Enforcement Trends: CMS Orders Medicare Contractors to Go After Labs that Received Specimen Validity Test Payments

Reflecting the wider opioid crackdown, CMS is targeting labs that perform urine drug testing for potential billing abuses. The hottest initiative: Labs that bill specimen validity testing (SVT) in combination with urine drug tests. A February 2018 OIG report claims Medicare made $66.3 million worth of improper payments for such tests and calls on CMS to get that money back. The agency has heeded the recommendation and unleashed the Medicare contractor dogs. Meanwhile, labs are stepping up and voluntarily self-disclosing that they received such payments. Here's a rundown of the situation.

Urine Drug & Specimen Validity Testing

SVT analyzes the urine specimen to ensure that it hasn't been tampered with or adulterated.  Unlike actual urine drug testing which is deemed medically necessary to detect and quantify the presence of drugs in a patient's body, Medicare doesn't consider SVT medically necessary where its sole purpose is to validate the specimen since the SVT results aren't actually being used to manage the patient's treatment.

Exception: SVT is medically necessary in limited cases when it's 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 are relatively rare, or at least CMS thinks they should be. So why are they being billed so frequently?

Indications of Improper Billing

With that question in mind, the OIG audited $67+ million in Medicare Part B payments for SVTs 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 OIG report cited two reasons for the improper payments:

• Providers' failure to follow existing Medicare guidance; and
• The inadequacy of CMS system edits designed to prevent payment for SVTs billed in combination with urine drug tests, in spite of revised edits implemented in 2016. 

The OIG urged Medicare contractors who made the $66.3 million in improper payments to implement better edits and make an effort to recover the money already spent.

The Fallout

Many of the 4,480 labs and physician offices that received improper SVT payments have gotten a repayment request from their Medicare contractor. But for contractors, recovery isn't that simple. One problem is that the audit looks only at specific claim lines. Consequently, contractors must conduct medical review of the entire claim to determine whether it includes a relevant diagnosis code.

Meanwhile, some labs have decided to do their own internal audits and voluntarily self-disclose any improper SVT payments they identify. There have been at least four such reported self-disclosure cases in the past month, each from the Ohio Valley region:

• $126,799 paid by The Northern Kentucky Center for Pain Relief (Jan. 24, 2019);
• $125,983 paid by VerraLab in Louisville, Kentucky (March 13, 2019);
• $111,706 paid by Wheelersburg Internal Medicine Group + Mohammad Mouhib Kalo, MD in Ohio (Feb. 6, 2019); and
• $69,776 paid by Medical Specialist of Kentuckiana, PLLC in Louisville (March 13, 2019).