Medicare contractors overpaid a number of providers for a breast cancer drug, reimbursing for full vials rather than the administered dose -- a problem federal auditors think could plague other multi-use drugs in Medicare.
In a 2008-2010 audit of Medicare payments for trastuzumab, also known as Herceptin, a drug for late-stage breast cancer patients with certain genetic mutations, the HHS Office of the Inspector General found that most "were incorrect," covering more drug than many had used.
The OIG reviewed more than 26,000 line items approved by Medicare Part B contractors for multi-use vials of Herceptin, and found that 77 percent were incorrect, totalling $24 million in overpayments.
In their Medicare bills, the providers reported the units of service for the entire content of one or more vials, instead of the amount actually administered to breast cancer patients, in accordance with Medicare policy..
Informed of the wrongful billing, providers told OIG staff that billing for units of service by vial, rather than dose, was a result of "clerical errors" or billing software that can't prevent or detect incorrect units of service.
Medicare contractors, meanwhile, told the OIG that they approved the payments because neither the Medicare fiscal intermediary standard system nor the Medicare common working file had sufficient code edits to adjust payments for Herceptin.
In March 2011, after the end of the OIG's audit period, the Centers for Medicare & Medicaid Services required Medicare contractors to implement "medically unlikely edits" for certain claims, including for Herceptin, as part of a bid to reduce Medicare Part B's claims error rate.
But the OIG found that even if those medically unlikely edits had been applied to the incorrect payments for Herceptin between 2008 and 2010, the overpayments may well have been approved, because almost all of them "were instances in which the providers billed units that did not represent unlikely dosages administered to patients."
Given that and the fact that Herceptin, which can cost up to $70,000 annually, is one of many multi-use drugs, "the problem of provider billing for full vials may exist with other such drugs."
After notification from the OIG, CMS said its contractors have recovered about $18 million of the $24 million in identified overpayments. But the road to preventing these kinds of billing issues may not be clear cut.
In addition to reviewing Medicare payments for Herceptin payments made after the end of the audit, the OIG is urging CMS to require contractors implement a Herceptin-specific edit to review claims for entire multi-use vials and to review other multi-use vial drugs "to determine whether system edits are needed to prevent incorrect billings."
CMS was not on board with those last two suggestions. A review of Herceptin claims "would not likely be feasible due to resource constraints," CMS officials responded to OIG. And a review of other multi-use drugs wouldn't be warranted based on this audit of Herceptin, CMS officials said, because the drug "is an unusual situation in that reconstitution with the supplied diluent creates a multidose vial" and because unsued, discarded ammounts "cannot be paid under Medicare Part B's discarded drugs policy
as this policy pertains to single use vials."
OIG staff, though, maintain that those two initiatives could help save funds in the long-run.
While a review of Herceptin claims would probably take a good deal of manual work, "considering that 77 percent of the claims we reviewed had overpayments totaling $24.2 million, we encourage CMS to explore the potential return on investment of performing these reviews," the OIG said.
Likewise, the OIG argues that more system edits may be needed to prevent incorrect billing for mutli-use vial drugs -- and that CMS won't know if they don't look.
"A multi-use vial, when reconstituted with a preservative, is generally stable for up to 28 days unless the manufacturer specifies otherwise," the OIG wrote. "CMS guidance states that Medicare does not pay for discarded amounts of multi-use vial drugs. Therefore, billing the entire amount of a multi-use vial drug reconstituted with a preservative has a greater possibility of being incorrectly billed and resulting in overpayments."