Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by Palmetto GBA, LLC, in Jurisdiction 1 for the Period January 1, 2006, Through June 30, 2009

Our review found that of the 1,323 selected line items for which Palmetto GBA, LLC (Palmetto), made Medicare payments to providers for outpatient services for the period January 1, 2006, through June 30, 2009, 926 were incorrect. The incorrect line items included overpayments totaling $7.5 million, which the providers had not refunded by the beginning of our audit.

The incorrect line items included incorrect units of service, Healthcare Common Procedure Coding System (HCPCS) codes that did not reflect the procedures performed, a combination of incorrect units of service and incorrect HCPCS codes, unallowable services, and lack of supporting documentation. The 397 remaining line items were correct.

The providers attributed the incorrect payments to clerical errors or to billing systems that could not prevent or detect the incorrect billing of units of service and other types of billing errors. Palmetto 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 (1) recover the $7.5 million in identified overpayments, (2) implement system edits that identify line item payments that exceed billed charges by a prescribed amount, and (3) use the results of this audit in its provider education activities. In written comments on our draft report, Palmetto provided information on actions that it had taken or planned to take to address the recommendations.