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Labs Rebuked After Charging for Specimen Validity Testing

Federal Insider: June 2018

Labs Rebuked After Charging for Specimen Validity Testing

After an Office of the Inspector General (OIG) report in February found some $66 million in over-billing, the Centers for Medicare and Medicaid Services (CMS) is cracking down on laboratories that code specimen validity testing as a separate service when they perform urine drug tests. A Medicare Learning Network bulletin released in March emphasizes that “providers performing validity testing on urine specimens utilized for drug testing shall not separately bill the validity testing.”

Validity testing includes assays for urinary pH, nitrates, oxidants, creatinine, specific gravity, and other indicators of specimen adulteration. Labs are only allowed to bill for screening and quantitative testing. Billing code descriptions for both types of tests contain the phrase, “includes sample validation when performed, per date of service.”

CMS is paying closer attention to the billing issue after OIG chastised the agency for failing to prevent the problem with “inadequate” systems. The agency put a fix in place in April 2016 that never worked properly, according to OIG.

Importantly, some of the same assays used to detect an adulterated specimen are also used to diagnose unrelated conditions, such as urinary pH and specific gravity for managing kidney stones and urinary tract infections. In such cases, these tests may be covered by Medicare.

OIG wants CMS to strengthen its billing editing system that detects and prevents specimen validity tests billed by the same provider for the same beneficiary on the same date of service as a urine drug test. However, based on the OIG report, the number of improper claims has shrunk considerably, from $37,054,887 in improper payments in 2014 to $4,335,028 in 2016.

CMS Touts Value-Based Payment Plan for Hospitals

With a new secretary at the helm of the Department of Health and Human Services (HHS), the administration is laying out how it sees the shift from volume to value-based payment in the 2019 Inpatient Prospective Payment system draft rule for hospitals.

The draft rule floats three main policy changes related to how the Centers for Medicare and Medicaid Services (CMS) will pay hospitals. The first would require hospitals to post their standard list of prices on the internet in a machine-readable format. Currently, hospitals only are required to make them available in “some form.”

Second, CMS is taking a fresh look at its electronic health record incentives. The rule would take new steps to ensure health record systems can exchange data and allow patients to access and control their own records.

Finally, CMS wants to eliminate duplicative, burdensome, or out-of-date quality measures through a
new initiative called Meaningful Measures that assesses quality based on factors such as reducing healthcare-associated infections.

The American Hospital Association (AHA) praised the idea of less paperwork, noting that an AHA analysis found that providers spend nearly $39 billion annually on administrative work for regulatory compliance. AHA estimates that hospitals could see a payment increase of 1.75% next year based on the draft rule.

In a speech to the Federation of American Hospitals in March, HHS Secretary Alex M. Azar II emphasized that he wants the agency to use market forces to increase efficiency. “Real competition—in the economic sense—has never really been fully tried in our bizarre third-party payer system,” he said. But he noted that, contrary to what some might expect from the administration, implementing a plan based on market competition “will require some degree of federal intervention—perhaps even an uncomfortable degree.”

Azar also plugged the HHS meaningful measures initiative as a way to simplify paperwork and give more power to providers and consumers. “Value is not accurately determined by arbitrary authorities or central planners,” he commented.

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