Review of Separately Billed Laboratory Tests Submitted by Spectra Laboratories for Medicare Beneficiaries With End-Stage Renal Disease Receiving Dialysis at Fresenius Medical Care North America's Facilities

We estimated, based on our sample results, that Medicare overpaid Spectra Laboratories (Spectra) $5.4 million for separately billed laboratory tests provided to end-stage renal disease beneficiaries at Fresenius Medical Care North America's (Fresenius) facilities during CYs 2004'2006. Federal regulations require that all tests covered by Medicare be ordered by the physician who is treating the beneficiary and that the physician who ordered the tests maintain documentation of medical necessity in the beneficiary's medical record. However, of the 100 beneficiary quarters that we sampled, 24 beneficiary quarters contained errors for separately billed tests that, based on an independent medical review by National Government Services, were not reasonable and necessary, and 12 beneficiary quarters contained errors for separately billed tests that were not reasonable and necessary because they were not ordered by the treating physician.

We recommended that (1) Spectra refund to the Medicare program $5.4 million in overpayments for CYs 2004'2006 and (2) both Spectra and the Fresenius facilities strengthen their policies and procedures to ensure that all tests billed are reasonable and necessary, in compliance with Medicare requirements. Fresenius disagreed with our recommendations. We maintain that our findings and recommendations are valid.