The Medicare Contractor for Jurisdiction 13 Overpaid Providers for Selected Outpatient Drugs

Payments that the Medicare contractor for Jurisdiction 13 made to providers for 667 of the 1,138 line items for outpatient drugs we reviewed were not correct. These incorrect payments resulted in overpayments of $2.7 million and underpayments of $1,700 that the providers had not identified, refunded, or adjusted by the beginning of our audit. Before our fieldwork, providers had refunded $127,000 of overpayments for another 30 line items. The remaining 441 line items were correct.

For the 665 incorrect line items with overpayments of $2.7 million that had not been refunded, providers reported incorrect units of service, did not provide supporting documentation, reported a combination of incorrect units of service and incorrect HCPCS codes, used incorrect HCPCS codes, and billed for noncovered use of a drug. For the two incorrect line items with underpayments of $1,700 that had not been adjusted, we notified the providers of the underpayments so that they could decide whether to submit adjustment claims. One provider also identified 13 additional line items that we did not review that resulted in overpayments of $27,000.

Providers attributed the incorrect billings to clerical errors and to provider billing systems that could not prevent or detect the incorrect billing of outpatient drug services. The Medicare contractor overpaid these providers because there were insufficient edits in place to prevent or detect the overpayments.

We recommend that National Government Services (NGS), the Medicare contractor for Jurisdiction 13, (1) recover the $2.7 million in identified overpayments, (2) verify the payment of $1,700 in identified underpayments, (3) verify the recovery of $27,000 in additional provider-identified overpayments, and (4) use the results of this audit in its ongoing provider education activities. NGS agreed with our first, second, and fourth recommendations and described actions that it planned to take to address these recommendations. Regarding our third recommendation, NGS asked us for specific claims information, which we provided.