Medicaid programs in eight of 11 states examined by the Department of Health and Human Services Office of Inspector General spent $1.3 million in fiscal years 2005 and 2006 on potentially improper payment for outpatient clinical diagnostic laboratory services for Medicare beneficiaries who also are entitled to some Medicaid benefits, the OIG says in a new report.

The OIG examined the 10 states wtih the highest Medicaid payments for all clinical diagnostic laboratory services for dual eligibles, including California, Florida, Illinois, Ohio, Mississippi, New Jersey, New York, North Carolina, Tennessee, and Texas. The OIG said that, after discussions with the Centers for Medicare and Medicaid Services, the state of Washington was included, but the OIG did not say why.

Only Illinois, Mississippi, and New Jersey did not use Medicaid to improperly pay for lab tests during the years examined. The amounts of potentially improper payments found by the OIG ranged from $5,482 in California to $794,580 in Texas.

According to the report, more than half of the potentially improper payments corresponded to five Current Procedural Terminology (CPT) codes, including complete and automated differential white blood cell count, comprhensive metabolic panel, urinalysis (non-automated with microscopy), and HIV-1 quantification. One code, collection of venous blood by venipuncture, accounted for almost 30 percent of the improper payments.

As of January 2006, there were more than 6 million dual eligibles nationwide, the report said. For those beneficiaries, services that are covered by both Medicare and Medicaid are paid first by Medicare. Any remaining balance is covered by Medicaid up to the state's payment limit.

Dual eligibles can receive clinical diagnostic laboratory services in different settings, such as independent laboratories, physicians' offices, hospitals, and clinics, according to the report. After such services are rendered, providers submit payment claims to Medicare using CPT codes, which determine how much Medicare will pay.

The report, "Potential Improper Medicaid Payments for Outpatient Clinical Diagnostic Laboratory Services for Dual-Eligible Beneficiaries," is available online at www.oig.hhs.gov/oei/reports/oei-04-07-00340.pdf.