Audit shows lab did not receive prior approval for exceeding tested allergen limits
During a recent audit, it was found that Quest Diagnostics improperly billed Texas Medicaid for allergy tests, resulting in incorrect payments. A review of sample client records revealed that Quest Diagnostics submitted claims and was reimbursed for testing more allergens than the allowable limit without obtaining the required prior authorization.
The OIG audit tested a sample of 30 encounters that involved procedure code 86003, covering allergy blood testing. This procedure code limits testing to 30 allergens per Medicaid member per year. If the limit is exceeded, prior authorization is required to ensure medical necessity and justify additional testing.
Of the 30 encounters tested, 11 involved Quest Diagnostics submitting claims for testing beyond the 30-allergen limit without obtaining prior authorization. On average, these 11 encounters involved 46 allergens tested per encounter. The failure to secure prior authorization resulted in incorrect billing to and reimbursement by Cook Children's Health Plan, the MCO responsible for processing the claims.
During the audit period, which covered September 2021 through August 2022, Quest Diagnostics provided allergy blood tests to 12,061 Texas Medicaid members, resulting in reimbursements totaling $669,140. The audit revealed that Quest Diagnostics was out of compliance with Texas Medicaid guidelines resulting in $2,207 in overbilling over the one-year period.
Auditors recommended that Quest Diagnostics implement corrective actions to prevent future billing errors. Specifically, they should:
- Develop and implement a process to bill for allergy testing above the 30-allergen limit only with prior authorization when the MCO payer requires it.
- Review the payments it received for these claims to determine whether the MCO reimbursed it correctly for actual services rendered.