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HHS OIG Finds CMS Oversight Failed to Reduce Risk of Improper Genetic Testing Payments

NEW YORK – A report issued last week by the US Department of Health and Human Services' Office of the Inspector General found that oversight by the Centers for Medicare and Medicaid Services failed to reduce the risk of improper payments for genetic testing claims. 

Previous work from OIG found that there had been increased spending on Medicare Part B genetic testing and fraudulent billing for those tests and that CPT code 81408 had the second-highest total Part B payments while it had the highest Medicare reimbursement rate per test, $2,000. The code is used for testing multiple genes associated with rare diseases when the genes would not generally be tested for in the Medicare population as the diseases usually manifest in childhood, OIG said in a statement. 

To determine whether CMS oversight of Medicare payments for the code was adequate in reducing the risk of improper payments, OIG analyzed Medicare Part B claims for more than 450,000 genetic tests billed using 81408 from 2018 to 2021 that were associated with payments of $888.2 million. 

The agency found that CMS oversight did not ensure all Medicare enrollees had established relationships with ordering providers. It also found that agency oversight did not ensure Medicare payments for code 81408 were related to diseases associated with genes that would generally be tested and billed under that code or include adequate monitoring of the number of tests billed under Tier 2 code 81408 to determine whether the number exceeded tests billed under Tier 1 codes, which are generally performed in higher volumes. 

OIG also noted that not all of the Medicare Administrative Contractors could identify the specific gene tested by laboratories billing 81408 and that two MACs did not limit the use of that code. The agency said that although CMS conducts data analysis, it did not ensure that MACs provided sufficient oversight over billing and payments for the code. According to OIG, payments from two of the MACs made up 97 percent of total payments for the code. 

By the end of the audit period there were no longer payments for the code, so OIG said it considers the issues corrected, but up to $888.2 million in payments were at risk of improper payment.

OIG recommended that CMS have the appropriate MACs review claims billed under code 81408 to determine whether they complied with Medicare requirements and determine the amount of improper payments for claims that didn't comply. For those claims that are within the four-year reopening period, the MACs should recover up to $888.2 million for those claims that were at risk of improper payment, OIG said. It also recommended that the MACs notify appropriate providers so they can identify, report, and return any overpayments.

CMS concurred with the first and third recommendations and neither concurred nor disagreed with the second but said any identified overpayments will be recovered consistent with statute and agency policy and procedure.