Medicare Paid $27.6 Million on Drug Claims With Code Mismatches, US Audit Finds

US Medicare paid approximately $27.6 million on outpatient drug claim lines whose procedure codes did not match the drug codes associated with them in federal crosswalk files, according to a newly published inspector-general review. The finding identifies a weakness in automated billing oversight, not a determination that all the payments were improper.

The Department of Health and Human Services Office of Inspector General (HHS-OIG) issued data brief OAS-25-09-090, dated October 23 and posted in its October 28 news updates. It analyzed 10,527,895 Medicare Part B claim lines with both Healthcare Common Procedure Coding System (HCPCS) procedure codes and National Drug Codes (NDCs) for services between April 1, 2024 and March 31, 2025.

The audit identified 160,918 claim lines submitted by 2,944 providers under 577 billed HCPCS codes that did not match the codes associated with their drug identifiers. Medicare paid $27,589,634 for those lines. Of that sum, $21,713,181 related to 33,617 lines under the hospital outpatient prospective payment system; $5,876,453 covered 127,301 lines under other payment arrangements.

Those figures require careful interpretation. The inspector general expressly said it did not determine whether overpayments or underpayments occurred across all 160,918 lines. A mismatch between codes is a warning requiring examination, not proof that a provider intentionally misbilled, that every claim was ineligible or that the entire $27.6 million should be recovered.

The agency examined a nonstatistical sample of 30 claim lines and found incorrect procedure codes on 24. Eleven of those 24, paid under the outpatient prospective payment system, could have produced a calculated net improper-payment amount of $1,304, combining overpayments and underpayments. The other 13 were paid under systems where the wrong procedure code did not change the amount received. The sample was not designed to support a projection of improper payments across all identified claims.

Six procedure codes accounted for 62% of the mismatched lines. Critical access hospitals and short-term acute-care hospitals together submitted 99%. One short-term acute-care hospital accounted for 7% of the mismatched claim lines, but the report notes its payment system meant incorrect codes would not have produced improper payments. Concentration alone is not evidence of fraud.

The inspector general identified two potential oversight gaps. CMS and its Medicare Administrative Contractors did not have system edits checking whether billed procedure codes matched drug codes in the crosswalk files. Their provider education also did not sufficiently explain how to match the codes. Providers contacted about the sample attributed incorrect billing to clerical mistakes and billing systems unable to detect errors.

The mismatch is notable because CMS separately maintains a public Medicare Part B Drug Payment Limit File with NDC-HCPCS crosswalks, including an October 2026 final crosswalk dated September 17. CMS cautions on that page that the presence or absence of a drug in a payment-limit or crosswalk file does not by itself determine Medicare coverage, and local contractors may make payment determinations under applicable rules. A crosswalk is a coding reference, not a standalone verdict on every claim.

Independent reporting by The Digital Free Press on October 30 similarly distinguished the value of affected claims from any established improper-payment amount. The outlet obtained a response from an HHS-OIG spokesperson reiterating that the identified weaknesses concerned missing matching edits and incomplete provider education. It reported that CMS had not replied to its request for comment at publication time.

HHS-OIG issued no specific formal recommendations in this data brief. It said the findings may help CMS and its contractors improve oversight; CMS furnished technical comments on the draft, which the inspector general addressed. The publicly available report does not establish that CMS has since deployed the missing matching edits.

The accountability issue is whether federal payment systems can detect code mismatches early enough to distinguish harmless data errors from billing that changes reimbursement. The audit documents the detection gap while placing clear limits on what can be concluded about financial loss or individual provider wrongdoing.