IG report: Medicare made $1.7B in 'questionable' payments

A Thursday report casts a shadow over Medicare, raising new questions about fraud and mismanagement within the government insurance program for people who are retired or disabled.

The inspector general of the Department of Health and Human Services (HHS) released a report that found Medicare made billions of dollars in suspect payments to clinical laboratories around the country in 2010, the most recent year for which data is available.

The report follows a similarly damaging account from the Senate Special Committee on Aging, which said Wednesday that improper Medicare payments are at a record high.

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The report mentioned Thursday in a Federal Register notice found examples of at least $1.7 billion in questionable payments to more than 1,000 laboratories, many of which were located in Florida and California. This accounted for about 20 percent of all the payments Medicare made that year.

Medicare was suspicious of many of these laboratories because they filed claims with ineligible physician identification number or for duplicate tests, but it still paid them, the report found.

These labs are used to test patients' blood count, for cholesterol screenings, and urinalyses. But the inspector general suggested they may be giving "kickbacks" to doctors who refer patients, which is illegal.

In many cases, the labs would file claims for patients who lived more than 150 miles away from the prescribing doctor.

"One purpose of the anti-kickback statute is to protect patients from inappropriate medical referrals or recommendations by health care professionals who may be unduly influenced by financial incentives," the inspector general wrote. 

But the American Clinical Laboratory Association (ACLA) questioned the methodology of the inspector general's report, pointing out that the majority of labs are not involved in fraudulent activity.

"While lab services represent less than 2 percent of Medicare spending as noted in the [office of inspector general] report, it remains important that clinical labs take seriously their responsibility as stewards of taxpayer dollars used to cover the expense of caring for Medicare beneficiaries," ACLA President Alan Mertz said.

The Wall Street Journal first reported the story.