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HHS Accuses Infusion Companies of Overcharging

Cheryl A. Thompson

Auditors for the Department of Health and Human Services (HHS) reported that infusion-therapy companies and skilled-nursing facilities (SNFs) overcharged the government millions of dollars for services provided to Medicare beneficiaries.

The 11-page report "Infusion Therapy Services Provided in Skilled Nursing Facilities", released in December 1999, also stated that the infusion-therapy companies recommended and provided unnecessary services, placing patients at needless risk for complications. 

Auditors for the HHS Office of Inspector General (OIG) reviewed charges associated with infusion drugs and supplies provided to Medicare-reimbursed SNFs by three infusion-therapy companies from 1995 through 1998, before implementation of a prospective pricing system. According to the report, the companies charged the SNFs substantially more than prevailing rates, provided infusion services not medically necessary, and incorrectly billed for certain services, prompting higher payments than warranted from the government. OIG blamed the overpayments on a cost-based reimbursement system "vulnerable to abusive billing schemes." Using antimicrobials as an example of excessive pricing, OIG reported that infusion-therapy companies in Texas charged SNFs $127 to $270 for drugs having average wholesale prices of $11 to $16. SNFs, in turn, had "little incentive to reduce costs," OIG stated, because greater expenses for ancillary services such as infusion therapy meant increased reimbursements from Medicare for administrative and general costs. 

Medical professionals' evaluation of 462 infusion-therapy claims submitted by 22 SNFs during the four-year period under study revealed that $4.8 million, or 53% of the total value of the claims, went to services not deemed medically necessary. Most of the infusion services evaluated in this audit were provided by two of the three companies reviewed in the company-specific audit. 

OIG also reported that misinformation from the companies caused the SNFs to misclassify some costs as ancillary rather than routine on the reports sent to Medicare. According to OIG, charges for nursing services and equipment such as infusion pumps and poles should have been classified as routine operating costs, which were subject to limits. 

One of the three infusion-therapy companies investigated in the audits has consented to a fine of $10 million under the False Claims Act and Civil Monetary Penalties Law. The other companies and many of the SNFs, according to the report, are under further federal scrutiny. 

OIG recommended that the Health Care Financing Administration (HCFA) take the following actions: 

  • Consider the effect of the "improper payments" before refining or updating the prospective pricing system for SNFs, 
  • Work with OIG to determine a national error rate for infusion-therapy services (to be used if Congress mandates a return to cost-based reimbursements for infusion services), 
  • Identify and recover overpayments made to SNFs, and 
  • Direct HCFA contractors to review the medical records of selected SNF residents (to ensure appropriate provision of infusion therapy).

ASHP commented on the report, noting that the findings "are not based on adequate knowledge of [infusion-therapy] services." The cost of infusion-therapy services, ASHP wrote, encompasses more than the cost of the drug.