Audits by OSC’s Medicaid Fraud Division revealed that independent clinical laboratories routinely billed and were paid for excessive and often medically unnecessary drug tests. In response, OSC recommended that the Department of Human Services’ Division of Medical Assistance and Health Services (DMAHS) implement policy changes to stop the excessive testing.
DMAHS implemented these recommendations in April 2021. By April 2025, the New Jersey Medicaid program had saved a total of about $102.4 million, according to OSC’s analysis, published today.
Key recommendations included:
Eliminating the use of blanket test orders, which subjected all patients to the same battery of drug tests, regardless of their individual needs.
Prohibiting definitive testing when initial presumptive screening tests were negative, preventing labs from using more expensive definitive tests as the first step and bypassing the less costly presumptive tests. (Presumptive tests are initial screenings that indicate whether a substance is present in a sample; definitive tests identify both the presence and quantity of specific substances.)
To quantify the savings from the policy changes, OSC forecasted the dollar amount of New Jersey Medicaid spending there would have been if these recommendations had not been adopted. This analysis highlights the savings that can be achieved through policy changes and is separate from the roughly $100 million OSC typically recovers each year for improper payments.
To report government fraud, waste, mismanagement or corruption, file a complaint with OSC or call 1-855-OSC-TIPS.
The Office of the State Comptroller (OSC) is an independent State agency that works to make government in New Jersey more efficient, transparent and accountable. OSC conducts audits and investigations of government agencies throughout New Jersey, reviews government contracts, and works to detect and prevent fraud, waste and abuse in Medicaid.
