Labs With Questionably High Billing for Additional Tests Alongside COVID-19 Tests Warrant Further Scrutiny

KEY TAKEAWAY

Certain labs billed Medicare Part B for questionably high levels of add-on tests alongside COVID-19 tests in 2020. This significantly increased the payments they received for claims that included COVID-19 tests. Such high levels of billing for add-on tests raise concern about potential waste or fraud, suggesting a need for further scrutiny of billing by these labs.

WHY WE DID THIS STUDY

Medicare Part B spending on COVID-19 lab tests increased steadily between spring 2020—when Medicare first started paying for these tests—and the end of that year. Preliminary analysis of Medicare Part B claims data indicated that some diagnostic testing laboratories billed for other diagnostic tests—such as individual respiratory tests (IRTs), respiratory pathogen panels (RPPs), genetic tests, and allergy tests—along with COVID-19 tests. We refer to these four types of tests billed with COVID-19 tests as add-on tests. Although it is not unusual for labs to bill for COVID-19 tests and other diagnostic tests on the same claim, certain billing patterns—such as a high volume of or high payments for add-on tests—raise concerns of potential waste or fraud.

HOW WE DID THIS STUDY

We performed outlier analysis to identify labs that billed for add-on tests at questionably high levels compared to other labs that billed for COVID-19 tests. We identified two kinds of outlier labs: (1) those for which add-on tests constituted a high proportion of each lab's total number of tests, and (2) those for which add-on tests constituted a high proportion of each lab's total payments for tests.

We examined all Medicare Part B claims paid for COVID-19 tests during 2020, and for the following types of add-on tests: IRTs, RPPs, genetic tests, and allergy tests.

WHAT WE FOUND

We found that 378 labs billed Medicare Part B for add-on tests at questionably high levels—in volume, payment amount, or both—compared to the 19,199 other labs. This includes 276 labs that billed for high volumes of add-on tests on claims for COVID-19 tests, and 263 labs that billed for high payment amounts from add-on tests on claims for COVID-19 tests. Further, 161 of these labs billed for both high volumes of add-ons and high payment amounts from add ons on claims for COVID-19 tests. We also found a small number of labs that had at least 10 claims where 2 labs had billed for the same enrollee for the same tests on the same day, which may be an indication of a fraud scheme involving the sharing of enrollee information.

On their claims for COVID-19 tests, some of the 378 labs billed for add-on tests in combinations that had little if any variation across patients. This may indicate that these tests were not specific to individual patients' needs. The add-on tests significantly increased the per-claim amounts that Medicare Part B paid to these labs. For example, one outlier lab regularly billed for a combination of five add-on respiratory tests on almost all of its claims for COVID-19 tests. As a result, the average per-claim Medicare payment to this outlier lab was $666, covering both COVID-19 and add-on tests, compared to an average payment of $89 to all other labs that billed for COVID-19 tests and any add-on tests. Although billing for add-on tests was generally allowable, and Medicare Part B pays for these tests when they are medically appropriate, these patterns of questionably high billing raise concerns that some tests may have been wasteful or potentially fraudulent.

WHAT WE CONCLUDE

Our analysis suggests that further scrutiny of billing by the 378 outlier labs is needed and, therefore, the Office of Inspector General has referred these labs to the Centers for Medicare & Medicaid Services for further review. Outlier labs exceeded the thresholds for one or both measures of questionable billing, raising concerns about potential waste or fraud.