Lose Your Medicare Appeal at Reconsideration? Don’t Throw in the Towel Just Yet — Consider the Consequences and Your Options.

(June 18, 2011):  As a review of the last several quarters of Medicare appeals statistics reflects, an overwhelming percentage of Medicare providers appealing alleged overpayments through the Medicare administrative appeals process have chosen to “throw in the towel,” so to speak, when they have lost at the reconsideration level.  As you will recall, at the reconsideration level, Medicare claims are assessed by a Qualified Independent Contractor (QIC) selected by the Centers for Medicare and Medicaid Services (CMS) to hear the second level of administrative appeals. 

According to statistics kept by Q2Administrators, the contractor selected to serve as the Administrative QIC (AdQIC), most Medicare providers have chosen not to appeal claims denials issued the QIC at the reconsideration level of appeal.  Nationwide, in the last eight quarters, the percentage of Part B QIC cases not being appealed has risen to an astounding 86%. This trend is also occurring in Part A QIC cases, where the numbers of non-appealed cases have grown from roughly half to 75%.  

The purpose of this article is to examine possible reasons why Medicare providers have chosen not to appeal claims denials to the Office of Medicare Hearings and Appeals (OMHA) to be heard by an Administrative Law Judge (ALJ).  We also examine points to be considered by providers if choosing to be represented by legal counsel in the ALJ hearing process.   

I.          The Third Level of Appeal: ALJ Hearings 

For 2011, if at least $130 remains in controversy following a QIC’s denial decision at the reconsideration level, a Medicare provider may request an ALJ hearing within 60 days of receipt of the reconsideration denial decision. ALJ hearings are intended to be non-adversarial proceedings aimed at determining the facts so that questions of coverage and payment may be properly addressed.  It has been our experience that the ALJ level of appeal is a provider’s best opportunity to present its arguments in support of coverage and payment.

ALJ hearings are usually held by video-teleconference or by telephone, but you may also ask for an in-person hearing. While an ALJ hearing is the third level of the administrative appeals process, it is the first time that a provider is given an opportunity to testify, clarify points missed by reviewers at lower level of appeal and answer any questions that may be raised by the ALJ.

 II.        Why Are Most Medicare Providers Not Appealing Reconsideration Denials? 

When facing an overpayment determination levied by a Zone Program Integrity Contractor (ZPIC), a Recovery Audit Contractor (RAC) or in some instances a Medicare Administrative Contractor (MAC), the first question to be addressed by a Medicare provider is: 

“Based on the record and the facts, should we have been paid for the services rendered and / or the products / devices provided to this Medicare beneficiary?”  

The answer to this question isn’t always as easy as it may initially seem.  Were the services medically reasonable and necessary?  Did you properly document the services? When faced with this question, the basic rule we recommend that providers follow is fairly simple – if it doesn’t belong to you, give it back.  In such a situation, a provider should examine the various reasons why the claim allegedly does not qualify for coverage and payment and should take steps to better ensure that any deficiencies are remedied. Additionally, any other overpayments noted must be promptly repaid to the government, with the 60 day period mandated under the Affordable Care Act (ACA). 

In cases where a provider (or their representative) contends that a claim does, in fact, qualify for payment, it typically appeals an overpayment assessment issued by a ZPIC, RAC or MAC.  Nevertheless, as previously discussed the vast majority of providers who lose an appeal at the reconsideration level choose not to further appeal the denial. In speaking with Medicare providers, the primary reasons for not appealing any further include: 

• Cost / benefit considerations. By the time a provider reaches the ALJ level, the provider has already endured the time, expense and frustration of unsuccessfully arguing its case through two levels of appeal.  By this time, many providers conclude that the amount in controversy does not justify the time and expense of further appealing the QIC’s denial to the ALJ level.  
• Many providers are intimidated by the hearing process and do not feel comfortable participating in an ALJ hearing.  Despite the fact that ALJ hearings are typically conducted by teleconference, the process can still be quite intimidating.  ALJs almost always place testifying providers and their designated “experts” under oath before taking their testimony.  Additionally, if a provider has introduced new evidence into the record, it will be required to show “good cause” for its admission at this late stage of the proceedings.  Finally, most providers find that the ALJ handling their case is quite knowledgeable and typically has extensive experience analyzing coverage requirements and assessing the adequacy of a provider’s documentation.  Providers who have failed to adequately prepare for the hearing are likely to find that the process can be quite difficult.   
• The ALJ hearing process has become considerably more complicated due to the participation of ZPIC personnel. Over the past year, the ALJ hearing process has become quite complicated when dealing with large, “big box” overpayment cases.  For instance, in cases when damages have been extrapolated, it is quite common for representatives of the ZPIC who issued the initial denial decision to attend the hearing as a “participant.”  When this occurs, ZPIC representatives often include an attorney representing the ZPIC, a statistician who will be prepared to support the extrapolation applied in the case, and a clinician (typically a Registered Nurse) who will testify why the claims allegedly do not qualify for coverage.   
• In cases where a provider’s third-party biller has agreed to handle claims appeals, few billers have agreed to pursue a denial past the reconsideration level of appeal.    

III.        Consequences of Not Filing for ALJ Appeal 

Assuming that no extended repayment plan has been established and the alleged overpayment has not already been repaid, the MAC will initiate recoupment of the alleged overpayment 30 days after the QIC issues its denial decision. Unfortunately, this will occur regardless of whether a request for ALJ hearing is filed in a timely fashion.  

Should a provider choose not to further appeal, its important to recognize that its “claims denial ratio” will increase.  As the government and its contractors increasingly rely on “data mining” when identifying potential targets for audit, providers with a high error rate will likely find their practices subject to further scrutiny.

 IV.       Don’t Give Up on Properly Billed Claims – Consider Your Options  

As Medicare claims audit and assessment efforts increase (through CMS’ use of ZPICs, PSCs and RACs), health care providers will be under increasing pressure to ensure that all statutory and regulatory medical necessity, documentation, coding and billing requirements are met.  Despite a provider’s best efforts to remain compliant, it may find that its practice or clinic is alleged to have been overpaid by a Medicare contractor. Should that occur, we strongly recommend that you retain qualified, experienced legal counsel to represent your interests as early in the appeals process as possible.

Should you choose to handle the appeal yourself and lose at the reconsideration level, contact experienced legal counsel before deciding to discontinue the appeal.  Depending on the facts, you may find that it is both cost-effective and advisable to have your case handled at the ALJ level by experienced legal counsel.  When retaining counsel,  there are several important questions that you should ask:

• How much of your law practice involves health law issues?
• Please describe the extent of your experience handling large, complex administrative appeals of denied Medicare claims.
• Please describe your experience in challenging statistical extrapolations applied to an alleged overpayment in a case.
• How often have you responded to AdQIC appeals of favorable ALJ decisions?
• How often have you handled MAC appeals?
• Can you provide provider references?

Hopefully, your practice will not face a large administrative appeal of denied Medicare claims.  However, should such an event occur, you need to be ready to respond to the contractor’s audit. 

V.         Conclusion

 In addition to representing a wide variety of providers in the administrative appeals process, our Firm has been retained by a number of other law firms to assist them with large, complex administrative appeals.  After representing health care providers for many years in administrative hearings, involving literally tens of thousands of claims, it has been our experience that the ALJ level of appeal is the single best opportunity that a provider has to present its arguments in support of payment.

 While there are no guarantees in litigation, working with qualified clinical personnel, experienced legal counsel can effectively present a provider’s arguments in support to an ALJ assigned to hear the provider’s case.  Keep in mind, the trier of fact is an attorney – not a clinician or a consultant. Experience, coupled with an in-depth knowledge of the statutory and regulatory requirements may prove essential in proving your case. The ALJs we have practiced before have been attentive, knowledgeable, willing to listen to the provider’s viewpoint, and perhaps most importantly, FAIR.   If facing an ALJ hearing, consider the benefits of retaining experienced counsel when considering your options.

Liles Parker attorneys have extensive experience representing Home Health, Hospice, CMHC, DME, Ambulance, Physician Practices, Nursing Homes, SNFs, and PT / ST / OT Therapy providers in the Medicare administrative appeals process. Our attorneys also work with providers to help better ensure that their Compliance Program addresses applicable statutory and regulatory requirements.   Need assistance?  Call us for a complimentary initial consultation.  We can be reached at:  1 (800) 475-1006.

Richard Pecore, Esq. Joins the Firm as Senior Counsel

(February 7, 2011): Liles Parker is pleased to announce that Richard Pecore has joined the Firm’s Health Law practice as Senior Counsel.  Mr. Pecore is a licensed Texas attorney and has worked on a variety of health care related matters and cases over the years.  Mr. Pecore has extensive civil litigation experience and will be representing Firm clients in “big-box” overpayment cases brought by Recovery Audit Contractors (RACs), Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs).  In recent years, Mr. Pecore has represented virtually hundreds of clients in health care related cases, conducting legal research, handling depositions and representing clients in contentious hearings.  As Managing Partner Robert W. Liles stated:

“We are thrilled to have Richard join our Health Law practice.  His litigation skills and experience will allow the Firm to further expand its representation of health care providers around the country, with an emphasis on cases in South Texas.”

At this time, Mr. Pecore will be working out of the Firm’s Washington and San Antonio offices.  Should you have any questions or would like to speak with Mr. Pecore about his legal services, please call our Washington office at (202) 298-8750.  Alternatively, you may e-mail Richard at rpecore@lilesparker.com. 

Welcome to the team, Richard!

2011. . . The Year of Compliance — Avoiding ZPIC Initiated Medicare Suspension Actions

(January 11, 2011): As you recall at the end of 2010 we identified the “Top Ten Health Care Compliance Risks for 2011.”  The purpose of this and subsequent articles is to analyze two of those risks; Zone Program Integrity Contractors (ZPICs) and Payment Suspension Actions. Over the next few days we will be discussing these two risk areas in depth.

I. Overview:

As discussed in our “Top Ten” article, we anticipate that Zone Program Integrity Contractors (ZPICs) will ratchet up their use of provider suspension actions in 2011.  At the close of 2010, there already appeared to be an increase in the use of suspension actions by ZPICs in South Texas and in other areas of the country.  In many instances, these actions were the result of sophisticated data mining techniques by ZPICs.  While cases are initiated in a variety of ways (including, but not limited to whistleblower complaints, anonymous reports to the government’s fraud hotline, etc.), data mining is a key tool relied on by ZPICs and government agencies for targeting purposes. 

After analyzing the data, ZPICs often send out requests for information or conduct site visits of health care provider facilities.  These requests and / or site visits can result in medical reviews, demands for alleged overpayments, or lead to referrals to one or more government investigative agencies (such as the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), the State Medicaid Fraud Control Unit (MFCU) and / or the Federal Bureau of Investigation (FBI)). Since established, ZPICs have clearly met their goal of developing “innovative data analysis methodologies for detecting and preventing Medicare fraud and abuse.”  Rather than pursuing merely administrative overpayment cases, over the last six months, we have noted an increase in the number of cases referred to law enforcement for fraud investigation.  While seven ZPIC zones have been identified, only three companies have been awarded ZPIC contracts at this time.  Where ZPIC contracts remain pending, Program SafeGuard Contractors (PSC) are typically still operating and are conducting essentially the same duties as their ZPIC counterparts.  The seven ZPIC zones include:  

• Zone 1- CA, NV, American Samoa, Guam, HI and the Mariana Islands.
• Zone 2 includes; AK, WA, OR, MT, ID, WY, UT, AZ, ND, SD, NE, KS, IA, MO.
• Zone 3-MN, WI, IL, IN, MI, OH and KY.
• Zone 4-CO, NM, OK, TX.
• Zone 5- AL, AR, GA, LA, MS, NC, SC, TN, VA and WV
• Zone 6- PA, NY, MD, DC, DE and ME, MA, NJ, CT, RI, NH and VT.
• Zone 7- FL, PR and VI

The following map reflects zones where the ZPIC contractor is currently operating.  Each of the ZPICs listed below are actively sending out requests for information and / or conducting site visits.  In a number of instances, the ZPICs have been noted to be suspending providers from the Medicare program based on variety of alleged statutory and / regulatory violations.

ZPICs have been very active in their site visits which have brought about Medicare suspension actions. In some cases, these site visits have resulted in allegations of “fraud or willful misrepresentation” with ZPIC’s contacting of CMS for approval to place the provider on payment suspension.  In our next article, we will be examining the primary reasons cited by CMS when placing a provider on payment suspension status.

Liles Parker attorneys have extensive experience representing health care providers in ZPIC initiated actions.  Should your Physician Practice, Home Health Agency, Hospice Company, Physical / Occupational / Speech Therapy Clinic, Ambulance Company, Community Mental Health Center, Pain Clinic or other provider entity be audited by a ZPIC, give us a call for a free consultation.  We can be reached at: 1 (800) 475-1906.

 

CMS Authorizes Medicare Contractors to Accept Administrative Appeals by Facsimile and Secured Internet Transmission but Many Contractors have Yet to Implement this Change

(November 21, 2010):  Earlier this year, the Centers for Medicare and Medicaid Services (CMS) issued Change Request (CR) 6958, titled “Guidelines to Allow Contractors to Develop and Utilize Procedures for Accepting and Processing Appeals Via Facsimile and/or Via a Secure Internet Portal/Application.”  Health care providers and their counsel welcomed the guidance, anticipating that this change would make it easier when filing requests for redetermination and reconsideration. 

To its credit, CMS authorized Part A and Part B Medicare Administrative Contractors (MACs), Durable Medical Equipment MACs, Fiscal Intermediaries, Carriers and Regional Home Health Intermediaries (RHHIs) to accept administrative appeals by facsimile and / or secured internet transmission.  However, CMS made this change optional — at the discretion of the contractor.  CMS did not require (at least for now) that contractors implement this change.  Nor did CMS provide additional funding for contractors desiring to allow providers to file administrative appeals in this fashion.  

Many health care providers around the country have experienced difficulty quickly and appropriately responding to pre-payment review actions and extrapolated post-payment audits conducted by Zone Program Integrity Contractors (ZPICs). As Recovery Audit Contractors (RACs) work their way down the provider chain, these pressures will undoubtedly increase.  The option to file an administrative appeal by facsimile or secured internet transmission would significantly assist health care providers, by both reducing filing costs (e.g. FedEx / USPS expenses) and by providing providers with options for handling appeals that must be immediately filed in order to meet applicable deadlines.

To date, few contractors have chosen to allow health care providers to file administrative appeals by facsimile or secured internet transmission. For example, TrailBlazer serves as the Part A and Part B MAC for providers in Texas.  Over the last year, providers in South Texas have been increasingly subjected to site visits, Medicare number revocation actions, pre-payment reviews and post-payment audits. Earlier this month, TrailBlazer released updated guidance covering the administrative appeals process for use by providers in its MAC region. Unfortunately, TrailBlazer confirmed its position in this regard, expressly stating “At this time, redeterminations may not be faxed to TrailBlazer.”  Hopefully, the filing of appeals by facsimile and secured e-mail will be permitted by TrailBlazer in the near future.

 As set out in CR 6958, CMS requires that contractors choosing to accept administrative appeals by facsimile and secured e-mail abide by a number of requirements covering the handling of appeals filed in this fashion.

Liles Parker attorneys represent a wide variety of health care providers in Medicare administrative overpayment cases around the country.  Should you have questions regarding a Medicare audit of your Physician Practice, Clinic, Home Health Agency, Hospice, Community Mental Health Center or DME Company, give us a call for a complimentary consultation.  Mr. Liles can be reached at 1 (800) 475-1906.

Region B RAC CGI Announces that it will Begin Review of Eighteen Projects that Involve Medical Necessity

(August 25, 2010): CGI Technologies and Solutions, Inc., (CGI), has announced it will immediately begin reviews on 18 newly approved projects that involve the medical necessity of selected inpatient DRG payments.  A complete list of the “issues” currently being examined by CGI can be found on its website. http://racb.cgi.com/Issues.aspx

Recovery Audit Contractors (RACs), such as CGI, contract with the Centers for Medicare & Medicaid Services (CMS) to perform post-payment reviews of Medicare claims to find overpayments and underpayments in return for a percentage (from 9 percent to 12.5 percent) of the amounts recovered. Put simply, they eat only what they kill.  CGI was awarded responsibility for handling Region B audits.  CGI’s contingency fee contract award dollar amount is 12.50% according to CMS.  Issues where CGI will be examining “medical necessity” requirements, include certain procedures related to:

• Chest Pain
• Other Circulatory System Diagnoses
• Other Vascular Procedures
• Syncope & Collapse
• Red Blood Cell Disorders
• Atherosclerosis
• Heart Failure & Shock
• Esophagitis, Gastroenteritis & Misc Digestive Disorders
• Musculoskeletal Disorders
• Chronic Obstructive Pulmonary Disease
• Respiratory
• Nutritional and Metabolic Disorders
• Kidney & Urinary Tract Infections
• GI Disorders
• Percutaneous Cardiovascular Procedures
• Renal Failure
• Nervous System Disorders and
• Cardiac Arrhythmia & Conduction Disorders.

 As CGI’s website discusses, when asked “What utilization criteria will CGI be using to review for medical necessity?” in its FAQ section, CGI states, “CGI will utilize the rules for National Coverage Determinations (NCD), Local Coverage Determinations (LCD), HCPCS, ICD-9 (ICD-10 when implemented and appropriate) and CCI that were in effect on the date of service.” 

 A continuing concern of providers is that the RAC determinations of medical necessity will be  performed by personnel with little, if any, specific knowledge of the specific claims at issue.  Given the RAC business model, providers remain worried that audits will not reflect a fair and reasonable application of applicable coverage requirements. This is especially worrisome in light of the fact that approximately 41 percent of overpayments in the demonstration project were due to medical necessity determinations.

 Should you have questions regarding the RAC process, you may contact us for a complimentary consultation.  We can be reached at 1 (800) 475-1906.

 

South Texas Medicare Providers are Under the ZPIC Microscope

(July 16, 2010):  If there were ever any doubts that ZPICs are going to make their presence known in South Texas now that they have replaced PSCs,those doubts can be put to rest.  Health Integrity LLC, the Zone 4 contractor, is proving to be an active and aggressive auditor of physician practices, physical therapy services, home health care, and other types of Medicare covered treatment in the region.

Even in a nationwide environment of intensifying oversight, Medicare providers in South Texas are under particularly close scrutiny.  According to a study by the Dartmouth Institute for Health Policy & Clinical Practice, updated as recently as May 12, 2010, “even after price adjustment, Miami and McAllen Texas are the highest cost regions in the country.” (Emphasis added).  And don’t forget that ZPICs are essentially being “graded” based on the amount of overpayments recovered, along with the number of enforcement actions handled and referred to law enforcement.

As many Medicare providers in South Texas can attest, the folks at Health Integrity (Zone 4 – ZPIC) are becoming a familiar sight in their offices and clinics — reportedly conducting extensive on-site audits with little if any notice.  To their credit, most providers have reported that Health Integrity’s representatives have been reasonable in their requests when conducting an on-site review, typically taking a sample of certain records and asking that the remaining records be sent within a reasonable amount of time after the visit.  Nevertheless, providers should take care when responding to the ZPIC’s requests for information.  While a provider may have an obligation to cooperate with the ZPIC, you should contact your counsel to ensure that your rights are protected while still fully meeting your obligations as a Medicare participant.

Moreover, we have found that ZPICs are increasingly placing home health providers (and others) on pre-payment review.  This can effectively delay a provider’s cash flow up to six months (and in some cases even longer).  Given the GAO’s recommendation last month that CMS put more emphasis on automated pre-payment review, we expect to see this trend continuing precipitously upward.

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.

Providers Should Exercise Caution When Handling Overpayments — More Than Likely, You Can’t Keep It, Even if the Payor Doesn’t Want it Back!

(July 15, 2010): Since the May 2009 passage of the Fraud Enforcement and Recovery Act (FERA) and subsequent enactment of the PPACA, we’ve heard a lot about how the government looks at Medicare overpayments and how providers should handle them.  Two major misconceptions seem to underlie the public response to provisions clarifying that failure to timely refund Medicare overpayments can result in False Claims Act (FCA) liability.

I.          Historical Overview of the “Overpayment” Issue

Prior to the clarification and statutory reinforcement of the “overpayment” issue provided by PPACA, a number of providers have mistakenly believed that in the absence of a direct demand for repayment, an identified overpayment would belong to the provider.  Notably, this issue is not new.  In fact, the recent enacted provisions have merely reinforced the government’s long-standing position that a provider has a responsibility to voluntarily refund Medicare overpayments without an overpayment determination being made by the government.

As you will recall, the agreement to return any overpayments is fundamental to a provider’s eligibility to participate in the Medicare program.  Section 1866(a)(1)(C) of the Social Security Act (42 U.S.C. § 1395cc) requires participating providers to furnish information about payments made to them and to refund any monies incorrectly paid.  Implemented in 2006, the Medicare Credit Balance Report (CMS-838) is designed to ensure timely compliance with this obligation.

Secondly, PPACA Section 6402 echoes the requirements of CMS’ 2002 proposed rule that providers “must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.”  (67 Fed. Reg. 3662 (January 25, 2002)).  A conservative reading of that proposed rule arguably suggested that HHS-OIG’s voluntary disclosure protocol may not be “voluntary” after all but a mandatory repayment may be required.  Thus, the government has long sought to clarify when, not if, overpayment refunds would be required.

Despite the publicity resulting from PPACA and its FCA implications, it is important to remember that this issue was addressed over a decade ago.  As set out in the 1998 holding in United States v. Yale University School of Medicine, Civil Action No. 3:97CV02023 (D.Conn.), the government intervened in a qui tam and obtained $1.2 million settlement based on alleged FCA violations for failing to return credit balances.  In summary, providers who fail to promptly (within 60 days of identification) return an overpayment to the government do so at their own peril.

II.         Handling Non-Federal Overpayments

As an aside, even if the overpayment at issue is not owed to a Federal payor (such as Medicare or Medicaid), it is imperative to remember that virtually no overpayments belong to a provider.  In the case of non-Federal payors (such as a private insurance company), we are aware of numerous instances where the non-Federal payor has notified the provider that due to the administrative burden of applying an overpayment to a beneficiary’s account (typically due to the complexity of the payment history), the non-Federal payor has chosen to either “waive” collection of an overpayment or not to cash a check sent by the provider.  This also regularly occurs when the identified overpayment is under a certain amount (such as $25.00).  When faced with such a situation, a provider must review applicable State law to ascertain how an overpayment must be handled.  For instance, in Texas, Title 6 of the Property Code requires businesses and other entities holding unclaimed property to turn the property over to the Texas Comptroller’s Office after the appropriate abandonment period has expired.  As in most States, violation of these escheat laws can subject a provider to various penalties.

III.        Conclusion

The lesson to be learned here is quite clear – regardless of who the payor is, an overpayment can rarely, if ever, properly be retained by a provider, regardless of the amount in controversy.  A provider must carefully examine both Federal and State statutes when faced with this issue.  The best practice is to return an overpayment to the payor (Federal, State, or private patient), regardless of the amount, upon identification.  Should a provider be unable to identify who is owed an overpayment or cannot locate a valid address to return the overpayment (due to a variety of factors), your State’s escheat law must be considered.

This can be a complicated issue, especially when a large overpayment has been identified and it is owed to a Federal payor.  While time is of the essence, it is strongly recommended that you contact your legal counsel as soon as it appears that a potential large or complicated Federal overpayment has been found.  Your attorney can help guide you through 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 our other attorneys at 1 (800) 475-1906.

Don’t Take ZPIC or RAC Extrapolation Calculations at Face Value – Can Their Results Be Readily Reproduced?

(July 14, 2010): Imagine a ZPIC, PSC, or RAC handing you a claim analysis rife with alleged errors, an indecipherable list of statistical formulae, and an extrapolated recovery demand that will cripple your practice or clinic.  What steps should you take to analyze their work?  Based on our experience, providers can and should carefully assess the contractor’s actions, use of formulas and application of the RAT-STAT program when selecting a statistical sample and extrapolating the alleged damages based on the sample pulled.  Over the years, we have challenged the extrapolation of damages conducted by Medicare contractors around the country, covering tens of thousands of claims.  Regardless of whether you are providing Partial Hospitalization, Evaluation and Management, Home Health, Physical Therapy, Surgical or other services, it is imperative that you work with experienced legal counsel and statistical experts to analyze the statistical sampling and extrapolation steps taken by the contractor. Should you succeed in invalidating the extrapolation, the whole games changes.  The question is – “How can you go about fighting an extrapolation calculation?”

One method is to show that the contractor’s auditor failed to identify a Statistically Valid Random Sample (SVRT).  Among the first steps is you should take is to retain experienced legal counsel to review the Medicare contractor’s actions.  Notably, there are a multitude of legal arguments which may be asserted (depending on the specific facts in your case).  Our firm has worked with several outstanding statistical experts over the years, each of which has a proven track record of analyzing the contractor’s actions and identifying any flaws made by the ZPIC or PSC when extrapolating damages.

Notably, Section 3.10.4.2 of CMS’ Medicare Program Integrity Manual establishes that the contractor is obligated to fully document the statistical methods an auditor employs:

“The PSC or ZPIC BI [Benefit Integrity] unit or the contractor MR [Medical Review] unit shall identify the source of the random numbers used to select the individual sampling units. The PSC or ZPIC BI unit or the contractor MR unit shall also document the program and its algorithm or table that is used; this documentation becomes part of the record of the sampling and must be available for review.” (emphasis added)

“The PSC or ZPIC BI units or the contractor MR units shall document all steps taken in the random selection process exactly as done to ensure that the necessary information is available for anyone attempting to replicate the sample selection.” (emphasis added)

ZPIC and PSC statisticians must be able show their work to the extent that a reviewer can attempt to “replicate” their actions and determine whether or not the steps taken were consistent with accepted principles and practices of statistical sampling.  The failure of a ZPIC or PSC statistician to fully and properly document his actions may serve as the basis for seeking to invalidate the extrapolation. The calculation of a valid statistical sample and the extrapolation of damages by ZPIC and PSC statistician is a highly complex process. After handling many extrapolated damages cases, we have found that few ZPIC or PSC statisticians fully meet their obligations to document the steps taken and / or conduct the process in a proper fashion, consistent with accepted statistical sampling procedures.  Should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you in the process.  Your legal counsel can then engage a qualified statistician to assess the contractor’s actions.

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.

Can ZPICs Use Minimal Reviews to Maximize Recoupment? Maybe. . . Maybe Not. . .

(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.

ACA Creates a Minefield for Medicare Providers Who Fail to Promptly Return Overpayments

(July 9, 2010): Does the failure to promptly return a Medicare overpayment really warrant liability under the False Claims Act (FCA)?  Congress thinks so.  The Patient Protection and Affordable Care Act (also known as the “Affordable Care Act” or “ACA”) creates an obligation under the FCA whereby a Medicare provider who fails to timely report and refund an overpayment may be subject to substantial penalties and damages.

Section 6402 of the ACA requires Medicare providers, including physicians and partial hospitalization providers, among others, to a) return and report any overpayment, and b) explain, in writing, the reason for the overpayment.

This law creates a minefield for physicians and other Medicare providers.  First, providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later.  Of course, the ACA does not actually explain what it means to “identify” an overpayment.

Nonetheless, the ACA makes this reporting and repayment requirement an “obligation” under the FCA.  Pursuant to the Fraud Enforcement and Recovery Act of 2009 (FERA) amendments to the FCA, an individual or entity may be liable if he or it “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”  Thus, providers who fail to meet their 60 day “obligation” may be subject to monetary penalties of up to $11,000 per claim, and treble damages.

Several Liles Parker attorneys have worked former Federal and / or State prosecutors.  Our attorneys have extensive experience working on False Claims Act cases.  Should you have any questions, 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.