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Prepayment Reviews and Postpayment Audits are Increasing in Frequency — New Guidance has Been Issued to ZPICs.

RACs and ZPICs are Conducting Prepayment Audits

Prepayment Audits are here to Stay. Is Your Practice Ready?

(September 3, 2013):  On August 21, 2013, the Centers for Medicare & Medicaid Services (CMS) released Transmittal 485/Change Request 8079. This transmittal imposes an obligation on Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs) to notify a health care provider prior to placing them on the provider on prepayment or postpayment review.

There are four major requirements for the notice:

  1. 1.  PSCs and ZPIC must notify providers of a provider-specific review by individual written notice prior to beginning the review.
  2. 2.  The written notice must delineate whether the review is to occur on a prepayment or postpayment basis.
  3. 3.  The contractors are required to maintain a copy of the letter and the date it was mailed.
  4. 4.  Finally, the notification must be mailed the same day the edit request is forwarded to the Medicare Administrative Contractor (MAC).

Benefits of receiving prior notice of a prepayment and/or postpayment review include:

  1. Advance Notice Allows Additional Time for a Health Care Provider to Prepare:   This notice requirement will give a health care provider more time to prepare for review and to determine what kind of assistance they may need in addressing the review, such as outside legal counsel.  As any health care provider who has undergone a prepayment review or a postpayment audit can attest, responding to onsite visits and documentation requests can be very time consuming. This is particularly true when supporting medical documentation is incomplete.  In such a case, you may require affidavits from the rendering provider or even outreach to a network of health care providers involved in the care of a single beneficiary.  Similarly, if you are dealing with documentation that is alleged to be illegible, you may need to which may require transcription or affidavits.

  2. CMS’ Template Letter to be Used by Contractors Leaves Little or No Room for Doubt:  Fortunately, CMS has drafted a template letter for its ZPIC and PSC contractors that is to be sent to providers in order to properly provide them with the mandated notice (see exhibit 45).  We believe this form letter is helpful because (a) health care providers will immediately understand the purpose and implication of the letter upon receipt; and (b) health care providers will know if a review is initiated without the provision of this letter, thereby invalidating the review.

Now, more than ever, it is imperative that you fully understand and comply with your obligations as participating provider in the Medicare program.  Prepayment reviews and postpayment audits are increasing in frequency and are being conducted based on data mining.   Depending on how you “slice and dice” the data, virtually any health care provider can appear to be an outlier.  All health care providers should carefully review their coding and billing practices to ensure that they are fully compliant with applicable statutory and regulatory requirements.  Do your services meet Medicare’s medical necessity requirements?  Are your documentation practices consistent with applicable NCD, LCD, LMRP and Medicare Benefit Policy Manual requirements?  Are you checking to ensure that Medicare’s coverage requirements are being met?  Are your coding and billing practices in full compliance with applicable regulations and requirements?  Finally, are you engaging in any business practices that might otherwise “taint” an otherwise payable claim?  If you cannot answer these questions, you will not be prepared if your practice is placed or prepayment review or subjected to a postpayment audit.

robert_w_lile-150x150Robert W. Liles, JD, MBA, MS, serves as Managing Partner at the health law firm of Liles Parker.  Our attorneys represent physicians, group practices, home health agencies, hospices and a wide variety of other health care providers around the country.  Please give us a call for a free consultation regarding your situation.  We can be reached at: 1 (800) 475-1906.

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