Medicare Contractors Nationwide Overpaid Millions to Providers for Full Vials of Herceptin

This report summarizes the results of our individual reviews related to incorrect billings for full vials of Herceptin and evaluates the effectiveness of the Herceptin-specific edit that was implemented after our audit period. Herceptin (trastuzumab) is a Medicare-covered drug used to treat breast cancer that has spread to other parts of the body.

Most payments that Medicare contractors made to providers for full vials of Herceptin were incorrect. Specifically, of the 26,042 line items reviewed, 19,954 (77 percent) were incorrect and included overpayments of about $24.2 million, or more than one-third of total dollars reviewed. These providers had not identified or refunded these payments by the beginning of our reviews. Prior to our audit work, and not as a result of our audit, providers had refunded overpayments on 1,484 line items totaling approximately $1.9 million. The 4,604 remaining line items were correct.

On nearly all of the 19,954 incorrect line items, the providers reported the units of service for the entire content of 1 or more vial(s), each containing 440 milligrams of Herceptin, rather than reporting the units of service for the amount actually administered. The providers attributed the incorrect payments to clerical errors and to billing systems that could not prevent or detect the incorrect billing of units of service. Medicare contractors 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. During our audit period, there was no specific edit to identify Herceptin claims incorrectly billed as full vials.

In March 2011, CMS issued guidance to Medicare contractors that required them to implement certain Medically Unlikely Edits (MUEs), including an edit related to Herceptin. However, of the 19,954 lines in error identified through the various reviews, we determined that 19,805

(99 percent) were instances in which the providers billed units that did not represent unlikely dosages administered to patients. Although we have not addressed in this report the specific reasons that the MUE was ineffective, we have discussed this issue with CMS officials. Herceptin is one of many multiuse drugs. Therefore, the problem of provider billing for full vials may exist with other such drugs.

We recommended that CMS (1) ensure that Medicare contractors collect the identified overpayment amounts as recommended in our individual reports, (2) review payments made to providers after our audit period ended December 31, 2010, for full vials of Herceptin and recover any identified overpayments, (3) require that Medicare contractors implement a Herceptin-specific system edit to identify for review claim lines billed for Healthcare Common Procedure Coding System code J9355 with unit counts in multiples of 44 that represent billings equivalent to entire multiuse vial(s), and (4) review other multiuse-vial drugs to determine whether system edits are needed to prevent incorrect billings. CMS concurred with our first two recommendations but disagreed with our remaining two recommendations.