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Medicare Improperly Paid $66.3M for Certain Specimen Validity Tests, HHS OIG Says

NEW YORK (360Dx) – Medicare improperly paid 4,480 clinical laboratories and physician offices a total of $66.3 million for specimen validity tests that did not comply with Medicare billing requirements, the US Department of Health and Human Services Office of Inspector General announced Tuesday.

The improper payments occurred because providers did not follow existing Medicare guidance and improperly billed for specimen validity tests in combination with urine drug tests, the OIG said. In addition, the Centers for Medicare and Medicaid Services' system edits were not adequate to prevent payment for specimen validity tests in combination with urine drug tests.

Specimen validity testing is used to analyze a urine specimen to ensure that it has not been adulterated or tampered with. The tests, such as urinary pH tests, are considered medically necessary if used to diagnose certain conditions, such as urinary tract infection, kidney stones and rheumatoid arthritis. However, if urinary pH tests are used simply to determine whether a urine specimen is valid and unadulterated, they are not considered a billable Medicare-covered service, according to the OIG report.

The OIG is recommending that CMS direct Medicare contractors to recover the $66.3 million in identified improper payments and further strengthen its system edits to prevent improper payments for specimen validity tests. In addition, the OIG recommends that CMS instruct Medicare contractors to educate providers on properly billing for specimen validity and urine drug tests.

CMS implemented a system edit on April 1, 2016 that was designed to prevent improper payments, according to the OIG, but many improper payments continued to be made. OIG identified $1.8 million in improper payments made between April 1, 2016 and December 31, 2016, a rate that the office estimated would total $12.1 million in improper payments over a five-year period.

The improper payments were always made when the specimen validity tests were billed in combination with urine drug tests, according to the OIG report. During the audit period, 91 percent of improper payments, or $60.2 million, were made to providers who routinely billed specimen validity tests in combination with urine drug tests.

The review was conducted because prior OIG work had indicated that Medicare improperly paid for medically unnecessary specimen validity testing in combination with urine drug tests. The OIG did not indicate when the improper payments were first uncovered.

CMS has agreed with the OIG recommendations and plans to address them, according to the OIG. CMS has requested data from OIG to help it identify and follow up on the status of improper payments. The OIG said it plans to provide the requested data to CMS.