Kusserow on Compliance: OIG found Medicare continues to overpay for selected drugs

In a number of blog articles, I have reported on the ongoing interest of the HHS Office of Inspector General (OIG) in drug related issues, particularly diversion and abuse. Much of this focus has been as result of Medicare Part D drug benefits. The most recent report issued by the OIG on this subject found Medicare contractors in 13 jurisdictions overpaid providers $35.8 million for selected outpatient drugs during a three year audit period. Nearly 90 percent of the overpayments were as a result of providers billing either incorrect units of service or a combination of incorrect units of service and incorrect Healthcare Common Procedure Coding System (HCPCS) codes.

The OIG also found that the Medicare claims processing systems did not have sufficient prepayment edits in place to prevent these overpayments and cited a notable example of the Medically Unlikely Edits (MUEs), which did not address many of the HCPCS codes associated with the outpatient drugs. Additional potential overpayments were identified for outpatient drugs that were billed after the period of the audit review that could result in an additional $11.5 million in overpayments. The OIG recommended that CMS:

  • ensure Medicare contractors collect remaining overpayments identified in the reviews;
  • continue to educate providers on correct billing of outpatient drugs;
  • instruct Medicare contractors to review payments to providers for outpatient drugs billed subsequent to the period of the audit; and
  • continue to implement line item and date-of-service MUEs for additional outpatient drugs.

CMS and the Medicare contractors concurred with all of the recommendations and provided information on actions that it has taken or planned to take to address the recommendations. CMS also highlighted actions taken during and after the audit period to prevent overpayments to providers incorrectly billing for outpatient drugs. This included steps taken to educate providers on avoiding common Medicare billing errors through published articles and newsletters, as well requiring Medicare contractors to implement line item MUEs for identified HCPCS codes related to outpatient drugs. CMS also began converting some line item MUEs to date-of-service MUEs. If the Medicare contractors had these line item and date-of-service MUEs in place during the entire audit period, $23.7 million, or 66 percent, of the $35.8 million in total overpayments could have been prevented. CMS also reported that as of May 4, 2015, Medicare contractors had already recovered 63 percent of the $35.8 million in overpayments, and 10 of the 13 Medicare contractors had used the results of the OIG audit for ongoing provider education activities.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.