Medicare Contractors' Payments in Jurisdiction 14 for Full Vials of Herceptin Were Often Incorrect

Almost half of the Medicare payments that NHIC, Corp. (NHIC), made to providers for full vials of Herceptin were incorrect. Specifically, of the 853 selected line items, 391 (46 percent) were incorrect and included overpayments totaling $403,000, or more than one-fifth of total dollars reviewed. These providers had not identified or refunded these overpayments by the beginning of our audit. Providers refunded overpayments on 130 line items totaling $141,000 before our fieldwork. The 332 remaining line items were correct.

For the 391 incorrect line items that had not been refunded, providers reported incorrect units of service on 386 line items with unit counts that represented full multiuse-vials, resulting in overpayments totaling $395,000, and did not provide supporting documentation for 5 line items, resulting in an overpayment of $8,000. The providers attributed the incorrect payments to clerical errors and billing systems that could not prevent or detect the incorrect billing of units of service. NHIC 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 NHIC (1) recover the $403,000 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. NHIC concurred with our recommendations.