Medicare Contractors' Payments in Jurisdiction 1 for Full Vials of Herceptin Were Often Incorrect

Most Medicare payments that Medicare contractors made to providers in Jurisdiction 1 for full vials of Herceptin were incorrect. Herceptin (trastuzumab) is a Medicare-covered drug used to treat breast cancer that has spread to other parts of the body.

Of the 2,005 selected line items, 1,498 (75 percent) were incorrect and included overpayments totaling $1.7 million, or 32 percent of total dollars reviewed. These providers had not identified or refunded these overpayments by the beginning of our audit. Providers refunded overpayments on 295 line items totaling $383,000 before our fieldwork. The 212 remaining line items were correct.

For the 1,498 incorrect line items that had not been refunded, providers reported incorrect units of service on 1,427 line items with unit counts that represented full multiuse vials, did not provide supporting documentation for 64 line items, billed for unallowable services on 6 line items, and reported a combination of incorrect units of service and an incorrect Healthcare Common Procedure Coding System code on 1 line item. The providers attributed the incorrect payments to clerical errors and to billing systems that could not prevent or detect the incorrect billing of units of service and other types of billing errors. 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 1, (1) recover the $1.7 million in identified overpayments, (2) implement or update system edits that identify for review multiuse-vial drugs that are billed with units of service equivalent to the dosage of an entire vial(s), and (3) use the results of this audit in its provider education activities. Palmetto provided information on actions that it had taken or planned to take to address our recommendations.