Healthcare Business News

Dubious Medicare billing found at clinical labs

By Bob Herman
Posted: July 9, 2014 - 1:30 pm ET

Medicare doled out $8.2 billion in Part B payments to clinical laboratories in 2010, but more than 20% of those payments came from claims tied to questionable billing patterns, according to a government report.

The report from HHS' Office of Inspector General (PDF) released Wednesday is the latest showing how improper payments are rampant throughout the Medicare program. In May, the OIG said Medicare overpaid physicians $6.7 billion in 2010 for basic health services provided in an office or clinic. Inappropriate reimbursement has also been found in home-health settings, inpatient hospice care and hospitals.

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More than half of Medicare patients receive a lab service, such as a cholesterol screening or blood count test, in a given year.

For the labs studied, the OIG created a list of 13 measures to describe questionable billing. For instance, high volumes of claims from individual physicians, ineligible physician ordering numbers, and high percentages of patients who live more than 150 miles from the physician who ordered the lab test were considered as possibly questionable.

Of the more than 94,000 labs analyzed, the OIG found 1,032 labs exceeded reasonable thresholds for at least five of the 13 billing measures in 2010, while more than half had abnormal patterns for at least one measure. Roughly $1.7 billion in Medicare payments were tied to questionable claims overall. A vast majority of those claims, $1.2 billion, involved patients who had no associated Part B services with the ordering physician within six months prior to their lab service.

The OIG did not want to paint a broad stroke, saying, “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.”

About 43% of the labs with problematic billing on at least five of the OIG's measures were in California and Florida—areas the OIG said are “known to be vulnerable to Medicare fraud”—despite only 13% of all labs being in those two states.

For example, 45% of claims at an unidentified lab in California had invalid physician billing numbers. That same lab had average billing amounts of $61,000 per ordering physician, or 15 times the average for all independent labs. A different lab in Florida allowed physicians to bill almost $108,000 on average.

The American Clinical Laboratory Association, the trade group that represents the industry's largest lab companies such as Quest Diagnostics and Laboratory Corporation of America, took issue with the OIG's methodology. Alan Mertz, president of ACLA, told Modern Healthcare some of the measures don't account for common situations. For example, a person living in Florida for the winter may receive lab services, but that claim would technically be considered questionable since the person's permanent residence is in a northern state.

“It doesn't necessarily indicate fraudulent billing, and I think that's important,” Mertz said.

The OIG recommended the CMS review all labs that had questionable billing patterns and take action as needed, including revoking a lab's Medicare license if needed. The agency also suggested Medicare ensure existing and future claims are in line with standard billing practices.

CMS Administrator Marilyn Tavenner wrote a letter saying, “CMS is committed to utilizing all available tools to identify and prevent improper payments made for clinical laboratory services.”

Follow Bob Herman on Twitter: @MHbherman

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