Knowledge Base Article

A farmer is selling baskets of apples that were picked several days ago. He knows that some may be bad so he will give a discount based on the percentage of bad apples. The first customer chooses five apples at random and only one of the five is bad, so the farmer gives him a 20% discount. The next customer carefully selects five apples with visible dark spots and all five apples are bad. The farmer gives him a 90% discount. Sometimes it is all in the selection.

In a recent OIG review of payments for selected outpatient drugs, the OIG found that payments for 1,132 of the 1,905 line items for outpatient drugs selected for review were not correct. This appears to be an astonishing error percentage, but beware, this is not a random selection. The OIG uses computer matching, data mining, and other analytical techniques to identify the line items potentially at risk for noncompliance with Medicare billing requirements. Some specific targets mentioned in the report are selected outpatient drugs, payments for drugs that exceeded charges by at least $1,000, and high-dollar payments.

The report found errors involving incorrect units of service, incorrect HCPCS codes, both incorrect units and HCPCS, billing for packaged or non-covered use of a drug, and lack of supporting documentation. Some of the specific drugs and issues include:

• Incorrect units were the cause of most of the billing errors.
• The billable units of a drug can be calculated by dividing the dosage of the drug given by the amount in the HCPCS code description for the drug. For example if 140 mg of a drug is given that has a HCPCS code description of Injection, drug, 1 milligram, then the correct units are 140÷1 = 140 units; if 800 mg of a drug is given that has a HCPCS code description of Injection, drug, 200 mg, then the correct units are 800÷200 = 4 units.
• Leuprolide acetate injections are used for different purposes, each with a different HCPCS code and description.
• HCPCS code J1950, leuprolide acetate injection, 3.75 milligrams per unit, is indicated for the treatment of endometriosis, uterine leiomyoma, and malignant neoplasms of the breast
• HCPCS code J9217, leuprolide acetate injection, 7.5 milligrams per unit is indicated for the treatment of prostate cancer
• Due to difference in Medicare payment rates for these drugs (J1950 - $760.03 and J9217 - $206.78) and the difference in milligram descriptions, billing the wrong HCPCS code for the wrong treatment will result in a significant over or under payment.
• Doxorubicin hydrochloride is available in both a lipid (or liposomal) and a non-lipid (or non-liposomal) formula. The non-lipid form of doxorubicin hydrochloride (HCPCS code J9000) is packaged, whereas the liposomal forms (previously J9001) receive separate Medicare payment. Medicare payment rates for the current HCPCS codes for liposomal doxorubicin (Q2049 and Q2050) are close to $500 per 10 mg.
• Are you using the correct HCPCS code? For example, are your codes correct for:
• Epoetin alfa, 1000 units, for non-ESRD use – J0885
• Darbepoeitn alfa, 1 mcg, non-ESRD use – J0881
• Epoetin alfa, 100 units, for ESRD use – Q4081
• Herceptin – not specifically mentioned in this report because Herceptin audits get their own separate reports. Herceptin is available in a 44mg multi-use vial and Medicare does not pay for drug wastage for multi-use vials. The units of Herceptin billed should be based on the patient’s dosage, not the vials used.

These types of errors may be repeated errors if the reason is a wrong multiplier in the chargemaster. Look for payments that appear too large or too small in relation to the charge amounts.

Hospitals need to make sure the correct drug code is being submitted for the correct treatment purpose.

Your hospital can use the same data mining approach that the OIG uses to check for internal issues with the billing for drugs. MMP’s HIQUP (Hospital Improvement in Quality and Performance) report, which data mines a facility’s Medicare outpatient 835 files, includes several queries designed to identify drugs at high risk of billing errors. So if you are struggling with drug units, please contact us if we can help.