Billing and Coding

OIG Calls on CMS to Crack Down on Improper Payment of Definitive Drug and LDL Cholesterol Tests

History tells us that whenever OIG issues a report pointing out a pattern of Medicare Part B overpayments for lab tests, labs and physicians that provide those tests should be concerned. In recent weeks, the agency published not one but a pair of such reports. Here are the details labs need to know about.

  1. Improper Payment for Drug Testing Services

Payment Rules: Medicare Part B pays for reasonable and necessary drug testing services as part of active treatment for substance use disorders. To code for such services, labs are supposed to use the following procedure codes:

  • Presumptive drug testing: CPT code 80305, 80306, or 80307, depending on the complexity level of the test; and
  • Definitive drug testing: HCPCS G0480, G0481, G0482, G0483, or G0659, based on the number of drug classes, including metabolites, tested.

Red Flag: On June 8, OIG issued a new report indicating that in 2019, Part B paid $180 million for drug treatment testing services provided to 274,000 substance use disorders. The fee-for-service improper payment rate for the year was a relatively low 7.3 percent; however, the improper payment rate for the highest-paying drug was 58.9 percent.

OIG Findings: So, OIG decided to examine how effectively Medicare administrative contractors have been in rooting out improper payments for drug testing services. They cited three weaknesses in contractors’ program safeguards, namely, lack of:

  • Clear and consistent requirements or guidance for labs to use in determining the number of drug classes to bill for definitive drug testing services;
  • Procedures for identifying or limiting the frequency of drug testing services, e.g., the number of drug tests performed per year for each beneficiary across all jurisdictions; and
  • Consistent requirements in Local Coverage Determinations (LCDs) or any procedures for identifying claims for direct-to-definitive drug testing.

OIG Recommendations: The OIG recommended that CMS work with Medicare contractors to:

  • Determine if there’s clinical evidence to support a single, specific reasonable and necessary standard for drug testing services, and if so, establish a National Coverage Determination or develop LCDs with more consistent requirements for drug testing services;
  • Clearly indicate in LCDs, Local Coverage Articles, and other instructions how labs should determine the number of drug classes for billing definitive drug testing services;
  • Implement a system edit or procedure to identify and limit frequency of drug testing services per beneficiary across all Medicare jurisdictions;
  • Consider adding a modifier to claims for definitive drug tests indicating whether a test was based on results obtained from a presumptive drug test; and
  • Determine if it’s necessary to conduct postpayment medical review on labs that have been paid for excessive definitive drug tests.

Practical Impact: The fifth recommendation, which CMS has accepted, is the one you need to be most concerned about if your lab bills Medicare for definitive drug tests. OIG didn’t provide a specific definition of what it meant by “excessive” payment triggering post-payment review but did offer an example of more than one test in a one-week period for the same beneficiary. CMS also concurred with the fourth recommendation but not the first three. OIG stood by all three but said it had “refined” recommendations one and two in accordance with CMS’s comments.

  1. Improper Payment of LDL Cholesterol Tests and Lipid Panels

Payment Rules: Medicare Part B covers two basic kinds of cardiovascular-screening blood tests measuring cholesterol and triglyceride levels to detect conditions that may lead to heart attack or stroke:

  • Lipid panels that measure the levels of four lipids in the blood, including total cholesterol, triglycerides, high-density lipoprotein (HDL) cholesterol and low-density lipoprotein (LDL) cholesterol, sometimes called “bad cholesterol”; and
  • Direct LDL tests that measure the actual level of LDL in the blood.

Red Flag: The LDL cholesterol level can also be calculated from the results of the other three tests in the lipid panel. As a result, direct testing for LDL cholesterol generally isn’t separately reimbursable when the lipid panel is performed for the same beneficiary on the same date of service. In 2003, CMS added the lipid panel (CPT code 80061) and direct LDL test (CPT code 83721) code pair to its National Correct Coding Initiative (NCCI) edits designed to flag codes that shouldn’t be billed together for the same patient at the same time (with relatively rare exceptions flagged by addition of the -59 modifier.

OIG Findings: Affirming the findings of a previous audit, new OIG report published in late May concludes that the NCCI edit isn’t working and that Medicare is still paying for LDL tests and lipid panels in circumstances where billing both wasn’t justified. Specifically, OIG auditors found that from 2015 to 2019, Part B made $35.8 million for direct LDL tests to 11,788 providers in addition to lipid panels for the same beneficiary on the same date. OIG determined that some providers were billing LDL tests and lipid panels together on a routine basis, i.e., more than 75 percent of the time. There were 1,334 such “at-risk providers” accounting for Medicare payments of $20.4 million.

“CMS’s oversight was not adequate to prevent improper payments for the direct LDL tests,” the OIG concluded. “If CMS had had oversight mechanisms to prevent such payments, Medicare could have saved up to $20.4 million for our audit period.”

OIG Recommendations: The OIG called on CMS to order Medicare contractors to:

  • Develop oversight mechanisms to identify and prevent improper payments for lipid panel and direct LDL tests to at-risk providers; and
  • Educate providers on the billing of direct LDL tests in addition to lipid panels.

Practical Impact: CMS pushed back, indicating that it didn’t agree with the first recommendation. Ordering direct LDL tests and lipid panels together is permissible under Medicare payment rules on the basis of the physician’s clinical judgment, CMS insisted. The agency was only slightly less happy with recommendation two, noting that it already has issued education on correct coding requirements for the proper use of modifiers on claim lines. We maintain that our finding and recommendations are valid. But OIG held its ground, saying that current education does not address this.


The most significant impact of the new OIG reports will likely be in the form of internal action aimed at improving code edits and stepped-up outreach and education efforts from Medicare contractors. However, there’s also a distinct risk of post-payment review, particularly in the case of labs that received “excessive” definitive drug testing payments. The other most likely target for audit, review and enforcement are the 1,334 “at-risk providers” accounting for Medicare $20.4 million in Medicare payments for LDL tests and lipid panels for the same patient at the same time.


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