Review of Medicare Payments for Laboratory Tests Billed With an AY Modifier by Total Renal Laboratories, Inc.

Total Renal Laboratories, Inc. (TRL), did not always comply with Medicare requirements for tests billed with an AY modifier for beneficiaries with end-stage renal disease (ESRD). Specifically, for 60 of the 100 beneficiary-days, TRL submitted separate claims using the AY modifier for tests furnished for the treatment of ESRD contrary to the consolidated billing requirement. In addition, TRL did not always comply with other Medicare requirements. These errors occurred primarily because TRL did not have adequate controls to comply with certain Medicare requirements. On the basis of our sample results, we estimated that Medicare overpaid TRL at least $1.2 million for tests that were furnished for the treatment of ESRD.

Furthermore, for 25 of the 100 beneficiary-days, we did not have enough evidence to make a determination whether Medicare appropriately paid TRL an estimated $600,000 for tests billed with an AY modifier or not ordered by a physician.