beneficiaries in our review also reported receiving 
an average of five unsolicited boxes of DTS in 2010 and/or 2011.   
 
For example, one beneficiary in our review from the Orlando-Kissimmee, Florida, CBA 
did not know that she is supposed to call her DTS supplier and request a refill for DTS.  
She said:  [A]bout every 3 months, DTS strips that I did not order arrive.  The supplier 
just sends strips.  She said that she did not choose her current DTS supplier:  [T]hey 
picked me, I guess.   
 
A second beneficiary in our review from the South Florida CBA reported receiving a 
total of eight unsolicited DTS boxes from a supplier that is not her current DTS supplier.  
She indicated that she saved the DTS and tested extra times when she felt that she needed 
to.  In some cases, she returned the DTS to the supplier and called CMS to make sure 
Medicare was not billed for the DTS she returned.    
 
CONCLUSION 
 
In response to a CMS request, we are providing information about the extent to which 
(1) claims in CBAs for the more expensive, non-mail order DTS increased between 2010 
and 2011; (2) suppliers improperly billed Medicare for the more expensive, non-mail 
order DTS in 2011; (3) beneficiaries changed from mail order to non-mail order DTS 
between 2010 and 2011 because suppliers waived their copayments; and (4) suppliers 
conducted activities that we determined to be inappropriate (i.e., waiving copayments, 
sending unsolicited DTS) in 2010 or 2011.  We found that claims in CBAs for the more 
expensive, non-mail order DTS increased by 33 percent from 2010 to 2011, while claims 
for the less expensive, mail order DTS decreased by 71 percent.  Further, for 20 percent 
of beneficiaries in our review, suppliers improperly billed Medicare for the more 
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 14  Marilyn Tavenner 
 
expensive, non-mail order DTS in 2011, but beneficiaries reported receiving the less 
expensive, mail order DTS.  This improper supplier billing contributed to the increase in 
non-mail order DTS claims between 2010 and 2011.  For the beneficiaries in our review 
who reported changing from mail order to non-mail order DTS between 2010 and 2011, 
none reported suppliers waiver of copayments as a reason for their change.  Therefore, 
suppliers inappropriate waiver of beneficiaries copayments did not appear to contribute 
to the increase in non-mail order DTS claims between 2010 and 2011.  However, 
23 percent of beneficiaries in our review reported supplier activities (e.g., routinely 
waiving copayments, sending unsolicited DTS) that we determined to be inappropriate. 
 
CMS may find this information useful as it prepares to implement the DMEPOS 
Competitive Bidding Program National Mail Order Competition, projected to begin in 
2013.  Further, CMS may also find this information useful in implementing additional 
safeguards to prevent fraud, waste, and abuse in the Medicare program and in educating 
beneficiaries about their Medicare benefits and the cost savings of mail order DTS to 
themselves and/or the Medicare program.   
 
This 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-04-11-00760 in all correspondence. 
 
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 15  Marilyn Tavenner 
 
APPENDIX A 
 
Table A-1 provides beneficiary information for respondents and nonrespondents in the 
South Florida Competitive Bidding Area (CBA) and the remaining eight CBAs. 
 
Table A-1:  Beneficiary Information for Respondents and Nonrespondents in the 
South Florida CBA and the Remaining Eight CBAs 
 
South Florida CBA  Remaining Eight CBAs  All CBAs 
Beneficiary 
Information 
Respondents  Nonrespondents  Respondents  Nonrespondents  Respondents  Nonrespondents 
Age             
   Less than 65  39%  61%  32%  68%  35%  65% 
   65-74  49%  51%  50%  50%  50%  50% 
   75-84  40%  60%  45%  55%  43%  57% 
   85-94  38%  62%  41%  59%  39%  61% 
   95+  43%  57%  0%  100%  33%  67% 
 
Sex 
40%  60%  39%  61%  39%  61% 
   Female 
44%  56%  50%  51%  47%  53% 
   Male 
Diabetes Test   
Strips Claims in  852  1,259  907  1,306  1,759  2,565 
2010 and 2011   
Note:  Sum of percentages may exceed 100 percent due to rounding. 
Source:  Office of Inspector General analysis of beneficiary data, 2012. 
 
 
   
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 16  Marilyn Tavenner 
 
APPENDIX B 
 
Table B-1 provides, for each estimate description, the combined sample statistic for 
beneficiaries from two strata (i.e., the South Florida Competitive Bidding Area (CBA) 
and the remaining eight CBAs), as well as the sample statistic for each of the two strata.  
Each sample statistic is weighted by the size of each stratums population from which our 
sample was selected.   
 
Table B-1:  Estimate Descriptions, Sample Sizes, and Weighted Point Estimates 
 
Estimate Description  Sample Size  Weighted Point Estimate 
Beneficiaries whose suppliers improperly billed  211  20% 
Medicare for non-mail order diabetes test strips     
(DTS) in 2011 but provided mail order DTS in     
2011     
   South Florida CBA  104  21% 
   Remaining Eight CBAs  107  20% 
Non-mail order DTS claims in 2011 for  43  133 
beneficiaries whose suppliers improperly billed     
Medicare for non-mail order DTS in 2011     
   South Florida CBA  22  38 
   Remaining Eight CBAs  21  95 
Medicare-allowed amount for non-mail order  43  $22,278 
DTS claims in 2011 for beneficiaries whose     
suppliers improperly billed Medicare in 2011     
   South Florida CBA  22    $6,182 
   Remaining Eight CBAs  21  $16,095 
Beneficiaries whose suppliers properly billed  211  42% 
Medicare for mail order DTS in 2010 and     
non-mail order DTS in 2011     
   South Florida CBA  104  38% 
   Remaining Eight CBAs  107  43% 
Beneficiaries whose suppliers properly billed  85  53% 
Medicare and who had DTS delivered to their     
homes in 2010 but picked up DTS from the     
suppliers storefronts in 2011     
   South Florida CBA  39    8% 
   Remaining Eight CBAs  46  65% 
Beneficiaries whose suppliers properly billed  85  47% 
Medicare and who had DTS delivered to their     
homes in both 2010 and 2011     
   South Florida CBA  39  92% 
   Remaining Eight CBAs  46  35% 
Beneficiaries whose suppliers improperly billed  211  29% 
Medicare for mail order DTS in 2010 but     
provided non-mail order DTS in 2010   
   South Florida CBA  104  30% 
   Remaining Eight CBAs  107  29% 
Beneficiaries whose suppliers improperly billed  62  60% 
Medicare for mail order DTS in 2010 but     
delivered DTS to beneficiaries homes in 2010     
   South Florida CBA  31  77% 
   Remaining Eight CBAs  31  55% 
Beneficiaries whose suppliers improperly billed  62  40% 
Medicare for mail order DTS in 2010 and who     
picked up DTS from the suppliers storefronts in     
2010     
   South Florida CBA  31  23% 
   Remaining Eight CBAs  31  45% 
continued on next page 
   
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 17  Marilyn Tavenner 
 
Table B-1:  Estimate Descriptions, Sample Sizes, and Weighted Point Estimates 
(Continued) 
 
Estimate Description  Sample Size  Weighted Point Estimate 
Beneficiaries who could not be classified as  211  8% 
receiving mail order DTS in 2010 or non-mail     
order DTS in 2011     
   South Florida CBA  104  12% 
   Remaining Eight CBAs  107    7% 
Beneficiaries who did not have diabetes in 2010  211  1% 
or 2011     
   South Florida CBA  104  0% 
   Remaining Eight CBAs  107  2% 
Beneficiaries who changed from mail order DTS  85  81% 
in 2010 to non-mail order DTS in 2011 because     
their suppliers no longer provided DTS via mail     
order     
   South Florida CBA  39  82% 
   Remaining Eight CBAs  46  80% 
Beneficiaries who changed from mail order DTS  85  8% 
in 2010 to non-mail order DTS in 2011 because     
they were dissatisfied with their suppliers     
   South Florida CBA  39  15% 
   Remaining Eight CBAs  46    7% 
Beneficiaries who changed from mail order DTS 
85  7% 
in 2010 to non-mail order DTS in 2011 because 
   
the brand of DTS that worked with their monitors 
   
was no longer available through the suppliers 
   
they used in 2010 
39  0% 
   South Florida CBA 
46  9% 
   Remaining Eight CBAs 
Beneficiaries who changed from mail order DTS  85  2% 
in 2010 to non-mail order DTS in 2011 because     
they did not like receiving DTS through mail     
order     
   South Florida CBA  39  3% 
   Remaining Eight CBAs  46  2% 
Beneficiaries who changed from mail order DTS  85  2% 
in 2010 to non-mail order DTS in 2011 and did     
not know why     
   South Florida CBA  39  0% 
   Remaining Eight CBAs  46  2% 
Beneficiaries who received mail order DTS in  85  79% 
2010 and non-mail order DTS in 2011 and did     
not pay any copayment in 2011     
   South Florida CBA  39  92% 
   Remaining Eight CBAs  46  76% 
Beneficiaries who did not pay a copayment for  71  87% 
DTS in 2011 because they had supplemental     
insurance      
   South Florida CBA  36  75% 
   Remaining Eight CBAs  35  91% 
Beneficiaries who did not pay a copayment for  71  10% 
DTS in 2011 and did not know why     
   South Florida CBA  36  22% 
   Remaining Eight CBAs  35    6% 
Beneficiaries who did not pay a copayment for  71  3% 
DTS in 2011 because they had financial     
hardships     
   South Florida CBA  36  3% 
   Remaining Eight CBAs  35  3% 
Beneficiaries not aware of the potential cost  85  71% 
savings for mail order DTS      
   South Florida CBA  39  77% 
   Remaining Eight CBAs  46  70% 
continued on next page   
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 18  Marilyn Tavenner 
 
Table B-1:  Estimate Descriptions, Sample Sizes, and Weighted Point Estimates 
(Continued) 
 
Estimate Description  Sample Size  Weighted Point Estimate 
Beneficiaries not aware of the potential cost  62  67% 
savings for mail order DTS who would be willing to     
switch back to mail order DTS     
   South Florida CBA  30  73% 
   Remaining Eight CBAs  32  66% 
Beneficiaries for whom suppliers inappropriately  211  23% 
waived copayments or to whom suppliers sent     
unsolicited DTS in 2010 or 2011     
   South Florida CBA  104  32% 
   Remaining Eight CBAs  107  21% 
Beneficiaries for whom suppliers conducted both  211  1% 
inappropriate activities     
   South Florida CBA  104  0% 
   Remaining Eight CBAs  107  2% 
Beneficiaries for whom suppliers inappropriately  211  20% 
waived copayments     
   South Florida CBA  104  24% 
   Remaining Eight CBAs  107  19% 
Beneficiaries for whom suppliers always  45  89% 
inappropriately waived copayments      
   South Florida CBA  25  100% 
   Remaining Eight CBAs  20    85% 
Beneficiaries for whom suppliers inappropriately  45  11% 
waived copayments half or more than half of the     
time, but not always     
   South Florida CBA  25     0% 
   Remaining Eight CBAs  20  15% 
Beneficiaries to whom suppliers sent unsolicited  211  5% 
DTS     
   South Florida CBA  104  8% 
   Remaining Eight CBAs  107  4% 
Average times beneficiaries received unsolicited  12  2 
DTS in 2010 and/or 2011     
   South Florida CBA  8  1 
   Remaining Eight CBAs  4  3 
Average number of unsolicited DTS boxes that  12  5 
beneficiaries received in 2010 and/or 2011     
   South Florida CBA  8  2 
   Remaining Eight CBAs  4  8 
Source:  Office of Inspector General analysis of beneficiary interview data, 2012. 
 
   
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 19  Marilyn Tavenner 
 
APPENDIX C 
 
Tables C-1 through C-3 show the percentage change in the number of claims, 
Medicare-allowed amounts, and the number of beneficiaries receiving non-mail order and 
mail order diabetes test strips (DTS) in Competitive Bidding Areas (CBA) between 2010 
and 2011.  Each table provides these data for the South Florida CBA, the remaining eight 
CBAs, and overall.   
 
Table C-1:  Number of Claims in CBAs for Non-Mail Order and Mail Order DTS in 
2010 and 2011 
Paid Medicare Claims   Number of  Claims in    Number of  Claims  in  Change Between 
2010  2011  2010 and 2011* 
Non-Mail Order   399,338  532,056  + 33% 
   South Florida CBA  131,112   155,946  + 19% 
   Remaining Eight CBAs  268,226  376,110  + 40% 
       
Mail Order  459,602  135,541        - 71% 
   South Florida CBA     74,921    12,996  - 83% 
   Remaining Eight CBAs  384,681  122,545  - 68% 
   
Total  858,940  667,597  - 22% 
   South Florida CBA   206,033  168,942  - 18% 
   Remaining Eight CBAs  652,907  498,655  - 24% 
 
* Percentage change includes beneficiaries who switched from mail order to non-mail order DTS, beneficiaries who were new to 
receiving DTS through Medicare in 2011, and beneficiaries who no longer received DTS through Medicare in 2011. 
Source:  OIG analysis of the 18-month updates of the 2010 and 2011 CMS Durable Medical Equipment 100 Percent Standard 
Analytic Files, 2012.  
 
 
Table C-2:  Medicare-Allowed Amounts for Claims in CBAs for Non-Mail Order 
and Mail Order DTS in 2010 and 2011 
Paid Medicare Claims   Medicare-Allowed  Medicare-Allowed  Change Between 
Amounts in 2010*  Amounts in 2011*  2010 and 2011** 
Non-Mail Order   $33,151,723  $49,433,348  + 49% 
 
   South Florida CBA    $11,374,886    $15,614,447  + 37% 
   Remaining Eight CBAs      21,776,837      33,818,901  + 55% 
       
Mail Order  $58,742,124  $  9,642,623   - 84% 
   South Florida CBA  $10,406,444  $1,137,212  - 89% 
   Remaining Eight CBAs    48,335,681    8,505,411  - 82% 
     
Total  $91,893,848  $59,075,971  - 36% 
   South Florida CBA   $21,781,331   $16,751,659  - 23% 
   Remaining Eight CBAs     70,112,518     42,324,312  - 40% 
   
* Sum of column may exceed total due to rounding. 
** Percentage change includes beneficiaries who switched from mail order to non-mail order DTS, beneficiaries who were new to 
receiving DTS through Medicare in 2011, and beneficiaries who no longer receive DTS through Medicare in 2011. 
Source:  OIG analysis of the 18-month updates of the 2010 and 2011 CMS Durable Medical Equipment 100 Percent Standard 
Analytic Files, 2012.  
 
   
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)   Page 20  Marilyn Tavenner 
 
 
Table C-3:  Number of Beneficiaries in CBAs With Non-Mail Order and Mail 
Order DTS in 2010 and 2011 
 Number of     Number of   Change Between 
Paid Medicare Claims 
Beneficiaries in 2010*  Beneficiaries  in 2011*   2010 and 2011** 
Non-Mail Order     124,991    182,502  + 46% 
   South Florida CBA     33,769     47,833  + 42% 
   Remaining Eight CBAs     91,2 4 4        134,689  + 48% 
 Mail Order    183,217   70,803   - 61%  
   South Florida CBA     30,970       8,130  - 74% 
 
   Remaining Eight CBAs  152,271     62,679  - 59% 
 Total    292,006   238,748   - 18%  
   South Florida CBA      60,777     52,884  - 14% 
   Remaining Eight CBAs  231,275  185,893  - 21% 
 * Sum of column may exceed total due  to various factors (e.g., rounding, beneficiaries being counted more than once because 
they received both mail order and non-mail order DTS within a year and/or because they resided in both the South Florida CBA 
 
and at least one of the remaining eight CBAs within the same year).   
** Percentage change includes beneficiaries who switched from mail order to non-mail order DTS, beneficiaries who were new to 
         
receiving DTS through Medicare in 2011, and beneficiaries who no longer receive DTS through Medicare in 2011. 
Source:  OIG analysis of the 18-month updates of the 2010 and 2011 CMS Durable Medical Equipment 100 Percent Standard 
Analytic Files, 2012.  
 
 
 
 
 
 
 
 
 
Supplier DTS Billing and Inappropriate Activities in CBAs (OEI-04-11-00760)