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SNF Prepayment Review by ZPICs are Increasing Around the Country

SNF Prepayment Review(August 1, 2012): Medicare fraud and abuse prevention and detection efforts are undertaken, in large part, by Zone Program Integrity Contractors (ZPICs).  Seven program integrity zones were implemented as part of the Medicare Modernization Act, and each ZPIC is responsible for early detection of fraud, waste, and abuse in its respective zone.  As of October 1, 2011, the Centers for Medicare & Medicaid Services (CMS) has awarded contracts in all seven zones.  Currently, only five of seven are operational.

I.  The Number of SNF Prepayment Review Cases is Increasing:

It has been our observation that there has been an upsurge in Medicare prepayment audits of skilled nursing facilities (SNFs) by ZPICs.  The consequences are grave for providers, as the result of these audits is that they are placed on prepayment review for up to a year, which is very costly.  The costs are so high due to the fact that claim determinations are made after the SNF services have been provided, but prior to any claim payment being made.  Recently, CMS proposed that this one year limit be eliminated, making the prepayment review period potentially indefinite, which would be even more devastating for providers.

Unfortunately for providers, ZPICs do not typically inform them before they are placed on prepayment audit.  The SNF often first becomes aware that it has been placed on prepayment review after it submits a claim to the Medicare Administrative Contractor (MAC).  The ZPIC or the MAC then sends the SNF an Additional Documentation Request (“ADR”), which alerts the facility of its prepayment review status, or the SNF may be subject to an unannounced visit from the ZPIC, the purpose of which is to obtain the additional documentation.  Either way, notice is lacking, and SNF providers are often taken by surprise.

Worse yet, ZPICs can take as long as they want to review and make a determination on a given claim.  There is no mandated timeframe.   Only after a claim is reviewed will the provider receive an Explanation of Benefits (“EOB”) from its MAC.  The EOB will indicate whether the claim was approved or denied, and, if the latter, the grounds for denial.  The process can be painfully long, and it puts SNFs at risk of going bankrupt.

II.  Where are SNF Prepayment Reviews by ZPICs Occurring?

Notably, the ZPIC for Oklahoma, Health Integrity, has conducted a number of prepayment reviews of SNFs in its region.  They have focused their audits in Oklahoma City and Tulsa, as well numerous other smaller cities.  Moreover, Health Integrity has been very active in Texas over the last year.  Additionally, AdvanceMed, the ZPIC that services Louisiana for CMS, has undertaken extensive prepayment audits in Baton Rouge and greater central Louisiana.

Getting out of a prepayment review is tricky.  Medicare does not have a formal process through which a provider can contest being placed on prepayment review.   Nor are there guidelines for ‘how-to’ get out of prepayment review.  The only option providers have is to appeal each claim in the Medicare appeals process, adding to the costs of such audits.

Robert Liles represents providers in Medicare post-payment audits and appeals, and similar appeals under Medicaid. In addition, Robert counsels clients on regulatory compliance issues, performs gap analyses and internal reviews, and trains healthcare professionals on various legal issues. For a free consultation, call Robert today at: 1 (800) 475-1906.

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