Are Inhalation Drugs the Next OIG Six Year Lookback Audit?

Published in Billing, Reimbursement, Audits and Compliance on Tuesday, November 12, 2019

Since 2010, the CMS’s Comprehensive Error Rate Testing (CERT) program has identified nebulizers and related drugs (i.e., inhalation drugs) among the top 20 supplies with the highest improper Medicare payments. Based on prior reviews, the Office of Inspector General (OIG) conducted a nationwide review to determine if the suppliers included in the review complied with Medicare requirements when billing for inhalation drugs.

The OIG’s claims universe included 2.3 million claim lines, totaling $259.5 million, for inhalation drugs that 7,868 suppliers provided to Medicare beneficiaries during the audit period. Using statistical analysis, the OIG calculated a stratified random sample of 120 claim lines for review. Of the claim lines reviewed, Medicare paid 65 suppliers $121,185.

What did the OIG’s review uncover? According to the OIG report, not all suppliers complied with Medicare requirements when billing for inhalation drugs. For 81 of the 120 sampled claim lines, suppliers complied with the requirements; however, for the remaining 39 claim lines, 22 suppliers did not comply with documentation requirements. Based on the sample results, the OIG found an estimated $92.5 million was improperly paid to suppliers for inhalation drugs.

If you think this sounds familiar, you are right. Not too long, in 2018, the OIG performed a simliar audit on PAP Supplies. Using statistical analysis a small sample of suppliers’ claims for PAP suppliers were reviewed, and the findings projected to the universe equaled over $600 million in improperly paid claim for PAP supplies. More importantly, however, is how the OIG advised the CMS and its contractors to impose self-audits for a six year lookback period.

OIG recommendations for the inhalation drugs audit include instructing the MACs to recover the actual overpayments of $36,825 for the unallowable claims lines and to “notify the 22 suppliers associated with the 39 claim lines with potential overpayments of $36,825 so that those suppliers can exercise reasonable diligence to investigate and return any identified overpayments.” This likely means these 22 suppliers will soon receive notices from Noridian and CGS advising them to “review claims submitted related to inhalation drugs to determine if overpayments exist within the 6 year lookback period.”

If you are a supplier of nebulizers and inhalation drugs it is likely you will see increased audit activity in the near future. The Supplemental Medical Review Contractor (SMRC) often conducts audits at the direction of CMS and the OIG. The MACs may also add inhalation drugs to their audit focus, by way of TPE audits.

Could you be subject to additional audits? Here’s what you need to know: 

  • Get ahead of it now. Review your claims and perform internal reviews to prepare for this audit. 
  • If you receive a request letter, read and understand exactly what is being requested and provide what they are asking.  You may only get once chance at this.
  • Only one claim deemed overpaid by the OIG may require a 100% claim review of six-years of claims.

Do you provide nebulizers and inhalation drugs?

Look-back reviews can be burdensome and require an expert statistician. The van Halem Group will work in conjunction with your legal counsel and our doctorate level statisticians to provide an accurate and thorough audit response. In addition to statistical analysis, our clinical experts will conduct a review of the identified claims to determine coverage and documentation requirements are met. 

For more information on how we can help with these audits, or anything else, contact us today!


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