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OIG Report Finds Overpayments for Cancer Drug Herceptin

The Department of Health and Human Services Office of Inspector General (OIG) released a report on July 31, 2012 which indicates that Medicare contractors made overpayments to providers for the breast cancer drug Herceptin. In an audit of Medicare contractor Novitas Solutions, Inc.‘s (Novitas), formerly Highmark Medicare Services, activities from January 2008 through December 2010, the OIG found that incorrect payments were made to providers in four states for full multiuse vials of Herceptin. States included in the audit were Delaware, the District of Columbia, New Jersey, and Pennsylvania.

Herceptin is a breast cancer treatment drug that comes in a multiuse vial containing 44 billable units of the drug. When properly reconstituted and stored, it is viable for 28 days. The OIG audit found that in many cases the vials were used for a single administration and then discarded, with charges entered for the entire vial which included the unused discarded portions. The Medicare Claims Processing Manual states that while single use vials may be charged for any unused or discarded amounts of drugs or biologicals, multiuse vials are only subject to payment for the portions used. The OIG identified overpayments in the amount of $1,576,374.00 for unused and discarded portions of multiuse vials of Herceptin.

The OIG made the following recommendations to Novitas:

1. That Novitas recover the $1,576,374 in identified overpayments;
2. That Novitas implement a system edit that identifies for review line items for multiuse-vial drugs with units of service equivalent to one or more entire vials;
3. That Novitas use the results of the audit in provider education activities.
Novitas concurred with all three recommendations, and commented that claims history adjustments will be initiated.

The OIG audit is part of a national review of the use of Herceptin, which started with a pilot audit, the results of which were released July 10, 2012. Providers can expect a review of this drug in every state. Recovery Audit Contractors (RACs) in two regions have already put Herceptin multiuse vials on their approved issues lists. Connolly in Region C and HealthDataInsights in Region D have approved issues posted for Herceptin. Providers should anticipate that RACs in Regions A and B may follow.

If you need assistance defending a Medicare contractor audit, or have questions about RAC approved issues, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888.