According to a recent report by the HHS Office of Inspector General (OIG), Medicare contractors in 13 jurisdictions overpaid providers by $35.8 million for select outpatient drugs, including injectable drugs used for cancer treatment and pain management, between July 1, 2009 and June 30, 2012.  The results are from the OIG’s performance of 13 individual reviews of payments for these select outpatient drugs, for which it issued 13 separate reports between January and July 2014.  As of May 4, 2015, Medicare contractors have recovered 63 percent of the $35.8 million in overpayments, and 10 of the 13 contractors have used the results of the OIG’s audits to provide ongoing provider education.

The vast majority of overpayments (88 percent) were attributed to either billing of incorrect units of service or a combination of incorrect units of service and incorrect HCPCS codes.  The OIG found that the Medicare claims processing systems did not have sufficient prepayment edits in place to prevent the overpayments.  Specifically, “Medically Unlikely Edits” (“MUEs”), which are automatic prepayment edits within the Medicare claims processing system that compare the billed units with the maximum units of service for a particular HCPCS code on a single date of service, were not in place for many of the outpatient drugs reviewed.  Had the MUEs been in place during the audit period, $23.7 million (66 percent) of the $35.8 million in total overpayments could have been prevented.  In addition, the OIG identified potential overpayments for outpatient drugs billed after the audit period and found that Medicare contractors could recover up to $11.5 million in overpayments if they were to review payments to providers between July 2012 and June 2014 that either had units of service exceeding MUE values, or that had units of service exceeding the number of units a provider would reasonably administer on a single day if there was not an established MUE value for the line item. 

The OIG recommended that CMS: (1) ensure that Medicare contractors collect the remaining overpayments identified in the OIG’s individual reviews; (2) continue to educate providers on correct billing of outpatient drugs; (3) instruct Medicare contractors to review payments to providers for outpatient drugs billed from July 2012 through June 2014 (which could represent overpayments of $11.5 million according to the OIG); and (4) continue to implement line item and date-of-service MUEs for additional outpatient drugs.  CMS concurred with all recommendations and requested the claims data from the OIG for item 3. 

For a copy of the OIG’s report, please click here. 

Reporter, Kerrie S. Howze, Atlanta, +1 404 572 3594, khowze@kslaw.com.