Can ZPICs Use Minimal Reviews to Maximize Recoupment? Maybe. . . Maybe Not. . .
July 12, 2010 by Robert Liles
Filed under Medicare Overpayments
(July 12, 2010): A ZPIC’s use of extrapolation can be a surefire way of destroying a provider’s practice. We’ve known it for years and yet the government’s passion for statistical sampling only seems to be growing. This makes it essential for providers to involve experienced counsel as soon as possible after the audit has been conducted. Over the last decade, Liles Parker attorneys have noted a marked increase in the prevalence of extrapolated damages. Rather than assume that the contractor’s calculations are correct, we have aggresively challenged their use of statistical sampling in Medicare overpayment audits.
“Extrapolation” is the process of using statistical sampling in a review to calculate and project (extrapolate) alleged overpayments made in connection with Medicare claims. Basically, ZPICs seek out errors in an alleged “statistically relevant sample” of the provider’s Medicare claims and then calculate and apply the “error rate” to the entire universe of claims covering a given period of time. This long-standing practice allows ZPICs to grossly inflate the monetary demands on their audit targets while avoiding actually reviewing each of the Medicare claims in the universe for which they are seeking recoupment or offset.
The practice dates back twenty years to a decision by the Secretary of Health and Human Services (HHS) to authorize the use of statistical sampling in lieu of engaging in onerous claim-by-claim reviews. In Chaves County Home Health Services v. Sullivan, 931 F.2d 914 (D.C. Cir. 1991), the district court upheld extrapolation as being within the Secretary’s discretion.
In 2003, after years of protest, physicians groups and others succeeded in convincing Congress to place some limitations on the use of extrapolation. Under Section 935 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), before an auditor can employ extrapolation, there must be either a determination of a sustained or high level of payment error, or documentation that educational intervention has failed to correct the payment error. While this keeps the door to challenging an extrapolation open, ZPICs and PSCs now regularly participate in ALJ hearings in order to defend their use of statistical sampling.
Over the years, Liles Parker has worked with a number of the best statisticians in the country, challenging the extrapolation and having it invalidated at either the Qualified Independent Contractor (QIC) level or at hearing before an Administrative Law Judge (ALJ). If your practice or clinic is audited by a ZPIC, PSC or RAC,we strongly recommend that you engage experienced legal counsel to represent your interests during this complex process.
Should you have any questions regarding these issues, don’t hesitate to contact us. For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.
The Next “Patient” You See May be an Undercover Agent Peforming an Audit on Your Practice.
April 10, 2010 by admin
Filed under Compliance, Health Law Articles
(April 10, 2010): As the American Medical Association (AMA) recently reported on March 22nd, 2010, health care providers may find themselves subjected to a “Secret Shopper” audit by fellow providers hired by the government to conduct reviews and investigations.
In a speech he made March 10th, 2010, President Obama expressed interest in a proposal by Senator Tom Coburn, M.D. (R-OK) to have physicians and other health professionals go undercover and pose as patients to root out fraud. Apparently, President Obama included it among with several other Republican proposals which were considered when the recently passed Health Care Reform Bill was enacted. Dr. Coburn tried to amend the Senate health reform bill with a provision that would direct the Department of Health and Human Services (HHS) to establish a demonstration project for undercover investigations. While a number of demonstration projects were ultimately included in the legislation, it isn’t clear if this is one of them.
American Medical Association (AMA) Response
Not surprisingly, the AMA has dismissed the idea of paying physicians to pretend to be patients in an effort to smoke out criminal activity. As the AMA responded:
“The AMA has zero tolerance for health fraud, but there’s no evidence that the undercover-patient tactic would be effective or efficient in finding fraud. . . We are partnering with HHS and the Justice Dept. to address fraud, and we strongly recommend the government target areas where fraud occurs most, instead of wasting physician time that could be better spent caring for real patients.” (AMA President J. James Rohack, M.D.)
Notably, “Secret Shopper” audits and investigations are nothing new. Both HHS and DOJ have used individuals posing as patients or employees in investigations for as long as health care fraud has been prosecuted by the government.
How Does This Affect Your Compliance Plan?
From a compliance standpoint, this could present a number of additional risks, not normally encountered in a standard billing and coding audit. This could implicate a variety of E/M related issues. Moreover, this may raise quality of care issues not otherwise covered in a routine audit. To limit your potential liability, you should work with legal counsel to develop, implement and follow an effective Compliance Plan.
Should you have any questions regarding these issues, don’t hesitate to contact us. For a complimentary consultation, you may call Robert W. Liles or one of our other health lawyers at: 1 (800) 475-1906.
