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Medicare Contractors' Payments to Providers in Jurisdiction 11 for Full Vials of Herceptin Were Often Incorrect

Most payments for one or more full vials of Herceptin that the Medicare contractors made to providers in Jurisdiction 11 (North Carolina, South Carolina, Virginia, and West Virginia) from January 2008 through December 2010 were incorrect. Herceptin (trastuzumab) is a Medicare-covered biological drug used to treat breast cancer that has spread to other parts of the body.

Of the 2,507 selected line items, 2,029 were incorrect and included overpayments totaling $2.4 million that the providers had not identified or refunded by the beginning of our audit. Providers refunded overpayments on 138 line items totaling $131,000 before our fieldwork. The remaining 340 line items were correct.

The 2,029 incorrect line items included incorrect units of service and a lack of supporting documentation. The providers attributed the incorrect payments to chargemaster errors, clerical errors, and billing systems that could not prevent or detect the incorrect billing of units of service. In some cases, providers could not store unused doses for later use because their pharmacies incorrectly reconstituted the Herceptin. When this occurred, the providers billed Medicare for the entire vial, including waste. The Medicare contractors made these incorrect payments because neither the Fiscal Intermediary Standard System nor the Common Working File had sufficient edits in place during our audit period to prevent or detect the overpayments.

We recommended that Palmetto GBA, LLC (Palmetto), the Medicare Administrative Contractor for Jurisdiction 11, (1) recover the $2.4 million in identified overpayments, (2) implement a system edit that identifies for review line items for multiuse-vial drugs with units of service equivalent to one or more entire vials, and (3) use the results of this audit in its provider education activities. Palmetto concurred with our findings and recommendations and described corrective actions that it had taken or planned to take.

Filed under: Center for Medicare and Medicaid Services