OIG spotlights diabetes test strips

Wednesday, March 19, 2014

WASHINGTON – The Office of Inspector General (OIG) says in a March 18 report that state Medicaid programs could save millions on diabetes test strips.

The OIG conducted audits in five states—Illinois, Indiana, New Jersey, New York and Ohio—to see whether competitive bidding or manufacturer rebates could lower costs for the test strips.

The OIG found that two of the five states had saved $17.9 million through the use of rebates; and four of the five states could have saved an additional $29.7 million through rebates or competitive bidding.

The OIG also identified $8.3 million in additional savings in four of the five states if pricing from Medicare’s national mail-order program had been used.

The OIG recommends, and CMS concurs, that the agency should work with state Medicaid agencies to determine whether manufacturer rebates and lower reimbursement rates could achieve savings.

In a separate report, the OIG reviewed claims for diabetes testing supplies without the KL modifier from three suppliers for calendar years 2010 and 2011. All three suppliers used company-owned vehicles to deliver supplies to beneficiaries, which the OIG says did not meet CMS’s then-definition of a mail-order supplier.

The OIG says Medicare would have paid approximately $4.7 million vs. $8.2 million for the supplies if the definition for mail order included deliveries with company-owned vehicles.