The Medicare Contractor for Jurisdiction 9 Overpaid Providers for Selected Outpatient Drugs

Payments that the Medicare contractor for Jurisdiction 9 made to providers for 112 of the 311 line items for outpatient drugs we reviewed were not correct. These incorrect payments resulted in overpayments of $445,000 and underpayments of $3,000 that the providers had not identified, refunded, or adjusted by the beginning of our audit. Before our fieldwork, providers refunded $116,000 of overpayments for another 37 line items. The remaining 162 line items were correct.

For the 91 incorrect line items with overpayments of $445,000 that had not been refunded, providers reported incorrect units of service, billed separately for an outpatient drug for which payment was packaged with the primary service, reported a combination of incorrect units of service and incorrect HCPCS codes, did not provide supporting documentation, and used incorrect HCPCS codes. For the 21 incorrect line items with underpayments of $3,000 that had not been adjusted, we notified the providers of the underpayments so that they could submit adjustment claims.

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 First Coast Service Options, Inc. (First Coast), the Medicare contractor for Jurisdiction 9, (1) recover the $445,000 in identified overpayments, (2) verify the payment of $3,000 in identified underpayments, and (3) use the results of this audit in its ongoing provider education activities. First Coast mostly concurred with our recommendations and provided information on actions that it planned to take to address our recommendations.