EXECUTIVE SUMMARY:
This final audit report points out that Medicare fiscal intermediaries (FI) did not always have adequate controls to detect and prevent inappropriate payment for certain laboratory tests (chemistry, hematology, and urinalysis tests). We estimated nationwide FI overpayments to hospital outpatient department laboratories of $43.6 million during the 2-year period ended December 31, 1995. For the same period, an additional $15.6 million could have been saved if policies had been developed to preclude payment for medically unnecessary automated hematology indices. In addition to recovering overpayments, we recommended that the Health Care Financing Administration (HCFA) direct FIs to implement additional procedures and controls to ensure proper payments in the future. We also recommended that HCFA consider eliminating separate reimbursement for additional hematology indices. The HCFA officials generally concurred with our recommendations, and agreed to take corrective action.