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.

Texas Physician Indicted and Arrested

(July 9, 2010):  On June 14, 2010 the U.S. Attorney’s Office for the Western District of Texas announced that a Federal Grand Jury had returned a 99-count indictment against a pain management physician who operated clinics in San Antonio and El Paso.  The physician was charged with 21 counts of health care fraud, 20 counts of false statements relating to health care fraud matters, 21 counts of mail fraud, 16 counts of wire fraud, 4 counts of unlawful distribution of a controlled substances and 16 counts of money laundering.  The indictment alleges that the physician “caused to be submitted claims for reimbursement of peripheral nerve injections, facet injection procedures and Level Four office visits–typically involving 25 minutes of face-to-face time between patient and physician–which never were performed.”  Instead, the U.S. Attorney’s Office alleges that the physician performed “prolotherapy” on his patients — a procedure that Federal health care benefit programs do not reimburse.

Notably, an indictment is merely a charge and is not considered to be evidence of guilt.  In issuing this indictment, the Texas HEAT task force, comprised of Federal prosecutors and investigative agencies,  have continued to ramp up efforts to investigate and prosecute allegations of health care fraud.  Notably, the use of “prolotherapy,” a relatively new therapeutic approach, has been supported by some of the best known clinics and physicians in the country.

While this case has yet to fully develop, it again points out that health care providers must take care when utilizing new approaches, despite the fact the therapeutic technique may be considered to be state-of-the-art.  Unfortunately, Medicare may take years to recognize and cover some techniques.  In the mean time, it is essential that providers take care when coding and billing for procedures that may not clearly qualify for coverage under applicable Medicare and / or contractor guidance.

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.

HEAT Enforcement Update: Investigations and Prosecutions in Texas Increased in March 2010

(April 3, 2010): Notably, the number of publicly-disclosed investigations and prosecutions in Texas significantly increased last month.  Two of the cases disclosed involved mental health professionals.

• A Psychologist was convicted of health care fraud and money laundering, in connection with various claims fraudulently billed to Medicare.  Instances of improper conduct included billing for more than twenty-four hours of services in a single day; billing for services in a single day which amounted to more than double the normal business hours of the Psychologist’s practice; billing for services allegedly rendered during weekends, holidays, and times that the Psychologist was known to be out of town and away from the practice; and, submitting claims for services and evaluations not actually performed by the Psychologist, as required by law.
• An unlicensed Behavioral Health Counselor was charged with Medicaid fraud for allegedly engaging in aggravated identity theft.  The defendant allegedly improperly acquired Medicaid beneficiaries’ information, including names, addresses and Medicaid numbers, then used the information to file false claims through a behavioral counseling service the defendant owned.  These behavioral counseling services were billed to Medicaid but allegedly not provided to the beneficiaries for which they were billed.

Since being established approximately a year, Texas HEAT team investigations and prosecutions have significantly increased throughout the State.  Both enforcement efforts and the frequency of Medicare audits are anticipated to increase throughout 2010.  In addition to the increasing number of civil and criminal cases brought by the Texas HEAT Strike Forces, the number of administrative overpayment cases is anticipated to grow as well.  It is essential that CMHCs continue in their efforts to ensure that both business operations and billing practices fully comply with applicable statutory and regulatory requirements.

Our Firm includes a number of attorneys with extensive former experience as Federal and / or State prosecutors.  Should your organization find itself under investigation, you may give us a call for a complementary consultation at: 1 (800) 475-1906.

Watch Out Texans — there’s a New Sheriff in Town — the Number of ZPIC Audits Being Conducted in Texas are Increasing

(March 16, 2010): Health care providers around the country are finding themselves the target of various audits from jurisdictionally overlapping Medicare contractors.  Notably, any of these audits have the potential to destroy a provider’s practice or clinic.

States where PSCs (Program Safeguard Contractors) have transitioned to ZPICs (Zone Program Integrity Contractors) are under extreme pressure. One of those states is Texas. Providers in the Lone Star state are being inundated with requests for documentation from Health Integrity, the ZPIC for Zone 4, which covers Texas, Colorado, New Mexico and Oklahoma.

Unlike Recovery Audit Contractors (RACS), whose primarily focus is to identify overpayments, or Medicare Comprehensive Error Rate Testing (CERT) audits, reviews aimed at measuring improper payments, ZPIC audits are subjecting providers to both pre–payment and post-payment Medicare audits.  Perhaps most importantly, ZPICs are expected to report suspected fraud to law enforcement.

ZPIC audits in Texas cover claims for everything from psychology E/M services to DME items. The Zone 4 contractor has said the audits are based on what it calls “atypical billing practices.”

Some providers have found the audit response process so burdensome that they have been forced to suspend operations in order to fulfill the requests for documentation.

Generally, health care providers have 30 days from the date on the letter of notification to get the ZPIC the information it has requested. If documentation is insufficient or is not received, the ZPIC will deny the claims and issue and issue an overpayment letter demanding the repayment of funds.  Additionally, in most cases, ZPIC have been seeking extrapolated damages, applying the error rate identified to the universe of claims at issue during the time period audited.

While RACs and CERT auditors only conduct post-payment audits, PSCs and ZPICs are increasingly placing providers on pre-payment review, effectively delaying a provider’s cash flow up to six months (and in some cases even longer).  Although RACs have only been conducting  “automated” reviews to date, providers should expect the number of “complex” reviews to increase in 2010.

ZPICs, CERT reviews, PSCs, and RAC auditors are aggressively reviewing Medicare claims around the country. Should any of these contractors identify possible fraud, they will not hesitate to report’s the provider’s conduct to law enforcement.

Liles Parker attorneys and staff have considerable experience representing Medicare providers in connection with an audt by a ZPIC.  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.