Liberty Medical, LLC, Received Unallowable Medicare Payments for Inhalation Drugs

For calendar years 2015 and 2016, Liberty Medical, LLC, (Liberty), which is located in Port St.'Lucie, Florida, did not always comply with Medicare requirements when billing for inhalation drugs. Of the 100 claim lines in our sample, 94 complied with the requirements; however, the remaining 6'claim lines did not comply with the requirements. Specifically, Liberty did not provide us with medical records for four claim lines and did not have adequate proof-of-delivery documentation for two claim lines. As a result, Liberty received $2,408 in unallowable Medicare payments.

On the basis of our sample results, we estimated that Liberty received at least $47,526 in unallowable Medicare payments for inhalation drugs. These overpayments occurred because Liberty's policies and procedures and its order-processing system were not adequate to ensure that it met Medicare requirements for billing inhalation drugs.

We recommend that Liberty (1) refund to the Medicare contractors $47,526 in estimated overpayments for inhalation drugs; (2) exercise reasonable diligence to identify and return any additional similar overpayments outside of our audit period, in accordance with the 60-day rule, and identify any returned overpayments as having been made in accordance with this recommendation; (3) strengthen its policies and procedures to ensure that it can provide medical records for inhalation drugs when requested; and (4) improve its order-processing system to maintain adequate proof-of-delivery documentation.

Liberty disagreed with our findings and recommendations. For the four sampled claim lines for which it did not provide medical records, Liberty stated that the documentation provided was sufficient to establish medical necessity. In addition, Liberty provided additional proof-of-delivery documentation for six of the eight sampled claim lines we disallowed in our draft report. Although Liberty disagreed with our recommendations, it provided information on actions that it had taken or planned to take to address our second, third, and fourth recommendations.

We did not revise our first finding because the information contained directly in the medical record is the source required to justify payment and must be made available upon request. After reviewing the additional documentation that Liberty provided, we revised our second finding to reflect that there was inadequate proof-of-delivery documentation for two sampled claim lines and adjusted the refund amount in our first recommendation.