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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Separately Billed End Stage Renal Disease Hospital Outpatient Laboratory Tests Included in the Composite Rate," (A-01-99-00506)

January 24, 2001

Complete Text of Report is available in PDF format (1.87 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report points out that, based on a statistical sample, approximately $6.1 million was improperly paid to hospital laboratories for services provided to ESRD beneficiaries during calendar years 1995 through 1997. Specifically, hospital labs were reimbursed separately for services which were included in the dialysis facility's composite rate. Also, contrary to the 50 percent rule, separate payments were made for additional profile tests performed in conjunction with the monthly testing included in the composite rate. We recommended that the Health Care Financing Administration (HCFA) require the fiscal intermediaries to provide education to ESRD providers and hospital laboratories explaining proper billing practices, including which lab tests are included in the composite rate, the frequencies at which these tests are included, and the 50 percent rule. We also recommended that HCFA monitor providers' billing for lab tests outside the composite rate and conduct detailed post-payment reviews to determine if reimbursement was proper. If implemented we estimate future savings of more than $2 million per year. The HCFA generally concurred with our recommendations.