The Medicare Contractor for Jurisdiction 10 Overpaid Providers for Selected Outpatient Drugs

Payments that the Medicare contractor for Jurisdiction 10 made to providers for 492 of the 998 line items for outpatient drugs we reviewed were not correct. These incorrect payments resulted in overpayments of $1.2 million and underpayments of $20,000. Providers had not identified and refunded any overpayments for these line items before our fieldwork. The remaining 506 line items were correct.

For the 477 incorrect line items with overpayments of $1.2 million that had not been refunded, providers reported a combination of incorrect units of service and incorrect Healthcare Common Procedure Coding System (HCPCS) codes, reported incorrect units of service, billed separately for an outpatient drug for which payment was packaged with the primary service, did not provide supporting documentation, and used incorrect HCPCS codes. For the 15 incorrect line items with underpayments of $20,000 that had not been adjusted, we notified the providers of the underpayments so that they could decide whether to submit adjustment claims. Providers also identified errors on 87 additional line items that we did not review that resulted in net overpayments of $57,000: 78 line items with overpayments of $58,000 and 9 line items with underpayments of $1,000.

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 overpayments.

We recommended that Cahaba Government Benefit Administrators, LLC (Cahaba), the Medicare contractor for Jurisdiction 10, recover the $1.2 million in identified overpayments, verify the payment of $20,000 in identified underpayments, verify the recovery of an additional $58,000 in provider-identified overpayments and payment of $1,000 in provider-identified underpayments, and use the results of this audit in its ongoing provider education activities. Cahaba concurred with our recommendations and described corrective actions that it had taken or planned to take to address our recommendations.