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Audit (A-09-13-02009)

The Medicare Contractors for Jurisdiction E Overpaid Providers for Selected Outpatient Drugs

Complete Report

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Payments that the Medicare contractors for Jurisdiction E made to providers for 874 of the 1,539 line items for outpatient drugs we reviewed were not correct. These incorrect payments resulted in overpayments of $4.2 million and underpayments of $9,000 that the providers had not identified, refunded, or adjusted by the beginning of our audit. Before our fieldwork, providers had refunded $139,000 of overpayments for another 33 line items. The remaining 632 line items were correct.

For the 823 incorrect line items with overpayments of $4.2 million that had not been refunded, providers reported incorrect units of service, reported a combination of incorrect units of service and incorrect Healthcare Common Procedure Coding System (HCPCS) codes, did not provide supporting documentation, used incorrect HCPCS codes, and billed separately for an outpatient drug for which payment was packaged with primary services. For the 51 incorrect line items with underpayments of $9,000 that had not been adjusted, we notified the providers of the underpayments so that they can decide whether to submit adjustment claims.

Providers attributed the incorrect billings to clerical errors and to provider billing systems that could not prevent or detect the incorrect billing of outpatient drug services. The Medicare contractors overpaid these providers because there were insufficient edits in place to prevent or detect the overpayments.

We recommended that Noridian Healthcare Solutions, LLC (Noridian), the Medicare contractor for Jurisdiction E, (1) recover the $4.2 million in identified overpayments, (2) verify the payment of $9,000 in identified underpayments, and (3) use the results of this audit in its ongoing provider education activities. Noridian concurred with all of our recommendations and provided information on actions that it had taken or planned to take to address our recommendations.

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