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OIG Issues Report on Toxicology Overpayments

Urine drug testing is medical protocol for patients prescribed opioid drugs in order to monitor compliance and expose possible drug abuse or diversion.  In the wake of the opioid crisis, there has been an increase in the frequency and cost of urine drug tests, resulting in a corresponding increase in spending by Medicare and private insurance on such tests.  Between 2011 and 2014, spending on urine drug screens and genetic tests by Medicare and private insurance quadrupled to an estimated $8.5 billion per year.

The increase in the cost of urine drug tests is attributable to more expensive and high-tech ways of running the tests.  Presently, laboratories are moving away from simple urine screenings and installing machines for urine drug tests. There is a financial incentive attached to machine tests; under Medicare rules, each drug tested for within a single specimen validity test may be billed individually.

The spike in reimbursement by Medicare and private insurance has caught the attention of the federal government.  In 2010, the Centers for Medicare & Medicaid Services (“CMS”) imposed stricter rules on billing for simple urine screens; however, these rules do not cover machine testing.  In addition, in 2011, the federal government settled with Millennium Health, LLC, one of the largest urine drug testing laboratories in the United States, for $256 million after it was alleged to have billed medically unnecessary urine drug and genetic tests.

More recently, on February 20, 2018, the Office of Inspector General (“OIG”) released a report, which found that Medicare improperly paid 4,480 physicians and laboratories $66.3 million for specimen validity testing billed in combination with urine drug test testing. The OIG report recommended that CMS edit its system further to prevent improper payments for specimen validity tests and instruct Medicare contractors to educate providers on properly billing urine drug tests.

Shortly after the release of the OIG’s report, on March 29, 2018, CMS issued an MLN Matters Article (SE18001) “reminding” providers of the Medicare requirements concerning specimen validity testing performed in conjunction with urine drug testing.  With the skyrocketing costs of urine drug tests, as well as the OIG’s report of improper payments for specimen validity testing in conjunction with drug testing, providers should expect greater scrutiny of its billings for urine drug tests by CMS.

For over 30 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, including the defense of Medicare overpayments. If you or your healthcare entity has any questions about toxicology compliance, or any other health care regulatory compliance questions, please contact an experienced healthcare attorney at (248) 544-0888, or via email at You may also subscribe to our health law blog by adding your email at the top right of this page.

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