(July 24, 2011): Has your Texas physician practice, home health agency, hospice, DME company or PT / OT / ST clinic been audited by a Zone Program Integrity Program (ZPIC)? If not, it may only be a matter of time. Despite your best efforts to follow Medicare’s directives, your organization may still be identified as an “outlier” by a ZPIC and subjected to a probe review or a full-blown audit. Should you receive a request for records from a ZPIC, being prepared -- in advance of receiving a ZPIC request-- can help ensure your organization’s compliance with applicable documentation, coding and billing requirements. The following recommendations can assist with those efforts:
Recommendation #1: If you have not already done so, conduct a “gap analysis" and implement an effective Compliance Program. Despite the fact that significant strides in compliance have been made by large Medicare providers (such as hospitals and nursing homes), it has been our observation that most physician practices and small-to-mid sized provider organizations still do not have a tailored Compliance Plan in place. To be clear, we recognize that many providers may have copied a draft plan right off of the internet, or may have purchased a sample plan from a vendor. While they may fully have intended to follow through with personalization of the draft document, in most of the cases we have seen, more pressing events have taken precedence and providers have not had the time or expertise to complete the project.
Providers who have not put together a Compliance Plan should immediately do so. As you have likely heard, Section 6401 of the Affordable Care Act (ACA)(generally referred to as the “Health Care Reform Act”) states, “. . . a provider of medical or other items or services or supplier within a particular industry, sector or category shall, as a condition of enrollment in the program under this Title. . .establish a compliance program.” To be clear, at this time, the Department of Health and Human Services, Office of Inspector General (HHS-OIG) has not announced deadlines effectuating this requirement. Nevertheless, it is merely a matter of time until all providers who choose to participate in the Medicare program will be required to have an effective Compliance Plan in place.
Rather than wait until the last-minute, Medicare providers who have not already done so should immediately take steps to implement an effective plan. As a first step, providers should review each of the regulatory and statutory provisions related to the specific services being billed to Medicare. Next, providers should compare their actual documentation, coding and billing practices with Medicare’s rules. Any gaps between the applicable requirements and a provider’s actual practices must immediately be remedied. Additionally, should these gaps represent an overpayment, the Medicare provider must repay the overpayment to the government within 60 days of identification.
Prior to conducting a gap analysis, we recommend that providers contact their legal counsel for assistance with both the internal review and with the implementation of an effective Compliance Plan. While no Compliance Plan can prevent an audit, the implementation of an effective plan will greatly improve a provider’s likely adherence to Medicare’s rules and regulations should a ZPIC audit be initiated.
Recommendation #2: Don’t ignore a ZPIC’s request for documents. At the outset, it is important to keep in mind that ZPICs play an important role. In addition to auditing records for possible overpayments, ZPICs are also responsible for identifying fraudulent providers (and potentially fraudulent providers) and making referrals to the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the U.S. Department of Justice (DOJ) for further action. Possible actions taken include, but are not limited to:
- CMS -- Administrative action such as suspension or revocation from the Medicare program.
- HHS-OIG – Administrative action such as Civil Monetary Penalty action. HHS-OIG may also investigate and refer a provider to DOJ for possible civil litigation under the False Claims Act. Finally, HHS-OIG may investigate and refer a provider to DOJ for criminal prosecution under the Federal Anti-Kickback Act or a host of other statutes.
- DOJ – May investigate and prosecute a provider for civil and / or criminal violations of law.
Should you receive a request for documents from your ZPIC, in many cases it will broken into two sections. The first section will likely be focused on business related records such as the following:
"Business contracts or agreements with other providers, suppliers, physicians, businesses or individuals in place during a specific period. Additionally, any verbal agreements must be summarized in writing.
A listing of all current and former employes (employed during a specific period), along with their hire date, termination date, reason for leaving, title, qualifications, last known address, phone number.
- A list of all practice locations, along with their address and phone number.
- Employment agreements.
- Medical Director contracts."
The unstated purpose of this portion of the ZPIC's request is likely to identify potential instances of violations of the Federal Anti-Kickback Statute, Stark and / or the False Claims Act. Should the ZPIC identify a possible violation, it will readily refer the case to CMS, HHS-OIG and / or DOJ, depending on the nature of the potential violation.
In contrast to the first section of the ZPIC's request, the second section of the request usually lists the patient records and dates of service to be audited by the ZPIC. While every case is different, the number of claims requested typically ranges from 8 – 100, depending on whether the ZPIC's request is a "probe review" or a full-blown audit. On occasion, we have seen the number of claims sought can range from 150 – 300.
Never ignore a ZPIC request for records. Importantly, should you fail to respond to the ZPIC’s request, the contractor can recommend to the CMS that your organization be suspended or from participation in the Medicare program. Depending on the ZPIC's concerns, the contractor can also recommend that CME pursue a revocation action against your organization. Should you need more time to the ZPIC's request for supporting documentation, don't hesitate to request it.
Recommendation #3: Remember learning how to “drive defensively” in high school? Your documentation practices should be approached in a similar fashion. ZPIC auditors are excellent at identifying one or more ways in which your claims do not meet applicable coverage requirements. While you may very well disagree with their assessments (especially in “medical necessity” determinations), in all likelihood, when you file a request for redetermination appeal (and later, a request for reconsideration appeal), you will find that your Medicare Administrative Contractor (MAC) and your Qualified Independent Contractor (QIC) agree with the ZPIC’s denial decision. Rather than endure significant costs and stress when defending against an overpayment assessment, you need to take steps to avoid a denial in the first place. To that end, health care providers should ensure that clinical staff members are fully trained and educated regarding Medicare's documentation, coding and billing process.
We recognize that “perfect documentation” is neither required nor realistic to expect from your clinical staff. Nevertheless, using published reports of other cases, you can show your clinicians that ZPICs enforce a strict application of Medicare's documentation and coverage requirements. Through education and training, your clinical staff will understand why it is imperative that they review, understand and comply with:
- Any applicable Local Coverage Determinations (LCDs).
- Any Local Medical Review Policies (LMRPs).
- The Medicare Policy Benefit Manual (MPBM).
- The Medicare Program Integrity Manual (MPIM).
- Any statutory provisions which cover the services.
- Any additional guidance issued by Medicare which would apply to these claims.
It is important that you regularly review the government’s latest concerns and any enforcement actions which have been taken. Additionally, you should read HHS-OIG’s reports so that you may learn from the mistakes being made by similarly situated providers. Upon doing so, we recommend that you check the list of “risk areas” in your Compliance Plan and ensure that they reflect both general “risks” and "specific risks” which may be unique to your organization. Is your organization still in full compliance? If not, remedial action is likely necessary.
Recommendation #4: Retain experienced legal counsel to assist with your efforts. When experiencing symptoms of a cardiac problem, most patients wouldn’t turn over their care to a dermatologist. Instead, they would seek to be evaluated and treated by a Cardiologist. Similarly, if you have a health law problem, would it be wise to rely on advice from an attorney specializing in family law? Ultimately, that's your call. While no attorney can guarantee you success -- we believe that an experienced health lawyer is well situated to give you advice regarding a Medicare audit or investigation. Having said that, it is important to recognize that the field of health law is extraordinarily broad. Should you be audited by a ZPIC or a Recovery Audit Contractor (RAC), don’t hesitate to ask a health lawyer whether they have handled these types of cases before. If so, how many times have they represented a provider in a ZPIC overpayment case? When selecting a lawyer, keep in mind that the legal fees charged by an attorney can vary greatly, depending on a variety of factors. Don’t be shy – ask how much the representation is likely to cost. While it is often difficult to estimate legal costs due to the various factors faced when handling a ZPIC audit case, most attorneys can give you a range of expected legal fees. Finally, be sure and ask for references. Other providers who have been through an administrative appeal case can provide you with invaluable insights into the process. As a final point, on numerous occasions, our firm has been retained to work with a provider's existing legal counsel. We are more than happy to do so and can effectively work with your counsel in a fashion which avoids duplication of efforts yet allows our experience and expertise to be applied to your case.
Recommendation #5: The administrative appeals process has become quite complicated in recent years. ZPIC audits can result in alleged overpayments running into the millions of dollars. Moreover, the ZPIC’s overpayment assessment (and the associated “demand” letter sent by a MAC) isn’t usually the end of the story. While providers often lose at the redetermination and reconsideration levels of appeal, the third level of appeal – before an Administrative Law Judge (ALJ) – is usually your single best opportunity to prevail in an administrative appeals action. Over the years, our attorneys have argued cases in front of judges out of each of the field offices of the Office of Medicare Hearings and Appeals (OMHA). While we may not always agree with their decisions, the ALJs in whose courts we have practiced have been professional, fair and more than willing to hear a provider’s arguments in support of payment.
Should you choose not to engage legal counsel and represent yourself in an ALJ hearing, keep in mind that even though these hearings are intended to be "non-adversarial," it can feel quite "adversarial" during the actual hearing. Furthermore, these proceedings can be quite complicated. In most large dollar cases, representatives of the ZPIC are participating in the hearing and arguing their position before the ALJ. ZPIC representatives can include one or more statisticians (if an extrapolation was conducted), a clinician (usually a Registered Nurse who is experienced in conducting medical reviews) and a lawyer. In a recent Home Health Agency case we handled, this was precisely what occurred. Frankly, few providers are experienced in presenting their case and in responding to the arguments raised by statisticians, clinicians and lawyers representing a ZPIC. As a result, it is strongly recommended that the provider consider engaging an experienced and knowledgable attorney.
Recommendation #6: When reviewing your claims, you should abide by the following: First, "If it doesn't belong to you, give it back." Conversely, "If you don’t owe the money, don’t throw in the towel." One of the attorneys in our firm is regularly asked to speak at provider conventions around the country. For years, he has told providers “If it doesn't belong to you, give it back.” This simple concept covers a lot of ground when it comes to alleged Medicare overpayments. Similarly, if the facts and the evidence shows that the claims should have been paid, think twice before waiving your right to appeal the denial of these claims. From a practical standpoint, we have heard of situations where a provider chooses to “just pay the bill” so that the case will quickly be resolved. Several providers have commented that when dealing with small dollar assessments, it is just easier to pay the alleged overpayment rather than incur the hassle and expense of contesting the contractor’s denial decision. Although we understand the reasoning behind such a decision, you should keep in mind that every claim which is denied by a ZPIC (and which remains denied) increases a provider’s “error rate.” If you were a ZPIC, PSC, RAC or MAC contractor, would you choose to audit a provider with a low error rate or a high error rate? In any event, the bottom line is fairly straight forward. Should you find that you are not entitled to payment for one or more claims, you must repay the money to the government as soon as possible (but no later than 60 days after an overpayment has been identified), regardless of whether the claim is part of an ongoing or recently completed Medicare audit. If, however, you are audited and you believe that a ZPIC has incorrectly denied one or your claims, you have the right to appeal the denial of these wrongfully denied claims.
Recommendation #7: Carefully read a ZPIC’s denial decision letter. When you receive a denial decision letter relied upon by a ZPIC, carefully review the notice and determine whether the contractor has specifically addressed the reasons for denial associated with each of the claims at issue. Every ZPIC is different. Over the last few months, one of the ZPICs involved in the cases we are handling has been citing only a general reason for denial (such as “not medically necessary"). Should the ZPIC in your case not provide sufficient information, you will find it difficult, if not impossible, to address any specific reasons your claims have been denied. Your legal counsel may be able to get the ZPIC to provide additional specificity in connection with their denial reasons. Alternatively, legal counsel may be able to argue that the ZPIC’s failure to provide specific reasons for denying your claims is a clear violation of your due process rights.
Recommendation #8: Don’t forget – shortly after the “demand letter” is sent, any payments you may be expecting may be recouped by your Medicare Administrative Contractor (MAC). A demand letter from your MAC usually follows a few days after you receive a ZPIC’s denial decision letter. While you have 120 days to file a request for redetermination appeal (as outlined in he MAC’s demand letter), should you fail to file the request for redetermination appeal within 30 days of the date of the MAC’s demand letter (not 30 days after receiving the demand letter!), your Medicare payments will be recouped starting on day 41. Alternatively, a provider may set up an extended repayment program with the MAC so that the alleged overpayment can be repaid through monthly installments. We strongly recommend that you set this up. You will then be able to take advantage of the 120 period permited to file a redetermination appeal rather than try and file a poorly prepared set of arguments within the previously discussed 30 day period. Similar issues (with completely different deadlines) are present at the reconsideration level of appeal -- the next level in the administrative appeals process. Once again, these issues can be quite complicated. We recommend that you discuss available appeals options with your legal counsel.
Recommendation #9: Foster a corporate culture which encourages compliance. ZPICs have increased their audit activities dramatically in numerous areas of the country. The Southern District of Texas (especially South Texas) has been hit hard in recent months. Providers in Houston, McAllen, Harlingen, Edinburgh, Laredo, Corpus Christi and Brownsville appear to have experienced a recent surge in audit activity. Be aware that ZPICs are looking for aberrations in billing patterns and often target providers based on these variations in coding or billing practices. Compliance with regulations and consistency in your “message” to employees is essential. Establishing good intake and records management procedures, continuing employee education and training efforts, can facilitate the adoption of an ethical, compliant corporate culture.
And, last but not least,
Recommendation #10: When drafting a Compliance Plan, providers should include a “Code of Conduct” that is easily understood by all employees. We believe that a “Code of Conduct” should accurately reflect the belief system an organization has pursued and sincerely intends to follow. In doing so, an organization can engender a compliant corporate culture. Over the years, we have seen organizational “Codes of Conduct” which range from a succinctly described phrase to discussions which take up more than a page.
Our favorite "Code of Conduct" (which also happens to be the "Code of Conduct" adopted by our law firm) is used by Cadets at the United States Military Academy at West Point. Modified for use by health care providers, the “Code of Conduct” reads:
“Our clinicians and staff will not lie, cheat, steal, or tolerate those who do."
This simple, yet elegant “Code of Conduct” succinctly lays out a provider’s ethical responsibilities, both with respect to Medicare and in their other business dealings. We recommend that you consider adopting and adhering to this or a similar “Code of Conduct.”
Our attorneys have extensive experience representing physicians, clinics, home health agencies, hospices, DME companies, skilled nursing facilities, chiropractors, pain medicine clinics, rehabilitative medicine clinics and other Medicare providers in connection with audits by ZPICs, MACs and other contractors. We also have years of experience assisting providers with “gap analyses" and in implementing an effective Compliance Program. Should you have questions about these or other health law issues, please feel free to call Robert W. Liles for a complementary consultation. Robert can be reached at: 1 (800) 475-1906.
 Infrequently, a ZPIC may choose to conduct a “probe” review rather than a full audit. Probe reviews usually involve a request for the records and supporting documentation related to 10 – 15 claims paid by Medicare.
 ZPIC requests for audit information typically include language similar to the following: “Failure to provide this information or to permit examination and duplication of records could result in a decision by the Office of the Inspector General to exclude you from Medicare, Medicaid and all Federal health care programs.”
 42 C.F.R. §405.372(a)(2).
 It is presumed that you received the MAC’s demand letter 5 days after the demand letter is dated. From a timing standpoint, we strongly recommend that you completely disregard the “5 day” issue unless it is absolutely necessary to rely on it. Our practice is to make sure that our client’s redetermination appeal is filed (and received) well in advance of the 120 day appeal deadline.