Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
  I
NAPPROPRIATE AND 
 
Q   M
UESTIONABLE  EDICARE 
 
B D T
ILL  ING FOR  IABETES  EST 
 
S
  TRIPS 
 
 
 
 
 
 
 
 
 
 
   
 
 
Daniel R. Levinson   
Inspector General  
 
August 2013 
OEI-04-11-00330   
   
EXECUTIVE SUMMARY:  INAPPROPRIATE AND QUESTIONABLE 
MEDICARE BILLING FOR DIABETES TEST STRIPS   
OEI-04-11-00330 
 
WHY WE DID THIS STUDY 
 
In 2011, Medicare allowed approximately $1.1 billion to 51,695 suppliers for diabetes 
test strips (DTS) provided to 4.6 million beneficiaries.  Recent investigations and prior 
Office of Inspector General studies have found that DTS is an area vulnerable to fraud, 
waste, and abuse. The Centers for Medicare & Medicaid Services (CMS) implemented 
the Competitive Bidding Program in 2011 to reduce payments for durable medical 
equipment, prosthetics, orthotics, and supplies and help reduce fraud and abuse.  Mail 
order DTS is included in the Competitive Bidding Program, but non-mail order DTS 
currently is not. 
 
HOW WE DID THIS STUDY  
 
We analyzed Medicare-allowed 2010 and 2011 DTS claims and inpatient claims from 
hospitals and skilled nursing facilities for beneficiaries associated with allowed 2010 and 
2011 DTS claims.  In addition, we identified suppliers that billed amounts that were 
unusually highaccording to at least one of six measures of questionable billingthat 
were subsequently allowed by Medicare, and we determined the geographic areas for 
these questionable-billing suppliers.  Finally, we determined the extent of questionable 
billing before and after implementation of the Competitive Bidding Program. 
 
WHAT WE FOUND 
 
In 2011, Medicare inappropriately allowed $6 million for DTS claims billed (1) for 
beneficiaries without a documented diagnosis code for diabetes, or that inappropriately 
overlapped with (2) an inpatient hospital stay, or (3) an inpatient Skilled Nursing Facility 
stay. Further, we found that $425 million in Medicare-allowed claimsmade by 
10 percent of DTS suppliershad characteristics of questionable billing.  Suppliers in 
10 geographic areas nationwide were responsible for 77 percent of questionable billing.  
However, the Competitive Bidding Program appears to have reduced questionable billing 
for mail order DTS in Competitive Bidding Areas (CBA).  Similar reductions in 
questionable billing did not occur in non-CBA areas or for non-mail order DTS.  
 
WHAT WE RECOMMEND 
 
CMS partially concurred with two of our recommendations:  CMS should enforce 
existing edits (system processes) to prevent inappropriate DTS claims, and CMS should 
increase monitoring of DTS suppliers Medicare billing.  CMS concurred with two other 
recommendations:  CMS should provide more education to suppliers and beneficiaries 
about appropriate DTS billing practices, and CMS should take appropriate action 
regarding inappropriate Medicare DTS claims and suppliers with questionable DTS 
billing.   
   
   
 
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................7 

Findings......................................................................................................14 

In 2011, Medicare inappropriately allowed $6 million for DTS 
claims with three types of errors ....................................................14 

Medicare allowed $425 million in questionable billing to  

10 percent of DTS suppliers ..........................................................16 

Seventy-seven percent of questionable billing was associated with 
suppliers in 10 geographic areas ....................................................19 

The Competitive Bidding Program appears to have reduced 

questionable billing for mail order DTS in CBAs  .........................21 

Conclusion and Recommendations ............................................................23 

Agency Comments and Office of Inspector General Response .....25 

Appendixes ................................................................................................27 

A: Geographic Areas of Diabetes Test Strips Suppliers With Four 

or More Measures of Questionable Billing, 2011 ..........................27 

B: Geographic Areas of Top 10 Questionable Billing Diabetes  Test 

Strips Suppliers, 2011  ....................................................................28 

C: Medicare-Allowed Amounts for and Number of Suppliers With 

Questionable Billing for Mail Order and Non-Mail Order Diabetes 

Test Strips in Competitive Bidding Areas and Non-Competitive 

Bidding Areas in 2010 and 2011 ....................................................29 

D: Agency Comments  ...................................................................33 

Acknowledgments......................................................................................37 

 
   
   
OBJECTIVES 
1. 	  To determine the extent to which diabetes test strip (DTS) suppliers 
had claims with at least one of three types of errors in 2011:  claims  
without a documented diagnosis code for diabetes, claims that 
overlapped with an inpatient hospital stay, and claims that overlapped 
with a Skilled Nursing Facility (SNF) stay.  
2. 	  To identify and describe suppliers that exhibited questionable billing 
for DTS in 2011 and the suppliers geographic areas. 
3. 	  To describe whether the Competitive Bidding Program appears to have 
reduced questionable billing for mail order DTS in Competitive 
Bidding Areas (CBA).  
BACKGROUND 
Diabetes is a chronic disease in which a person has a high blood sugar 
(i.e., glucose) level because the body either does not produce enough 
insulin or cells do not respond properly to the insulin that the body does 
produce.1  Diabetes may be managed in several ways, including healthy 
diet, physical activity, and insulin injections.2  If those with diabetes do 
not properly manage their glucose levels, medical complications (e.g., 
hypoglycemia, cardiovascular disease or retinal damage) may occur.    
Diabetes disproportionately affects older adults.  Approximately 
26.9 percent of individuals ages 65 and older10.9 million people 
reported having diabetes in 2010, while only 8.3 percent of individuals of 
 
all ages reported having the disease.3   
Those with diabetes may use small, hand-held meters to test the 
concentration of glucose in their blood.  To test glucose level, 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.  The meter reading provides the 
individual with information to use in managing his or her diabetes.  There 
are two main types of diabetes, type 1 and type 2.  Those with type 1 (i.e., 
insulin-dependent) diabetes depend on insulin injections to regulate their 
 
1 National Institutes of Health (NIH), What are the Types of Diabetes?   Accessed at 
http://diabetes.niddk.nih.gov/dm/pubs/overview/ on May 15, 2012.  
2 NIH, Diabetes Overview:  How is Diabetes Managed? Accessed at 
http://www.diabetes.niddk.nih.gov/dm/pubs/overview/index.htm#managed on   
May 15, 2012. 
3 National Institute of Diabetes and  Digestive and Kidney Diseases, National Diabetes 
Statistics, 2011. Accessed at 
http://diabetes.niddk.nih.gov/dm/pubs/statistics/DM_Statistics_508.pdf  on May 3, 2012. 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     1  
   
   
blood-glucose levels. Generally, type 1 diabetes is diagnosed when 
individuals are children or young adults.  Type 2 (i.e., 
non-insulin-dependent) diabetes mostly affects adults over age 40.  Many 
individuals with type 2 diabetes can manage the disease with lifestyle 
changes, such as special diets and exercise, and do not require insulin 
injections to regulate their blood-glucose levels.4    
DTS is an area vulnerable to fraud.  For example, in response to 
allegations initially made by a whistleblower, a Tennessee medical supply 
company agreed to pay the United States Government and the State of 
Tennessee $18 million to settle claims that the company wrongly solicited 
Medicare beneficiaries and wrongly billed Medicare for diabetes testing 
supplies (e.g., blood-glucose monitors, lancets) and other medical products 
between 2008 and 2010.5   
Medicare Coverage of Diabetes Test Strips 
Medicare covers services and testing supplies to help beneficiaries with 
diabetes manage the condition.  In 2011, Medicare allowed approximately 
$1.1 billion for DTS.6    
To be eligible for Medicare coverage of DTS and other diabetes testing 
supplies, beneficiaries must have diabetes that is being treated by a 
physician.7   They also must use the DTS in their homes (i.e., not in a 
hospital or SNF).8  To receive Medicare payment, suppliers must 
document an appropriate diabetes diagnosis code for beneficiaries.9    
 
4 NIH,  Type 2 Diabetes.  Accessed at 
http://www.nlm.nih.gov/medlineplus/ency/article/000313.htm on February 27, 2013.  
5 Department of Justice news release, AmMed Direct, LLC, to Pay $18 Million to  Settle 
False Claims Act Allegations, April 13, 2012.  Accessed at 
http://www.justice.gov/usao/tnm/pressReleases/2012/4-13-12.html on April 30, 2012.  
6 OIG analysis of Medicare Part B claims  data for DTS, 2012.  Medicare-allowed 
amounts are 100  percent  of the payment  made to a supplier by both Medicare and the 
beneficiary.   Medicare pays 80 percent of allowed charges, and  the beneficiary  is  
responsible for  the remaining 20  percent.    
7 Medicare Local Coverage Determinations (LCDs) for Glucose Monitors (L11530,  
L27231, L11520, and L196  for Jurisdictions A,  B, C, and D respectively).   CMS requires 
LCDs developed and revised  by Durable Medical Equipment Medicare Administrative 
Contractors (DME MACs) to  be identical. CMS, Medicare Benefit Policy Manual, Pub.  
No.  100-08, ch. 13,  13.1.4.   
8 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 15,  110.1(D). 
9 Medicare LCDs  for  Glucose Monitors (L11530, L27231, L11520, and L196). Each 
LCD states that for Medicare coverage of home blood glucose monitors and related  
accessories and supplies, the patient must have diabetes (International Classification of 
Diseases 9th Revision (ICD-9) codes 249.00250.93).  In addition, [t]he  ICD-9  
diagnosis code describing the condition that necessitates glucose testing must be included 
on each claim for the monitor, accessories, and supplies.   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     2  
   
   
Suppliers can bill Medicare for DTS for up to 3 months at a time. 10  Each 
claim must indicate the number of units of DTS and the start and end dates 
associated with the claim.11  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 non-insulin-dependent beneficiaries.12   
Medicare allows additional DTS if deemed medically necessary and 
documented in physician records.13   
Medicare beneficiaries may purchase their DTS via mail order or non-mail 
order means.  In 2010 and 2011, mail order applied to DTS ordered 
remotely (that is, by telephone, e-mail, Internet, or mail) and delivered by 
a common carrier such as UPS, FedEx, or the U.S. Postal Service.14   
Non-mail order applied to beneficiary storefront pickup and DTS 
supplier delivery to beneficiaries homes.15    
To receive Medicare payment for mail order DTS, suppliers submit claims  
using the Healthcare Common Procedure Coding System (HCPCS) code 
A4253 and modifier KL. The KL modifier must be included on each 
claim to specify that the item was provided via mail order.  Claims without 
the KL modifier indicate that the DTS was provided via non-mail order.16  
Suppliers may refill an order for mail order or non-mail order DTS only 
when beneficiaries have nearly exhausted the previous supply and 
 
10 Medicare LCDs  for  Glucose Monitors (L11530, L27231, L11520, and L196).  

11 CMS, CWF Change for Billing for Glucose Test Strips  and  Supplies  Follow-up to CR 

2156, Change Request 2363, Transmittal B-03-004 (Jan. 24, 2003).  On  the claim,  the 

start and end dates are referred to as the from and through dates, respectively. The 
 
from date is the date that the DTS is provided directly to  the beneficiary or the shipping 
 
date, if a delivery/shipping service is used.  The through date is the date that a 

beneficiary should exhaust his or  her supply of DTS.  For example, see Local Coverage 

Article for Billing for Glucose Test Strips  and  Supplies (A143). 
 
12Medicare LCDs  for Glucose Monitors (L11530,  L27231, L11520, and L196).   

13 Ibid.   

14 CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch. 36,  10.2, 

20.5.4.1, and 50.6.  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_ICN90092 

4.pdf on  June 20, 2012. 
 
15 After Round  1 of the Competitive Bidding  Program, the definition  of mail order will 

expand to include DTS delivered by company vehicles and  will be any item (e.g., DTS) 

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). 

16 CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch. 36,  20.5.4.1 and 
50.6.  
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     3  
   
   
specifically request additional DTS.17   Suppliers may not automatically 
dispense a quantity of DTS on a predetermined basis.18  Instead, suppliers 
must contact the beneficiary before dispensing the refill to verify the 
quantity of DTS that is needed for the next billing period.  Suppliers 
should contact beneficiaries regarding refills no sooner than approximately 
7 days before the anticipated delivery/shipping date.  The refills should be 
delivered no sooner than approximately 5 days before the anticipated end 
of the DTS supply.19  
The Competitive Bidding Program and Diabetes Test Strips 
Before 2011, Medicare reimbursed all DTS suppliers on the basis of 
established fee schedule amounts, which were updated annually and varied 
by State. In 2011, Medicare replaced these fee schedule amounts with a 
Competitive Bidding Program for selected durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS) in nine CBAs.20, 21  Mail 
order DTS was included in the first year of implementation of the 
Competitive Bidding Program, but non-mail order DTS was not.   
CMS used bids submitted by DMEPOS suppliers to determine the 
competitive bidding payment amounts.  CMS evaluated bids on the basis 
 
17 CMS, Medicare Program Integrity Manual.  Pub. 100-08, ch. 4,  4.26.1  (before 

Change Request 7410, Transmittal 389).   During our review, CMS revised the guidance 
 
for timeframes for refills.  For claims with dates of services on or after August 2,  2011, 

CMS revised the contact and delivery timeframes to allow suppliers to  (1) contact 

beneficiaries regarding refills no  sooner than 14  days before the delivery/shipping date 

and (2) deliver refills no sooner than  10  days before the end of usage of the current  

supply.  However, we did  not consider this revised guidance in  our review.  CMS, 

Medicare Program Integrity  Manual.   Pub. 100-08,  ch. 5   5.2.6 (added by  Change 

Request  7452,  Transmittal 378, effective August 2,  2011) and CMS, Medicare Program 

Integrity Manual.   Pub. 100-08, Ch. 4,   4.26.1  (revised by Change Request 7410, 
 
Transmittal 389, effective Oct. 31, 2011).  
 
18 Ibid. 

19 Ibid. 

20 Medicare Prescription Drug, Improvement, and  Modernization Act  of 2003, 

P.L. 108-173   302(b)(1), as amended by the Medicare Improvements for Patients and 
Providers Act of 2008, P.L. 110-275,  154.  Social Security Act  1847, 42 U.S.C. 
 1395w-3.  
21 A CBA is defined by  specific ZIP Codes related to Metropolitan Statistical Areas 
(MSA), which are designated by  the Office of  Management and Budget that include  
major cities and the suburban  areas surrounding them.  The 9 CBAs included in Round 1 
of the Competitive Bidding Program were Charlotte (CharlotteGastoniaConcord,  
North Carolina and South Carolina); Cincinnati (CincinnatiMiddletown, Ohio, 
Kentucky,  and Indiana);  Cleveland (ClevelandElyriaMentor, Ohio); Dallas (Dallas 
Fort WorthArlington, Texas);  Kansas City  (Kansas City, Missouri and Kansas); Miami  
(MiamiFort LauderdaleMiami Beach, Florida); Orlando (OrlandoKissimmee, 
Florida); Pittsburgh (Pittsburgh,  Pennsylvania); and Riverside (Riverside 
San BernardinoOntario, California).  CMS,  Metropolitan  Statistical Areas, Competitive 
Bidding Areas, and ZIP Codes. Accessed at 
http://www.cms.gov/DMEPOSCompetitiveBid/01a_MSAs_and_CBAs.asp#TopOfPage  
on May 25, 2012.  
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     4  
   
   
of suppliers eligibility, their financial stability, and the bid price.22  CMS 
awarded contracts to the suppliers who generally offered lower prices and 
met applicable quality and financial standards.23, 24  
Beginning in 2011, beneficiaries residing in CBAs had to obtain mail 
order DTS through a contract supplier in the Competitive Bidding 
Program.  Non-mail order DTS provided by any Medicare supplier, as 
well as mail order DTS provided to beneficiaries residing in non-CBA  
areas, continued to be reimbursed at the fee-schedule amount.25  
As a result of the Competitive Bidding Program, 2011 payment rates for 
mail order DTS for beneficiaries residing in CBAs were lower than 
payment rates for mail order DTS for beneficiaries residing in non-CBA  
areas. Specifically, the average Medicare payment for mail order DTS 
provided to beneficiaries in CBAs was $14.62 per 50-count box, less than 
half of either the national average Medicare payment for mail order DTS 
of $32.47 or the national average payment for non-mail order DTS of 
$37.67. The national mail order competition for DTS began on July 1, 
2013, for mail order DTS only.26   After July 1, 2013, beneficiaries may 
continue to purchase DTS in person at any Medicare-enrolled supplier 
storefront accredited to furnish these items.27   The payment rate for non-
mail order DTS will be equal to the single payment amount for mail order  
 
22 CMS, Overview of the DMEPOS Competitive Bidding Program.  Accessed at 
http://www.dmecompetitivebid.com/palmetto/cbic.nsf/DocsCat/Home on  April 24, 2012.  
23 CMS, CMS Media Release Database Fact Sheet.  Details for:  Expansion of  
Competitive Bidding Program for Durable Medical Equipment, Prosthetics, Orthotics, 
and Supplies. Accessed at 
http://www.cms.gov/apps/media/press/factsheet.asp?Counter=2812 on  April 24, 2012.    
24 The number of winning suppliers in each CBA ranges from 9 to 25. CMS, Contract 
Supplier Lists.  Accessed at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/Contract-Supplier-Lists.html on June  5, 2012.  
25 CMS educated suppliers about the appropriate billing  requirements under the 
Competitive Bidding Program.  For example, CMS produced a Medicare Learning 
Network (MLN) fact sheet on the diabetes test supplies product category, an MLN article 
for noncontract suppliers, and an MLN article about the use of modifiers.   CMS also led a  
national supplier call and a contract supplier call about appropriate billing under the 
Competitive Bidding Program.   
26
 The national mail order competition for DTS includes all parts of the United States, 
including the 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 
and American Samoa.  CMS, The Durable Medical Equipment, Prosthetics, Orthotics, and 
Supplies (DMEPOS) Competitive Bidding Program:  Mail-Order Diabetic Supplies. 
Accessed at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNProducts/downloads/DME_Mail_Order_Factsheet_ICN900924.pdf on July 31, 
2013.  
27
 Ibid.   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     5  
   
   
DTS under the Competitive Bidding Program, i.e. $10.41.28, 29    
CMS estimates that the Competitive Bidding Program will save Medicare  
Part B $25.7 billion between 2013 and 2022 and will help reduce fraud 
and abuse.30  CMS reported that in the first year of implementation, the 
program saved Medicare approximately $202.1 million.31  Additionally, 
expenditures in the nine CBAs for the DMEPOS items included in the 
program decreased 42 percent in the first year of implementation.32  CMS 
also reports that the Competitive Bidding Program has not disrupted 
beneficiaries access to DMEPOS items and that no negative health-care 
consequences have resulted from the program.33    
Related Office of Inspector General Work 
OIG has identified vulnerabilities pertaining to suppliers claims for 
DTS.34  Specifically, OIG found that the documentation associated with 
some suppliers claims did not:  (1) indicate the medical necessity for DTS 
quantities in excess of utilization guidelines; (2) support refills of DTS; 
and (3) contain complete physician orders, and/or contain proof-of-
delivery records. OIG also found that DME MACs did not have edits (i.e., 
system processes) to prevent one supplier from billing for DTS when the 
beneficiary should still have DTS provided by another supplier.35, 36  
 
28 CMS, Round 2 and National  Mail Order Single Payment Amounts.  Accessed at 
http://www.dmecompetitivebid.com/palmetto/cbicrd2.nsf/DocsCat/Single%20Payment% 

20Amounts on January 30, 2013. 

29  P.L. 112-240, the American Taxpayer Relief Act of  2012. 

30 According to  CMS, the Competitive Bidding Program helps prevent Medicare fraud 
 
and abuse because all suppliers in the program  must be licensed, meet strict quality and 
 
financial standards, and be accredited by a  national accreditation organization. Further, 

a reduction in excessive  payment amounts makes competitively bid items less attractive 

targets for fraud and abuse.  CMS, Medicares DMEPOS  Competitive Bidding Program.  

Accessed at http://www.cms.gov/Outreach-and-
Education/Outreach/Partnerships/Downloads/PartnerFAQJuly2012.pdf on 
 
August 14, 2012. 

31 CMS, Competitive Bidding UpdateOne Year Implementation Update, April  17, 2012.  

Accessed at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/Downloads/Competitive-Bidding-Update-One-Year-
Implementation.pdf  on April 25, 2012. 

32 Ibid. 

33 Ibid. 

34 OIG,  Review  of Medicare Claims for Home Blood-Glucose Test  Strips and Lancets
 
Durable Medical Equipment  Medicare Administrative Contractor for Jurisdiction A  
(A-09-08-00043), August 2010. 

35 Ibid. 

36 DME MACs process and pay Medicare Part B claims.   

Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     6  
   
   
In 2012, OIG issued a fraud alert notifying beneficiaries of common 
schemes that suppliers use to submit fraudulent Medicare DTS claims.37   
OIG encouraged beneficiaries not to accept DTS from suppliers in 
exchange for the beneficiaries Medicare or financial information.  This 
includes not accepting: (1) diabetes supplies in the mail that beneficiaries 
did not order; (2) free diabetes supplies, such as DTS; and (3) other 
free supplies such as heating pads, lift seats, foot orthotics, or joint 
braces.  
In late 2012 and early 2013, OIG issued two reports on DTS.  In the first 
report, OIG found an increase in claims for non-mail order DTS between 
2010 and 2011.  OIG determined that the increase was partly due to 
suppliers improperly billing Medicare for the more expensive, non-mail 
order DTS in 2011, when beneficiaries reported having received the less 
expensive, mail order DTS.38  OIG also found that some beneficiaries in 
CBAs reported inappropriate supplier activities (e.g., routinely waiving 
copayments or sending unsolicited DTS).  As summarized in a 2013 
report, OIG reviewed a suppliers 2010 DTS claims and determined that 
the supplierin accordance with Medicare billing requirementshad 
submitted claims for non-mail order diabetic testing supplies without the 
KL modifier.39    
METHODOLOGY 
We analyzed 2010 and 2011 DTS claims from CMSs Durable Medical 
Equipment Standard Analytical File.  We analyzed approximately 
11.2 million DTS claims billed by 51,695 suppliers in 2011 and 
approximately 11.3 million DTS claims billed by 51,576 suppliers in 
2010.40   
We also used CMSs Inpatient Standard  Analytical File and SNF Standard 
Analytical File to analyze inpatient claims from hospitals and SNFs for 
beneficiaries associated with DTS claims.  We used beneficiaries Health 
Insurance Claim Numbers to link these hospital and SNF claims to the 
DTS claims.  Finally, we determined suppliers geographic areas by using 
the National Provider Identifier numbers from their claims to look them up 
 
37 OIG,  Fraud Alert for People with Diabetes.  Accessed at 
http://www.oig.hhs.gov/newsroom/news-releases/2012/alert20120309.asp on   
May 25, 2012. 

38 OIG,  Supplier Billing for Diabetes Test Strips  and  Inappropriate Supplier Activities in 
 
Competitive Bidding Areas (OEI-04-11-00760), November 2012. 

39 OIG,  Neighborhood  Diabetes, Inc., Submitted Claims for Diabetic Testing  Supplies 

Without the KL Modifier in Accordance With Medicare Billing Requirements 

(A-09-l1-02073), January  2013. 
 
40  We excluded  all claims with a Medicare-allowed amount  of zero. 
 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     7  
   
   
in the National Plan and Provider Enumeration System (NPPES) and find 
their ZIP Codes.41    
Identification of Suppliers who Inappropriately Billed for 
Diabetes Test Strips 
We analyzed 2011 DTS claims data from the 18-month  update of CMSs 
 
Durable Medical Equipment Standard Analytical File to determine the 
number of claims that (1) were billed for beneficiaries without a 
documented diagnosis code for diabetes; (2) inappropriately overlapped 
with an inpatient hospital stay; or (3) inappropriately overlapped with an 
inpatient SNF stay.  We also calculated the total inappropriate 
Medicare-allowed amounts for these DTS claims and identified suppliers 
associated with these claims.     
DTS claims for beneficiaries without a documented diagnosis code for 
diabetes.   We identified DTS claims with a diagnosis code that did not 
signify diabetes.42  ICD-9 codes between 249.00 and 250.93 indicate that a 
beneficiary has diabetes.43  Claims for DTS without a diagnosis code in 
this range do not meet Medicare coverage requirements.    
We calculated the number of and Medicare-allowed amounts for DTS 
claims without a diabetes diagnosis code in 2011.  We did not examine 
supplier documentation to determine whether it indicated a diabetes 
diagnosis.  
Medicare DTS claims for beneficiaries during inpatient hospital stays and 
SNF stays.  Medicare Part B reimburses suppliers for DTS that 
beneficiaries use in their homes.  Part B claims for DTS provided to 
beneficiaries during inpatient hospital or SNF stays are inappropriate.44  If 
a beneficiary is hospitalized or admitted to a SNF, he or she should receive 
DTS from the facility and not from a separate supplier.   
We identified DTS claims that overlapped with an inpatient hospital or 
SNF stay.  Specifically, if the start date on the claim fell between the 
admission date and discharge date for an inpatient hospital stay or SNF 
stay covered by Medicare Part A, we determined that the claim was 
inappropriate. 
 
41 The NPPES assigns a National Provider Identifier to all health care providers that 

enroll in Medicare.  It also contains other relevant information for enrollment, such as the 

providers  physical location, type, and owner.  NPPES data are self-reported by  suppliers.  
 
42 To identify beneficiaries diagnoses, we  reviewed the ICD-9 codes listed on DTS 

claims.    

43 Medicare LCDs  for  Glucose Monitors (L11530, L27231, L11520, and L196).  

44  Medicare Claims Processing Manual,  Durable Medical Equipment, Prosthetics, 

Orthotics, and Supplies (ch. 20, section 01).  Accessed at 

http://www.cms.gov/manuals/downloads/clm104c20.pdf on May 8, 2012. 

Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     8  
   
   
We calculated the number of and Medicare-allowed amounts for DTS 
claims that overlapped with a date that the patient was in a hospital or 
SNF.   We also describe how many of the instances of inappropriate billing 
occurred 1 or 2 days preceding the beneficiarys discharge from the 
inpatient hospital or SNF.  
We excluded appropriate instances of overlap.  Appropriate instances of 
overlap occur when suppliers bill for DTS:  (1) on the day a beneficiary is 
admitted to or discharged from an inpatient hospital or SNF or (2) during a 
beneficiarys leave of absence from an inpatient hospital or SNF stay.45    
Identification of Suppliers That Had Questionable DTS Billing  
We analyzed 2010 and 2011 DTS claims from the 18-month update of 
CMSs Durable Medical Equipment Standard Analytical File.  We  
developed six measures of questionable billing on the basis of the results 
of past OIG analyses and fraud investigations related to DTS suppliers, as 
well as input from CMS staff.  We considered a DTS suppliers billing to 
be unusually high, or questionable, on each of the six measures if it was 
greater than the 75th percentile plus 1.5 times the interquartile range (i.e., 
the Tukey method).46  Although some of this billing may be legitimate, 
suppliers that bill for extremely high amounts warrant further scrutiny. 
For each questionable-billing characteristic, we identified those suppliers 
that submitted an unusually high percentage of claims.  For each 
characteristic, we counted as suppliers with questionable billing those for 
whom Medicare allowed $1,000 or more for each questionable-billing 
characteristic. Questionable-billing characteristics pertain to supplier 
claims for both mail order and non-mail order DTS, unless otherwise 
specified. The six measures of questionable billing we developed were: 
Claims for non-mail order DTS provided to beneficiaries residing an 
unusually long distance from suppliers.  We considered suppliers to have 
questionable billing if they submitted claims for non-mail order DTS (i.e., 
claims without the KL modifier) provided to beneficiaries residing an 
unusually long distance from them.  Mail order suppliers have an incentive 
to bill DTS as non-mail order because of the higher payment rates of 
non-mail order DTS.  Suppliers with high percentages of non-mail order 
DTS claims for beneficiaries that reside an unusually long distance away 
 
45  Medicare Claims Processing Manual,  Durable Medical Equipment, Prosthetics, 
Orthotics, and Supplies (ch. 20, section 01).  Accessed at 
http://www.cms.gov/manuals/downloads/clm104c20.pdf on May 8, 2012. 
46 This is a standard exploratory method for identifying members of a population  with  
unusually high values  on a given statistic compared to the rest of the population when  no  
established benchmarks exist.  See J.W. Tukey,  Exploratory Data  Analysis, 
Addison-Wesley, 1977. 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     9  
   
   
are questionable because the suppliers may be inappropriately billing for 
mail order DTS as non-mail order to receive the higher payment rate.  We  
used the Tukey method to determine the threshold for unusually long 
distances to be 20 miles.47, 48   We conducted an additional analysis using a 
threshold of 50 miles.49  
DTS claims for beneficiaries in excess of utilization guidelines.  We  
considered suppliers to have questionable billing if they had high 
percentages of DTS claims for beneficiaries in excess of Medicare 
utilization guidelines. Medicare covers different amounts of DTS 
depending on a beneficiarys medical condition.  Medicare covers up to 
100 DTS (i.e., 2 units) every month for insulin-dependent beneficiaries 
and every 3 months for non-insulin-dependent beneficiaries.50  Medicare 
allows additional DTS if deemed medically necessary and documented in 
physician records.  
Beneficiaries associated with DTS claims at perfectly regular intervals. 
We considered suppliers to have questionable billing if they had high 
percentages of beneficiaries who received DTS at perfectly regular 
intervals. Beneficiaries must specifically request a DTS refill from a 
supplier before a supplier dispenses it.51  Suppliers must not refill an order 
or automatically dispense a quantity of DTS on a predetermined basis.  
DTS claims that regularly fall on the exact anniversary of the previous 
claim for the same beneficiary may indicate that a supplier is 
automatically providing DTS and not seeking the beneficiaries 
authorization.  
Beneficiaries associated with multiple DTS claims submitted by the same 
supplier during overlapping time periods. We considered suppliers to 
have questionable billing if they had high percentages of beneficiaries for 
whom they had submitted multiple DTS claims during overlapping time  
 
47  We calculated distance by  determining the number of miles between the center of the 
ZIP code  of the suppliers  physical location  and the center of the ZIP Code for the 
corresponding beneficiary.  Therefore, a distance of 0 miles indicates that the beneficiary 
and supplier were in the same ZIP Code.  The median distance between ZIP Codes was 2 
miles and the mean distance was 34.2  miles.  Distances ranged between 0 and  8,230  
miles.  For example, one beneficiarys permanent  residence  was in Guam, but  he or she 
had claims for  non-mail order DTS from a supplier in Florida. 
48 Beneficiaries  at a temporary residence (e.g.,  on vacation) may  obtain non-mail  order 
DTS from a local supplier.  For beneficiaries in CBAs, suppliers must submit claims with  
the KT modifier for non-mail order DTS furnished to  beneficiaries who have traveled  
outside the CBA in which they reside.  In 2011, there were 6,251  DTS claims with the 
KT modifier.  We removed these claims from our analysis. 
49  We  judgmentally selected 50  miles to remove suppliers that may have  used supplier 
vehicles to  deliver the DTS and  were properly billing  for non-mail order DTS. 
50 Medicare LCDs  for  Glucose Monitors (L11530, L27231, L11520, and L196).  
51 CMS, Medicare Program Integrity Manual.   Pub. 100-04, ch. 5  2.6.  
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     10  
   
   
periods. Suppliers may refill an order for DTS only when beneficiaries 
have nearly exhausted the previous supply and specifically request that the 
DTS be dispensed.52  Suppliers may provide DTS refills on or after the 
anniversary of the prior DTS order/shipping date (i.e., the start date).  
Previous OIG work found that many suppliers submit claims for the same  
beneficiary for DTS during overlapping time periods.53  
DTS claims for a given beneficiary in 2010 but not in 2011. We  
considered suppliers to have questionable billing if they had high 
percentages of DTS claims for beneficiaries who received DTS in 2010 
but did not receive DTS in 2011.54  Diabetes is a chronic disease that 
requires regular medical attention.  Beneficiaries who needed DTS in 2010 
would likely still need DTS in 2011, provided that they are still Medicare 
beneficiaries.55  
Beneficiaries with DTS claims from any supplier in 2010 but not in 2011 
may have received DTS in 2010 from suppliers who provided excess DTS 
before the start of the Competitive Bidding Program.  In addition, some  
beneficiaries may not have received DTS from the supplier; the supplier 
may have been fraudulently billing on behalf of the beneficiary in 2010.    
Beneficiaries associated with overlapping DTS claims from more than one 
supplier. We considered suppliers to have questionable billing if they had 
high percentages of beneficiaries with overlapping DTS claims from more  
than one supplier.  When multiple suppliers submit DTS claims for the 
same beneficiary during overlapping time periods, the beneficiary may 
receive excess DTS (1) not authorized by the attending physician, and/or 
(2) in excess of Medicare utilization guidelines.  Previous OIG work found 
that DME MACs allowed DTS claims from multiple suppliers for one 
beneficiary during overlapping time periods. 
Analysis of Geographic Areas of DTS Suppliers With 
Questionable Billing  
We determined the geographic areas of DTS suppliers with questionable 
billing in 2011.  To do this, we obtained each suppliers physical location 
ZIP Code from NPPES and identified suppliers Core Based Statistical 
 
52 CMS, Medicare Program Integrity Manual.   Pub. 100-04, ch. 5  2.6.  
53 OIG,  Blood Glucose  Test Strips:  Inappropriate  Medicare Payments, 
 
OEI-03-98-00230, June 2000.    
 
54 This category of beneficiaries includes only those who did not receive  DTS in 2011 

from  any supplier.  It does not include beneficiaries who switched suppliersi.e., those 
who received DTS in 2010 from  one supplier and in 2011 from  a different supplier. 
55  We  used the Medicare Enrollment Database to identify and remove from our analysis  
beneficiaries who (1) were associated  with  DTS in 2010 but not in  2011 and  (2)  had dates 
of  death in  either 2010 or 2011.   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     11  
   
   
Areas (CBSA).56, 57  Four hundred twenty-eight suppliers (9 percent) were 
in rural areas (i.e., not in a CBSA). 
In geographic areas with the highest totals of questionable 
Medicare-allowed amounts, we calculated the number of DTS suppliers 
with questionable billing out of the total number of DTS suppliers, and the 
number of claims associated with the questionable-billing suppliers.  In 
addition, we identified the geographic areas of suppliers with four or more  
questionable-billing characteristics. 
Analysis to Determine Medicare-Allowed Amounts in 
Questionable Billing for Suppliers in CBAs Before and After 
Implementation of the Competitive Bidding Program 
We examined the extent to which Medicare-allowed amounts for mail 
order DTS questionable billing in CBAs decreased after the Competitive  
Bidding Program was implemented.  To do this, we identified 
beneficiaries who (1) received mail order DTS in 2010 in the areas that 
became CBAs in 2011 and (2) received mail order DTS in 2011 in CBAs.  
(We refer to these beneficiaries as beneficiaries in CBAs). 
For these beneficiaries, we calculated the amount that Medicare allowed in 
questionable billing for mail order DTS and the number of suppliers with 
questionable billing. We calculated the percentage change in the amount 
that Medicare allowed in questionable billing for mail order DTS and the 
number of suppliers with questionable billing between 2010 and 2011.   
For context and to establish a baseline, we also conducted this same  
analysis for beneficiaries who were not affected by the Competitive 
Bidding Program.   These beneficiaries (1) lived in non-CBA  areas in 2011 
and areas that match non-CBA areas in 2010 (we refer to these 
beneficiaries as beneficiaries in non-CBA areas) and/or (2) received 
non-mail order DTS in 2011 and 2010.   
We did not include two questionable-billing characteristics in our analysis  
of suppliers questionable billing in CBAs before and after implementation 
of the Competitive Bidding Program. First, we did not include the 
characteristic of suppliers having claims for non-mail order DTS provided 
 
56 A CBSA is a region around an  urban center that has at least 10,000  people.   We used  
DTS suppliers ZIP Codes to  determine their CBSAs.  CBSAs may be categorized as 
metropolitan or micropolitan.  A metropolitan area is defined as a core urban area with a 
population  of 50,000  people or more.  A micropolitan area is defined as an urban cluster 
of at least 10,000 and fewer than 50,000 people.  U.S. Census Bureau,  Metropolitan and  
Micropolitan Definition Files. Accessed at 
http://www.census.gov/population/metro/data/def.html on May 18, 2012.  
57  We  used the NPPES active NPI file as of  August 2011 to identify the supplier ZIP 
Codes for the geographic areas analysis.  NPPES data are self-reported by suppliers.  
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     12  
   
   
to beneficiaries residing an unusually long distance from them.  We did 
not include this characteristic because it provides information only about 
non-mail order DTS, and the Competitive Bidding Program includes only 
mail order DTS.  Second, we did not include the characteristic of 
suppliers having DTS claims for beneficiaries in 2010 but not in 2011.  
We did not include this characteristic because it specifies a comparison 
between 2010 and 2011 and identifies suppliers active in 2010, and the 
Competitive Bidding Program was not in place at that time.   
Limitations 
The six questionable-billing characteristics included in our analysis are not 
intended to be a comprehensive set of characteristics for identifying 
questionable billing for DTS under Medicare.  Additionally, although the 
presence of these characteristics raises questions about the appropriateness 
of the DTS claims submitted by suppliers, we did not conduct a medical 
record review to determine whether the claims that suppliers submitted for 
DTS were inappropriate or potentially fraudulent. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     13  
   
   
FINDINGS 
In 2011, Medicare inappropriately allowed $6 million 
for DTS claims with three types of errors  
Medicare coverage policies prohibit payment for DTS claims without an 
appropriate documented diagnosis code for diabetes and with dates of 
services that overlap with an inpatient hospital or SNF stay.58  In addition, 
CMS has implemented claims-processing edits to prevent these payments.  
However, Medicare inappropriately allowed $6 million for DTS suppliers 
that had at least one of these three types of errors in 2011.   
These inappropriate claims represent less than 1 percent of the $1.1 billion 
allowed for DTS in 2011, but they still pose a program vulnerability.  The 
DTS suppliers with these inappropriate claims represented 11 percent of 
all DTS suppliers in 2011.  On average, these suppliers inappropriately 
received $999 from Medicare in 2011 for DTS.  One supplier 
inappropriately received $692,036 for DTS, the highest amount for any 
one supplier in 2011.   
In 2011, 5,803 suppliers had claims with at least one of the three types of  
errors we analyzed. A total of 5,045 DTS suppliers exhibited one type of 
error, 667 suppliers exhibited two types of errors, and 91 exhibited all 
three.59  Table 1 shows the inappropriate Medicare-allowed amount, 
number of claims, and number of suppliers by the three types of errors we 
analyzed. 
   
 
58  Medicare LCDs  for  Glucose Monitors (L11530, L27231, L11520, and L196). CMS, 

Medicare Program Integrity  Manual.   Pub. 100-04, ch. 20  10.2. 
 
59 OIG analysis of Part B DTS claims, 2012. 
 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     14  
   
   
Table 1:  Inappropriate Medicare-Allowed Claims for Diabetes Test Strips, 2011  
Inappropriate 
Number of  
Error Type   Medicare-Allowed  Number of Claims  
Suppliers* 
Amount 
DTS claims for beneficiaries 
without a documented 
$2,315,584   23,778   2,211  
diagnosis code for diabetes  
DTS claims that 
inappropriately overlapped 
 $3,382,550   25,589   4,115  
with a hospital stay 
DTS claims that 
inappropriately overlapped 
$112,787   908  326 
with an SNF stay  
Total   $5,798,689  50,170   5,803  
                                     *Sum  of column exceeds total because some suppliers  had  multiple types of errors.      
Source:  OIG analysis of Part B DTS claims, 2012. 
 
Medicare inappropriately allowed $2.3 million in 2011 for DTS 
claims for beneficiaries without a documented diagnosis code 
for diabetes 
In 2011, Medicare allowed $2.3 million for DTS claims with a diagnosis 
code that did not signify diabetes. The top five diagnoses associated with 
these inappropriate claims were:  chronic airway obstruction, long-term  
use of insulin, urinary incontinence, osteoarthrosis, and obstructive sleep 
apnea.60      
Medicare inappropriately allowed $3.5 million in 2011 for DTS 
claims that overlapped with a stay in an inpatient hospital or a 
SNF  
Specifically, overlap between DTS claims and an inpatient hospital stay 
accounted for $3.4 million in inappropriate Medicare claims in 2011.  
Nationwide, Medicare allowed 25,589 claims from 4,115 DTS suppliers 
when DTS claims and an inpatient hospital stay inappropriately 
overlapped. Of these inappropriate claims, 5,022 claims (20 percent) 
occurred 1 day before the discharge date from the inpatient hospital, and 
an additional 3,852 claims (15 percent) occurred 2 days before the 
discharge date.   
Overlap between DTS claims and a SNF stay accounted for an additional 
$112,787.  In 2011, Medicare allowed 908 claims from 326 DTS suppliers 
when DTS claims and an SNF stay inappropriately overlapped.  Of these 
 
60 The ICD-9 code  for long-term use of insulin is V58.67.  This does not fall within the 
range of ICD-9 codes required for DTS billing  (i.e., 249.00250.93).  In 2011, Medicare 
allowed  $162,406 for DTS for beneficiaries with  the  V58.67 diagnosis code.  
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     15  
   
   
inappropriate claims, 99 claims (11 percent) occurred 1 day before the 
discharge date from the SNF, and 73 claims (8 percent) occurred 2 days 
before the discharge date.   
Medicare allowed $425 million in questionable billing 
to 10 percent of DTS suppliers 
In 2011, 10 percent (4,959 of 51,695) of DTS suppliers exceeded the 
threshold that indicated unusually high billing for at least one of our six 
questionable-billing measures.61   
One percent (758) of the DTS suppliers exceeded the thresholds for two or 
more measures.  Table 2 shows the number and percentage of DTS 
suppliers by the number of measures of questionable billing for which 
DTS suppliers exceeded thresholds.  
 
Table 2:  Number and Percentage of DTS Suppliers by Number of Questionable-Billing 
Measures for Which Suppliers Exceeded Thresholds That Indicate Unusually High Billing, 
2011  
Number of Measures of  
Questionable Billing for Which  Percentage of DTS 
Number of DTS Suppliers  
DTS Suppliers Exceeded   Suppliers* 
Thresholds  
0 
46,736   90%  
1 
4,201   8%  
2 
634 
1%  
3 
111 
0%  
4 
13 
0%  
5 or more  
0  0% 
 Total   51,695   100%  
Source:  OIG analysis of Part B DTS claims, 2012. 

*The percentages do not sum to 100 percent because of rounding. 

 
 
For each measure of questionable billing, Table 3 shows the median 
among all DTS suppliers, the threshold that indicated unusually high 
billing, the range of unusually high billing, the Medicare-allowed amounts 
for claims associated with questionable billing, and the number of DTS 
suppliers with unusually high billing. 
   
 
61 Of these, 1,640  DTS suppliers with questionable billing also  had at least one 
inappropriately allowed claim  in 2011. 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     16  
   
   
Table 3:  DTS Suppliers with Unusually High Billing by Measure of Questionable Billing, 2011  
DTS Suppliers With Unusually High Billing** 
Median 
Medicare-
Among All  
Measure of Questionable Billing  Allowed  
DTS 
Amounts for  Number of  
Suppliers*  Threshold   Range  
Claims with  Suppliers   
Questionable  
Billing  
Average percentage of suppliers 
non-mail order DTS claims for  5%   25%   25% to 100%   $55 million   1,689 
beneficiaries that resided an 
unusually long distance away   
Average percentage of suppliers 
DTS claims in excess of Medicare  7%   26%   26% to 100%   $242 million   1,378  
utilization guidelines  
Average percentage of suppliers 
beneficiaries that were associated 
3%   11%   11% to 100%   $67 million   851 
with DTS at perfectly  regular 
intervals  
Average percentage of suppliers 
that had an unusually high 
percentage of beneficiaries 
15%   38%   38% to 100%  $10 million   745 
associated with overlapping DTS 
claims submitted by the same 
supplier 
 
Average percentage of suppliers 
DTS claims for beneficiaries in  15%   40%   40% to 100%   $2 million***   683 
2010 but not in 2011 
Average percentage of suppliers 
beneficiaries associated with 
10%   26%   26% to 100%   $102 million   508 
overlapping DTS claims from more 
than one supplier  
Total****     $425 million   4,959  
*The median (i.e., the 50th percentile) indicates that half of all DTS suppliers fell below this value. 

**We considered a DTS suppliers billing to be unusually  high if  it was greater than the 75th percentile plus 1.5 times the interquartile range. 

***This questionable-billing characteristic identifies 2010 Medicare-allowed amounts.   

****Sum of column exceeds total because some  suppliers had multiple questionable-billing characteristics.    

Source:  OIG analysis of Part B data for DTS, 2012. 

In 2011, 1,689 suppliers had an unusually high percentage of 
non-mail order DTS claims for beneficiaries residing an 
unusually long distance from suppliers  
In 2011, Medicare allowed $55 million in questionable billing to 
1,689 DTS suppliers for beneficiaries who resided an unusually long 
distance away (i.e., over 20 miles) from suppliers.62  Further, Medicare 
allowed a total of $4.2 million to 78 suppliers for which 100 percent of 
 
62 Some suppliers in this analysis may have  delivered the DTS to  beneficiaries in  
supplier-owned  vehicles and, therefore, appropriately billed the DTS as non-mail order.   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     17  
   
   
their non-mail order DTS claims were for beneficiaries residing over 
20 miles away.  Additionally, Medicare allowed 46 suppliers over 
$100,000 each for non-mail order DTS associated with beneficiaries 
residing over 20 miles from suppliers locations.   
For one supplier in Fort Lauderdale, FL, Medicare allowed $2.3 million 
for 14,741 non-mail order claims for beneficiaries who resided over 
20 miles away.  Medicare allowed over $1 million to each of two 
additional suppliers in Woburn, MA, and Fort Worth, TX.63   
When we used 50 miles as the distance threshold, we found that Medicare 
allowed over $19 million to 994 DTS suppliers for beneficiaries that 
resided more than 50 miles away from suppliers.  Further, Medicare 
allowed $4.1 million to suppliers for which 100 percent of their non-mail 
order DTS claims were for beneficiaries residing over 50 miles away from 
the supplier.  
In 2011, 1,378 suppliers had an unusually high percentage of 
DTS claims in excess of utilization guidelines  
Medicare allowed $242 million in questionable billing to 1,378 suppliers 
that had high percentages of DTS claims in excess of utilization guidelines 
in 2011.  For 12 suppliers, 100 percent of their DTS claims exceeded 
utilization guidelines. For 245 suppliers, 50 percent or more of their DTS 
claims exceeded utilization guidelines.  Twenty-five suppliers had over   
$1 million each in DTS claims that exceeded utilization guidelines.  
In 2011, 851 suppliers had an unusually high percentage of 
beneficiaries associated with DTS at perfectly regular intervals  
Medicare allowed $67 million in questionable billing to 851 DTS 
suppliers that had high percentages of beneficiaries associated with DTS at 
perfectly regular intervals. For one supplier, 100 percent of its 
beneficiaries were associated with DTS on the exact anniversary of the 
previous claim.  For 12 suppliers, Medicare allowed over $1 million each  
in DTS claims for beneficiaries at perfectly regular intervals.  
In 2011, 745 suppliers had an unusually high percentage of 
beneficiaries associated with overlapping DTS claims 
submitted by the same supplier 
Medicare allowed $10 million in questionable billing to 745 DTS 
suppliers that had high percentages of beneficiaries with multiple DTS 
claims submitted by the same supplier during overlapping time periods.  
For three suppliers, 100 percent of their beneficiaries were associated with 
 
63 There are 676 and 909 suppliers, respectively, in the Boston, MA, CBSA (which 
includes Woburn, MA) and the Dallas-Fort  Worth, TX, CBSA. 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     18  
   
   
multiple DTS claims from the same  supplier during the same time period.  
For two suppliers, Medicare allowed over $1 million each for beneficiaries 
with multiple DTS claims from the same supplier during the same time  
period. For 198 suppliers, 50 percent or more of their beneficiaries were 
associated with multiple DTS claims from the same supplier during the 
same time period.     
In 2011, 683 DTS suppliers had an unusually high percentage 
of DTS claims for beneficiaries associated with DTS from any 
supplier in 2010 but not in 2011 
In 2010, Medicare allowed $2 million in questionable billing to 683 DTS 
suppliers that had high percentages of Medicare DTS claims for 
beneficiaries in 2010 but not in 2011.  These beneficiaries did not receive 
DTS from any other supplier in 2011. For 33 suppliers, over 75 percent of 
their allowed claims were for beneficiaries associated with DTS in 2010 
but not in 2011.   
In 2011, 508 suppliers had an unusually high percentage of 
beneficiaries associated with overlapping DTS claims from 
more than one supplier 
Medicare allowed $102 million in questionable billing to 508 DTS 
suppliers that had high percentages of beneficiaries with DTS from at least 
one other supplier during overlapping time periods.  For 77 suppliers, at 
least 50 of their beneficiaries had claims from at least one additional 
supplier during overlapping time periods in 2011.  For one supplier, 
100 percent of its beneficiaries had DTS claims from at least one other 
supplier during overlapping time periods in 2011.   
Seventy-seven percent of questionable billing was 
associated with suppliers in 10 geographic areas 
In 2011, 77 percent of questionable billing ($329 million of the total 
$425 million) was associated with suppliers in 10 geographic areas 
nationwide.64   These 10 geographic areas housed 20 percent (999 of 
4,959) of DTS suppliers with questionable billing.  Overall, the 4,959 DTS 
suppliers with questionable billing were in 651 CBSAs and 428 rural ZIP  
Codes.65  Eighty-six geographic areas had more than 8 suppliers with 
questionable DTS billing in 2011; 301 geographic areas did not have any 
suppliers with questionable DTS billing in 2011.66   
 
64 Nine of the top 10 geographic areas were CBSAs.  Amory, MS, is a rural area.    

65 There are 955  CBSAs in the United States.  There were  4,464 suppliers in  CBSAs and 

428 suppliers in  rural ZIP Codes with at least one questionable billing characteristic.  The 

ZIP Codes of 67 suppliers were not listed in NPPES;  therefore, we cannot determine 

whether these suppliers were in rural locations  or CBSAs. 

66 The average number of questionable billing  suppliers per geographic area was seven. 
   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     19  
   
   
Table 4 lists these geographic areas, the number of suppliers with 
questionable billing, the total number of suppliers, the percentage of 
suppliers with questionable billing, and the Medicare-allowed amount for 
suppliers with questionable billing. 
 
Table 4:   Geographic Areas With the Highest Number of Suppliers With DTS Questionable 
Billing, 2011  
DTS 
Number of  
Suppliers  
DTS  Total  
Questionable   With  
Suppliers   Number of  
Geographic Area   Medicare- Questionable  
With   DTS 
Allowed   Billing out of  
Questionable   Suppliers  
Amount  Total DTS 
Billing  
Suppliers  
Port St. Lucie, FL   $114,963,257   11  79  14%  
Miami-Fort Lauderdale-
$113,196,111  222  1125   20%  
Pompano Beach, FL  
Nashville-Davidson-
$34,698,435  33  330  10%  
Murfreesboro-Franklin, TN 
New  York-Northern New Jersey-
$15,497,578  358  3647   10%  
Long Island, NY-NJ-PA 
Tampa-St. Petersburg-
$14,208,167  61  571  11%  
Clearwater, FL  
Amory, MS   $9,399,811   4  8  50%  
Phoenix-Mesa-Glendale, AZ  $7,325,878   63  579  11%  
Kansas City, MO-KS  $7,256,647   30  307  10%  
Boston-Cambridge-Quincy, MA- $6,481,774  25  676  4%  
NH  
Los Angeles-Long Beach-Santa  $5,844,420  192  1628   12% 
Ana, CA  
 National 
$424,905,138  4,959   51,695   10%  
Source:  OIG analysis of Part B data for DTS, 2012. 
In addition, 13 suppliers with questionable billing had 4 or more 
questionable billing characteristics.  These 13 suppliers were in 11  
CBSAs. Three suppliers with four or more questionable-billing 
characteristics had over $1 million in allowed DTS claims.  These 
suppliers were in Miami, FL ($13.9 million), Atlanta, GA ($3.7 million),  
and Cleveland, OH ($1.6 million).   
Appendix A lists the geographic areas of DTS suppliers with four or more  
measures of questionable billing in 2011.  Appendix B lists the geographic 
areas of the top 10 questionable-billing DTS suppliers in 2011.    
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     20  
   
   
The Competitive Bidding Program appears to have 
reduced questionable billing for mail order DTS in 
CBAs 
The amount Medicare allowed for mail order DTS in CBAs for suppliers 
exhibiting questionable billing decreased by 87 percent ($28.9 million)  
between 2010 and 2011.  This corresponds to when the Competitive 
Bidding Program went into effect.  Questionable billing in non-CBA areas 
did not have a similar decrease.   
As shown in Table 5, the amount Medicare allowed for mail order DTS for 
suppliers exhibiting questionable billing in CBAs decreased from  
$33.2 million to $4.3 million between 2010 and 2011.  We did not find this 
trend in areas that were not affected by the Competitive Bidding Program.  
That is, there was only a small decrease in the amount Medicare allowed 
for suppliers with questionable billing for mail order DTS for beneficiaries 
in non-CBA areas (i.e., beneficiaries not affected by the Competitive 
Bidding Program) between 2010 and 2011.   
Table 5:  Medicare-Allowed Amounts for Suppliers With Questionable Billing for Mail Order 
DTS in CBAs and Non-CBA  Areas in 2010 and 2011  
Change 
Medicare-Allowed Amount   2010   2011   Between 2010 
and 2011  
Beneficiaries in  CBAs   $33,232,992   $4,291,370   -87%  
Beneficiaries in  Non-CBA  
$395,286,785  $382,894,324   -3%  
Areas 
Source:  OIG analysis of Part B data for DTS, 2012.   
Additionally, as shown in Table 6, the number of suppliers with 
questionable billing that provided mail order DTS to beneficiaries in 
CBAs decreased by 36 percent from 2010 to 2011.  We did not find this 
trend in areas that were not affected by the Competitive Bidding Program.  
That is, the number of suppliers with questionable billing for mail order 
DTS associated with beneficiaries in non-CBA areas increased by 
6 percent between 2010 and 2011.    
Table 6:  Number of Suppliers  With Questionable Billing for Mail Order DTS in CBAs and 
Non-CBA  Areas in 2010 and 2011  
Change Between 
Number of Suppliers    2010     2011  
2010 and 2011  
Beneficiaries in  CBAs   303  194  -36%  
Beneficiaries in Non-CBA areas   660  697  6%  
Source:  OIG analysis of Part B data for DTS, 2012.   
Based on our analysis of 2010 and 2011 data, these data suggest that the 
Competitive Bidding Program was successful in reducing the amount 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     21  
   
   
Medicare allowed in questionable billing, and the number of suppliers 
with questionable billing, for mail order DTS.   
See Appendix C for the Medicare-allowed amounts for suppliers with 
questionable billing, and the number of suppliers with questionable 
billing, for mail order DTS in CBAs and non-CBA areas.  Appendix C 
also contains these data for non-mail order DTS. 
   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     22  
   
   
CONCLUSION AND RECOMMENDATIONS 
In 2011, Medicare allowed approximately $1.1 billion to 51,695 suppliers 
for DTS provided to 4.6 million beneficiaries.  Recent investigations and 
prior OIG studies have found that DTS is vulnerable to fraud, waste, and 
abuse. This report found continued vulnerabilities in Medicare payments 
for DTS claims.   
Specifically, we found that Medicare inappropriately allowed $6 million 
for DTS claims with three types of errors.  Further, we found that in 2011, 
Medicare allowed $425 million in questionable billing to 10 percent of 
DTS suppliers. Additionally, 77 percent of suppliers with questionable 
billing were in 10 geographic areas nationwide.  However, based on our 
data from 2010 and 2011, the Competitive Bidding Program appears to 
have reduced questionable billing for mail order DTS in CBAs.  Similar 
reductions in questionable billing did not occur in non-CBA areas or for 
non-mail order DTS. 
We recommend that CMS: 
Enforce existing edits to prevent inappropriate DTS claims 
CMS should enforce claims-processing edits to prevent inappropriate 
claims that do not include an appropriate diabetes diagnosis code.  
Additionally, these edits should identify DTS claims that overlap with an 
inpatient hospital stay or a SNF stay, and flag them for further review to 
ensure the overlap is appropriate (i.e., on the day of discharge or during a 
leave of absence).   
Increase monitoring of DTS suppliers Medicare billing   
CMS should instruct DME MACs and Medicare Zone Program Integrity 
Contractors (ZPIC) to increase monitoring of suppliers DTS claims by 
using measures of questionable billing similar to those in this report.67   
CMS should develop additional thresholds and new edits for these 
measures and instruct its contractors to conduct additional review of DTS 
suppliers that exceed the thresholds.  CMS should also consider including 
these measures of questionable billing in its predictive analytic work. 
On July 1, 2013, the national mail order (NMO) Competitive Bidding 
Program for diabetic testing supplies began.  CMS believes the NMO 
Competitive Bidding Program will reduce the number of mail order DTS 
suppliers. We encourage CMS to closely monitor suppliers that are 
 
67 ZPICs perform Medicare integrity work  for Medicare Parts A and B.  This includes 
conducting audits, interviewing  beneficiaries and providers, and initiating administrative 
sanctions (including suspending payments, determining overpayments, and referring  
providers for exclusion from Medicare). 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     23  
   
   
awarded an NMO contract. CMS should also monitor non-NMO suppliers 
that did not win contracts. 
Provide more education to suppliers and beneficiaries about 
appropriate DTS billing practices 
-  CMS should educate suppliers about appropriate DTS billing 
practices. CMS should continue to implement supplier training that 
addresses the unique requirements of billing Medicare for DTS.  
-  CMS should educate beneficiaries about how to identify potential 
fraud, waste, or abuse in DTS by more closely examining their 
benefits statements and/or better understanding Medicares payment 
policies for DTS. 
Take appropriate action regarding inappropriate Medicare DTS 
claims and suppliers with questionable DTS billing  
In a separate memorandum, we will refer to CMS for appropriate action a 
list of suppliers with the inappropriate-billing characteristics that we 
identified. We will also forward for further analysis the 4,959 DTS 
suppliers with questionable billing. 
 
   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     24  
   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In its comments on the draft report, CMS partially concurred with two of 
our four recommendations and concurred with the remaining two 
recommendations.  CMS acknowledged the high billing rate of DTS and 
described the steps being taken to address it.  These include 
implementation of the NMO Competitive Bidding Program, which will 
reduce the cost of mail-order diabetes testing supplies by an average of 72 
percent. Further, the payment amounts for non-mail order diabetes testing 
supplies were reduced to the NMO Competitive Bidding Program amounts 
on July 1, 2013. CMS noted that implementing market-based payment 
amounts will make diabetes testing supplies a less-tempting target for 
fraudulent suppliers. 
CMS partially concurred with our first recommendation to enforce 
existing edits to prevent inappropriate DTS claims.  CMS stated that it is 
already enforcing billing procedures for claims where the beneficiary does  
not have a diabetes diagnosis. Further, CMS stated that it will implement 
billing procedures that deny unpaid DME claims that have a service date 
greater than 2 days before a Part A  discharge date or a Part A discharge 
status that was not to home.  CMS should ensure that these edits apply to 
both inpatient hospital stays and SNF stays. 
CMS partially concurred with our second recommendation to increase 
monitoring of DTS suppliers Medicare billing. CMS noted that it plans to 
develop a revised DTS medical review strategy after the NMO 
Competitive Bidding Program for diabetes test supplies is implemented.  
While CMS will consider additional automated edits, it cannot commit to 
implementing edits that require only more medical review, because of 
resource limitations. CMS also stated that it will closely monitor suppliers 
in the NMO Competitive Bidding Program and non-mail order DTS 
suppliers.  Additionally, CMS noted that it launched a model in the Fraud 
Prevention System in January 2013 related to DTS. 
CMS concurred with our third recommendation that it provide more 
education to suppliers and beneficiaries about appropriate DTS billing 
practices. CMS stated that it has provided extensive education on the 
definition of mail order and the requirements for submitting mail order  
and non-mail order DTS claims.  Additionally, CMS noted that it provides 
educational materials to beneficiaries, including a handbook mailed to 
beneficiaries annually about DTS coverage, as well as public service 
announcements and a letter mailed to beneficiaries about the NMO 
Competitive Bidding Program.  
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     25  
   
   
CMS also concurred with the fourth recommendation that it take 
appropriate action regarding inappropriate Medicare DTS claims and 
suppliers with questionable DTS billing.  CMS stated that it will forward  
the list of questionable suppliers to the RACs and DME MACs and will 
instruct them to consider information in this report when prioritizing their 
medical review strategies or other interventions. 
CMS also provided technical comments.  In response, we made revisions 
to the report, where appropriate. For the full text of CMSs comments, see 
Appendix D.   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     26  
   
   
APPENDIX A 
 
Geographic Areas of Diabetes Test Strips Suppliers With Four or More 
Measures of Questionable Billing, 2011 
 
Diabetes Test 
Strips (DTS) 
Suppliers out of  
Total DTS 
Geographic Area   Medicare-Allowed  Number of   Suppliers With 
Amount   Suppliers   
Four or More 
Measures of 
Questionable  
Billing *  
MiamiFort Lauderdale 
$15,480,748.14  2  15%  
Pompano Beach, FL  
Atlanta-Sandy Springs-Marietta, GA   $4,360,452.40  2  15%  
Cleveland-Elyria-Mentor, OH   $1,970,246.89  1  8%  
New  York-Northern New Jersey-Long  $591,296.94  1  8%  
Island, NY-NJ-PA  
Dayton, OH   $195,321.57  1  8%  
$81,481.08  1  8%  
Dallas-Fort Worth-Arlington, TX  
El Dorado, AR   $63,749.18  1  8%  
Indianapolis-Carmel, IN  $55,894.71  1  8%  
$54,596.44  1  8%  
San Antonio-New Braunfels, TX  
Fairmont, WV   $43,091.05  1  8%  
San Juan-Caguas-Guaynabo, PR   $2,757.24  1  8% 
 National  $22,899,635.64   13  100%  
*The percentages do not sum to 100 percent because of rounding. 
Source:  Office of  Inspector General analysis of Part B data for DTS, 2012. 
   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     27  
   
   
APPENDIX B 
 
Geographic Areas of Top 10 Questionable-Billing Diabetes Test Strips 
Suppliers, 2011  
 
Questionable  
Supplier 
Geographic Area   Medicare-Allowed 
Number  
Amount 
Supplier 1  Port St. Lucie-Sebastian-Vero Beach, FL   $114,748,373  
Supplier 2  Miami-Fort Lauderdale-Pompano Beach, FL   $19,943,999  
Supplier 3  Nashville-Davidson--Murfreesboro--Columbia, TN   $17,932,498  
Supplier 4  Nashville-Davidson--Murfreesboro--Columbia, TN   $16,330,932  
Supplier 5  Miami-Fort Lauderdale-Pompano Beach, FL   $13,913,613  
Supplier 6  Miami-Fort Lauderdale-Pompano Beach, FL   $11,442,097  
Supplier 7  Miami-Fort Lauderdale-Pompano Beach, FL   $10,688,470  
Supplier 8  Tampa-St. Petersburg-Clearwater, FL   $10,401,737  
Supplier 9  New York-Newark-Bridgeport, NY-NJ-CT-PA   $7,763,993  
Supplier 10   Miami-Fort Lauderdale-Pompano Beach, FL   $6,722,770  
Source:  Office of  Inspector General analysis of Part B data for diabetes test strips, 2012. 
 
   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     28  
   
   
APPENDIX C 
Medicare-Allowed Amounts for and Number of Suppliers With Questionable 
Billing for Mail Order and Non-Mail Order Diabetes Test Strips1 in 
Competitive Bidding Areas2 and Non-Competitive Bidding Areas3 in 2010 
and 2011  
 
Table C-1:  Medicare-Allowed Amounts for and Number of Suppliers With Questionable Billing 
for Mail Order DTS in CBAs in 2010 and 2011  
Change 
Measure of Questionable Billing    2010   2011   From 2010 
to 2011  
Beneficiaries associated with multiple       
DTS claims submitted by the same       
supplier during overlapping time periods:        
       
             Medicare-allowed amount  $772,156  $6,024  -99%  
Number of suppliers  24  8  -67%  
Beneficiaries associated with DTS        
claims at perfectly regular intervals:       
       
             Medicare-allowed amount  $5,130,164  $1,040,701  -80%  
Number of suppliers  133  52  -61%  
Beneficiaries associated with 
overlapping DTS claims from more than 
one supplier: 
 
             Medicare-allowed amount  $5,188,186  $397,390  -92%  
Number of suppliers  108  73  -32%  
DTS claims for beneficiaries in excess of 
utilization guidelines: 
 
             Medicare-allowed amount  $22,143,612  $2,847,988  -87%  
Number of suppliers  178  113  -37% 
     Total Medicare-allowed amount   $33,232,992   $4,291,370   -87% 
     Total number of suppliers   303  194  -36%  
Source:  Office of  Inspector General (OIG) analysis of Part B data for DTS, 2012. 

1 DTS. 

2 CBAs. 

3 Non-CBA areas.  

 
   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     29  
   
   
Table C-2:  Medicare-Allowed Amounts for and Number of Suppliers With Questionable Billing 
for Mail Order DTS in Non-CBA  Areas in 2010 and 2011  
Change 
Measure of Questionable Billing    2010   2011   From 2010 
to 2011  
Beneficiaries associated with multiple 
DTS claims submitted by the same 
supplier during overlapping time 
periods: 
 
             Medicare-allowed amount  $7,652,322  $5,972,260  -22%  
Number of suppliers  46  54  17%  
Beneficiaries associated with DTS  
claims at perfectly regular intervals: 
 
             Medicare-allowed amount  $53,218,904  $58,709,687  10%  
Number of suppliers  319  352  10%  
Beneficiaries associated with 
overlapping DTS claims from more 
than one supplier:  
 
             Medicare-allowed amount  $72,763,498  $98,380,726  35%  
Number of suppliers  164  185  13%  
DTS claims for beneficiaries in 
excess of utilization guidelines: 
 
             Medicare-allowed amount  $261,691,402  $219,911,302   -16%  
Number of suppliers  355  313  -12% 
     Total Medicare-allowed amount   $395,286,785  $382,894,324   -3% 
     Total number of suppliers   660  697  6%  
 
Source:  OIG analysis of Part B data for DTS, 2012. 
 
 
 
 
 
 
 
 
 
 
 
 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     30  
   
   
Table C-3:  Medicare-Allowed Amounts for and Number of Suppliers With Questionable Billing 
for Non-Mail Order DTS in CBAs in 2010 and 201168  
Change 
Measure of Questionable Billing    2010   2011   From 2010 
to 2011  
Beneficiaries associated with multiple 
DTS claims submitted by the same 
supplier during overlapping time 
periods: 
 
                   Medicare-allowed amount  $457,293  $361,111  -21%  
Number of suppliers  86  113  31%  
Beneficiaries associated with DTS  
claims at perfectly regular intervals: 
 
                   Medicare-allowed amount  $797,742  $1,880,789  136%  
Number of suppliers  123  145  18%  
Beneficiaries associated with 
overlapping DTS claims from more 
than one supplier:  
 
                   Medicare-allowed amount   $310,141  $323,994  4%  
Number of suppliers  116  85  -27%  
DTS claims for beneficiaries in excess 
of utilization guidelines: 
 
                   Medicare-allowed amount  $1,986,617  $4,556,094  129%  
Number of suppliers  260  273  5% 
     Total Medicare-allowed amount   $3,550,236  $7,121,368  101% 
     Total number of suppliers   519  544  5%  
 
Source:  OIG analysis of Part B data for DTS, 2012. 
 
   
 
68 As shown in Table C-3, there was a 101 percent increase in the amount  Medicare 
allowed in  questionable billing  for non-mail order DTS in  CBAs between 2010 and  2011.  
Prior OIG work has determined  that this was in  part due to suppliers improperly billing  
mail order DTS as non-mail order.   OIG,  Supplier Billing for Diabetes Test Strips and  
Inappropriate Supplier Activities in Competitive Bidding  Areas (OEI-04-11-00760),  
November 2012.  
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     31  
   
   
Table C-4:  Medicare-Allowed Amounts for and Number of Suppliers With Questionable Billing 
for Non-Mail Order DTS in Non-CBA  Areas in 2010 and 2011  
Change 
Measure of Questionable Billing    2010   2011   From 2010 
to 2011  
Beneficiaries associated with multiple 
DTS claims submitted by the same 
supplier during overlapping time 
periods: 
 
                 Medicare-allowed amount  $4,662,777  $4,041,784  -13%  
Number of suppliers  649  676  4%  
Beneficiaries associated with DTS  
claims at perfectly regular intervals: 
 
                 Medicare-allowed amount  $4,434,763  $5,556,782  25%  
Number of suppliers  682  711  4%  
Beneficiaries associated with 
overlapping DTS claims from more 
than one supplier:  
 
                 Medicare-allowed amount   $2,602,851  $3,204,223  23%  
Number of suppliers  389  422  8%  
DTS claims for beneficiaries in 
excess of utilization guidelines: 
 
                 Medicare-allowed amount  $15,590,781  $14,483,191  -7%  
Number of suppliers  1,269   1,188   -6% 
     Total Medicare-allowed amount   $27,266,702  $27,243,881  0% 
     Total number of suppliers   2,708   2,711   0%  
 
Source:  OIG analysis of Part B data for DTS, 2012. 
 
 
 
   
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     32  
  APPENDIX D 
Ag ency Comments 
DEPARTMENT OF HEALTH & HUMAN SERVICES  Centers tor Medic;ue & Metlb;lld Services 
- -- ------------- - --
Administratar 
Washi ngton. DC 20201 
DATE: 	 AP R3 0 ZOll 
T O : 	 Daniel R. Lev inson 
Inspector General 
FROM: 	 Matilyn \ravenner 
Acting Administrator 
SUBJECT : 	 Office oflnspector General (OIG) Draft Report: inappropriate a nd 
Questionable Medicare Billing for Diabetes Test Srrips (OEI--04-11-00330) 
Thank you for the opportunity to review and comment on the OIG draft report titled, 
"Inappropriate and Questionable Medicare Billing for Diabetes Test Strips, (OEI-04-11-00330)." 
'The Centers for Medicare & Medicaid Services (CMS) appreciates the time and resources OlG 
has invested to review this issue. OlG's audit focused on Medicare-allowed 2010 and 2011 
claims lor diabetes test strips (DTS). OIG also examined instances ofallowed claims that 
overlapped with dates for which a patient was in a hospital or skilled nursing facility. 
The CMS is aware of, and acknowledges, the high Medicare billing rate of DTS and is 
proactively taking steps to address it. This July, CMS will update its claims processing 
procedures to ensure that Medicare does not pay for durabl e medical equipment (DME) while a 
beneficiary is in IUl inpatient hospital. Also in July, CMS will implement the National Mail 
Order Program under competitive bidding for diabetic supplies. This program will reduce the 
cost of mail-order diabetic testing supplies by an average of 72 percent. Under the American 
Taxpayer Relief Act of2012, the fee schedule amounts for retail diabetic testing supplies will be 
reduced to the National Mail Order Program amounts starting on July 1. Implementing market
based payment amounts will make diabetic testing supplies a less tempting target for fraudulent 
suppliers. 
We have reviewed the report and responded to your recommendations below. 
OIG Recommendation 1 
l:'.nforcc existing edits to prevent inappropriate DTS claims. CMS should enloree claims
processing edits to prevent inappropriate claims that do not include an appropriate diabetes 
diagnosis code. Additionally, lhese edits should identify DTS claims that overlap with an 
inpatient hospital stay or a skilled nursing facility stay and flag them for further review to ensure 
the overlap is appropriate (i.e., on the day ofdischarge or during a leave of absence). 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11  00330)  33   
   
 
 
 
 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     34  
   
   
 
 
 
 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     35  
   
   
 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                     36  
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Dwayne Grant, Regional 
Inspector General for Evaluation and Inspections in the Atlanta regional 
office, and Jaime Durley, Deputy Regional Inspector General.   
Starr Kidda served as the lead analyst for this study.  Other principal 
Office of Evaluation and Inspections staff from the Atlanta regional office 
who conducted the study include Rachel Daiber.  Central office staff who 
provided support include Berivan Demir Neubert, Scott Horning, 
Scott Manley, and Christine Moritz. 
  
 
 
 
 
 
 
 
 
Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330)                        37  
   
   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services  
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components: 
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office of Counsel to the Inspector General 
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and abuse cases involving HHS programs,  including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.