Finance / Government Watch

Minor Typing Errors Cost Medicare Millions in Overpayments

money-stethoscopeFrom – – by Sarah Chavey

Medicare continues to eat up a growing share of the federal budget, but millions of dollars in spending on the program are due to waste and mismanagement. Case in point: in an audit period from July 1, 2009 to June 30, 2012, the federal government paid $35.8 million more than necessary for outpatient drugs.

In the two years that followed, the Health and Human Services Inspector General estimates the government overpaid $11.5 million more. According to a recently released Inspector General report, the money was misspent primarily due to errors in entering code numbers and amounts for outpatient drugs.

On the bright side, 63 percent (about $22.6 million) of the $35.8 million has been recovered.

However, 66 percent ($23.7 million) of the total amount was easily preventable, and most of the $11.5 million since could have been eliminated as well.

Of the 15,912 line items totaling $131.2 million the Office of the Inspector General (OIG) reviewed during the audit period, 51 percent of the line items were incorrect.

The investigation was conducted because previous reviews had revealed contractors overpaid providers by more than $122.4 million for outpatient drugs.

“Because of the significant overpayments identified in those reviews, we performed 13 individual reviews of payments for selected outpatient drugs at the Medicare contractors,” the office of the health and human services inspector general said in an email. The 13 individual reviews were collected and summed up in this report.

The payments come from Medicaid Part B, which covers outpatient drugs for beneficiaries. The drugs are organized through a system of standardized codes, known as Healthcare Common Procedure Coding System, or HCPCS. Each line item for each drug is given an HCPCS, and the HCPCS helps determine the payment amount.

The payments are sent from providers to one of 13 contractors. Each contractor is responsible for a specific area of the country. They pay the provider using the established rate per each unit subject to the Part B Deductible and coinsurance.

However, providers erred in many of the numbers they sent to the contractors, primarily (88 percent) in the number of units billed or in a combination of improper units billed and improper HCPCS codes.

For example, one provider administered 6 units of rituximab—an injection which treats cancer—to a patient, but billed it as 60 units of service, causing the contractor to send an overpayment. Twenty-one similar errors totaled $743,699 in overpayments.

In addition to rituximab, the drugs adenosine, infliximab, leuprolide acetate, and bortezomib are frequently billed incorrectly.

In another instance, 24 providers billed Medicare for two to 12 units of service for cancer-treating leuprolide acetate injections, when they should have billed for only one to six units of service—the doses actually administered. The result of these errors totaled $913,004.12 in overpayments.

CMS attempts to avoid errors by using programs such as the Medicare Learning Network and the Medicare Quarterly Provider Compliance Newsletter as well as an automatic edit program using Medically-Unlikely Edits, known as MUEs.

The MUEs compare the amount of a drug billed to the maximum amount of units the HCPCS code provides. If the billed amount is greater than the HCPCS number, the payment is denied.

While this system has prevented many overpayments, MUEs do not exist for all HCPCS codes. CMS enhances and expands the program every quarter, but the deficiencies of the MUE system may have resulted in $11.5 million more in overpayments from July 2012 to June 2014, the period after the audit period.

Had the MUE system been updated during the audited period to include as many HCPCS codes as it does now, 54 percent (19.3 million) of the overpayments could have been prevented.

The Inspector General suggested several reforms and fixes for the Centers for Medicare and Medicaid Services to implement:

  • Refund the remaining overpayments of the $38.5 million
  • Continue to educate providers in order to prevent mistakes
  • Review the period after the audit period and refund as seems necessary
  • Continue to implement and improve MUEs.

CMS concurred with the four recommendations, but insisted the Inspector General “provide the claim data necessary to determine whether overpayments exist” and how they should they proceed.

“Once the OIG furnishes the necessary claims data, CMS will instruct the Supplemental Medical Review Contractor (SMRC) to review a sample of claims and/or claims data to determine if overpayments exist. Once complete, CMS will determine if it is appropriate to continue to review the remaining claims and collect any overpayments identified to the maximum extent possible within the purview of CMS policies and regulations,” CMS responded to the Inspector General.

Of the 13 contractors, the contractor most error prone was CGS, which serves Kentucky and Ohio, with 65 percent of line items incorrect. Only 36 percent of line items from Provider First Coast—serving Florida, Puerto Rico, and the Virgin Islands—were incorrect.

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6 years ago

The biggest problem is ‘all medical costs’ are ‘coded’, the codes are ‘copyrighted’ by the medical association, and not avaiable to the person receiving any treatment, and thus when the patient receives a bill, he has no idea what the codes mean, or if he received
them. All he can do is ‘smile’, because what is billed, then is reduced, making the patient believe he has a ‘deal’. Anyway, maybe this
will ‘open the door’, to debate. Have a ‘Great Day, in the Lord’…..gene

6 years ago

the 2 so called “top dogs” of congress, Ban ( nothin) and mit ( worthless) should be fired and any retirement pay revoked. They are as useless as “Tits” on a boar hog. I have voted rep. for many years, But I am going to vote for Donald T. , no matter if he runs as a independent or We have some very good congressmen and senators working for the people, BUT we have to many do-nothing but “What in it for ME’S, that need to be replaced without retirement pay. How many barbershops and shoe shine and door men need to be paid by taxpayers to baby the senate and congress, as much time they take off, they can shine there own shoes and open there on doors to there dining rooms.

6 years ago

Lets see here… $131.2 million divided by 15,912 line items equals $824.50 for each item! That right there tells you that the pharmaceutical companies are charging way too much. Who is watching them?

Something a lot of folks don’t realize is that hospital and doctor costs were fairly high before the Liar-in-Chief introduced that method of downgrading America called obomacare. The reason they gave us back then was to cover the costs of the uninsured. I clearly recall that! Now that everyone is supposed to be insured now, why aren’t medical costs coming down? Can anyone give an answer to that?

Another interesting point is why these kinds off errors are occurring in the first place. Doesn’t the government have the best people money can buy? I’m no racist, but I’ll be willing to bet that it’s black people who are making the errors, intentionally to help out other blacks, and they probably aren’t even being punished for committing a crime when caught.

Like Social Security, Medicare is OUR MONEY, not the governments. Both are special taxes for special purposes. Until the American people wake up and demand that the government take all 10,000 of it’s hands out of our cookie jar, this crap will continue, and will get worse. We need to demand that all money taken from both programs since their inception be put back with penalties and interest. Then clamp down on fraud with sever punishments for both the ones intentionally making the inaccuracies as well as the receivers.

Melanie Clark
6 years ago

Changing a 6 to a 60 is NOT a typographical error, it is theft, a criminal act. Someone changed that 6 to a 60, maybe not the typist. Someone should be in jail or at least out of a job and fined.

George Roets
6 years ago

The Federal Government tends to create extremely complicated processes, use incompetent contractors, and appoint politically incompetent managers to rum very important programs. Obama Care roll out was one glaring example. As a past Medicare and Medicaid provider I learned very quickly to expect constant changes, intelligible guidelines, mind numbing rules, confusing communications, daily updates, contradictory explanations and frequently poor instructions.

Inspections and reviews were inconsistent, very slow with issuing results and in some case came back before prior plans of correction were replied to. They tended to request changes and corrections, that were reversed for the next survey. Finding answers to questions raised was often unsuccessful as the rules were interpreted differently from one bureaucrat to another.

Add to that elaborate payment and record requirement, intentional payment delays, and denials without clear cause. Finding answers from the agencies and contractors was close to impossible, and contradictory answers were common. No business could run like the Federal Bureaucracy and survive. from the trenches it almost appeared that the purpose was to justify continued expansion of the bureaucracy due to the created complexity and the need to do systems corrections for isolated or rare problems.

I wish that the could learn to “Keep it Simple, Stupid!

6 years ago
Reply to  George Roets


Very well said George.

The problem is far too much of the federal government has absolutely no incentive, as in ZERO, to be either efficient or cost effective in anything it does. There is no down side to the actions and rarely is anyone in government actually held accountable for their actions. Since they “make the rules”, they can exempt themselves from the very rules and standards they hold everyone else accountable to. As you’ve not doubt seen from your experience, any attempt to reason or rationalize with the ever-changing morass, known as the federal government bureaucracy, is met with either total indifference or outright distain. There is no incentive for the federal government to “Keep it simple stupid”, because there is no consequence to them for cost over-runs, missed deadlines, endless re-definitions of the program policies and payout rules. If you can’t change your business on a dime to reflect the latest “mandate” or rule change, that someone just arbitrarily dreamed up, they’ll either fine you, withhold payment, or find some other way to make it your fault.

In the private sector, we are all held accountable for our decisions for a few very simple reasons:
1) We have to run our businesses efficiently in order for them to actually make a profit and pay our people. We do not have the luxury of forcing the public to pay us, as the government does through both taxation and government regulations, to keep our businesses going.
2) We have to be responsive to the customer, because the customer is the one who ultimately allows us, through their continued purchase and use of our product or services, to actually pay our bills. The federal government has no such dependency on the good will of the public to ensure its revenue stream.
3) We have to be responsive to trends in the marketplace, with respect to not only our competition, but the direction of the industry we’re in as a whole. Failure to do so will quickly result in loss of customers and market share, which will lead to either reduced revenue prospects for our business and employees or even the potential bankruptcy of the business. While you would think some degree of common sense would exist in the highest levels of the federal government, that for the nation to prosper, grow and compete globally against other countries while gaining market share for the nation’s goods and services around the world, the country’s national policies should be tailored accordingly. Unfortunately, as you already know, that is not the case. A federal bureaucracy so completely divorced from the accountability of the private sector loses all touch with what should be prudent, responsible policy and governance.

6 years ago

The problem is Government jobs being “lifetime” positions —— any moron can get a Government job; and short of ax murdering multiple people, they can’t be fired! How many more times are we going to hear that Government workers are on the Internet on Porn sites, cheating sites, off on fancy conferences, buying stuff on Amazon, and heaven knows what else — on our dime! They put more paperwork thru the shredders than they “process” – and 2/3 of what is processed is incorrect. We hear and see plenty of examples and lamenting over it ——- yet what, in the end, is being done????? Status Quo.

SSI and Medicare are going bankrupt for many reasons — but they’ll blame the fact that there are too many “boomers” sucking them dry. What about all the DISABILITY RECIPIENTS draining both SSDI and Medicare??????? Pull up a list of “legal” reasons to be qualified as disabled, and you may be surprised! Alcoholism, Migraine headaches, nervousness……….since when???????? It would be cheaper for Americans to declare ALL of Congress and ALL Government workers as disabled, and kick them off their jobs — I’d rather pay the inept to stay home than to continue to foul up any more programs for the rest of us.

Phyllis Jost
6 years ago

I agree that prices of drugs should be negotiated by Medicare. I would suggest that all federal programs related to health care negotiate drug prices as one unit rather than each program having to negotiate separately. This would provide a larger base for negotiations.

I also believe that participation in Medicare be voluntary. There are plenty of people, including myself, who can and would pay for insurance that provides better coverage suited to their personal needs. This would make Medicare a need based program and would save untold costs for Medicare. There should also include an option for future application should the circumstances change, again on need base requirement.

Ivan Berry
6 years ago

QUESTION: How many underpayments occurred due to these convenient typos? Who’s advantage was gained? Were the billing firms the receivers of those over charges? Follow the money and punish the consistantly error prone. This is stupid and is preventable mismanagement. Maybe all those in charge, esp. govt employees, should be replaced along with dishonest vendors. Most theft and graft is not unintentional. “Minor typos” my as is.

6 years ago
Reply to  Ivan Berry

Hi, Mr Barry
Do you think all those “minor typos” perhaps might have been done intentionally so someone can get a “kick-back?” I often wonder about that. I think that when a company constantly makes “errors” in their billing reports, that should raise a red flag and someone should be fast to jump on it and see why it happens so often. Do they even have proof-readers to go over the reports before sending them out for payment?? That’s another way of wasteful spending whenever they get overpaid….even if over payment is refunded later, It takes both the sending and the receiving parties to go over the reports before it goes out and before payment is made and ask questions if any errors are noted.
If we don’t want out, out Medicare payment through SS could increase…what for?…to cover for these kinds of errors?
Do they even provide excellent training for their employees…both in the billing firms and at Medicare. I understand honest mistakes do happen but when it seems so constant, the employers need to take a good , hard look at the workers and see how well they know their jobs. If I were an employer, I’d make sure all of my employees are well-trained and have re-current training for those who still make lots of errors, or else, let them go.
Another thing, I wonder if the offending company has to pay a fine(s) if they have so many errors in a month or even in a quarter, however they process their billing cycle? Make sure they have people who are good typists.

Ivan Berry
6 years ago
Reply to  Maria

Maria, without answering your specific and valid questions since the answers are so complex, we need to understand the incentives of the heads of all these government programs. Bureaucratic chiefs are the big fish in each of these various bureaucratic ponds whose budgets for the future are based on current spending. There is no need to economize, otherwise the power of dept. heads would not grow. That’s the nature of the beast. Whether mistakes are honest errors or intentional, bureaucrats use the errors to increase their budgets, increase their employee base to have more fire fighters to put out the flames of past mistakes or to provide more arsonists to provide more fires to fight in the future. This tendancy for intentional growth is not usually a subject for our governments three branches, since bureaucratic growth contributes to the economic gains for elected officials, appointed heads of departments as well as power accrued by judges of our various courts. Unless restrained, the direction of all government bodies is that of growth, including more and more power over the people.
In essence, it’s the voting public who must attempt to reverse this trend by electing to Congress, Representatives who will reduce the powers delegated to Executive Depts. that Constitutionally belong to the Congress. One example (there are hundreds) is the Trade agenda. Congress has the responsibility through treaties to form agreements with foreign nations. Congress now allows these treaties to be approved with a simple majority in both Houses. Proper action would be for the President to present the agreement to the Senate for a supermajority ratification. A very large book could be written that only contained these unlawful delegations of authority that places the power in the hands of unelected and unaccountable bureaucrats.
Thanks for your comments. You are so right in questioning the methods and intentions of these “handlers” of our various programs.

6 years ago
Reply to  Ivan Berry

Thank you, It all sounds so confusing and “crooked”, too, if you ask me. You are right, we need the right people in Congress to fix the problems and it looks like an uphill battle, but I feel it can be done. Congress just cannot sit back and do nothing….time for a “changing of the guards” to really dig in and do the right thing. We the voters are responsible for putting the right Representatives in Congress and I hope all voters will step up to the plate and do just that.

6 years ago

Congress allows Medicaid and Veterans Affairs to negotiate with drug companies for lower prices.

However Congress DOES NOT permit Medicare to negotiate with drug companies for lower prices.

Billions of dollars could be saved if Medicare were permitted to negotiate for Medicare drug prices.

Write or call your elected representative to congress and insist that Medicare be allowed to negotiate for lower drug prices.

There’s something fishy about why Medicare can’t negotiate.

6 years ago
Reply to  PaulO

Hey BozO, ALL health care costs were much lower BEFORE Obamacare came into existence, but NOW you want to “blame” the Republican controlled Congress to TRY to do something when YOUR savior, Obama, would veto anything they would do? … If this country can survive his Presidency, we just might be able to turn things around, or at least stop Democrats (Socialists) from continuing the destruction of this country! … But brainwashed dummies (Democrats), like yourself, are too stupid to understand that we ALL flourish under Capitalism, and we ALL suffer under Socialism!

6 years ago
Reply to  Rik

Rik, I agree with everything you said except for one thing. Obama is not the president. I refuse to recognize him as being anything more that a Court Jester. He’s a man who sits in the presidents chair with his feet on the desk, mocking our society at every turn. He is not our main problem anymore. It’s all those in Congress who are allowing him to take this great country down!

Richard Hutchinson`
6 years ago
Reply to  PaulO

Any Program run by the Government sometimes help a few and always hurts everyone !!!
Maybe you can figure out where the problem is !!!

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