CMS to OIG: Get Back the $66.3 Million You Improperly Paid to Labs for Urine Validity Tests

As if times were not already tense enough for labs that bill Medicare for urine drug tests, the OIG ratcheted up the pressure another notch on Feb. 20 by issuing a new report chiding CMS for making $66.3 million worth of improper payments for such tests. More precisely, the assays called out by the OIG are specimen validity tests billed in combination with urine drug tests. Here is an overview of the report and what it may portend for providers of Part B lab tests.

Urine Drug & Specimen Validity Testing
Under Medicare rules, urine drug testing is deemed medically necessary to detect and quantify the presence of drugs in a patient’s body.  Specimen validity testing, which analyzes the urine specimen to ensure that it has not been adulterated or tampered with, is not deemed medically necessary if its sole purpose is to validate the specimen since the test results are not being used to manage the beneficiary’s treatment.

Exception: Specimen validity testing is medically necessary in limited cases when it is used in combination with a urine drug test done on the same day for purposes of diagnosing certain conditions such as kidney stones or urinary tract infection. However, the latter cases should be relatively rare, according to CMS officials cited in the report.

OIG Findings
With that in mind, the OIG audited $67+ million in Medicare Part B payments for specimen validity tests billed in combination with urine drug tests, i.e., on the same dates of service, from 2014 through 2016. The findings: $66.3 million of the payments were improper. Those payments were received by 4,480 clinical labs and physician offices. The report cites two reasons for the improper payments:

• The providers’ failure to follow existing Medicare guidance; and
• The inadequacy of CMS system edits designed to prevent payment for specimen validity tests billed in combination with urine drug tests.

In fact, CMS did implement revised edits on April 1, 2016. But while the revised edits helped, $1.8 million worth of improper payments still got past the goalie during the first nine months they were in place. That projects to an unacceptable rate of $12.1 million over five years.

OIG Recommendations
The report lists two recommendations, both of which CMS has accepted:

• Medicare contractors should recover the $66.3 million it improperly paid out for specimen validity testing; and
• CMS and its software contractors should go back to the drawing board and come up with a better system edit solution for flagging improper billing of specimen validity tests in combination with urine drug tests edits to repair the leakage in the current edits.

Impact on You
If yours is among the 4,480 labs and physician offices to receive improper payments for specimen validity tests during the audit period, you can expect a repayment request from your Medicare contractor. But the recovery process may not be so simple and straightforward. True, your contractor knows who you are since the OIG audit identifies the improper payment recipients. The problem, at least for the contractors, is that the audit looks only at specific claim lines. As a result, contractors will have to conduct medical review of the entire claim to determine whether it includes a relevant diagnosis code.