On August 24, 2006, the Office of Inspector General (“OIG”) of the United States Department of Health and Human Services (“DHHS”), through its Office of Audit Services, issued a report finding that the Medicare Program overpaid an estimated twenty million dollars for non-physician radiology services provided to hospital inpatients. The estimated overpayments covered the period 2001-2003.

During a Medicare patient’s inpatient hospital stay, the Medicare Program, under Part A, pays the hospital under the Prospective Payment Systems (“PPS”) based on what is known as DRGs. DRG payments include payment for non-physician radiology services. These non-physician services are known as the “technical component” of radiology services. The physician component of radiology services, known as the “professional component”, is billed to the Medicare Program, Part B, by the physician.

The estimated overpayments apparently resulted from Part B being billed and paying for the non-physician radiology services, while Part A also paid the hospitals for the non-physician radiology services. This can happen when the physician who bills Part B bills for radiology services as “global” billing (for both the professional component and the technical component), as opposed to only for the professional component.

The OIG made three recommendations as a result of its findings: (1) that the Centers for Medicare and Medicaid Services (“CMS”) should instruct Part B carriers to recover the overpayments; (2) that CMS should establish computer edits to prevent these duplicate payments for the non-physician services and should develop post-payment review procedures to identify inappropriate billings; and (3) that CMS should alert Part B carriers and help them to educate radiology suppliers (physicians) about improper billings. CMS has accepted all three recommendations.

The full OIG report is A-01-04-00528 and may be found on the OIG website at http://oig.hhs.gov