OIG identifies potential oversight vulnerabilities tied to outpatient drug billing

A new Office of Inspector General (OIG) data brief highlights potential weaknesses in CMS’ and Medicare Administrative Contractors’ (MAC) oversight of Part B outpatient drug billing.

For this audit, the OIG identified 160,918 outpatient drug claim lines submitted by 2,944 facilities with dates of service between April 2024 and March 2025. These claims involved 577 unique Healthcare Common Procedure Coding System (HCPCS) codes that did not match those associated with the National Drug Codes (NDC) in CMS’ NDC/HCPCS crosswalk files.

The OIG determined that organizations consistently billed for 38,512 to 42,994 claim lines with HCPCS and NDC discrepancies each quarter. Six HCPCS codes (J7050, J7040, J7030, J0131, J9075, and J0688) were associated with 62% of the discrepancies. Critical access hospitals and short-term acute care hospitals billed for 99% of the claim lines, with one short-term acute care hospital accounting for 7% alone.

The OIG also reviewed a nonstatistical example of 30 claim lines and determined that 24 contained incorrect HCPCS codes. Of these claim lines, 11 were reimbursed under the Outpatient Prospective Payment System, potentially resulting in $1,304 in improper payments. Organizations attributed the discrepancies to clerical errors and billing systems that could not prevent or detect the incorrect billing of outpatient drugs, according to the OIG. Outside of these 24 claim lines, three had the correct HCPCS codes but incorrect NDCs.

Through its review, the OIG determined that CMS and MACs did not have system edits in place to ensure facilities used the correct HCPCS code when billing for outpatient drugs. It also found that their provider education activities did not address billing for drugs using procedure codes that match those associated with the NDCs in CMS’ crosswalk files.

While the OIG did not include any formal recommendations in the data brief, it hopes CMS will use the audit findings to strengthen oversight efforts.