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Transcript for audio podcast: Contractors Overpaid Millions to Providers for Herceptin

From the Office of Inspector General of Department of Health and Human Services

[Jaime Saucedo] I'm Jaime Saucedo, audit manager in Chicago, speaking with Leslie Preuss, senior auditor in our Springfield, Illinois office. Leslie, your audit team recently led a nationwide review that found that Medicare contractors across the country overpaid millions to providers for the cancer drug Herceptin. Can you give us some background on this review?

[Leslie Preuss] Yes, I'd be glad to. Basically, we found that providers were billing Medicare for quantities of cancer drug beyond what they actually administered to the patient. These improper billing practices cost the Medicare program millions of dollars and may have subjected cancer patients to higher co-pays. This review began as a spinoff of an excessive payment review. Over the last several years, we've performed these types of reviews at the Medicare Administrative Contractors, commonly known as MACs, with the focus on whether providers billed certain claims appropriately. During one of these reviews, we noticed that providers were continuously overbilling for one particular type of code.

[Jaime Saucedo] Can you tell us about this code?

[Leslie Preuss] Sure. Providers use a particular code to bill for the drug Herceptin. Herceptin is a Medicare-covered drug used to treat breast cancer that has spread to other parts of the body. The drug is packaged as a multiuse-vial, and this packaging allows for reduced waste of the drug. If a patient does not require the full contents of the multi-use vial, the leftover drug can be safely stored and then administered to that patient or another patient up to 28 days after the first use.

[Jaime Saucedo] What is a single-use vial?

[Leslie Preuss] A single use vial is designed to be used once. The patient might receive all or just part of the drug contained in the vial. If the patient receives only part of the vial's drug contents, the leftover amount of the drug is discarded and should not be administered to another patient. Since that discarded drug is unavoidably wasted, Medicare allows providers to bill for the full single use vial, even if they had to throw some of the drug away.

[Jaime Saucedo] What about a multi-use vial?

[Leslie Preuss] Multiuse vials are designed to be safely used for more than one administration, either repeat visits by the same patient or for multiple patients. Providers don't have to waste the leftover drug, rather, they should save it to administer to a patient. Because Herceptin is supplied in a multiuse vial, providers should bill Medicare only for the actual dose of Herceptin administered to the patient. Providers should not bill Medicare for a full vial of Herceptin unless the patient actually received a full vial of the drug.

[Jaime Saucedo] So what were the providers doing incorrectly?

[Leslie Preuss] Providers were billing for an entire vial of Herceptin when they were only administering a portion of the drug.

[Jaime Saucedo] Listeners are probably wondering what the providers were doing with the volume of Herceptin that was left in the multiuse vial. Do you think they might have been throwing it away? Do you think they might have been administering it to another patient, and perhaps billing Medicare twice for the same physical vial of Herceptin?

[Leslie Preuss] Well, both those two scenarios are quite possible. However, the focus of our review was on whether providers were billing claims appropriately. In either scenario, the providers should only have billed Medicare and the beneficiary for the amount of Herceptin actually administered to the patient, and not for the rest of the vial.

[Jaime Saucedo] How were you able to tell that providers were billing incorrectly?

[Leslie Preuss] We reviewed medical record documentation like doctors' orders, nurses' notes, and the amount of Herceptin administered. We found that providers were billing for the entire vial instead of what was being administered. This improper billing resulted in an overpayment for the drug. Based on these findings, we decided to embark on a pilot review focused specifically on Herceptin at one particular Medicare Administrative Contractor.

[Jaime Saucedo] What did your pilot review in the Chicago region find?

[Leslie Preuss] During our three year review, we found that 78 percent of line items for Herceptin were billed incorrectly. Out of almost 4,000 selected line items reviewed, approximately 3,100 were incorrect and included overpayments of approximately $3.8 million dollars.

[Jaime Saucedo] And how did the providers explain the incorrect billing?

[Leslie Preuss] Providers said the incorrect billing was caused by clerical errors or billing systems that could not prevent or detect the incorrect billing. Based on the results of the pilot review, we expanded our review nationwide and performed 18 separate reviews for the billing of Herceptin.

[Jaime Saucedo] Did other teams find similar results to your pilot review?

[Leslie Preuss] Yes they did. Our nationwide reviews covered all Medicare Administrative Contractor jurisdictions from 2008 through 2010. We reviewed over 26,000 line items totaling approximately $69 million dollars. Of the line items we reviewed, 77 percent were incorrect and included overpayments of more than $24 million dollars.

[Jaime Saucedo] Wow. 77 percent is a very high error rate. Are you looking into other types of outpatient services that may have similar kinds of errors?

[Leslie Preuss] Yes. We are currently assisting in another nationwide review that focuses on other select drugs using a similar approach as we used in the Herceptin reviews. We've already identified about $8 million dollars in recoveries in two reviews. Participating in these types of reviews will help to develop other audit ideas that may allow us to further reduce waste, recover federal dollars, and educate providers.

[Jaime Saucedo] Thank you, Leslie, for sharing such important audit work about incorrect billing, leading to overpayments with Herceptin.

[Leslie Preuss] Thank you Jaime.


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