Resale of Diabetic Test Strips Speaker: Maurene Mealy PMP, CAMS, CFE Deputy Director of Administration National Benefit Integrity MEDIC.

Resale of Diabetic Test StripsResale of Diabetic Test Strips

Speaker:Maurene MealyPMP, CAMS, CFEDeputy Director of AdministrationNational Benefit Integrity MEDIC

ObjectivesObjectives

• Present an overview of the types of complaints received by the National Benefit Integrity (NBI) MEDIC.

• Summarize concerns related to overutilization and resale of diabetic test strips.

• Provide insight into obstacles regarding potential referral to law enforcement.

• Discuss need for controls to prevent improper payments for high utilization claims for diabetic test strips and lancets.

• Identify types of controls in place by plan sponsors.

• Resale and Repackaging • A pharmacist noted an advertisement in a local newspaper

for an unidentified entity purchasing diabetic test strips for $10/box. The only identifying information was a telephone number.

• Employee Theft • Proactive data-mining analysis by a plan sponsor revealed

a significant difference between the number of diabetic test strips provided as inventory to an outpatient pharmacy and what could be accounted for through normal business activity.

Overutilization and Resale of Diabetic Test Strips:Types of Complaints Received




• Excessive Number of Units Billed • Data analysis by a plan sponsor identified a Durable Medical

Equipment (DME) provider billing for an excessive number of units of diabetic supplies per member.

• A DME provider was referred to the NBI MEDIC because of continued billing for an excessive number of units of diabetic supplies per member. This was despite previous attempts at provider education on this issue by the plan sponsor.

• Beneficiary Complaints Concerning DME Suppliers• Unsolicited telephone calls• Aggressive marketing tactics • Services billed but not actually rendered from DME suppliers

Concerns Regarding Resale of Diabetic Test Strips:Product Safety

Concerns Regarding Resale of Diabetic Test Strips:Product Safety

• Potential for resale of expired, recalled, or defective products:• Test strips on secondary market may be beyond their period of

effectiveness and give inaccurate readings.• Sellers may not be registered, as required, by the Food and Drug

Administration (FDA) company.• The number of advertisements and solicitations to buy unused test strips

is increasing. • In September 2011, eBay had 61 listings from diabetic test strip buyers. By July

2012, the number had increased to 1,395 and continues to remain close to this figure.

• Amazon lists 2,015 both buying and selling diabetic test strips.• Craigslist revealed 240 buyers.

Resale of Diabetic Test Strips: Internet Advertisements

Resale of Diabetic Test Strips: Internet Advertisements

• SCNOW.com Morning News Online - Wanted to Buy: Diabetic Test Strips. Serving Florence for 3 years. Same-day service. Highest price paid—up to $20 per box. Call Brad: (843) 432-2619.

• Sell Your Test Strips.com - NEED EXTRA CASH? STOP THROWING AWAY UNUSED DIABETIC TEST STRIPS! We will be happy to PAY YOU CASH for any boxes of extra, unused, and unneeded test strips—UP TO $26 PER BOX!

• DTSBuyers.com - Do you receive 10 boxes of diabetic test strips when you only need one? Get cash for the unused boxes you don’t need! Do you have extra test strips lying around? How would you like to start earning cash from them each month? At DTSBuyers.com we make it simple for you to calculate your earnings and begin making money each month! We take most diabetic test strip brands, as well as pay your shipping!

Concerns Regarding Resale of Diabetic Test Strips:Liability for Resale

Concerns Regarding Resale of Diabetic Test Strips:Liability for Resale

• Internet Vendor • May be subject to FDA dispenser registration requirements. • Potential liability if selling expired/defective products.

• Beneficiary• Encouraged to report unrequested or excess shipments and other

supplier fraud. • No requirement to return excess supplies. • Potential denial of coverage based on lack of medical necessity.

• DME Supplier• Potential loss of Medicare participation.• Potential fraud liability (medical necessity requirements not met;

over-shipping).

Concerns Regarding Resale of Diabetic Test Strips:Overutilization


• Statistics obtained from the National Institute of Diabetes and Digestive and Kidney Diseases, National Institutes of Health, indicate:• 26.9% of persons over 65 have diabetes as opposed to

8.3% of the entire U.S. population. An increase in utilization and Medicare expenditure will be in direct proportion to the increasing aging population and rising health care costs.



• Medicare utilization guidelines allow for coverage:• 100 test strips and lancets every month for insulin-

dependent beneficiaries.• 100 test strips and lancets every 3 months for non-insulin

dependent beneficiaries.• Larger quantities are covered if medically necessary.

• If ordered quantities of test strips and lancets exceed the quantities specified in policy, there must be justification for testing frequency and evidence in the patient’s medical record of use of the testing supplies.

Concerns Regarding Overutilization of Diabetic Test Strips: Part C Vulnerability

Concerns Regarding Overutilization of Diabetic Test Strips: Part C Vulnerability

• The NBI MEDIC reported resale of diabetic test strips as a vulnerability to the Part C program based on:• Product safety concerns, • Potential lack of controls by claims processors to prevent

overutilization, and• Conclusions that prior determinations of inappropriate

payments made are significant. • Lack of access to a Part C claims central repository. The

monetary impact and exposure to Part C was compared to what has been identified overutilization of diabetic test strips for Part B.

OIG Report on Improper Payment of High Utilization Claims for Diabetic Test Strips

OIG Report on Improper Payment of High Utilization Claims for Diabetic Test Strips

• In June 2012, the Office of Inspector General (OIG) issued a report entitled, “Medicare Contractors Lacked Controls to Prevent Millions in Improper Payments for High Utilization Claims for Home Blood-Glucose Test Strips and Lancets (A-09-11-02027).”• Summarized review of Medicare Part B claims paid for diabetic test

strips and lancets by four Medicare DME administrative contractors in calendar year (CY) 2007.

• Examined 400-claim sample of high utilization claims (those that exceed Medicare utilization guidelines).

• Listed total expenditures for these items in Calendar Year (CY) 2007 as approximately $1.2 billion, with about $484.3 million making up the high utilization claims.

OIG ReportOIG Report

• To identify high utilization claims, the OIG analyzed information submitted by suppliers on claim forms. The accuracy of the claims information was not verified.

• Of the 400 claims reviewed by the OIG, 303 (or 76%) were deficient and some contained multiple deficiencies:• 56% of the claims had no documentation supporting the need for

additional supplies.• 29% had no documentation indicating that refill requirements had

been met.• 23% were missing physician orders in whole or part.• 8% were missing proof of delivery records.

OIG ReportOIG Report

• The OIG study concluded that the four Part B contractors improperly paid a total of approximately $209 million in CY 2007 to suppliers. Controls were not in place to ensure that claims for test strips or lancets complied with certain Medicare requirements. • The contractors did not have system edits to identify high utilization

claims and review when necessary. • Controls were lacking to identify claims with overlapping service

dates for the same beneficiary, allowing payment for claims when beneficiaries had not exhausted previously dispensed test strips and/or lancets.

Questions for Medicare Advantage PlansQuestions for Medicare Advantage Plans

• What types of edits does the claims processor have in place?• Do edits exist that will:

• Detect high utilization claims?• Identify and flag a claim for review prior to payment or deny

overlapping dates of service for diabetic test strips?• Find claims where multiple suppliers have billed the same

beneficiary for diabetic test strips? • Does a process exist that will notify the beneficiary that a claim for

diabetic test strips has been denied due to lack of medical necessity? Is a process in place to request an overpayment from a beneficiary?

• Is internal data mining performed to identify suppliers with a high volume of high utilization claims?

Contact InformationContact Information

Maurene Mealy(410) 770-3170

[email protected]

Resale of Diabetic Test Strips Speaker: Maurene Mealy PMP, CAMS, CFE Deputy Director of Administration National Benefit Integrity MEDIC.

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