Healthcare Compliance Risks with Urine Drug Testing Overpayments

Urine drug testing overpayments drove up to $216 million in overpayments to Medicare over five years, according to a recent OIG audit report.

A physician practice in Texas paid $3.9 million. A major health system in California paid $13 million. A solo practitioner in Washington state paid $228,000. A physicians group in Florida paid $700,000. A medical group in Nevada paid over $2 million.  

What do all these entities and settlements have in common? The answer is urine drug testing (UDT). 

There has been significant enforcement over the last couple years relating to overpayments for UDT. This enforcement emphasis does not appear to be slowing down. 

What is Urine drug testing? 

UDT is laboratory testing of urine samples for the presence or amount of drugs in the urine. It is frequently performed on patients who might be at risk for substance abuse. This might include patients being treated for substance abuse or patients being treated for pain. 

In general, there are two major categories of UDT. The first is usually called qualitative or presumptive drug screening. This type of UDT detects the presence of a drug in the body. The second type is typically called quantitative or definitive drug testing. This might be performed when the results of initial screening are presumptively positive. Or it could be performed when the results of the screening are negative, and the negative finding is inconsistent with the patient’s medical history. Lastly, it might be used when there is no presumptive test available for that class of drug. 

The U.S. Department of Health and Human Services Office of Inspector General (OIG) has expressed concerns about UDT billing. According to the OIG, prior error rate testing has suggested an improper payment rate of almost 30% for Medicare. The overpayment rate for definitive drug testing for 22 or more drug classes was over 71%. The OIG’s work plan also highlights UDT as a future area of focus. 

Urine Drug Testing Enforcement Specifics 

The enforcement and settlement amounts highlighted at the beginning of this article share some common alleged non-compliant behaviors. These are summarized below: 

Medically Unnecessary 

The allegations frequently claimed UDT was not medically necessary. For example, the government regularly asserts Medicare claims must be “reasonable and necessary for the diagnosis or treatment of an illness or injury.” This language originates from the Social Security Act §1862 which outlines when a service can be paid by Medicare. 

In many of the cases it was alleged the definitive UDT was performed on the same day as presumptive UDT. The government argued that before ordering definitive UDT, a provider first needs to review the results of the presumptive test. Then, he or she can assess the individualized need before ordering definitive UDT. 

One red flag is the use of standing orders for definitive UDT. Some providers use the term “standing order” to mean routine orders for services delivered to a population of patients. In the example of UDT, providers might have a standing order to perform definitive UDT immediately after presumptive UDT. Medicare reimbursement guidelines require services to be medically necessary and the documentation needs to support the orders are individualized to each patient. Without the individualized decision making, Medicare will usually consider the service not eligible for payment. 

High Utilization 

Some of the physician practices developed in-house laboratories to perform the UDT. The government alleged the physician practices overutilized UDT. In one case, the government contended the clinic established protocols resulting in urine testing for an excessive number of metabolites. Reportedly, the clinic could not remain profitable without the income generated from such excessive testing.  

Faulty Equipment 

In some cases, the government alleged the laboratory equipment used to perform the UDT was faulty. For example, it alleged one clinic’s medical equipment for testing urine was broken. In this case, the samples were simply frozen for later testing. Some were never tested at all. 


In some of the UDT settlement cases, the government alleged upcoding. Upcoding is when a provider assigns an inaccurate billing code to a medical procedure or treatment to increase reimbursement. In other words, a medical code for higher reimbursed UDT procedures were billed when using a lowered reimbursed code was more appropriate.  

Expect a continued focus on UDT

The enforcement focus on UDT does not appear to be going away. In February 2023, the OIG released an audit report about UDT. The report concluded Medicare could have saved up to $216 million over five years if it had implemented safeguards for definitive UDT. The report recommended Medicare do the following four things to prevent improper payment for UDT.  

  1. Expand program safeguards to prevent and detect at-risk payments to at-risk providers for procedure code G0483. 
  2. Review at-risk payments made to at-risk providers during and after the OIG’s audit period and recover any overpayments.
  3. Notify providers to exercise reasonable diligence to identify, report, and return any overpayments. 
  4. Educate providers who received payments that did not comply with Medicare requirements.

Armed with this knowledge of the government’s interest in UDT overpayments, Compliance professionals should consider taking the following steps: 

  • Identify existing standing orders for UDT. If standing orders remove conscientious medical decision making by physicians for individualized patients, UDT services could be suspect. 
  • Perform coding and medical documentation reviews for UDT services.  
  • Engage compliance experts with clinical expertise to determine if UDT services meet Medicare’s medical necessity requirements. 

For many years now, the government has scrutinized providers over their UDT billing. In many cases, providers have paid millions of dollars to resolve improper billing allegations. Common allegations include medically unnecessary services, overutilization, faulty equipment, and upcoding.  

Enforcement agencies like the OIG are not slowing down their investigative efforts. In fact, they just released a report with recommendations for Medicare. The recommendations include detecting at-risk providers. Once identified, Medicare should perform audits on those providers. When overpayments are detected, Medicare should recoup the overpayments. Compliance officers can protect their organization by identifying UDT standing orders, performing medical documentation reviews, and involving compliance experts with clinical knowledge.

Related: A million-dollar healthcare compliance monitoring mistake: Don’t let processes overwhelm clinical colleagues

Verifying Regulatory Changes with YouCompli

Managing regulatory change is crucial to avoid enforcement actions. YouCompli is the only healthcare compliance solution that combines actionable, regulatory analysis with a simple software as a service (SaaS) solution to help you manage regulatory change. Read more about the rollout and accountability of requirements.  

CJ Wolf, MD, M.Ed is a healthcare compliance professional with over 22 years of experience in healthcare economics, revenue cycle, coding, billing, and healthcare compliance. He has worked for Intermountain Healthcare, the University of Texas MD Anderson Cancer Center, the University of Texas System, an international medical device company and a healthcare compliance software start up. Currently, Dr. Wolf teaches and provides private healthcare compliance and coding consulting services as well as training. He is a graduate of the University of Illinois at Chicago College of Medicine, earned a masters in education from the University of Texas at Brownsville and was magna cum laude as an undergraduate at Brigham Young University in Provo, UT. In addition to his educational background, Dr. Wolf holds current certifications in medical coding and billing (CPC, COC) and healthcare compliance, ethics, privacy and research (CHC, CCEP, CHPC, CHRC).

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