Medicare likely has a problem overpaying physicians who bill for full vials of a drug but use only a portion of it, according to a report issued this week by the U.S. Department of Health and Human Services' Office of Inspector General.
The report titled 'Medicare Contractors Nationwide Overpaid Millions to Providers for Full Vials of Herceptin' looked at billing for one drug in particular — but the findings are relevant for all drugs where Medicare reimburses physicians for the full vial, even though they use only a portion of the package.
For their report OIG investigators reviewed claims from physicians who billed for full vials of Herceptin from January 2008 to December 2010, and they found a significant error rate of 77 percent in their claims and overpayments by Medicare of $24.2 million.
Herceptin, also known as trastuzumab, is used to treat breast cancer that has spread to other parts of the body.
The drug is packaged in a multi-use vial containing 440 milligrams.
Medicare pays only for the amount administered to a beneficiary and does not pay for any discarded drug.
But many physicians have been billing for the entire vial, resulting in overpayments, according to the OIG.
The report notes that for the three years ending Dec. 31, 2010, Medicare contractors processed 170,606 outpatient Part B service line items of Herceptin totaling approximately $295.3 million.
Of these 170,606 line items, 26,143 represented billings for entire multi-use vials. Of these 26,143 line items, OIG investigators reviewed 26,042 items totaling approximately $69 million paid by Medicare contractors.
They found that most payments that Medicare contractors made to providers for full vials of Herceptin were incorrect.
Specifically, of the 26,042 line items reviewed, 19,954 (or 77 percent) were incorrect and included overpayments of about $24.2 million or more than one-third of total dollars reviewed.
On nearly all of the 19,954 incorrect line items, the providers reported the units of service for the entire content of one or more vials, each containing 440 milligrams of Herceptin, rather than reporting the units of service for the amount actually administered.
The providers attributed the incorrect payments to clerical errors and to billing systems that could not prevent or detect the incorrect billing of units of service.
“Herceptin is one of many multiuse drugs,’’ the OIG report noted. “Therefore, the problem of provider billing for full vials may exist with other such drugs.’’
Based on its findings, OIG made four specific recommendations for improvement to the Centers for Medicare and Medicaid Services, the agency that administers the public health insurance programs for the elderly, poor and disabled.
CMS accepted two recommendations, including that Medicare contractors collect the identified overpayments, and that the agency review payments for full vials of Herceptin made after the audit period.
But CMS rejected the OIG’s recommendation that the agency require Medicare contractors to implement a system for identifying claims for full vials of Herceptin, and that the agency review other multi-use vial drugs to determine whether further safeguards are needed to prevent overpayment of claims.
CMS stated that a Herceptin-specific edit would require manual review and that “any such medical review would not likely be feasible due to resource constraints.”
CMS also disagreed with our recommendation to review other multi-use vial drugs to determine whether system edits are needed, noting that Herceptin is a unique drug that can be reconstituted using a preservative, unlike other drugs.
But OIG investigators disagreed, stating that many multi-use vials can be reconstituted with a preservative and last for up to 28 days — increasing the likelihood that physicians will continue to incorrectly bill Medicare for the entire amount of a multi-use vial, and that Medicare would likely continue to overpay.