Medicare Market Shares of Mail Order Diabetic Testing Strips

We found that suppliers submitted claims for at least 75 types of mail order diabetic testing strips for the 3-month period ending December 2009.

Section 154(d)(3)(B) of the Medicare Improvements for Patients and Providers Act (MIPPA) requires the Office of Inspector General (OIG) to complete a study to determine market shares of diabetic testing strips before 2011.

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) requires CMS to phase in, with several rounds of bidding, a durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) Competitive Bidding Program. Under this program, suppliers compete to become Medicare contract suppliers by submitting bids in certain geographic areas for selected DMEPOS items, including mail order diabetic testing strips. The payment amounts resulting from the accepted bids will replace the Medicare fee schedule amounts in these areas.

The Competitive Bidding Program does not currently include diabetic testing strips purchased at a local pharmacy or supplier storefront (i.e., nonmail order). Beneficiaries that do not wish to order their diabetic test strips through the mail may continue to receive their preferred type from a local pharmacy or supplier storefront for the fee schedule amount.

Initial rounds of bidding did not require that winning suppliers provide a specific number or percentage of diabetic testing strip types available on the market. However, the MIPPA requires that future rounds of Competitive Bidding Program contracts for mail order diabetic testing strips be awarded to suppliers who provide at least 50 percent, by volume, of all types of mail order diabetic testing strips (i.e., the MIPPA 50-percent requirement).

We determined the Medicare market shares for diabetic testing strip types associated with a random sample of Medicare claims for the 3-month period ending December 2009. Our sample of 1,210 claims was drawn from a population of approximately 574,000 for mail order diabetic testing strips provided to beneficiaries. We projected our sample data to the population of mail order diabetic testing strips to estimate the Medicare market shares.

We found that 2 types of diabetic testing strips accounted for approximately 26 percent of the Medicare mail order market share, 7 types of diabetic testing strips accounted for approximately 50 percent of the Medicare mail order market share, and 19 types accounted for approximately 81 percent.

CMS may consider these data when determining whether future rounds of suppliers' mail order diabetic test strip bids comply with the MIPPA 50-percent requirement.