The COVID-19 pandemic has caused an enormous need for testing and has spawned the creation of new labs and specimen collection agencies to (try to) meet that need.  In 2020 alone, Medicare spent $1.5 billion on COVID-19 tests. This set of tests included antibody tests, high-throughput tests with shorter test turnaround times, and panel tests that tested for COVID-19 along with other respiratory diseases.  As a result, the OIG is focused on COVID-19 testing and is conducting a “series of audits” of Medicare Part B lab services that “focus on aberrant billing of COVID-19 testing during the pandemic.” 

In addition, the OIG is conducting a trend analysis of Medicare lab billing for potential fraud and abuse with COVID-19 add-on testing.  The focus on add-on testing is a result of CMS’ relaxation of certain rules related to COVID-19 testing and other diagnostic lab tests to eliminate the requirement for an order from a physician or non-physician provider during the PHE for one COVID-19 test.  The focus of the OIG’s investigation is to evaluate potential fraudulent billing of medically unnecessary add-on testing and to identify trends in the use of Respiratory Pathogen Panel (“RPP”), allergy, and genetic testing to identify “patterns of billing by laboratories that may indicate fraud and abuse.”  Id.  

The OIG will also evaluate Medicare Part A spending for COVID-19 testing in the inpatient setting under the hospital OPPS.  

The audits are concentrated on several key areas: 

  • Whether tests were eligible for Medicare payment.

Medicare does not provide coverage for all COVID-19 tests.  

For instance, while Medicare covers diagnostic testing for nursing home residents who either have signs or symptoms of COVID-19 or have a known or suspected exposure to COVID-19, Medicare does not cover non-diagnostic tests, such as testing performed for public health surveillance purposes.   

CMS also revised its policy pertaining to clinical diagnostic lab testing during the PHE as part of the May 8, 2020 IFC and revisions published on September 2, 2020.  Specifically, Medicare covers one COVID-19 and related test without the order of a physician or other health practitioner, but requires an order to cover further COVID-19 and related tests.

  • Whether it was appropriate to bill for specimen collection and travel.

If an entity (such as the lab itself or a specimen collection company) travels to and collects samples for diagnostic tests for homebound or non-hospital (SNF), Part B inpatients, Medicare may be billed for travel and specimen collection.

However, if the collection of the sample for the COVID-19 test is in the same location as the performance of the test, Medicare will not pay for travel.  Additionally, the specimen collection fee is not available for tests where a patient collects his or her own specimen.

  • Whether COVID-19 tests were bundled with other medically unnecessary tests. 

Medicare only will pay for medically necessary lab tests.  Audits may focus on tests conducted and submitted for payment with COVID-19 tests and apply scrutiny to whether each test was medically necessary.  

  • Whether COVID-19 tests were billed with proper codes.
  • Whether the appropriate documentation exists to support payment.

Audits will focus on whether documentation exists to justify payment for the COVID-19 related claims.  For example, was the COVID-19 test ordered by a physician or practitioner (if the individual already had one non-physician ordered diagnostic test)?  If an entity has billed Medicare for specimen collection related travel, it is required to have logs supported the mileage traveled (whether in paper or electronic format).  If no such logs exist, payment for travel may be in jeopardy.

Because of the extensive changes to billing and reimbursement rules during the PHE, providers, suppliers, and labs can also expect CMS to conduct post-payment review of COVID-19 lab testing and recoup payments made for tests that were not medically necessary or fail to meet the criteria to bill for such tests

With the continued development of new variants and the likelihood of COVID-19 becoming endemic, it is important to be mindful of the documentation and billing requirements associated with payment for COVID-19 lab testing and other add-on tests and the institution of audits by the OIG and CMS.  Providers, suppliers, and labs should also implement policies and documentation to identify claims that do not meet the necessary billing requirements and proactively consider making repayments to their MAC to avoid the potential of overpayments and reverse False Claims Act liability.

Womble Bond Dickinson’s Healthcare team is available to help providers understand, respond to, and defend audits of their COVID-19 claims and to proactively manage potential issues related to overpayments.