OIG Finds $1.7 Billion in 2010 Medicare Payments for Questionable Lab Billings

12331351_lMedicare allowed $1.7 billion across all clinical labs for claims associated with questionable billing in 2010, a Department of Health and Human Services Office of Inspector General (OIG) report found.

The report, Questionable Billing For Medicare Part B Clinical Laboratory Services (OEI-03-11-00730), issued July 9, noted that from 2005 to 2010, Part B Medicare enrollment increased by 10%, while spending for lab services increased by 29%.

According to OIG, in 2010, 52% of labs nationwide exceeded the threshold for at least one measure of the 13 measures for questionable billing and 1,032 out of 94,609 labs exceeded the thresholds for at least five of the measures. “Although some of this billing may be legitimate, all labs that exceeded thresholds on five or more measures of questionable billing may warrant further scrutiny,” OIG noted.

A majority of labs that exceeded the thresholds for five or more measures of questionable billing (830 out of 1,032 such labs) had an unusually high percentage of claims with invalid ordering-physician numbers, an unusually high percentage of claims with ineligible ordering-physician numbers, or both, the report found.

In addition, 813 labs out of 1,032 exceeded the threshold that indicated an unusually high average allowed amount per ordering physician and another 335 labs had unusually high percentages of claims with compromised ordering physician numbers.

OIG noted that by regulation, lab services not ordered by the physician who is treating the beneficiary are not reasonable and necessary. “Therefore, having an unusually high percentage of claims for beneficiaries with no recent, associated Part B services with the ordering physician could mean that the lab billed for unnecessary services,” OIG said.

Of the 1,032 labs that exceeded the thresholds for five or more measures of questionable billing, 230 had unusually high percentages of claims for a beneficiary without recent contact with the ordering physician listed on the lab claim, the report observed.

According to the report, 43% (444 of 1,032) of labs that exceeded the thresholds for five or more measures of questionable billing were located in California and Florida, areas known to be vulnerable to Medicare fraud.

“[T]hese findings call for stronger oversight of labs and identify specific issues with Medicare payments for lab services that need to be addressed to more effectively safeguard Medicare,” OIG concluded.

To that end, OIG recommended that the Centers for Medicare & Medicaid Services (1) review the labs identified as having questionable billing and take appropriate action, (2) review existing program integrity strategies to determine whether these strategies are effectively identifying program vulnerabilities associated with lab services, and (3) ensure that existing edits prevent claims with invalid and ineligible ordering-physician numbers from being paid.

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