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A CMS ZPIC Contract is Quite Lucrative.

CMS ZPIC Contract(September 26, 2012):  From the start, Zone Program Integrity Contractors (ZPICs) have worked to separate themselves from their proverbial “bounty hunter” peers – Recovery Audit Contractors (RACs). As you may know, ZPICs are paid on a contractual basis by the Centers for Medicare & Medicaid Services (CMS), instead of by how much money they return in overpayments, as the RACs are. But as we’ve explained, the incentives are still there – if the ZPIC doesn’t produce positive results, it may lose its lucrative CMS ZPIC contract altogether. So, even though they are not traditional “bounty hunters,” ZPICs are still driven by those same financial interests. And many would argue that shows up in how they approach Medicare claims reviews.

The largest ZPIC, holding two CMS ZPIC contracts and covering nearly half the country, is AdvanceMed Corporation, an NCI company. A closer look at the contractor’s payments reveals some pretty interesting information, none more interesting than the fact that AdvanceMed has been paid nearly half a billion dollars by the Federal government to perform healthcare audit services (specifically $467,087,923). The majority of this money has been awarded in just the past few years, from 2009 to the present.

While we’ve previously mentioned that AdvanceMed appears to have received over one hundred million dollars for one contract (and a similar amount for their second primary contract), it also looks like AdvanceMed receives “option” bonuses, which make up a large percentage of the rest of AdvanceMed’s receipts. In all likelihood, AdvanceMed’s contract with CMS (and other ZPIC contracts with CMS) outline certain opportunities for CMS to further compensate AdvanceMed for exceptional work. This would be called an “option” and when CMS pays AdvanceMed (often around $5 – $15 million), it is referred to as “exercis[ing] an option” by the Federal government. AdvanceMed has received a half-dozen “option” bonuses during 2012 alone, worth approximately $33 million, and many more in year prior.

So it is not entirely accurate to say that ZPICs are not “bounty hunters” unlike RACs. While they do have a primary contract that guarantees payment over a certain period, they do have to renew that contract periodically with CMS (requiring that they continue to meet certain overpayment recovery standards) and they also have the potential for earning extra bonuses. Providers should consider this fact carefully when communicating with AdvanceMed or other ZPICs during a Medicare audit.

Robert LilesRobert W. Liles represents health care 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, conducts internal reviews, and trains healthcare professionals on various legal and compliance issues. For a free consultation, call Robert today at 1-800-475-1906.

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