Medicare Contractors for Jurisdiction 15 Overpaid Providers for Selected Outpatient Drugs

Payments that the Medicare contractors for Jurisdiction 15 made to providers for 632 of the 947 line items for outpatient drugs we reviewed were not correct. These incorrect payments resulted in overpayments of $5.1 million and an underpayment of $600 that the providers had not identified, refunded, or adjusted by the beginning of our audit. Before our fieldwork, providers had refunded $660,000 of overpayments for another 15 line items. The remaining 300 line items were correct.

For the 631 incorrect line items with overpayments of $5.1 million that had not been refunded, providers reported incorrect units of service, billed separately for an outpatient drug for which payment was packaged with the primary service, did not provide supporting documentation, reported a combination of incorrect units of service and incorrect Healthcare Common Procedure Coding System (HCPCS) codes, and used incorrect HCPCS codes. For the one incorrect line item with an underpayment of $600, the provider reported incorrect units of service and has adjusted the claim.

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 overpayments.

We recommended that CGS Administrators, LLC (CGS), the Medicare contractor for Jurisdiction 15, (1) recover the $5.1 million in identified overpayments, (2) verify the payment of $600 in the identified underpayment, and (3) use the results of this audit in its ongoing provider education activities. CGS concurred with all of our recommendations and provided information on actions that it had taken or planned to take to address our recommendations.