Medicare Improperly Paid Providers for Specimen Validity Tests Billed in Combination With Urine Drug Tests

Payments made to providers for specimen validity tests did not comply with Medicare billing requirements. Specifically, Medicare improperly paid 4,480 clinical laboratories and physician offices a total of $66.3 million for specimen validity tests billed in combination with urine drug tests. Centers for Medicare & Medicaid Services (CMS) officials explained that medically necessary tests used to diagnose certain conditions (which include the same tests that can be used to validate urine specimens) that are performed on the same day as a urine drug test for a single beneficiary should be a rare occurrence.

The improper payments occurred because providers did not follow existing Medicare guidance, and CMS's system edits were not adequate to prevent payment for specimen validity tests billed in combination with urine drug tests. Improper payments decreased but continued to be made during our audit period as Medicare guidance was updated and CMS introduced new automated system edits. Although CMS implemented on April 1, 2016, a system edit designed to identify and prevent these improper payments, we still identified $1.8 million in improper payments from April 1 through December 31, 2016. At this observed rate, these improper payments would total $12.1 million over a 5 year period. By strengthening its system edits and educating providers on properly billing for specimen validity and urine drug tests, CMS could save an estimated $12.1 million over 5 years.

We recommended that CMS (1) direct the Medicare contractors to recover the $66.3 million in identified improper payments and (2) strengthen its system edits to prevent improper payments for specimen validity tests and instruct the Medicare contractors to educate providers on properly billing for specimen validity and urine drug tests, which could result in savings of an estimated $12.1 million over a 5-year period.

CMS concurred with both of our recommendations and provided information on actions that it had taken or planned to take to address our recommendations.