OIG: Labs Billed Medicare Part B for High Levels of Diagnostic Tests

More than 370 labs submitted Medicare Part B claims that included questionably high billing for COVID-19 and additional diagnostic tests, a report from the Office of Inspector General (OIG) found.

Medicare Part B began paying for COVID-19 lab tests in the spring of 2020, causing spending on the tests to increase. Some laboratories also billed for other diagnostic tests, including individual respiratory tests (IRTs), respiratory pathogen panels (RPPs), genetic tests, and allergy tests.

Claims that bill for COVID-19 tests along with a high volume of or high payments for these add-on tests raise concerns of potential waste or fraud, leading OIG to investigate.

OIG identified outlier labs billed for add-on tests at questionably high levels compared to other labs billed for COVID-19 tests. Labs were considered outlier labs when add-on tests constituted a high proportion of their total number of tests or their total payments for tests.

The report reflected data from all Medicare Part B claims paid for COVID-19 tests and IRTs, RPPs, genetic tests, and allergy tests in 2020.

OIG found that 378 labs billed Medicare Part B for add-on tests at exceptionally high levels compared to the 19,199 other labs in the study. Medicare Part B paid the labs more than $67 million for add-on tests across 11 months in 2020.

The outlier labs included 276 labs that billed for high volumes of add-on tests on claims for COVID-19 tests. For these labs, the volume of add-on tests accounted for at least 38 percent of the labs’ billing for COVID-19 and add-on tests. Twenty-four of the labs billed for add-on tests on 90 percent or more of their claims for COVID-19 tests.

Meanwhile, 263 labs billed for high payment amounts from add-on tests. Payment for add-on tests made up at least 33 percent of the total payment on claims for COVID-19 tests for these labs. Thirty labs received more than 80 percent of their payments for these claims from add-on tests rather than the COVID-19 tests.

Out of the 378 labs, 161 submitted claims with both high volumes of add-on tests and high payment amounts from add-on tests.

In addition, eight labs had at least 10 claims where two labs had billed for the same enrollee for the same tests on the same day. According to OIG, this may indicate a fraud scheme involving sharing enrollee information.

Some of the labs billed for add-on tests in combinations with little variation across patients, suggesting that the tests were not specific to individual patients’ needs. Including the tests on the claims increased the amount that Medicare Part B paid to the labs.

One lab regularly billed for a combination of five add-on respiratory tests on almost all of its COVID-19 test claims, the report noted. This led to an average per-claim Medicare payment to the lab of $666, covering both COVID-19 and add-on tests. In comparison, other labs that billed for COVID-19 tests and add-on tests had an average payment of $89.

Billing for add-on tests is generally allowed, and Medicare Part B will reimburse labs for the tests if they are medically appropriate. However, the study findings of consistent, questionably high billing suggest that some add-on tests may have been wasteful or fraudulent.

OIG has referred the labs to CMS for further review of their billing practices.