(March 25, 2011): Zone Program Integrity Contractors (ZPICs) have established themselves as the preeminent audit tool of the Centers for Medicare and Medicaid Services (CMS), surpassing both Recovery Audit Contractors (RACs) and Medicare Administrative Contractor (MAC) Benefit Integrity units. Unfortunately, many health care providers and suppliers wait until notice of an audit has been received to conduct an objective assessment of their coding, billing and business practices. After the ZPIC audit and appeals process has been initiated, a provider’s options for correcting any identified deficiencies are limited, at best. For this reason, we strongly encourage providers to engage qualified health care counsel to direct a gap analysis of your organization’s practices. Through this process, you will be in the best position to identify and correct problems before an audit has been initiated. The process for filing a Medicare administrative appeal is outlined below. Please keep in mind that the procedures discussed are only a brief overview of your obligations as a provider if you want to properly appeal the wrongful denial of one or more Medicare claims by a ZPIC or other CMS program integrity contractor.
I. How Are ZPIC Audits Initiated?
ZPIC audits of your Medicare claims can be generated in a number of ways, such as data-mining, which is a method used to identify aberrant billing patterns. A provider may be targeted based on the number of patients he or she is allegedly seeing each day, the frequency that a specific Code Procedural Terminology (CPT) code is billed, or countless other factors examined by a contractor when assessing coding and billing practices. Alternatively, a provider may be reviewed as a result of a complaint filed by a former employee, a dissatisfied patient, or even a competitor. Regardless of the source, once a provider is targeted and an audit has been initiated, it is imperative that the provider diligently work to address any operational, coding, or billing concerns that may be identified.
While the nature of a contractor’s initial contact with a Medicare provider can vary (it often is made by a telephone call, an unannounced site visit, or a letter), at some point in the process, a provider will receive a written request for information from the contractor. In past years, the request was primarily focused on supporting medical documentation related to specific claims for services or devices billed to Medicare. This focus has seemingly changed over the years. Although many requests continue to seek only supporting medical documentation, we have seen an appreciable increase in the number of requests for business records sent out by Medicare contractors. These requests often seek copies of contracts, medical director agreements, lists of former employees, and accounting records. Essentially, these document requests are meant to provide the contractor with an accurate picture of the provider’s business and referral relationships. Should the contractor identify any questionable relationships, they will then refer their findings to the Inspector General of the Department of Health and Human Services (OIG) or the Department of Justice (DOJ) for further review and consideration.
In postpayment audit cases, once a ZPIC has concluded its review, it will send out a letter detailing its findings. A second letter from the provider's assigned MAC will follow. The MAC letter constitutes a formal "demand letter" for the amount of the overpayment that is allegedly owed.
II. The Extrapolation of Damages is Now Commonplace:
Extrapolation is the process of using statistical sampling in a review to calculate and project or extrapolate alleged overpayments made in connection with Medicare claims. Medicare contractors seek out errors in a purported “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 Medicare contractors to substantially inflate the monetary demands on their audit targets while actually avoiding review of 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 HHS to authorize the use of statistical sampling in lieu of engaging in onerous claim-by-claim reviews. In Chaves Cnty. Home Health Servs. v. Sullivan, the Court of Appeals for the District of Columbia Circuit upheld extrapolation as within the Secretary’s discretion.
A ZPIC's use of extrapolation can be a surefire way of destroying a provider’s practice, and the reliance of ZPICs on statistical sampling only seems to be growing. This makes it essential for providers to involve experienced counsel and qualified experts as soon as possible in cases where damages have been extrapolated.
III. Filing a "Rebuttal":
Before filing for redetermination appeal, a provider may prepare and file a rebuttal letter within 15 days of the date of the overpayment decision letter. The purpose of a rebuttal letter is solely to argue why any proposed recoupment action by the contractor should not take place. The rebuttal process is generally limited to ZPIC and RAC overpayment actions.
Compliance Officers should try to file a rebuttal within the deadline imposed. Unfortunately, we have seen instances where a demand letter was held a week before it was mailed, thereby giving the provider approximately a week within which to file its rebuttal. In a recent case, the MAC cited an incorrect due date for the rebuttal to be filed and failed to indicate where the rebuttal was to be sent. In any event, once a rebuttal is filed, don’t hold your breath. In recent years, Medicare contractors have only issued a formal response to a handful of rebuttals filed on behalf of providers, despite the fact that many of these filings outlined legitimate arguments why a provider’s future claims should not be subject to rebuttal. Nevertheless, many providers are understandably anxious about filing a rebuttal in a timely fashion. Therefore, we encourage Compliance Officers to immediately begin work on this filing in order for it to be timely filed with the MAC.
Regardless of whether you choose to file a Rebuttal or not, please keep in mind -- the filing of a Rebuttal is NOT the same as filing for a Medicare administrative appeal! Should you confuse the processes and fail to file for administrative appeal in a timely fashion your untimely appeal will be dismissed.
Timeframes, both for recoupment and filing appeals, are very strict, and you should ensure that you meet these deadlines.
IV. Filing for Redetermination Appeal:
The first level of appeal in the Medicare administrative appeals process is a “redetermination” appeal. At this level, the MAC will conduct a de novo review of both the auditing contractor’s (ZPIC’s, or RAC’s) determination and the provider’s arguments in support of payment. Under the Code of Federal Regulations, “any request for redetermination must be filed within 120 calendar days from the date a party receives the notice of the initial determination.” To preserve your appeal rights, you must ensure that an appeal is received by the MAC well within the 120 day deadline. Additionally, the appeal should be sent by USPS Express Mail, Federal Express, or any other method whereby it may be tracked and documented to have been received by the MAC.
V. Filing for Reconsideration Appeal:
A provider may file for reconsideration appeal with the Qualified Independent Contractor (QIC) within 180 days of the date of receipt of a MAC’s redetermination decision letter. The date of receipt of the notice is presumed to be five calendar days after the date of the notice, unless there is evidence to the contrary. You should ensure that your request for reconsideration addresses each reason why you contend the MAC’s redetermination decision was incorrect. Additionally, the request for reconsideration appeal should clearly set out the provider’s arguments in support of payment. Finally, it is imperative that all relevant supporting documentation and arguments to be asserted should be forwarded to the QIC as part of the provider’s request for reconsideration appeal. The failure to forward supporting documentation to the QIC will likely result in the information being excluded from consideration at the ALJ level of appeal unless “good cause” for admission is shown.
VI. Filing for ALJ Appeal:
A health care provider (or his or her representative) must request an ALJ hearing within 60 days of the QIC’s reconsideration decision. Always keep in mind that the court will be conducting a de novo review. In other words, the judge will review the entire record and is not bound by previous decisions, even if those rulings are in your favor. It is essential that a request for an ALJ hearing be filed in a timely fashion. It is extraordinarily difficult to show “good cause” for a late filing.
VII. Final Remarks Regarding the Medicare Administrative Appeal Process:
The administrative appeal process grows more complicated each year. We strongly recommend that you obtain professional assistance if your alleged overpayment is substantial. For more information on the timing of an appeal, please review the Liles Parker "ZPIC Audit and Appeals Process" Chart. Click here: ZPIC Audit and Appeal Process Chart
Robert W. Liles, J.D. serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Mr. Liles has extensive experience representing health care providers and suppliers in Medicare administrative appeal actions. For a free consultation on your case, give us a call. We can be reached at: 1 (800) 475-1906.