As a health care regulatory attorney, I have worked with many diabetic suppliers over the years and have learned a lot about diabetes. However, this fall I learned a great deal more when my oldest son was diagnosed as a type 1 diabetic just before his 19th birthday. I immediately went to the American Diabetes Association Web site and found some startling facts. In 2007, the total estimated cost of diabetes in the United States was $174 billion in terms of direct medical expenditures and lost productivity.

There are 20.8 million Americans who suffer from diabetes, and it is the sixth leading cause of death in the United States. In fact, every day 613 Americans die from diabetes. Also, 20.9% of all Americans over age 60 are diabetic. No wonder diabetic suppliers are experiencing tremendous growth.

Along with this growth will come additional audits regarding the appropriateness of payments for diabetic supplies. In fact, the 2008 Office of Inspector General (OIG) Work Plan specifically states that the OIG will be examining Medicare Part B payments for home blood glucose test strips and lancets. The plan mentions the need for a physician order and the use of a modifier to indicate whether a patient is insulin or non-insulin treated. Based on the Work Plan, there are a number of areas that diabetic suppliers should review to ensure their documentation is in compliance.

The first area that suppliers should review is physician orders. A 2006 Prepayment Probe Review of diabetic suppliers conducted by TriCenturion found that often a supplier's physician order was not sufficient. The probe review found that diabetic supply orders often listed items such as glucometers, batteries, test strips, lancets, calibration solution, and lancing devices but did not require the physician to affirmatively order each item, or specify the quantity of the item being requested. Unless the physician selects the exact items and quantity of items being ordered, the order will be considered insufficient. A complete physician's order should include: 1) the item(s) to be dispensed; 2) the specific frequency of testing; 3) the treating physician's signature; 4) the date of the treating physician's signature; and 5) the start date of the order if the start date is different from the signature date.

Without an appropriate order, the supplies will be denied, and if the supplier has previously been paid, a recoupment will take place. Another area of concern is the appropriate use of modifiers. The amount of supplies that Medicare will cover depends on whether a patient is insulin dependent. If a patient is non-insulin dependent, Medicare guidelines will generally allow a patient to test once a day. If a patient is insulin dependent, Medicare guidelines will generally allow a patient to test three times a day.

If a patient needs to test more than Medicare guidelines allow, additional documentation requirements must be met. For this reason, it is important that the modifiers are used appropriately to identify the patients who fall outside Medicare utilization guidelines. If a patient is insulin dependent, the KX modifier should be used with claims, and if the patient is non-insulin dependent, the KS modifier should be used with claims. While the patient's insulin status is not required to be stated on the order, suppliers should be able to provide some sort of documentation regarding the patient's insulin status.

In addition to the KX and KS modifiers, a diabetic supplier needs to be aware of the KL modifier. This modifier is required for all claims after July 1, 2007, and is used to identify supplies that are delivered via mail order. This modifier is particularly important as competitive bidding is implemented in the first 10 MSAs.

Denise M. Fletcher

The KL modifier will distinguish suppliers that must have a competitive bidding contract from those that do not require a contract. In accordance with the competitive bidding program, diabetic supplies that are delivered via mail in the competitive bidding areas can be provided only by suppliers that have been awarded a contract. If a supplier is delivering the products directly to the beneficiary's home via personal delivery or if the beneficiary picks up their supplies from the supplier, a competitive bidding contract is not necessary. The fact that non-mail order diabetic supplies are not part of competitive bidding provides an opportunity for suppliers who were not awarded a contract to continue to serve beneficiaries in the competitive bidding MSAs.

In addition to the areas identified above, suppliers should also examine their files for patients who test outside Medicare guidelines. For patients testing in excess of the utilization guidelines, Medicare policy requires that there be documentation in the physician's records (a specific narrative statement that adequately documents the frequency at which the patient is actually testing, or a copy of the beneficiary's testing log) or in the supplier's records (a copy of the beneficiary's testing log) that the patient is actually testing at a frequency that corroborates the quantity of supplies that have been dispensed.

If the patient is regularly using quantities of supplies that exceed the utilization guidelines, new documentation must be present at least every 6 months. Most diabetic suppliers do not regularly obtain documentation to support additional testing by their patients. However, Medicare policy requires that a supplier must provide the documents upon request. If a supplier is unable to provide the documentation, the claim will be denied.

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It is unrealistic to think that a supplier will obtain additional documentation for every one of its high-frequency testers prior to dispensing supplies, but it is recommended that a supplier add language to its order that will help it to identify the reason for testing beyond the guidelines. If a reason is not present, the supplier may wish to obtain further information before dispensing the supplies for high-frequency testers. Such language will not be sufficient to prove medical necessity in the case of a carrier audit, but it will help suppliers make informed choices about dispensing the supplies.

Ultimately, the provision of diabetic supplies represents an opportunity for suppliers. However, like any area of Medicare that is experiencing growth, expect audits and be prepared to provide documentation supporting the medical necessity of the supplies.

Denise M. Fletcher, JD, is an attorney with the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. She represents pharmacies, infusion companies, HME companies, and other health care providers throughout the United States. Fletcher is Board Certified in Health Law by the Texas Board of Legal Specialization. She can be reached through the HME Today editor via e-mail: .