Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

JUNE 2000 

OEI-03-98-00230 

Blood Glucose Test Strips: 

Inappropriate Medicare Payments 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 

protect the integrity of the Department of Health and Human Services programs as well as the 

health and welfare of beneficiaries served by them. This statutory mission is carried out through a 

nationwide program of audits, investigations, inspections, sanctions, and fraud alerts. The 

Inspector General informs the Secretary of program and management problems and recommends 

legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. The 

inspection reports provide findings and recommendations on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

OEI's Philadelphia Regional Office prepared this report under the direction of Robert A. Vito, 

Regional Inspector General, and Linda M. Ragone, Deputy Regional Inspector General. Principal 

OEI staff included: 

REGION 

Robert Katz, Project Leader

Nancy Molyneaux, Program Analyst

Cynthia Hansford, Program Assistant

Lauren McNulty, Program Analyst

Dave Tawes, Program Analyst

Amy Sernyak, Program Analyst

REGION IV 

John Mejia, Office of Audit Services 

HEADQUARTERS 

Stuart Wright, Program Specialist

Barbara Tedesco, Mathematical Statistician

Linda Moscoe, Technical Support Staff

Scott Horning, Technical Support Staff

To obtain copies of this report, please call the Philadelphia Regional Office at (800) 531-9562. 

Reports are also available on the World Wide Web at our home page address: 

http://www.dhhs.gov/progorg/oei 
EXECUTIVE SUMMARY 

PURPOSE 

To assess the appropriateness of Medicare payments for blood glucose test strips by 

examining critical elements of this Part B benefit, including coverage requirements, 

supplier information and documentation, and beneficiary utilization. 

BACKGROUND 

Medicare covers home blood glucose monitors and test strips for beneficiaries who must 

periodically test their blood sugar levels as part of their diabetes management, regardless 

of insulin usage. Prior to July 1, 1998, Medicare coverage was restricted to beneficiaries 

with insulin-treated diabetes. Insulin-treated diabetics usually test their blood glucose 

levels one or more times a day. Medicare allowances for test strips more than doubled 

between 1994 and 1997, increasing from about $102 million in 1994 to $220 million in 

1997. Allowances exceeded $314 million in 1998. 

Suppliers of blood glucose test strips submit claims to the Durable Medical Equipment 

Regional Carriers (DMERCs) for processing and payment. The supplier must have an 

order from the beneficiary’s physician verifying medical need for blood glucose test strips. 

Suppliers signify that they have sufficient documentation to establish Medicare coverage 

of supplies for insulin-treated beneficiaries by appending a ZX modifier to procedure 

codes representing the supplies furnished. 

For this inspection, we collected data from a sample of Medicare beneficiaries with paid 

claims for blood glucose test strips in 1997 and the medical equipment suppliers who 

provided the supplies. 

FINDINGS 

Medicare allowed $79 million for blood glucose test strips with missing or flawed 

documentation. $33 million in test strip claims had insufficient documentation to support 

eligibility. An additional $46 million in claims had incomplete orders or no supplier delivery 

records. 

Blood Glucose Test Strips 1 OEI-03-98-00230 
Irregular billing cycles make review of test strip claims difficult. Such irregular 

cycles can make it difficult for DMERCs to identify overlapping claims, claims without correct 

supporting documentation, and claims containing excessive amounts of test strips. 

RECOMMENDATIONS 

To address the vulnerabilities identified in this report, we recommend that the 

Health Care Financing Administration: 

Alert suppliers of the importance of properly completed documentation to support 

their claims for test strips. This effort should encompass physicians’ orders as well as 

supplier delivery documentation and documentation to support the medical necessity of 

quantities of test strips greater than 100 per month. In addition, the use and meaning of 

ZX modifiers should be emphasized. Further, HCFA should periodically review 

documentation to ensure that it exists and is accurate. 

Require suppliers to indicate actual and accurate “start” and “end” dates on claim 

forms. This action would make it easier for DMERCs to determine the existence of 

aberrant or potential problems, such as overlapping claims or whether documentation is 

needed to support more than 100 test strips a month. 

Promote supplier concurrence and cooperation with the Office of Inspector 

General’s recently issued document entitled, Compliance Program Guidance for the 

Durable Medical Equipment, Prosthetics, Orthotics and Supply Industry. Suppliers 

should be encouraged to establish and adhere to the voluntary compliance program to 

ensure that their operations meet the standards promulgated by the Office of Inspector 

General along with national health care organizations. 

Advise beneficiaries, as part of its outreach service, to report any instances of 

fraudulent or abusive practices (such as receiving excessive or unrequested 

deliveries of test strips) involving their home blood glucose monitors, test strips, or 

related supplies to their DMERCs. 

AGENCY COMMENTS 

The HCFA concurred with our recommendations. The HCFA noted a number of initiatives that 

have reduced the incidence of improper payments in recent years. To specifically address our 

recommendations, HCFA stated that (1) DMERCs will continue to stress the importance of 

properly completed documentation through a combination of published guidance in supplier 

manuals and bulletins and supplier education and outreach seminars, (2) in the 2001 “Work 

Change Process,” they will promulgate changes on claims forms to require actual and accurate 

“start” and “end” dates, (3) they will work with the National Supplier Clearinghouse to include 

Blood Glucose Test Strips 2 OEI-03-98-00230 
language in the notifications sent to suppliers awarding them billing numbers to read and adhere 

to the OIG’s Compliance Program Guidance for the Durable Medical Equipment, Prosthetics, 

Orthotics and Supply Industry, and (4) beneficiary outreach efforts will encourage the reporting 

of abusive supplier practices to the DMERCs. The full text of HCFA’s comments can be found in 

Appendix B. 

Blood Glucose Test Strips 3 OEI-03-98-00230 
TABLE OF CONTENTS 

PAGE

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

INTRODUCTION ..................................................... 5

FINDINGS ............................................................... 10

Medicare improperly allowed $79 million for test strip claims .................... 10

Irregular billing cycles ................................................. 12

RECOMMENDATIONS ............................................... 13

APPENDICES

A: Estimates and Confidence Intervals ..................................... 15

B: Health Care Financing Administration Comments .......................... 18

Blood Glucose Test Strips 4 OEI-03-98-00230 
INTRODUCTION 

PURPOSE 

To assess the appropriateness of Medicare payments for blood glucose test strips by 

examining critical elements of this Part B benefit, including coverage requirements, 

supplier information and documentation, and beneficiary utilization. 

BACKGROUND 

Diabetes is an illness characterized by abnormally high glucose or sugar levels in the 

blood resulting from a deficiency of insulin. Insulin is a hormone produced in the 

pancreas which regulates blood sugar levels. When insufficient amounts of insulin are 

produced, serious health complications may result, including heart disease, blindness, 

kidney failure, and poor circulation in the lower limbs, which could lead to amputation. 

There are two main types of diabetes, Type 1 and Type 2. People with Type 1 diabetes 

are dependent on insulin injections to regulate their blood sugar levels. Generally, Type 1 

is diagnosed when patients are children or young adults. Type 2, sometimes called “late 

onset diabetes” mostly affects adults over age 40. Many Type 2 diabetics can manage 

their disease with lifestyle changes, such as special diets and exercise. Approximately 16 

million people have diabetes in the United States. It is the seventh leading cause of death. 

Health care personnel advocate self-monitoring as the key to successful diabetes 

management. Diabetics are taught to use special devices called blood glucose monitors 

or meters to test their blood sugar levels. Typically, patients place a tiny amount of 

fingertip blood on a test or reagent strip which produces a numeric read-out when 

inserted into the monitor. Depending on the results of the read-out, patients can adjust 

their insulin dosages or contact their physicians for further instructions. Patients usually 

test their glucose levels in this manner one or more times a day. 

Medicare Coverage of Home Blood Glucose Monitors and Test Strips 

Title XVIII of the Social Security Act prescribes coverage requirements under Part B of 

the Medicare program. Part B covers services and items including durable medical 

equipment (DME). Claims for home blood glucose monitors and test strips are covered 

under Part B within the DME benefit. Suppliers submit claims for reimbursement to 

Blood Glucose Test Strips 5 OEI-03-98-00230 
DME regional carriers (DMERCs). The four DMERCs process all Medicare claims for 

prosthetics, orthotics, medical supplies, and other DME. They are under contract with 

the Health Care Financing Administration (HCFA), the agency which administers the 

Medicare program. 

A blood glucose monitor and the supplies needed to use it effectively are covered if the 

beneficiary meets these requirements: 1) the patient is under a physician’s care for 

diabetes; 2) the glucose monitor and related accessories and supplies have been ordered 

by the patient’s treating physician; 3) the patient (or patient’s caregiver) has been trained 

to use the required equipment in an appropriate manner; and 4) the equipment is designed 

for home rather than clinical use. 

Medicare Payment Policies and Expenditures 

Prior to July 1, 1998, Medicare coverage for home blood glucose monitors and test strips 

was restricted to beneficiaries with Type 1, or insulin-treated diabetes. Medicare 

expanded coverage on that date to beneficiaries with Type 2, or non-insulin treated 

diabetes. Medicare allowances for test strips more than doubled between 1994 and 1997, 

increasing from about $102 million in 1994 to $220 million in 1997. Allowances 

exceeded $314 million in 1998. 

Medicare reimburses suppliers for test strips based on monthly fee schedule allowances 

which vary by State. During 1997, the base period of our review, monthly fee schedule 

allowances for test strips ranged between $34.69 and $40.81 for a box of 50 strips. 

Effective January 1, 1998, fee schedule amounts were reduced 10 percent to between 

$31.22 and $36.73 for 50 strips. 

Medical Documentation 

The supplier must have documentation from the beneficiary’s physician verifying medical 

need for diabetic testing supplies. For diabetic supplies furnished in 1997, such 

documentation may be an order or prescription which has been signed and dated by the 

ordering physician. This document (hereinafter referred to as an “order” in this report) 

must contain a statement indicating that the patient is a diabetic and is being treated with 

insulin injections. The supplier must indicate on the claim that the order is on file by 

appending the modifier “ZX” for each supply provided. The ZX modifier may only be 

used when these requirements are met. The actual order does not have to be submitted 

with the claim. In addition, when billing for quantities greater than those described as the 

usual replacement frequency (100 test strips a month), the claim must include 

documentation supporting the medical necessity for the higher amount. (These 

documentation requirements were modified when coverage was expanded effective July 

1, 1998.) 

Blood Glucose Test Strips 6 OEI-03-98-00230 
The DMERCs have requested that suppliers note on the claim if they are billing for more 

than one month’s supplies. However, there is no limit on the number of months of test 

strips a supplier can bill for at one time. 

The HCFA issued a memorandum in December 1998 entitled, “Durable Medical 

Equipment Carrier (DMERC) Billing Procedures.” The HCFA stated that claims 

involving supplies provided periodically, such as test strips, should not be submitted more 

frequently than monthly. By limiting the billing to a 30-day cycle, HCFA indicated the 

program would save extensive program dollars and would simplify the review process at 

the same time. 

Medicare also requires suppliers to maintain detailed records of items furnished to 

beneficiaries, including brand name, model number, quantity, and delivery dates. 

Suppliers are required to retain evidence of the delivery of DME items, such as copies of 

receipts and pick-up slips. This documentation may be requested by the DMERCs to 

verify delivery of the items. 

In June 1999, the Office of Inspector General issued a document entitled, Compliance 

Program Guidance for the Durable Medical Equipment, Prosthetics, Orthotics and 

Supply Industry. This document can be located on the World Wide Web at 

http://www.hhs.gov/progorg/oig/modcomp/cpgfinl.htm. The Guidance, which was 

prepared in consultation with health care trade organizations, was designed to promote a 

higher level of ethical and legal conduct among providers of medical equipment and 

supplies. The Guidance details specific problems which we encountered in our 

inspection, such as the improper use of ZX modifiers and delivering and billing for 

supplies without a physician’s order. 

METHODOLOGY 

Sampling 

We first selected a simple random sample of 555 Medicare beneficiaries with paid claims 

for blood glucose test strips in 1997. The beneficiaries were selected from a 1 percent 

DME claims file developed from HCFA’s National Claims History File. We defined our 

sample population as those patients whose claims for test strips averaged $50 per month 

or more. In order to compute point estimates and confidence intervals for inappropriate 

and questionable claims, we treated the beneficiary sample as a single-stage cluster 

sample in which each of the beneficiaries was a cluster and their 1997 claims were the 

unit of analysis. Estimates were made only for the universe of beneficiaries with claims 

averaging $50 a month or more. 

Blood Glucose Test Strips 7 OEI-03-98-00230 
We then checked current Medicare records to ascertain if any sample beneficiaries were 

shown as deceased. We removed these beneficiaries from the sample. In addition, we 

removed beneficiaries from the sample whose test strips were provided by suppliers under 

investigation. The remaining sample consisted of 472 Medicare beneficiaries. In all, 310 

different suppliers had submitted 2,184 claims for Medicare reimbursement for these 

beneficiaries. Since many of the 310 suppliers had provided test strips for multiple 

beneficiaries, our unique supplier-beneficiary combination totaled 540. 

Data Collection and Analysis 

Beneficiary information. We collected information from beneficiaries via telephone 

interviews. Questions related to beneficiaries’ medical care and treatment for diabetes, 

frequency of blood sugar testing, how supplies were obtained, and supplier marketing 

practices. We completed telephone interviews with 313 of the 472 beneficiaries, a 66 

percent response rate. The interviews were conducted from December 1998 to June 

1999. 

Supplier information. We mailed 540 survey forms to suppliers, one for each 

beneficiary for whom a claim was filed. In addition to asking suppliers about the types of 

equipment and supplies provided to beneficiaries, we also included questions about their 

business and marketing practices. Of the 540 surveys mailed, 469 were completed and 

returned, an 87 percent response rate. The completed surveys represented 1,902 claims. 

We also asked the suppliers to provide pertinent items of documentation, including the 

physician’s order, copies of HCFA-1500 Medicare claim forms submitted for the selected 

beneficiary in 1997, and documentation indicating the test strips were delivered. 

Additionally, we asked suppliers to submit any records of contact with the sample 

beneficiaries in 1997. Although not a HCFA requirement, we felt such information 

would give us valuable insight into the beneficiary’s history of test strip utilization and 

changing needs. In some cases, suppliers, with our concurrence, substituted comparable 

documentation if requested information was unavailable. 

We reviewed supplier responses to confirm that each piece of requested documentation-­

particularly the physician order--had been submitted. We examined this documentation 

to ensure that the orders specified that beneficiaries had insulin-treated diabetes in 1997 

and had used test strips to monitor their blood sugar levels. We also examined the 

documentation to ensure they were completed, signed, and dated by the beneficiaries’ 

treating physicians. 

According to Medicare guidelines, orders are considered to be completed timely if they 

are dated prior to or within 30 days after the first service date. We decided that if 

multiple orders were submitted, the document which was dated closest or prior to the 

first date of service to be the controlling document for verification purposes. However, if 

Blood Glucose Test Strips 8 OEI-03-98-00230 
that order lacked any of the essential elements to support Medicare coverage 

requirements, we examined other documents to see if the missing elements were present. 

In cases where sample beneficiaries were supplied with more than 100 test strips a month, 

we reviewed the documentation to ensure that prescribing physicians had validated such 

quantities of supplies. Initially, however, we reviewed the claims listed in our sample 

database to determine if we could detect claims requiring documentation supporting more 

than 100 test strips a month. Our database reflected dates of service for the claims as 

well as billed dollars which indicated quantities of test strips supplied. For the majority of 

claims, we could easily determine that the additional documentation was not necessary. 

For example, many claims were dated approximately 30 days apart and only contained a 

billing for 100 test strips. For some claims, however, billings indicated supplies of greater 

than 100 test strips. Further, some claims were submitted every two or three months, or, 

in certain cases, in time periods of less than 30 days. We determined, therefore, that the 

only way to confirm whether the additional documentation was needed for these claims 

was to examine copies of HCFA-1500 claim forms along with physician documentation. 

We carefully examined information contained on claim forms, particularly “from” and 

“to” billing dates and any information representing how many months the strips were 

provided for. Absent such information, we generally assumed that quantities billed were 

intended for one month’s use. 

We compared beneficiary and supplier responses to related questions to detect 

inconsistencies and questionable practices. In cases where conflicting responses were 

uncovered, we rechecked beneficiary and supplier responses and pertinent documentation 

before reaching a determination. 

We determined that beneficiaries did not meet Medicare coverage requirements for test 

strips if physician orders were not provided and no reasonable explanation was supplied, 

orders were unsigned, did not pertain to the sample service dates, or did not indicate a 

diagnosis of insulin-treated diabetes. 

This study was conducted in accordance with the Quality Standards for Inspections 

issued by the President’s Council on Integrity and Efficiency. 

Blood Glucose Test Strips 9 OEI-03-98-00230 
FINDINGS 

Medicare allowed $79 million for blood glucose test strips 

with missing or flawed documentation 

$33 million in test strips claims had insufficient documentation to support 

eligibility 

Orders for 25 percent of the sampled claims for blood glucose test strips failed to 

establish beneficiaries’ eligibility for the supplies. In these cases, we found that physician 

orders were missing, failed to contain any indication of insulin usage, were unsigned, or 

did not cover the dates of service billed. We estimate that Medicare allowed $33 million 

for test strip claims for which supporting documentation failed to establish beneficiaries’ 

entitlement for these supplies. This figure represents the unduplicated total allowances 

for these claims; more than one of the problems cited above was present in some orders. 

Suppliers in our sample appended ZX modifiers to procedure codes on claims for 

reimbursement even though documentation was missing or deficient. Medicare 

guidelines stipulate that ZX modifiers are only to be used when all documentation 

requirements have been met. The actual documentation does not have to be submitted to 

the DMERCs when the ZX modifier is used. However, use of the ZX modifier means 

that the supplier is in possession of all the documents needed to fully support the claim. 

Eight percent of claims were supported by orders that did not cover the service dates 

billed. In these instances, the beneficiaries for whom the flawed orders pertained would 

not be eligible for test strip coverage. Generally, suppliers must have completed orders in 

their possession before providing supplies to beneficiaries. However, we found instances 

where orders were dated months, even years, after the beginning dates of service. In all, 

we received 63 orders which were completed and signed more than 30 days after test 

strips were initially provided. Lengths of time from the initial supply of test strips to 

dates of completed orders ranged from 5 weeks to almost 25 months, with a median of 

more than 4 months. 

About 6 percent of claims had missing orders or orders not signed by physicians. Such 

deficiencies do not meet Medicare eligibility requirements for coverage of blood glucose 

test strips. 

Under the Medicare guidelines in effect for 1997, insulin use was a requirement for 

coverage and reimbursement of test strips. This requirement was modified when 

coverage was expanded on July 1, 1998. For our 1997 beneficiary sample, however, we 

Blood Glucose Test Strips 10 OEI-03-98-00230 
found that physician orders for 15 percent of claims did not state that beneficiaries used 

insulin. About half of the $33 million involved beneficiaries who were not eligible for test 

strips because they were not using insulin. In addition, our beneficiary survey revealed 

that 9 percent of the sample beneficiaries did not use insulin during 1997. 

An additional $46 million in test strips claims had incomplete orders or no 

supplier delivery records 

In addition to documentation problems affecting beneficiaries’ eligibility for blood 

glucose test strips, we found other documentation problems, which included missing or 

incomplete supplier delivery documentation and orders not sufficiently detailed. While 

these problems do not prevent beneficiaries from being eligible for the test strips, they do 

raise questions about beneficiaries’ expected utilization regimens, types and quantities of 

test strips provided, and whether the products were even delivered. These problems 

represent $46 million in allowances, according to our estimates. 

We found 21 percent of claims were supported by orders which were lacking in such 

basic details as the item being ordered (in this case, test strips), in addition to any 

information relating to quantity needed, frequency of utilization, or length of need. Some 

orders even failed to mention the diagnosis. Medicare requires orders to be sufficiently 

detailed enough to include a complete description regarding what is being ordered as well 

as the regimen of use. One DMERC instruction states, “If the order is for supplies that 

will be provided on a periodic basis, the order should include appropriate information on 

the quantity used, frequency of change, and duration of need.” 

Many items billed to the DMERCs require a designated form, such as a certificate of 

medical necessity (CMN) form. However, during the period of our review, no CMN or 

special form was required for test strips. Suppliers were free to design their own “order” 

forms, so long as these forms carried the information which Medicare required. As a 

result, suppliers submitted a variety of forms constituting orders for diabetic testing 

supplies. Some forms were exhaustively detailed, while others were nothing more than a 

line or two written on a physician’s prescription pad. 

Suppliers could not furnish any delivery documentation for 18 percent of claims. 

Medicare requires suppliers to maintain documentation detailing items furnished to the 

beneficiary as well as details regarding the delivery of the items. According to one 

DMERC instruction, “The supplier must also have a detailed record of the items provided 

to the beneficiary which would include brand name, model number, quantity and the date 

of delivery. For durable medical equipment, the supplier should retain delivery and pickup slips. This information must be sent to the DMERCs if requested.” 

Blood Glucose Test Strips 11 OEI-03-98-00230 
Irregular billing cycles make review of claims for test strips 

difficult 

We found that many suppliers submitted claims for reimbursement at irregular intervals 

which we believe made DMERC review of claims difficult. Such irregular cycles can 

make it difficult to identify overlapping claims, claims without correct supporting 

documentation, and claims containing excessive amounts of test strips. 

We found that Medicare does not require billing dates on claim forms to have an ending 

date for repetitive supplies even though HCFA-1500 claim forms have blocks for a start 

date and an ending date. Nearly all of the claims in our sample had the same date in both 

the “from” and “to” fields. Also, claim forms often failed to contain any statement 

indicating how many months were being supplied. Without this information, it was 

difficult to determine whether a supply of test strips was meant for one month or multiple 

months. Adding to this difficulty, we found suppliers frequently billed in intervals ranging 

from less than 30 days to every 3 months. Around 15 percent of the beneficiaries (n=88) 

in the original claims sample of 555 obtained or received two or more test strip supplies 

in time periods under 30 days. 

Irregular billing cycles contribute to the problem of overlapping claims, particularly if 

multiple suppliers are involved. Essentially, overlapping claims present two potential 

problems: 1) excessive supplies of test strips not ordered by the attending physician, and 

2) more than 100 test strips supplied during a 30-day period without physician 

authorization. For example, one beneficiary received test strips from three different 

suppliers during an overlapping time period, and wound up with 600 test strips in one 

month. There was no medical necessity documentation for more than 100 test strips a 

month. 

These irregular billing cycles, coupled with claims having the same “from” and “to” dates, 

made it difficult to determine whether claims in excess of 100 test strips were intended to 

cover more than one month and, as a result, whether additional documentation was 

needed to support the quantity of supplies claimed. However there were cases in which it 

did seem clear that additional documentation was required. We found 60 sampled claims 

with billings for more than 100 test strips a month that we believe lacked documentation 

to support the necessity for such quantities. During the period of our review, suppliers 

were required to obtain documentation supporting the medical need for quantities 

exceeding 100 test strips a month, such as a written statement from the ordering 

physician. In one example, a beneficiary received 500 strips over a 3-month period, 

despite the fact that the physician order indicated that she only tested 20 times per week. 

In another case, a supplier provided a beneficiary with 100 test strips on April 3, 1997 

and another 100 strips on April 4, 1997. The physician’s order did not contain any 

documentation to support the medical necessity of more than 100 test strips a month. 

Blood Glucose Test Strips 12 OEI-03-98-00230 
RECOMMENDATIONS 

To address the vulnerabilities identified in this report, we recommend that the 

Health Care Financing Administration: 

Alert suppliers of the importance of properly completed documentation to support 

their claims for test strips. This effort should encompass physicians’ orders as well as 

supplier delivery documentation and documentation to support the medical necessity of 

quantities of test strips greater than 100 per month. In addition, the use and meaning of 

ZX modifiers should be emphasized. Further, HCFA should periodically review 

documentation to ensure that it exists and is accurate. 

Require suppliers to indicate actual and accurate dates on claim forms. This action 

would make it easier for DMERCs to determine the existence of aberrant or potential 

problems, such as overlapping claims or whether documentation is needed to support 

more than 100 test strips a month. 

Promote supplier concurrence and cooperation with the Office of Inspector 

General’s Compliance Program Guidance for the Durable Medical Equipment, 

Prosthetics, Orthotics and Supply Industry. Suppliers should be encouraged to 

establish and adhere to the voluntary compliance program to ensure that their operations 

meet the standards promulgated by the Office of Inspector General along with national 

health care organizations. 

Advise beneficiaries, as part of its outreach service, to report any instances of 

fraudulent or abusive practices (such as receiving excessive or unrequested 

deliveries of test strips) involving their home blood glucose monitors, test strips, or 

related supplies to their DMERCs. 

AGENCY COMMENTS 

The HCFA concurred with our recommendations. The HCFA noted a number of initiatives that 

have reduced the incidence of improper payments in recent years. To specifically address our 

recommendations, HCFA stated that (1) DMERCs will continue to stress the importance of 

properly completed documentation through a combination of published guidance in supplier 

manuals and bulletins and supplier education and outreach seminars, (2) in the 2001 “Work 

Change Process,” they will promulgate changes on claims forms to require actual and accurate 

“start” and “end” dates, (3) they will work with the National Supplier Clearinghouse to include 

language in the notifications sent to suppliers awarding them billing numbers to read and adhere 

to the OIG’s Compliance Program Guidance for the Durable Medical Equipment, Prosthetics, 

Blood Glucose Test Strips 13 OEI-03-98-00230 
Orthotics and Supply Industry, and (4) beneficiary outreach efforts will encourage the reporting 

of abusive supplier practices to the DMERCs. The full text of HCFA’s comments can be found 

in Appendix B. 

OIG RESPONSE 

We support HCFA’s continuing efforts to reduce the incidence of improper Medicare payments. 

Although HCFA indicated that our estimate of improper payments was based on an extrapolation 

from a sample of high use (emphasis added) beneficiaries, we wish to point out that we selected 

for our sample those patients whose claims averaged at least $50 per month. We do not believe 

that all of these beneficiaries should be defined as high-use beneficiaries. 

Blood Glucose Test Strips 14 OEI-03-98-00230 
APPENDIX A 

Estimates And Confidence Intervals

The tables below contain statistical estimates presented in the Findings section of this report. To 

calculate the point estimates and confidence intervals for the percentage of claims and total 

Medicare allowances we used the Survey Data Analysis (SUDAAN) software package. These 

estimates are weighted based on a single-stage cluster sample design. To calculate the point 

estimates and confidence intervals for the percentage of Medicare beneficiaries we used the SAS 

software package. These estimates are based on a simple random sample design. All estimates 

are reported at the 95 percent confidence level. Estimates were made only for the universe of 

beneficiaries with claims averaging $50 a month or more. 

MEDICARE ALLOWED $79 MILLION FOR BLOOD GLUCOSE TEST STRIPS WITH 

MISSING OR FLAWED DOCUMENTATION 

Table 1. 

Claims With Missing or Flawed Documentation 

Point 

Estimate 

95% Confidence Interval 

Total Medicare Allowances in 1997 for Glucose Test 

Strip Claims With Missing or Flawed Documentation $78,939,525 $68,015,130 - $89,863,921 

Table 2. 

Claims Which Failed to Establish Beneficiary Eligibility 

Point 

Estimate 

95% Confidence Interval 

Percent of Claims Which Failed to Establish 

Beneficiary Eligibility 

24.50% 18.68% - 30.32% 

Total Medicare Allowances in 1997 for Glucose Test 

Strip Claims Which Failed to Establish Beneficiary 

Eligibility 

$33,009,187 $25,402,245 - $40,616,130 

Blood Glucose Test Strips 15 OEI-03-98-00230 
APPENDIX A 

Table 3. 

Claims With Other Documentation Problems 

Point 

Estimate 

95% Confidence Interval 

Percent of Claims With Other Documentation 

Problems 

33.77% 27.56% - 39.98% 

Total Medicare Allowances in 1997 for Glucose Test 

Strip Claims With Other Documentation Problems $45,930,337 $36,682,684 - $55,177,989 

Table 4. 

Claims With Orders Not Covering the Dates of Service 

Point 

Estimate 

95% Confidence Interval 

Percent of Claims With Orders Not Covering the 

Dates of Service 

8.43% 5.57% - 11.29% 

Table 5. 

Claims With Missing or Unsigned Orders 

Point 

Estimate 

95% Confidence Interval 

Percent of Claims With Missing or Unsigned Orders 5.52% 2.68% - 8.36% 

Table 6. 

Claims With No Documentation of Insulin Use 

Point 

Estimate 

95% Confidence Interval 

Percent of Claims With No Documentation of Insulin 

Use 

15.24% 9.67% - 20.80% 

Blood Glucose Test Strips 16 OEI-03-98-00230 
APPENDIX A 

Table 7. 

Beneficiaries Who Said They Did Not Use Insulin in 1997 

Point 

Estimate 

95% Confidence Interval 

Percent of Beneficiaries Who Said They Did Not Use 

Insulin in 1997 

9.45% 8.61% - 10.29% 

IRREGULAR BILLING CYCLES MAKE REVIEW OF CLAIMS FOR TEST STRIPS 

DIFFICULT 

Table 8. 

Claims Without Documentation That Test Strips Were Ordered 

Point 

Estimate 

95% Confidence Interval 

Percent of Claims Without Documentation That Test 

Strips Were Ordered 

20.75% 15.56% - 25.94% 

Table 9. 

Claims Without Delivery Documentation 

Point 

Estimate 

95% Confidence Interval 

Percent of Claims Without Delivery Documentation 17.90% 12.63% - 23.17% 

Blood Glucose Test Strips 17 OEI-03-98-00230 
APPENDIX B 

Health Care Financing Administration Comments

Blood Glucose Test Strips 18 OEI-03-98-00230 
APPENDIX B 

Blood Glucose Test Strips 19 OEI-03-98-00230 
APPENDIX B 

Blood Glucose Test Strips 20 OEI-03-98-00230 
APPENDIX B 

Blood Glucose Test Strips 21 OEI-03-98-00230 
APPENDIX B 

Blood Glucose Test Strips 22 OEI-03-98-00230 
APPENDIX B 

Blood Glucose Test Strips 23 OEI-03-98-00230