Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

INAPPROPRIATE AND 

QUESTIONABLE MEDICARE 

BILLING FOR DIABETES TEST 

STRIPS 

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 high—according to at least one of six measures of questionable billing—that 

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 claims—made by 

10 percent of DTS suppliers—had 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 older—10.9 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. 

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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 249.00–250.93). 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 beneficiary’s 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. 

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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 (Charlotte–Gastonia–Concord, 

North Carolina and South Carolina); Cincinnati (Cincinnati–Middletown, Ohio, 

Kentucky, and Indiana); Cleveland (Cleveland–Elyria–Mentor, Ohio); Dallas (Dallas– 

Fort Worth–Arlington, Texas); Kansas City (Kansas City, Missouri and Kansas); Miami 

(Miami–Fort Lauderdale–Miami Beach, Florida); Orlando (Orlando–Kissimmee, 

Florida); Pittsburgh (Pittsburgh, Pennsylvania); and Riverside (Riverside– 

San Bernardino–Ontario, 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. 

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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 nonmail 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-ServicePayment/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-NetworkMLN/MLNProducts/downloads/DME_Mail_Order_Factsheet_ICN900924.pdf on July 31, 

2013. 

27 Ibid. 

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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-ofdelivery 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, Medicare’s DMEPOS Competitive Bidding Program. 

Accessed at http://www.cms.gov/Outreach-andEducation/Outreach/Partnerships/Downloads/PartnerFAQJuly2012.pdf on 

August 14, 2012. 

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

Accessed at http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/DMEPOSCompetitiveBid/Downloads/Competitive-Bidding-Update-One-YearImplementation.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. 

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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 supplier’s 2010 DTS claims and determined that 

the supplier—in accordance with Medicare billing requirements—had 

submitted claims for non-mail order diabetic testing supplies without the 

KL modifier.39 

METHODOLOGY 

We analyzed 2010 and 2011 DTS claims from CMS’s 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 CMS’s 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.
 

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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 CMS’s 

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 

provider’s 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. 

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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 beneficiary’s 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 

beneficiary’s 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 

CMS’s 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 supplier’s 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. 

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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 beneficiary’s 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 supplier’s 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 beneficiary’s 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 supplier’s 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 suppliers—i.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 
 

Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330) 14 

 

 

 

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.
 
 

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Table 1: Inappropriate Medicare-Allowed Claims for Diabetes Test Strips, 2011 

Error Type 

Inappropriate 

Medicare-Allowed 

Amount 

Number of Claims Number of 

Suppliers* 

DTS claims for beneficiaries 

without a documented 

diagnosis code for diabetes $2,315,584 23,778 2,211 

DTS claims that 

inappropriately overlapped 

with a hospital stay $3,382,550 25,589 4,115 

DTS claims that 

inappropriately overlapped 

with an SNF stay $112,787 908 326 

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 

60 apnea.

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., 249.00–250.93). 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) 16 

 

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 

DTS Suppliers Exceeded 

Thresholds 

Number of DTS Suppliers Percentage of DTS 

Suppliers* 

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. 
 

 

 

 

 

 

Table 3: DTS Suppliers with Unusually High Billing by Measure of Questionable Billing, 2011 

Measure of Questionable Billing 

Median 

Among All 

DTS 

Suppliers* 

DTS Suppliers With Unusually High Billing** 

Threshold Range 

MedicareAllowed 

Amounts for 

Claims with 

Questionable 

Billing 

Number of 

Suppliers 

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 

utilization guidelines 

7% 26% 26% to 100% $242 million 1,378 

Average percentage of suppliers’ 

beneficiaries that were associated 

with DTS at perfectly regular 

intervals 

3% 11% 11% to 100% $67 million 851 

Average percentage of suppliers 

that had an unusually high 

percentage of beneficiaries 

associated with overlapping DTS 

claims submitted by the same 

supplier 

15% 38% 38% to 100% $10 million 745 

Average percentage of suppliers’ 

DTS claims for beneficiaries in 

2010 but not in 2011 

15% 40% 40% to 100% $2 million*** 683 

Average percentage of suppliers’ 

beneficiaries associated with 

overlapping DTS claims from more 

than one supplier 

10% 26% 26% to 100% $102 million 508 

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 supplier’s 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. 

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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.
 

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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 

Geographic Area 

Questionable 

MedicareAllowed 

Amount 

Number of 

DTS 

Suppliers 

With 

Questionable 

Billing 

Total 

Number of 

DTS 

Suppliers 

DTS 

Suppliers 

With 

Questionable 

Billing out of 

Total DTS 

Suppliers 

Port St. Lucie, FL $114,963,257 11 79 14% 

Miami-Fort LauderdalePompano Beach, FL $113,196,111 222 1125 20% 

Nashville-DavidsonMurfreesboro-Franklin, TN $34,698,435 33 330 10% 

New York-Northern New JerseyLong Island, NY-NJ-PA $15,497,578 358 3647 10% 

Tampa-St. PetersburgClearwater, FL $14,208,167 61 571 11% 

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, MANH 

$6,481,774 25 676 4% 

Los Angeles-Long Beach-Santa 

Ana, CA 

$5,844,420 192 1628 12%

 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 

Medicare-Allowed Amount 2010 2011 

Change 

Between 2010 

and 2011 

Beneficiaries in CBAs $33,232,992 $4,291,370 -87% 

Beneficiaries in Non-CBA 

Areas $395,286,785 $382,894,324 -3% 

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 

Number of Suppliers 2010 2011 Change Between 

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 
 

Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330) 23 

 

 

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). 
 

 

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 Medicare’s 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 CMS’s 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 

Geographic Area Medicare-Allowed 

Amount 

Number of 

Suppliers 

Diabetes Test 

Strips (DTS) 

Suppliers out of 

Total DTS 

Suppliers With 

Four or More 

Measures of 

Questionable 

Billing * 

Miami–Fort Lauderdale– 

Pompano Beach, FL $15,480,748.14 2 15% 

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 

Island, NY-NJ-PA 

$591,296.94 1 8% 

Dayton, OH $195,321.57 1 8% 

Dallas-Fort Worth-Arlington, TX $81,481.08 1 8% 

El Dorado, AR $63,749.18 1 8% 

Indianapolis-Carmel, IN $55,894.71 1 8% 

San Antonio-New Braunfels, TX $54,596.44 1 8% 

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 

Supplier 

Number Geographic Area 

Questionable 

Medicare-Allowed 

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 

Measure of Questionable Billing 2010 2011 

Change 

From 2010 

to 2011 

Beneficiaries associated with multiple 

DTS claims submitted by the same 

supplier during overlapping time periods: 

 Medicare-allowed amount 

Number of suppliers 

$772,156 

24 

$6,024 

8 

-99% 

-67% 

Beneficiaries associated with DTS 

claims at perfectly regular intervals: 

 Medicare-allowed amount 

Number of suppliers 

$5,130,164 

133 

$1,040,701 

52 

-80% 

-61% 

Beneficiaries associated with 

overlapping DTS claims from more than 

one supplier: 

 Medicare-allowed amount 

Number of suppliers 

$5,188,186 

108 

$397,390 

73 

-92% 

-32% 

DTS claims for beneficiaries in excess of 

utilization guidelines: 

 Medicare-allowed amount 

Number of suppliers 

$22,143,612 

178 

$2,847,988 

113 

-87% 

-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 

Measure of Questionable Billing 2010 2011 

Change 

From 2010 

to 2011 

Beneficiaries associated with multiple 

DTS claims submitted by the same 

supplier during overlapping time 

periods: 

 Medicare-allowed amount 

Number of suppliers 

$7,652,322 

46 

$5,972,260 

54 

-22% 

17% 

Beneficiaries associated with DTS 

claims at perfectly regular intervals: 

 Medicare-allowed amount 

Number of suppliers 

$53,218,904 

319 

$58,709,687 

352 

10% 

10% 

Beneficiaries associated with 

overlapping DTS claims from more 

than one supplier:

 Medicare-allowed amount 

Number of suppliers 

$72,763,498 

164 

$98,380,726 

185 

35% 

13% 

DTS claims for beneficiaries in 

excess of utilization guidelines: 

 Medicare-allowed amount 

Number of suppliers 

$261,691,402 

355 

$219,911,302 

313 

-16% 

-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 
 

Inappropriate and Questionable Medicare Billing for Diabetes Test Strips (OEI-04-11-00330) 31 

 

 

 

 

 

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 

Measure of Questionable Billing 2010 2011 

Change 

From 2010 

to 2011 

Beneficiaries associated with multiple 

DTS claims submitted by the same 

supplier during overlapping time 

periods: 

 Medicare-allowed amount 

Number of suppliers 

$457,293 

86 

$361,111 

113 

-21% 

31% 

Beneficiaries associated with DTS 

claims at perfectly regular intervals: 

 Medicare-allowed amount 

Number of suppliers 

$797,742 

123 

$1,880,789 

145 

136% 

18% 

Beneficiaries associated with 

overlapping DTS claims from more 

than one supplier:

 Medicare-allowed amount 

Number of suppliers 

$310,141 

116 

$323,994 

85 

4% 

-27% 

DTS claims for beneficiaries in excess 

of utilization guidelines:

 Medicare-allowed amount 

Number of suppliers 

$1,986,617 

260 

$4,556,094 

273 

129% 

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. 
 

 

 

 

 

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 

Measure of Questionable Billing 2010 2011 

Change 

From 2010 

to 2011 

Beneficiaries associated with multiple 

DTS claims submitted by the same 

supplier during overlapping time 

periods: 

 Medicare-allowed amount 

Number of suppliers 

$4,662,777 

649 

$4,041,784 

676 

-13% 

4% 

Beneficiaries associated with DTS 

claims at perfectly regular intervals: 

 Medicare-allowed amount 

Number of suppliers 

$4,434,763 

682 

$5,556,782 

711 

25% 

4% 

Beneficiaries associated with 

overlapping DTS claims from more 

than one supplier:

 Medicare-allowed amount 

Number of suppliers 

$2,602,851 

389 

$3,204,223 

422 

23% 

8% 

DTS claims for beneficiaries in 

excess of utilization guidelines: 

 Medicare-allowed amount 

Number of suppliers 

$15,590,781 

1,269 

$14,483,191 

1,188 

-7% 

-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 of allowed 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 marketbased 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 claimsprocessing 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 OIG’s 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.