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

Payments that the Medicare contractor for Jurisdiction F made to providers for 867 of the 1,549 line items for outpatient drugs we reviewed were not correct. These incorrect payments resulted in overpayments of $3.1 million and underpayments of $7,000 that the providers had not identified, refunded, or adjusted by the beginning of our audit. Before our fieldwork, providers had refunded $348,000 of overpayments for another 116 line items. The remaining 566 line items were correct.

For the 834 incorrect line items with overpayments of $3.1 million that had not been refunded, providers reported incorrect units of service, reported a combination of incorrect units of service and incorrect Healthcare Common Procedure Coding System (HCPCS) codes, did not provide supporting documentation, used incorrect HCPCS codes, billed for noncovered use of a drug, and billed separately for an outpatient drug for which payment was packaged with primary services. For the 33 incorrect line items with underpayments of $7,000 that had not been adjusted, we notified the providers of the underpayments so that they can decide whether to submit adjustment claims. Providers also identified 252 additional line items that we did not review that resulted in overpayments of $298,000.

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.