Criminals find veins of gold in diabetic supply benefits

Payments for diabetic supplies can be worth investigating because fraud, waste and abuse related to these items have gouged Medicare and Medicaid, according to an Office of Inspector General spotlight report.

Diabetics can fall victim to telemarketers who break the law by convincing them to disclose insurance identification numbers in exchange for kickbacks, free test strips or cookbooks, the OIG noted. Then telemarketers bill for excessive supplies or items never provided.

But individual fraud accounts for only a fraction of the losses linked to diabetic supplies, the report noted. An audit of 400 Medicare claims filed with four carriers in one year, for example, revealed that more than three quarters of sampled claims were problematic: Supply quantities exceeded Medicare guidelines or the items lacked physician orders. These claims resulted in approximately $209 million overpaid dollars.    

Medicare lost another $6 million in 2011 for diabetes test strips (DTS) billed for people without the disease or for others who received strips during hospital or skilled nursing facility stays, the OIG found. Moreover, nearly 5,000 suppliers filed multiple DTS claims for the same patient in overlapping time frames. This caused Medicare to lose $425 million, the report stated.  

And Medicare overpaid another $55 million for DTS deliveries to patients living far away from suppliers, the OIG found. Suppliers billed mail-order supplies as nonmail-order items to generate higher per-claim allowances.

Finally, failure to tap cost-saving opportunities available for diabetic supplies has wasted program dollars. Two out of five state Medicaid programs could have saved $17.9 million through rebates, while four out of five state Medicaid agencies could have saved $29.7 million through rebates and competitive bidding for DTS purchases, the OIG found. And competitive bidding programs reduce potential fraud and abuse without restricting patient access to supplies, the report stated.         

The Centers for Disease Control and Prevention estimates 27 percent of Americans aged 65 and older have diabetes, with 400,000 more diagnosed annually. And diabetes-related healthcare expenditures topped $11,000 per beneficiary in 2012, with Medicare picking up most of the tab, as FierceHealthPayer reported.

For more:
- here's the OIG report

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