Drug billing errors lead to Medicare overpayments

The Office of Inspector General (OIG) this month released audit information focused on hospitals not complying with Medicare rules when they billed for drugs.

For instance, Memorial Health System in Colorado Springs did not comply with Medicare billing requirements for drug injections (alpha 1-proteinase inhibitor, trastuzumab, pemetrexed, cetuximab and immune globulin), resulting in more than $110,000 in overpayments, OIG said in report released yesterday.

Out of the 17 provided services (called "line items") from January 2008 to April 2011 reviewed, the hospital did not comply with 16 of them. The trauma health system documented the incorrect number of service units because of billing system and clerical errors, OIG found.

For most of the errors (12 line items for alpha 1-proteinase inhibitor), Memorial documented thousands when there were really only hundreds of service units, OIG noted.

Memorial Interim CEO and Chief Compliance Officer Mike Scialdone told the OIG that it has since taken corrective action: "Prior to April 7, 2010, MHS was billing Medicare per vial irrespective of the amount of medication actually administered to the patient. The billing practices have since been changed to incremental billing (billing only for the amount ordered) so that the bill issued to Medicare reflects the actual amount of the medication administered to the beneficiary based on service units wherein one service unit is billed for every 10-milligram injection of an Alpha 1-protienase inhibitor."

In another audit, also released yesterday, OIG found that Touchette Regional Hospital in Centreville, Ill., did not follow Medicare rules in 14 of the 20 line items reviewed, leading to overpayments totaling more than $55,000.

OIG found overpayments from injectable cancer drug (bevacizumab and paclitaxel) billing from January 2008 to April 2011, which the acute care hospital attributed to billing system errors.

Touchette Chief Financial Officer John Majchrzak responded, "The computer system issue that caused these errors was corrected prior to this audit," he said. "Our system now includes various validation checks, and we have created MUEs [medically unlikely edits] in our claim validation system to help ensure compliance."

This isn't the first time OIG has audited hospitals for drug-related billing (and likely not the last). Last week, OIG also released two audit reports that focused on noncompliance for selected drugs at Johnston Memorial Hospital in Abingdon, Va., and Augusta Health Care in Fishersville, Va., partly due to clerical mistakes.

For more information:
- see the OIG summary and report (.pdf) of Memorial Health System
- check out the OIG summary and report (.pdf) of Touchette Regional Hospital

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