Personal Care Services Are Under the Government’s Microscope

January 22, 2018 by  
Filed under Health Law Articles

personal care services (January 22, 2018): The Department of Health and Human Services, Office of Inspector General (HHS-OIG) has conducted numerous audits, evaluations, and investigations involving the provision of “ personal care services ” to Medicaid beneficiaries.  In fact, from 2006 to 2012, HHS-OIG produced more than 20 audit and evaluation reports analyzing various program integrity risks presented when providing personal care services.  Much of this work was summarized in a November 2012 report entitled “Personal Care Services: Trends, Vulnerabilities, and Recommendations for Improvement.” [1] Additionally, last month, HHS-OIG published an Issue Brief highlighting the involvement of State Medicaid Fraud Control Units (MFCUs) in pursuing health care fraud and beneficiary abuse in personal care services programs.

In this article, we have taken the summary information assembled by HHS-OIG in the reports outlined above and combined this information with data collected from the 50 state MFCUs in order to provide an overview of state and federal investigations, indictments, convictions, and recoveries involving fraud, waste, abuse and patient neglect in Medicaid personal care services programs around the country.  Before examining this information, let’s go over a few basics.

I. What Are “Personal Care Services”?

The coverage and scope of a state’s specific personal care services benefit varies from one state’s Medicaid program to another.  Using Texas as an example, prior to 2006, personal care services under Medicaid were only provided to qualified minors with physical disabilities and other medical needs.  Notably, children with cognitive or behavioral disabilities did not qualify for this benefit.  As a result of a class action lawsuit settlement,[2] the Texas Medicaid State plan was amended to cover personal care services for children with disabilities and chronic health conditions enrolled in the state’s Medicaid program. Today, the Texas Department of State Health Services describes “personal care services” as:

“A Medicaid benefit that assists eligible clients who require assistance with activities of daily living (ADLs) and instrumental activities of daily living (IADLs) because of a physical, cognitive or behavioral limitation related to their disability, physical or mental illness, or chronic condition.”[3]

Examples of ADLs that are often provided under the personal care services benefit include bathing, eating, toileting, positioning and transferring, dressing and walking. IADLS provided under the benefit typically include doing laundry, performing light housework, shopping for groceries and preparing meals.  As these tasks and activities reflect, personal care services are non-skilled in nature.  Skilled services provided by nursing personnel do not qualify as personal care services, though they may qualify under some other benefit such as home health.

It is also important to remember that neither ADLs nor IADLs would qualify as covered personal care services if a beneficiary has the physical, behavioral and cognitive ability to perform these tasks and activities without adult supervision.

II. Who Qualifies for Medicaid-Covered Personal Care Services?

Like the service itself, whether a person qualifies for personal care services depends on the specific requirements of each state program. However, using Texas as an example, a beneficiary must:

  • Be 20 years or younger and be eligible for Medicaid.
  • Have a disability, physical or mental illness, or a health problem that lasts for a long time.
  • Have a Practitioner Statement of Need signed by a practitioner (physician, advanced practice nurse, or physician assistant) who has examined you in the last 12 months.
  • Need help with ADLs and IADLs based on the Personal Care Assessment Form (PCAF).
  • Provide a reason why your guardian cannot help you with ADLs and IADLs.[4]

III. Trends in Medicaid Personal Care Service and MFCUs: 

Between 2012 and 2015, Medicaid spending on personal care services jumped from $10.9 billion to $13.3 billion.[5] As a result, MFCUs have increasingly been tasked with investigating and prosecuting Medicaid provider fraud and patient abuse and neglect within healthcare facilities. Despite being only one of 80 types of providers regulated by MFCUs, personal care service providers constituted 38% of their indictments and 34% of their convictions. During this period indictments and convictions related to fraud by personal care service providers increased 56% and 33% respectively. In the year 2015, cases of fraud by personal care service providers constituted 12% of all MFCU investigations. Overall these trends indicate that MFCUs are concerned with the vulnerability of Medicaid beneficiaries and are more aggressively targeting personal care service providers.

IV. Current Systemic Weaknesses Facilitate Fraud, Abuse, and Neglect:

Throughout last month’s report, HHS-OIG highlighted many of the weaknesses of the current model of Medicaid personal care service oversight. Presently, there are no federal training or educational requirements for personal care service attendants so the quality of personal care services provided from one caregiver to another can vary greatly.  Additionally, thorough background checks are not consistently required.  As a result, there have been a number of instances where habitual offenders have been found to have exploited beneficiaries under their care.

Another issue of concern is that thorough documentation is not required for Medicaid personal care services, leading to the ability of an attendant to charge for services that did not occur or for time in which the attendant and beneficiary where not even in the same location. Aside from creating a window of opportunity for fraud, this also allows for personal care service attendants to neglect their beneficiaries. In the past, this scenario has led to the death of a beneficiary.  Lack of oversight also shifts the burden to report on to the beneficiary. Thus, mental and physical handicaps of beneficiaries leave them vulnerable as reporting may be rather difficult. Due to federal regulations, MFCUs are also unable to investigate or prosecute cases of abuse or neglect by in-home/community personal care service providers.

As a consequence of these systemic issues, despite being the best equipped agency to take on this task, MCFUs do not receive funding for this and are forced to refer such cases to other agencies that may be less effective in investigating and prosecuting these cases. Overall, the current model is vulnerable to fraud and leaves beneficiaries vulnerable to abuse and neglect.

V. Improper Payments to Personal Care Service Providers Will Lead to Investigations:

An improper payment is any payment that is made that, according to federal and/or state laws, should not have been made. The inconsistency in state rules and the lack of depth of federal rules complicates the generalization of improper payments. According to an audit of state Medicaid programs by HHS-OIG, the most common types of improper personal care service payments are:

  • Claims paid without supporting documentation.
  • Services provided and billed that are ineligible for Medicaid reimbursement.
  • Services provided without required supervision.
  • Services provided by an unqualified attendant.
  • Services provided by an attendant without proper verification of required qualifications.
  • Payments made for care while the Medicaid beneficiary was in an institution.

It is important to note that improper payment is not the same as fraud. Improper payments are considered a result of error and a personal care service provider is required to return the overpayment as soon as the improper payment is discovered and may face further consequences. While self-disclosure of improper payments is considered an act of good faith, the nature of the improper payment may lead into an investigation into potential waste, fraud, and/or abuse.[6]

VI. What is Personal Care Services Fraud?

The vulnerability of the current personal care services system to fraud has made these services a significant concern for MCFUs around the country. Many of the fraud cases brought in recent years have involved instances of billing for services not rendered to a Medicaid beneficiary.  Examples of this type of improper conduct has included instances when:

  • A Medicaid beneficiary was on a vacation.
  • A Medicaid beneficiary was in an institution.
  • A Medicaid beneficiary was documented to be without the personal care attendant by another healthcare provider.
  • The personal care aide or attendant was documented to be working elsewhere at the time.
  • The Medicaid beneficiary was deceased at the time personal care services were billed.

Often, wrongdoers have committed this type of fraud by having a Medicaid beneficiary sign off on blank time sheets in advance of services that are to be provided. While the Medicaid beneficiary is typically unaware of the fraudulent intentions of the personal care attendant, there have been cases where the personal care services attendant has made an agreement to share profits with the beneficiary or a family member of the beneficiary in order to obtain a signed blank time sheet.

While fraud is often committed by individual personal care aides or attendants, a personal care services agency can be held accountable if it is aware of the attendant’s fraudulent billing practices. One investigation in Alaska led to the criminal prosecution of over 40 individuals for fraud.[7] In that case, the personal care services agency was aware that employees were submitting falsified timesheets in addition to charging Medicaid for services rendered by excluded individuals.

VII. Personal Care Services Fraud Investigations:

Personal care services fraud has been an increasing concern of MCFUs. As expected, the amount of criminal investigation into personal care services fraud has risen over the 2015 and 2016 fiscal years, with a total of 1,929 individual personal care services attendants and 250 personal care services agencies being investigated for fraud at the end of 2016.[8] Convictions have risen slightly over those 2 years, with 464 individual personal care aides and attendants and 36 personal care services agencies convicted of criminal fraud charges in 2016. Overall, personal care service fraud appears to more commonly perpetrated by individual personal care service attendants, though agencies are certainly being held responsible for their role in personal care services fraud.

personal care services fraud

Table 1: The number of open investigations into personal care services fraud by agencies and attendants at the close of the 2015 and 2016 fiscal years.

personal care services fraud

Table 2: The number of criminal convictions and civil court settlements/judgements for personal care services fraud in the 2015 and 2016 fiscal years.

VIII. Recoveries from PCS Fraud Cases:

Despite an increase in civil settlements and judgements, the total amount recovered through settlements decreased substantially for both PCS attendants and PCS agencies. The result of criminal convictions has been markedly different. In the fiscal year 2016, a total of 464 PCS attendants were convicted of PCS fraud compared to only 36 agencies.[11] While personal care attendants constitute the overwhelming majority of convictions, approximately 45.8% of the amount recovered in 2016 came from personal care service Agencies. From fiscal year 2015 to 2015, the amount of PCS agencies convicted increased by 63.6%, from 22 to 36. In the same period, the amount recovered from criminal convictions of PCS agencies more than doubled, from $1,718,223 to $4,108,575. Thus, it is evident that PCS agencies are increasingly being held responsible for their role in PCS fraud.

personal care services fraud

Table 3: The amount of money recovered in personal care services fraud cases in the 2015 and 2016 fiscal years.

 IX. What is Abuse or Neglect of a Beneficiary?

The current system leaves beneficiaries vulnerable to abuse. Abuse has cases revolve around incidents in which a personal care services attendant causes physical harm to the beneficiary. In a case in Florida, a personal care attendant was fired and later charged with elderly abuse after repeatedly striking, pinching, and pulling at an elderly individual and leaving bruises on the individual.[13] However, abuse is not always physical. Abuse also includes harm done by theft, in which personal care service attendants take advantage of their beneficiaries and steal valuable items from them. In one case, a personal care service attendant at an assisted living facility stole nearly $10,000 from beneficiaries.[14] In another, an attendant stole two guitars from a beneficiary and sold the guitars to a local music shop.[15] When the attendant became aware of the beneficiary’s intent to contact authorities, the attendant returned the items. In the end, the attendant was still charged with fourth degree larceny.

Drug diversion is a serious abuse prevalent in personal care service that goes beyond theft and extends into physical harm as well. In addition to the monetary loss, the beneficiary is losing the treatment they require. For many, especially in hospice care, the use of opioids is used to manage pain. When attendants take these medications, they leave the beneficiaries suffering. In one case, an attendant began to switch a beneficiary’s hydrocodone with acetaminophen, leaving the patient suffering until the attendant’s drug diversion was discovered. In addition to leaving patients suffering, the use of substitute substances and potentially unsterile equipment puts the beneficiary at risk of serious harm or death.

Neglect is defined as “the failure or omission on the part of a caregiver to provide the care, supervision, and services necessary to maintain the physical and mental health of a disabled adult or elderly person that a prudent person would deem essential for the  well-being of the patient.” Neglect is serious, as the lack of adequate care or supervision of vulnerable individuals can be fatal. In one case, a personal care service attendant did not provide the services that were billed for an entire week, leaving the beneficiary hospitalized due to malnourishment and dehydration.[16] In another case, a personal care service attendant took a mentally handicap person to a crowded shopping area and lost the individual on a winter day in Philadelphia. The attendant did not immediately seek out the beneficiary nor did the attendant contact authorities in a prompt manner. The beneficiary was later found dead due to hypothermia. Neglect can also stem from fraud. In one case in Arkansas, a personal care service attendant billed Medicaid for services rendered to a beneficiary while frequenting Casino.[17] The attendant’s neglect led to malnourishment and dehydration, eventually leading to the death of the beneficiary.

X. Investigating Abuse or Neglect of a Beneficiary:

Despite the desire of MCFUs to investigate abuse or neglect, allegations are not investigated as often and extensively as they would like due to a lack of federal and state funding to do so. From the close of the 2015 fiscal year to the close of the 2016 fiscal year, open investigations into Abuse or neglect of a beneficiary decreased marginally from 254 to 252 investigations.[18] This marginal decline indicates the limitations placed on MCFUs ability to investigate abuse or neglect of beneficiaries. All of these investigations were criminal. In the same period, criminal convictions for abuse or neglect raised from 44 in 2015 to 52 in 2016. In 2015, there was one civil court settlement for abuse or neglect by a personal care service attendant. Overall it appears that MCFUs are becoming increasingly serious about addressing abuse or neglect by personal care service attendants and will continue to do what they can within their means to address the issues.

personal care service abuse

Table 4: The number of open investigations into abuse or neglect by personal care service attendants at the close of the 2015 and 2016 fiscal years.

personal care service abuse

Table 5: The number of criminal convictions and civil court settlements/judgements for personal care service abuse or neglect cases in the 2015 and 2016 fiscal years.

 XI. Recoveries from Abuse or Neglect Cases:

As can be expected by the findings of the recent HHS-OIG issue brief, convictions of abuse or neglect of a beneficiary only increased by 8 convictions in 2016, an 18% increase from the 2015 fiscal year. This again highlights the limitations placed of MFCUs in addressing abuse or neglect of beneficiaries. However, the total amount recovered in these cases more than tripled from the 2015 to the 2016 fiscal year, from $71,817 in 2015 to $247,972 in 2016. This substantial increase in recoveries again suggests that MFCUs are increasingly serious about addressing abuse or neglect of beneficiaries.

personal care service abuse

Table 6: The amount of money recovered in personal care service abuse or neglect cases in the 2015 and 2016 fiscal years.

XII.  HHS-OIG Recommendations:

The recommendations made by HHS-OIG are aimed at creating greater state oversight of personal care services provided by aides and attendants to Medicaid beneficiaries. These recommendations include measures such as:

  • Creating an enrollment or registration process for attendants.
  • Requiring comprehensive background checks for personal care service attendants
  • Mandating greater documentation requirements for personal care service attendants, including details such as time of service and services provided.
  • Requiring beneficiary case managers to conduct more in-home/community supervisory visits.
  • Establishing mandatory training or educational standards for personal care service attendants.
  • Cross-referencing personal care service attendant and beneficiary locations to prevent fraudulent billing.
  • Federal funding for investigations and prosecutions of abuse or neglect by in-home/community personal care service agencies.

The current model provides too much opportunity for fraudulent, negligent, and abusive behavior by agency providers to be overlooked. These reforms could effectively deter personal care service providers from engaging in fraudulent, abusive, or negligent behavior by making them aware of the consequences of such behavior. In addition, these reforms would make it easier for MFCUs to effectively hold all personal care service providers accountable for their actions.

XIII.  Conclusion:

At present, despite efforts from personal care agencies to better screen their staff, Medicaid beneficiaries are still finding themselves subject to fraud, abuse and / or neglect by a significant number of individual personal care service aides and attendants each year. Unfortunately, fraud, abuse and / or neglect by personal care service aides and attendants will likely continue to be a major concern until the further safeguards are taken by both personal care agencies and regulators to better protect Medicaid beneficiaries.

In addition to conducting standard due diligence, as an owner of a personal care services agency, it is especially important that you screen your applicants (before hire), employees, vendors and contractors, against all Federal and State exclusion databases, every 30 days.  We recommend that you contact the folks at Exclusion Screening to get this accomplished.  They can be reached at www.exclusionscreening.com

Robert W. Liles is a health care attorney experienced in handling prepayment reviews and audits.Robert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at Liles Parker, PLLC.  Liles Parker is a health law firm representing personal care agencies and other health care providers around the country in connection with Medicare, Medicaid and private payor audits.  For a complimentary consultation, give Robert a call at: (202) 298-8750.

[1] As mandated by Public Law 95-452, HHS-OIG’s mission is to “protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the health and welfare of beneficiaries served by those programs.”  HHS-OIG’s report entitled “Personal Care Services: Trends, Vulnerabilities, and Recommendations for Improvement” (OIG-12-12-01).

[2] Alberto N. et al. v. Hawkins. (No. 6:99-cv-00459) May 19, 2005.  EDTX, Tyler Division.

[3] https://www.dshs.texas.gov/region1/documents/tmp-personalCareservices.pdf

[4] https://www.dshs.texas.gov/caseman/pcs.shtm

[5] https://oig.hhs.gov/oei/reports/oei-12-16-00500.pdf

[6] “Waste” occurs when unnecessary services are provided that lead to a waste of resources, such as when more hours of services are rendered than are necessary. “Fraud” is defined at 42 C.F.R. §433.304 as “(in accordance with §455.2) . . . an intentional deception or misrepresentation made by a person with knowledge that the deception could result in some unauthorized benefit to himself or some other person. This includes any act that constitutes fraud under applicable Federal of State law.” “Abuse” is defined is defined at 42 C.F.R. §455.2 as “provider practices that are inconsistent with sound fiscal, business, or medical practices, and result in an unnecessary cost to the Medicaid program, or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards for health care. It also includes beneficiary practices that result in unnecessary cost to the Medicaid program.”

[7] https://oig.hhs.gov/reports-and-publications/portfolio/ia-mpcs2016.pdf

[8] https://oig.hhs.gov/oei/reports/oei-09-17-00210.pdf;


[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Ibid.


[14] http://www.fox9.com/news/caregiver-admits-to-stealing-thousands-in-cash-jewelry-from-elderly-patients

[15] https://www.nbcconnecticut.com/news/local/Personal-Care-Attendant-Accused-of-Stealing-Guitars-from-Client-in-Southington-464400253.html

[16] https://oig.hhs.gov/reports-and-publications/portfolio/ia-mpcs2016.pdf

[17] http://www.swtimes.com/news/caretaker-arrested-fort-smith-man-s-death?start=6

[18] https://oig.hhs.gov/oei/reports/oei-09-17-00210.pdf;


[19] Ibid.

[20] Ibid.

[21] Ibid.

Revocation of Your Medicare Billing Privileges.

December 14, 2017 by  
Filed under Featured, Health Law Articles

Revocation of Your Medicare Billing Privileges

The revocation of your Medicare billing privileges can subject your practice to financial ruin!

(December 14, 2017):  The Centers for Medicare and Medicaid Services (CMS) has engaged various types of outside contracting entities to perform program integrity functions on behalf of the Medicare program.  At the present time, Uniform Program Integrity Contractors (UPICs) and Zone Program Integrity Contractors (ZPICs) are very aggressive when it comes to referring evidence of potential fraud to federal law enforcement agencies, primarily the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the U.S. Department of Justice (DOJ).  In matters where fraud is not apparent but it appears that other improper conduct has occurred, UPICs and ZPICs are actively recommending to CMS that adverse administrative actions (such as the revocation of your Medicare billing privileges), be taken.  As the General Accounting Office (GAO) noted in its August 2017 report entitled “CMS Fraud Prevention System Uses Claims Analysis to Address Fraud,  the administrative actions[1] recommended by these program integrity contractors typically range from prepayment review to revocation.[2]


I. Background:

To participate in the Medicare program, a provider must typically complete either a CMS-855A, CMS-855B, CMS-855I or CMS-855S[3] enrollment application, each of which requires that the provider disclose their practice or office address.[4] Notably, a provider may also  provide documentation of its “practice location” with its enrollment application.[5] Once a provider has enrolled in the Medicare program, any changes to the provider’s enrollment information must be reported within a strict timeframe.  For example, a change in practice location must be reported within 30 days.[6]

Among their various duties, Medicare Administrative Contractors (MACs), UPICs and ZPICs are required to periodically perform site visits in order to verify that a provider is operational, that the provider’s enrollment information is accurate, and that the provider is in compliance with applicable Medicare enrollment requirements.[7] To accomplish this, the CMS contractor will normally inspect the  “qualified physical practice location” given by the provider or supplier that is currently in file with the MAC. See, e.g., JIB Enterprises, LLC, DAB CR3010, at 9 (2013).

II. Failure to Meet Provider Requirement to Maintain Active Enrollment Status:

Over the past year, our firm has represented more physicians, home health agencies and other providers than ever before in challenging proposed Medicare revocation actions.  As we indicated in an article on ZPIC audits last March, program integrity contractors are aggressively conducting site visits of enrolled providers. Approximately one-third of these revocation actions have been based on a Medicare contractor’s assertion that they were unable to verify a provider’s operational status. In many cases, this has occurred because a provider has moved its office or clinic without properly reporting the relocation to Medicare in a timely manner. GAO’s December 2017 report on the status of CMS fraud efforts illustrates how frequently this particular category of revocation action has been occurring. As GAO noted with respect to Florida:

“According to a 2016 report, from July 1, 2015, through September 30, 2016, a contractor covering Florida had conducted 9,891 site visits to verify providers’ and suppliers’ operational status, deactivated 422 practice locations, and revoked or denied 1,157 providers.[8]

III.  What Occurs if a Medicare Contractor Believes that a Provider is Not Operational?

What does it mean for a provider’s practice or office to be “operational”?  As set out under 42 C.F.R. § 424.502, the term operational:

“means the provider or supplier has a qualified physical practice location, is open to the public for the purpose of providing health care related services, is prepared to submit valid Medicare claims, and is properly staffed, equipped, and stocked (as applicable, based on the type of facility or organization, provider or supplier specialty, or the services or items being rendered), to furnish these items or services.”

Therefore, if a UPIC or ZPIC were to visit the location of your practice (as then listed in Medicare’s records) and were to find that the practice or office were closed, the contractor would likely take the position that your organization is not operational.

Neither UPICs nor ZPICs exercise independent authority to issue a revocation letter or otherwise revoke your Medicare billing privileges.  These contractors must first obtain prior approval from CMS’ Provider Enrollment & Oversight Group (PEOG).  When seeking approval to initiate a revocation action, the contractor is required to cite the specific regulatory basis upon which this adverse action is being based.  In most cases, obtaining CMS approval to initiate a revocation action is a perfunctory step in the process. Once approval is obtained, the provider’s Medicare billing privileges are normally revoked, retroactive to the date that the CMS contractor determined that the provider was not operational.[9]  As set out in the Federal Register:

“Moreover, we maintain that when CMS or our contractor determines that a provider or supplier, including a DMEPOS supplier, is no longer operating at the practice location provided to Medicare on a paper or electronic Medicare enrollment application that the revocation should be effective with the date that CMS or our contractor determines that the provider or supplier is no longer operating at the practice location.”[10]

ANon-Operational Due to Change in Location Without Proper Notice.

 We have handled practically every permutation of this scenario that you can imagine.  The most common facts have involved a provider or supplier who moved offices and failed to notify their MAC.  As luck would have it, a UPIC or ZPIC contractor conducted a site visit, found that the practice location on file was closed or empty, and concluded that it was not operational.  The contractor then recommended to CMS that a revocation action be pursued.

In several instances, the provider and / or the provider’s office manager was willing to swear that written notice of the change in location was, in fact, sent to the MAC.  Unfortunately, unless the provider can provide proof that notice was given by Certified Mail, Return Receipt Requested or other trackable mail service, these cases have been an uphill battle in the administrative appeals process.

In other cases, a provider has been able to show that written notice was given, in a timely fashion, to state regulatory authorities.  In at least one case, a provider argued that the MAC was provided proper notice through the Cost Report process.  Unfortunately, proof of such notice was not provided to the Administrative Law Judge so no ruling as to adequacy was issued.

The bottom line with respect to notice is fairly straight forward, timely notice of a change in practice location must be provided to the MAC, on the proper form and within the proscribed time limits.  Moreover, as with all communications to a CMS contractor, it is imperative that proof of submission and receipt be maintained.

B.  Non-Operational Due to Closed or Non-Staffed at the Time of the Site Visit.

From a practical standpoint, a provider doesn’t necessarily have to change its practice or office location to be found non-operational.  We have handled multiple cases where a ZPIC contractor conducted a site visit at the provider’s address listed on the CMS-855, but for one reason or another, the office was locked and was not staffed at the time of the visit, thereby giving rise to a revocation action.

IV.  A Look at the Regulatory Bases for Revocation:

As reflected under 42 CFR §424.535(a)(1)-(14), there are fourteen regulatory bases for revocation that may be relied upon by the government.  This article focuses on only one of these reasons for revocation – a provider’s failure to notify Medicare of a change in its practice location.  Notably, there are several regulatory bases that may be cited when revoking a provider’s billing privileges for this infraction, each of which are briefly discussed below.

A.  42 C.F.R. §424.535(a)(1), “Non-Compliance.”

Under 42 C.F.R. §424.535(a)(1), a revocation may be pursued if:

“The provider or supplier is determined to not be in compliance with the enrollment requirements described in this subpart P or in the enrollment application applicable for its provider or supplier type, and has not submitted a plan of corrective action as outlined in part 488 of this chapter. The provider or supplier may also be determined not to be in compliance if it has failed to pay any user fees as assessed under part 488 of this chapter.

(i) CMS may request additional documentation from the provider or supplier to determine compliance if adverse information is received or otherwise found concerning the provider or supplier.

(ii) Requested additional documentation must be submitted within 60 calendar days of request.”

Under this basis for revocation, CMS or one of its contractors typically alleges that a provider has violated an enrollment requirement listed on the enrollment application or currently in Medicare’s electronic records system.  Although most revocation actions pursued under this regulatory provision are based on a licensure-related violation, the scope of the provision is broad enough to cover situations where a provider has failed to meet its obligations to report a change in practice location in a timely fashion.

B.  42 C.F.R. §424.535(a)(5), “On-Site Review.”

Under 42 C.F.R. §424.535(a)(5), a revocation action may be pursued if:

“Upon on-site review or other reliable evidence, CMS determines that the provider or supplier is either of the following:

 (i) No longer operational to furnish Medicare-covered items or services.

(ii) Otherwise fails to satisfy any Medicare enrollment requirement.”

As previously indicated, both CMS contractors are actively conducting site-visits of Medicare providers and suppliers in an efforts to better ensure the program integrity of the Medicare Trust Fund.  These site-visits are expected to intensify, not subside in 2018.  It is therefore essential that you understand your obligations under the regulations to qualify as an “operational” entity and to properly notify Medicare of any changes to your enrollment status.

C.  42 C.F.R. §424.535(a)(9), “Failure to Report.”

Under 42 C.F.R. §424.535(a)(9) a revocation action may be pursued if:

The provider or supplier did not comply with the reporting requirements specified in § 424.516(d)(1)(ii) and (iii) of this subpart.”

As 42 C.F.R. §516(d)(1)(ii) and (iii) describes, physicians, nonphysician practitioners, and their organizations must report any adverse legal action or change in practice location to their Medicare contractor within 30 days. If a provider that has failed to meet this reporting requirement is subject to having their Medicare billing privileges revoked under 42 C.F.R. §424.535(a)(9).

V.  Impact of a Medicare Revocation Action:

Simply put, if your Medicare billing privileges are revoked, you will be barred from participating in the Medicare program from the date of the revocation until the end of the re-enrollment bar that has been identified in the revocation letter.  The re-enrollment bar lasts from 1 – 3 years. [11]  The length of the re-enrollment bar depends on the severity of the reason for the underlying revocation. The re-enrollment period begins 30 days after the provider receives the notice of revocation letter from CMS.

Under 15.1.1 of the MPIM, the definition of the term “Final Adverse Action” includes a Medicare-imposed revocation of any Medicare billing privileges.”  More than likely, each of your private payor participating agreements includes a requirement that you notify the payor within 30 days of any adverse action.  If for some reason your particular contract does not include this requirement, it is important to remember that all licensing boards, payors and hospitals have access to the NPDB and regularly submit queries on their staff or licensees.  Depending on the reason for revocation, these organization may choose to pursue a reciprocal action.

VI.  Appealing a Medicare Revocation Action:

As reflected in Section IV above, the business impact of a revocation action on your practice can be devastating.  If you are facing a revocation action, we strongly recommend that you engage experienced health law counsel to represent you in the process. Unlike the traditional Medicare administrative appeals process, the Medicare revocation appeals process has abbreviated timeframes and is highly restrictive with respect to the introduction of evidence and arguments.  Having said that, our attorneys have been very successful in working directly with CMS to resolve many of these revocation actions to the satisfaction of our clients and achieve a result that likely would be unavailable through the traditional revocation appeals process.

Generally, the Medicare revocation appeals process is set out under 42 C.F.R. § 405.803, “Appeal Rights.” As this provision outlines, a provider is entitled to challenge the revocation of its Medicare billing privileges an may appeal an initial determination made by CMS or its contractor by following the procedures specified in Chapter 498.  A brief overview of these provisions is outlined below:

Preliminary Appeal Determination: Can We File a Corrective Action Plan (CAP)?  In limited circumstances, if a provider’s Medicare billing number has been revoked, it may be afforded an opportunity by CMS to take remedial action to correct the deficiencies that were the basis for the revocation action.   After the effectuation of the December 2014 Final Rule, only provider’s whose Medicare billing privileges have been revoked due to non-compliance under 42 CFR 424.535(a)(1) are entitled to submit a CAP. The other thirteen regulatory bases for revocation are not eligible for CAP remediation.  To the extent that your revocation action falls within category, the CAP must be submitted within 30 days of the date of the revocation notice and must provide evidence that the provider is now in full compliance with its applicable obligations.  If the provider can demonstrate compliance, CMS will reinstate the provider’s billing privileges.  If the CAP is denied, the provider can still exercise its appeal rights under Part 498.  Importantly, the submission of a CAP does not “stay” your appeal deadlines.  More than likely, you will therefore pursue a dual-track approach is challenging the revocation action.

Appeal Level I:  Reconsideration.  The first level of appeal for a provider to contest the evocation of its Medicare billing privileges is known as the “Reconsideration” level. A reconsideration request must be submitted within 60 days from receipt of the notice of initial determination. Take care, some appeals will be filed with the CMS-PEOG while others must be filed with MAC. Any documentary evidence a provider wants considered by the hearing officer assigned to their case must be submitted at this level of appeal. If a provider later wants to submit documentary evidence into the record, an Administrative Law Judge (ALJ) will require that the provider show “Good Cause” exists for the late submission of the evidence. “Good Cause” is rarely found to exist absent evidence of an Act of God that prevented earlier submission.

Appeal Level II: Administrative Law Judge (ALJ) Hearing. Should you not prevail at the reconsideration level of appeal, you can seek a hearing before an ALJ of the HHS Departmental Appeals Board, Civil Remedies Division. Requests for an ALJ hearing must be submitted within 60 days from the date of the reconsideration decision.  The ALJ hearing is like a “mini-trial.”  The government will be represented by an attorney assigned by your HHS Regional Office of General Counsel.  If the facts in the case are contested, both sides will typically submit briefs, introduce evidence and present witness and / or expert testimony.  If both sides agree as to the basic facts in the case, the ALJ will often issue his / her ruling based on the written record.

Appeal Level III: Departmental Appeals Board (DAB) Hearing.   Both the provider and CMS may contest a decision of the ALJ. Should a party choose to do so, they must request review of the ALJ’s decision by the Departmental Appeals Board, Appellate Division within 60 days of the date of the ALJ’s decision.  Importantly, this is the end of the proverbial line administratively.  If a provider is dissatisfied with the DAB’s ruling, it must seek judicial review.

Appeal Level IV:  Judicial Review  If a provider wishes to challenge the decision of the DAB, it must file a civil action in U.S. District Court within 60 days of the date of the DAB decision.  If a provider can show “Good Cause,” the DAB is permitted to extend the civil action filing deadline.

VII.  Conclusion:

The revocation of a provider’s Medicare billing number often comes as a shock.  It is never expected and few providers are prepared to effectively respond to the challenges presented by the hyper-strict requirements of the revocation appeals process.  It is important to keep in mind that the appeals process isn’t meant to provide a level playing field for a provider to argue its case.  Unfortunately, the rules are skewed in favor of CMS from the very start.  It is therefore essential that you take steps to challenge the revocation of your Medicare billing privileges.  Unless you are skilled in responding to these types of adverse actions, it is likely in your best interests to engaged experienced health law counsel.

Healthcare AtorneyRobert W. Liles, J.D., M.B.A., M.S., is a former Federal prosecutor and an experienced health lawyer.  Robert and the other lawyers at Liles Parker, PLLC, represent health care providers and suppliers around the country in connection with Medicare revocation actions.  If you or your practice have been had their Medicare billing privileges revoked, please give Robert a call for a complimentary consultation:  Please call:  1 (800) 475-1906.    


[1] Importantly, this list of administrative adverse actions is not all-inclusive.  For instance, as set out in Section of the Medicare Program Integrity Manual (MPIM), UPICs and ZPICs are also required to  review and evaluate cases to determine if they warrant exclusion action.  If so, they are to make a recommendation to OIG for exclusion. One of the examples cases suitable for exclusion listed in the MPIM includes:

“Providers who are the subject of prepayment review for an extended period of time (longer than 6 months) who have not corrected their pattern of practice after receiving educational/warning letters.”

[2] As defined under 15.1.1 of the MPIM, the term “Revocation” means that the provider or supplier’s billing privileges are terminated.

[3] CMS-855A – Medicare Enrollment Application for Institutional Providers; CMS-855B – Medicare Enrollment Application for Clinics, Group Practices, and Certain Other Suppliers; CMS-855I – Medicare Enrollment Application for Physicians and Non-Physician Practitioners; CMS-855S – for DME suppliers.

[4] 42 C.F.R. § 424.510(a).

[5] 42 C.F.R. § 424.510(d)(2)(ii).

[6] See 42 C.F.R. § 424.516(d)(1)(iii).

[7] 42 C.F.R. §§ 424.510(d)(8), 424.515(c), 424.517(a).

[8] GAO-18-88. “CMS Needs to Fully Align Its Antifraud Efforts with the Fraud Risk Framework,” December 2017.  See footnote 62.

[9]42 C.F.R. §§ 405.800(b)(2); 424.535(a)(5)(i), (g).

[10] 73 Fed. Reg. 69,725, 69,865 (Nov. 18, 2008) (emphasis added).

[11] 42 CFR §424.535(c)

[12] If a revocation actions is based on an “Abuse of Billing Privileges” under 42 CFR 424.535(a)(8), the initial level of appeal (Reconsideration) will be filed directly with CMS rather than with the provider’s MAC.

UPIC / ZPIC Referrals to State Boards, Societies, Surveyors and QIOs

November 29, 2017 by  
Filed under Health Law Articles

(November 29, 2017):  The Medicare and Medicaid programs are managed by the Centers for Medicare and Medicaid Services (CMS). CMS has engaged Unified Program Integrity Contractors (UPICs) and Zone Program Integrity Contractors (ZPICs), among others, to provide program integrity support. In the course of their duties, UPICs and ZPICs may initiate a prepayment review, postpayment audit, suspension or revocation action.  These CMS contractors are less known for their referrals to state licensing boards, professional medical societies, state survey agencies and quality improvement organizations. Nevertheless, in recent years, we have seen a significant increase in the number of UPIC / ZPIC referrals to state regulatory enforcement agencies.

This article examines the various directives governing UPIC / ZPICs that are currently generating a significant number of inter-agency referrals.[1]

I.  ZPIC Referrals to State Licensing Authorities Due to Improper Conduct:

Over the years, a number of fundamental changes have been made by the Centers for Medicare and Medicaid Services (CMS) to Chapter 4 of the Medicare Program Integrity Manual (MPIM).  Many of these changes were designed to facilitate the sharing of adverse case findings between federal and state regulatory agencies.

Pursuant to Chapter 4, Sec. 4.18.2 of the MPIM, ZPICs are required to make a referral to a provider’s state licensure board if it finds that the provider engaged in unethical or improper practices or unprofessional conduct.”  We have handled several cases that resulted from ZPIC referrals to state licensure boards.  Situations we have seen where a ZPIC has made a referral to the responsible state licensing authority include:

  • Referral to State Medical Board: Failure to exercise proper level of supervision over a Nurse Practitioner.
  • Referral to State Nursing Board: Performing certain patient care services without the requisite level of physician supervision in place.
  • Referral to State Nursing Board: Inappropriately prescribing controlled substances to one or more patients.

II.  ZPIC Referrals to State Licensing Boards Based on Data Mining:

It is important to keep in mind that ZPIC referrals to state licensure boards are not limited to merely those situations where the contractor has alleged that a provider has engaged in improper or unprofessional conduct.   We have seen at least one referral based solely on conclusions reached through data mining, where no actual audit of the provider’s medical records had been conducted.

III.  ZPIC Referrals to Professional Societies:        

Historically, professional societies have only infrequently taken disciplinary actions against their members.  When actions have been taken they have often been in response to adverse action taken by state licensure boards. That may no longer be the case in the future.  ZPICs are required under Sec. 4.18.2 of the MPIM to refer instances of apparent unethical / improper practices or unprofessional conduct to professional societies for possible disciplinary action.

IV.  ZPIC Referrals Based on Evidence of Potential Poor Quality Care or Potential Patient Harm:

Under Chapter 4, Sec., of the MPIM, ZPICs are required to maintain effective lines of communication with other entities. As this section provides:

“The ZPIC shall establish and maintain formal and informal communication with state survey agencies, the OIG, the DOJ, state Medicaid agency, other Medicare contractors, other ZPICs, and other organizations as applicable to determine information that is available and that should be exchanged to enhance program integrity activities.

If the ZPIC identifies a potential quality problem with a provider or practitioner in its area, it shall refer such cases to the appropriate entity, be it the QIO, state medical board, state licensing agency, etc. Any provider-specific information shall be handled as confidential information.” (emphasis added).

Sec. 4.18.3 of the MPIM further requires that ZPICs make a referral to the Medicare Quality Improvement Organization (QIO) if a situation involves potential patient harm.  As the regulations state:

If potential patient harm is discovered during the course of screening a lead or through the investigation process, the ZPIC shall refer those instances to the QIO, state medical board, or state licensing agency. In addition to making the appropriate referrals, the ZPIC shall notify the COR and IAG BFL within two (2) business days once the potential patient harm issue is discovered. (emphasis added).

If the ZPIC refers a provider to the State licensing agency or medical society (i.e., those referrals that need immediate response from the State licensing agency), the ZPIC shall also send a copy of the referral to the QIO.” (emphasis added).

V.  NBI MEDIC Referrals to State Licensure Boards:

Since 2016, both state and federal authorities have been aggressively reviewing the care and treatment practices of physicians, nurse practitioners, physician assistants, dentists and others who are alleged to have engaged in improper opioid and high-risk drug prescription practices.  To accomplish this task, CMS awarded a nationwide contract known as the “National Benefit Integrity Medicare Drug Integrity Contract” (NBI MEDIC) to “Health Integrity, LLC.”  As you may recall, Health Integrity also serves as ZPIC for Zone 4.

In its role as NBI MEDIC, Health Integrity is responsible for monitoring and auditing the prescription of opioids under the Medicare Part D program.  As in its ZPIC capacity, Health Integrity is required to employ predictive analytics and other investigative tools in order to identify physicians, nurse practitioners and others whose opioid prescriptive practices appear to be aberrant.  When this occurs, two actions are normally taken:  First, a referral is typically made to the prescriber’s state licensing authorities so that they may conduct a review of the provider’s practices.  Second, the NBI MEDIC may make a referral to the responsible ZPIC so that an medical review of the provider’s Medicare claims can be conducted.

VI.  ZPIC Referrals to OIG for “Exclusion” Consideration:

More than likely, most of you had no idea that CMS has tasked ZPICs with making referrals of unethical / improper practices or unprofessional conduct to state regulatory bodies and private, professional societies.  If that’s the case, you will likely find Paul Weidenfeld’s article entitled Is Your Practice Being Audited by a ZPIC? Did You Know it Can Lead to an OIG Exclusion?” fascinating.  Believe it or not, CMS requires ZPICs to make appropriate referrals to the Office of Inspector General (OIG) if it believes that “exclusion” action is warranted.  Check out Paul’s article at www.exclusionscreening.com

VII.  Conclusion:

Regrettably, the number of complaints filed with state licensure boards will likely continue to increase as long as CMS contractors are required under the terms of their contract to make referrals for the types of conduct outlined above.  If you are facing a board complaint or potential disciplinary action by a professional society, it is essential that you understand the basis for the underlying referral by the UPIC or ZPIC.  We have identified a number of instances where the ZPIC basis of referral was either factually incorrect or was based on a flawed interpretation of the data.  Your ability to effectively respond to the basis for the referral can greatly impact the ultimate direction of a board action.

Robert W. Liles, JD, MBA, MS, is Managing Partner at the law firm Liles Parker.  He represents health care providers around the country in UPIC and ZPIC audits, and State Medical Board and State Nursing Board actions.  For a complimentary consultation, please give him a call.  He can be reached at: (202) 298-8750.

[1] As set out in Chapter 4, Sec. 4.1 of the Medicare Program Integrity Manual (MPIM), all references to ZPICs also apply to Unified Program Integrity Contractors (UPICs).


Pain Management Prescribing Practices and Audits.

August 16, 2017 by  
Filed under Health Law Articles

(August 16, 2017): Earlier this summer, the U.S. Department of Justice (DOJ) executed its most extensive “health care fraud takedown” to date, initially arresting 412 licensed healthcare providers, doctors, and nurses alleged to have engaged in fraudulent conduct (additional arrests were made in the days following the takedown).  As Attorney General Jeff Sessions stated at that time, We are sending a clear message to criminals across this country: We will find you. We will bring you to justice. And you will pay a very high price for what you have done.” Of the 412 individuals arrested, approximately 120 of the defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. The charges aggressively targeted pain management providers billing Medicare, Medicaid, and TRICARE for medically unnecessary prescription drugs and compounded medications that often were never even purchased and / or distributed to beneficiaries. Many of the charges brought against pain management professionals have alleged that these individuals have contributed to the nation’s current opioid epidemic through the unlawful distribution of opioids and other prescription narcotics.

I.  Pain Management Providers Around the Country are Being Targeted by DOJ:

To be clear, there is, in fact, a significant problem with prescription opioid abuse and diversion.  In the first six months of 2017, there have been a number of federal enforcement cases brought against pain management physicians, practices and clinics for a wide variety of opioid-related violations.  Several of these include:

February 2017:  In this Pennsylvania case, a pain management physician pleaded guilty to selling prescriptions for controlled substances in exchange for cash payments.  The government further alleged that many of the customers who went to the clinic were drug dealers or addicts who sold the medications they were prescribed.  It was further alleged that neither the defendant nor the other pain management professionals charged in the case conducted medical or mental health examinations as required by law. The government alleged that during the period that this conspiracy took place, the defendant physician illegally sold over $5 million worth of controlled substances.

March 2017:  Two Michigan physicians providing care to pain management patients were found guilty by a jury for allegedly running a “pill mill” supplying narcotics to drug-seeking individuals.  More specifically, the government argued that the evidence showed that the physicians wrote prescriptions for Schedule II narcotics to individuals outside of the course of professional medical practice and for no legitimate purpose.  The government further claimed that the clinic’s physicians prescribed over 1.5 million oxycodone pills and charged customers $250 cash for a 30-day supply of narcotics.

April 2017:  In this Louisiana case, a physician and former co-owner of a pain management practice pleaded guilty to several criminal counts.  The physician was alleged to have run a “pill mill” where he prescribed controlled substances to drug abusers and seekers for a flat fee, even though there no legitimate medical purpose for the prescriptions.

May 2017:  In this Missouri case, a medical resident pleaded guilty to writing over 70 false prescriptions.  The government reported that the defendant wrote opioid prescriptions using the names of six separate persons, despite the fact that he did not have a physician-patient relationship with any of them.

June 2017:  In this New York case, a criminal complaint was unsealed against a family practice physician with no specialized training in pain management, who is alleged to have written more than 14,000 prescriptions, totaling more than 2.2 million oxycodone pills, between approximately 2012 and 2017.  The government has alleged that thousands of illegal prescriptions were written that did not have a legitimate medical purpose.

July 2017:  This Tennessee-based pain management practice settled False Claims Act violations for $312,000.  The pain practice was alleged to have caused the submission of false claims to Medicare and TennCare for medically unnecessary urine drug tests. The settlement also resolves allegations that the [pain practice] caused the submission of false claims to Medicare and TennCare for non-Food & Drug Administration. . . approved pharmaceuticals. . . “The United States’ investigation was initiated after extensive data analysis identified [the practice] as a potential outlier in the provision of urine drug testing to Medicare patients.”

II.  Typical Criminal Violations Charged in Pain Management Diversion and / or Trafficking Cases:

As you will notice, the standard that DOJ repeatedly cites is that a prescription is illegal if it has no “legitimate medical purpose” and / or is outside the “usual course of his professional practice.”  From a practical standpoint, if your prescribing practices fall into one of these categories, DOJ is likely to argue that your practices are below the applicable standard of care and are indicative of a crime. Typical statutory offenses charged in criminal pain management diversion and / or trafficking cases include:

Drug Trafficking (21 U.S.C. §§ 84l).  Typically charged when alleging that a party knowingly and intentionally, prescribed controlled substances, not for a legitimate medical purpose and not in the usual course of professional practice.

Health Care Fraud (18 U.S.C. § 1347).  It is unlawful for any person to knowingly: (1) defraud any health care benefit program; or (2) obtain by false pretenses any money or property owned or under the control of a health care benefit program.   Any person convicted under this statute could be fined and/or imprisoned for a maximum of 10 years.  If the offense resulted in serious bodily injury, then the eligible term of imprisonment is increased to 20 years.  If the offense resulted in death, then the maximum term of imprisonment is increased to life.

Aggravated Identity Theft (18 U.S.C. § 1028A).  Under this statute, whoever during and in relation to any felony enumerated in subsection (c) [predicate offense], . . . knowingly transfers, possesses, or uses without lawful authority a means of identification of another person, shall, in addition to the punishment provided for such [predicate offense], be sentenced to a term of imprisonment of 2 years. . .

Examples of the 60 predicate offenses include:

18 U.S.C. 1001 (relating to false statements or entries generally),

18 U.S.C. 1035 (relating to false statements relating to health care matters),

18 U.S.C. 1347 (relating to health care fraud)

18 U.S.C. 1343 (relating to wire fraud)

18 U.S.C. 1341 (relating to mail fraud)

Obstruction of a Federal Audit (18 U.S.C. § 1516).  It is illegal to intentionally influence, or obstruct a federal auditor in the course of performing his or her official duties relating to any person or organization receiving more than of $100,000 from the federal government in any one-year period.  The penalty for violating this section is the imposition of a fine and/or a maximum of five years imprisonment.  A federal auditor is any person employed for the purpose of conducting an audit or quality assurance inspection on behalf of the federal government.

Obstruction of a Criminal Investigation into Health Care Offenses (18 U.S.C. § 1518).  It is unlawful to prevent, obstruct, or delay the communication of information relating to a federal health care offense to a criminal investigator. Any person convicted for violating this statute could face a fine and / or up to five years imprisonment. 

Prohibition Against Kickbacks (Anti-Kickback Statute) (42 U.S.C. § 1320a–7b(b)). The federal Anti-Kickback Statute makes it a crime to knowingly and willfully offer, pay, solicit, or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to purposefully induce or reward referrals of items or services payable by a federal health care program. Simply put, it is against the law to pay or provide anything of value in an effort to induce referrals or business related to a federal health care program.

III.  What is Behind the Current Crackdown on Improper Opioid Prescribing Practices?

The DOJ currently believes that these pain management medications are a large contributing factor to the ongoing opioid epidemic. Essentially, federal prosecutors contend that opioid medications are being over prescribed and are not being used for the intended purposes, but are ending up on the streets for illegal sale and use. From 1999 to 2015, more than 183,000 patients died from overdoses related to prescription opioids with over 30,000 of those deaths occurring in 2015. Almost half of those deaths from 2015 being from prescription opioid overdose. With nearly 2 million Americans either abusing or dependent on opioids, the Center for Disease Control and Prevention (CDC) took significant steps last year to address the growing problem of opioid abuse in this country. In March 2016, the agency published its CDC Guideline for Prescribing Opioids for Chronic Pain (CDC Guideline). Since the issuance of the CDC Guideline, a growing number of states have either adopted this voluntary guidance or implemented similar restrictions on the prescribing practices of physicians, nurse practitioners and physician assistants in their respective states.

IV.  The Role of Medicare Part D:

Medicare Part D is an optional prescription drug program for Medicare beneficiaries. As of 2016 it covered more than 40 million individuals. While Medicare Part D can be very beneficial when it comes to helping its beneficiaries handle their pain management it can also easily be taken advantage of. While Medicare part D was aimed at providing medication for beneficiaries, it has substantially contributed to the opioid crisis through over prescription as well as the redirection of prescriptions for unlawful and abusive purposes, such as recreational use and the sale of opioids.

The CDC recently posted guidelines for medical prescription providers on how to prescribe opioids to patients with chronic pain. The CDC cautions providers on prescribing patients more than 90mg or more of morphine per day, any higher dosage and the patient becomes at risk for overdose or fatality.  A result of over prescription of opioids was one-third of all beneficiaries receiving at least one prescription opioid through Medicare Part D in 2016. In total, approximately 14 and a half million people received opioid prescriptions, out of a total of 43.6 million Part D beneficiaries. These 14.4 million prescriptions totaled $4.1 billion for nearly 80 million prescriptions.

Several states such as Alabama and Mississippi have significantly higher proportions of opioid prescriptions for Medicare Part B beneficiaries, 46% and 45% respectively. Approximately 10% of Medicare Part B recipients received one or more opioids on a regular basis, with 5 million beneficiaries receiving opioids for three months or more in 2016.  More than half a million beneficiaries received high amounts of opioids through Part D in 2016. All of these beneficiaries received a morphine equivalent dose (MED) of greater than 120mg per day for at least 3 months[1].

V.  Both Patients and Legitimate Pain Management Professionals are in a No-Win Situation:

From a patient standpoint, many individuals suffering from chronic pain report that it’s a bad time to be in pain.  Patients suffering from chronic pain are increasingly finding it more difficult to obtain care and treatment.  A recent survey by the Pain News Network and International Pain Foundation found that more than 90% of the respondents did not think that the 2016 CDC Guideline improved the quality of pain care in the United States.  Additionally, more than 80% reported that their level of pain had increased and their quality of life had decreased over the past year since the CDC Guideline had been issued. These increases in patient dissatisfaction are due, in large part, to the growing reluctance of non-specialists to prescribe opioids and other controlled substances. This is a result of the ever-increasing level of scrutiny that is being given to a physician’s opioid and controlled substance prescribing practices. Patients suffering from chronic pain are now often referred to pain management clinics and centers for specialized pain care and toxicology monitoring.

Unfortunately, legitimate pain management physicians, practices and clinics around the country are now finding themselves at the center of an ongoing effort by state and federal regulators to address opioid dependence, diversion and abuse.  As they diligently work to alleviate the painful conditions of their patients they must also worry about their medical decision-making and opioid prescribing practices being second-guessed by well-meaning federal and state investigators, regulators and prosecutors. Regretably, legitimate pain management professionals, practices and clinics are inadvertently being swept-up in the government’s current enforcement efforts targeting opioid abuse and diversion.

VI.  Conclusion:

While the government’s interest in opioid and controlled substance prescribing practices isn’t new, there is no question that this area is currently the subject of heightened enforcement.  The number of opioid-related administrative investigations initiated by state medical and  dental boards has significantly grown over the last year.  During this same period, the opioid prescribing practices of physicians, nurse practitioners, physician assistants, podiatrists and dentists have been carefully assessed (primarily through data mining) by state and federal law enforcement in an effort to identify and prosecute providers engaging in illegal conduct.  Now, more than ever, it is essential that you review your care and treatment practices to ensure that your documentation accurately reflects the medical necessity of any pain medications prescribed.  Despite the fact that the CDC March 2016 guidance is “voluntary,” we recommend that pain management professionals review their prescribing practices and verify whether their particular practices are consistent with the recommendations set out in the CDC’s March 2016 guidance.  Additionally, you should ensure that your opioid prescribing practices also comply with any requirements established by your state legislature and any state licensing authorities.

Pain Management

[1] United States of America. U.S. Department of Health & Human Services. Office of Inspector General. HHS OIG Data Brief OEI-02-17-00250.

Are your opioid prescribing practices currently being investigated or audited by the state medical board, state AG’s office, DEA or DOJ?  If so, give us a call.  Liles Parker attorneys represent health care providers around the country in regulatory audits and investigations.  For a free consultation, please call Robert: 1 (800) 475-1906.

NBI MEDIC Referrals to Boards, OIG and DOJ are Here!

June 28, 2017 by  
Filed under Health Law Articles

(June 28, 2017):  The Medicare program is enormous.  As of 2016, more than 56 million individuals participated in the program, with more than 10,000 additional individuals enrolling in the program each day.  The Centers for Medicare and Medicaid Services (CMS) is the agency responsible for managing this costly program.  To direct this $640 billion program, CMS has engaged a number of private companies to handle practically every aspect of the administrative claims submission, payment and audit process.  Several companies have dominated this industry, one of which is Health Integrity, LLC (Health Integrity).  Established in 2006, Health Integrity has been awarded three major categories of contracts by CMS.  In addition to serving a Zone Program Integrity Contractor (ZPIC) responsible for auditing Medicare Part B claims[1], Health Integrity also serves as the Medicaid Integrity Contractor (MIC) in one or more jurisdictions arounds the country.  Finally, since 2009, Health Integrity has served as the only National Benefit Integrity Medicare Drug Integrity Contract (NBI MEDIC).

I.  Impact of the Opioid Crisis on Health Integrity’s Activities (as NBI MEDIC):

As NBI MEDIC, Health Integrity is responsible for identifying and investigating incidents of fraud, waste and abuse in the Medicare Part C (Medicare Advantage) and Medicare Part D (Outpatient Prescription Drug) programs.  In this capacity, Health Integrity has established close working relationships with federal and state law enforcement and regulatory agencies around the country.

Over the last two years, Health Integrity’s benefit integrity activities as NBI MEDIC have effectively been on overdrive.  This is due, in large part, to the government’s national initiative to address the current opioid epidemic that has become endemic in areas around the country and has disproportionately impacted Medicare and Medicaid beneficiaries. In one report published by the Office of Inspector General (OIG) in 2016, the agency found that 30% of Medicare of beneficiaries have at least one prescription for an opioid.  Moreover, OIG concluded that a median number of 5 prescriptions for opioids were issued per Medicare beneficiaries over the period of a year.[2]  Over the last year, a number of federal and state legislature and regulatory bodies have taken affirmative steps to better protect patients from opioid abuse and the public from the illegal diversion of opioids and other controlled substances.[3]  In addition to their day-to-day analytics work to identify health care providers with aberrant opioid and / or other controlled substance prescribing practices, Health Integrity is also actively involved in a number of specific projects targeting specific categories of prescribers and / or claims.  These projects include:

The Quarterly Pharmacy Risk Assessment Project: In this project Health Integrity is targeting pharmacies that appear to be engaged in illegal or improper prescribing activities.  Two of the factors examined by Health Integrity involved schedule II controlled substances. Potential wrongdoers are either audited or referred to law enforcement for further investigation.

The Prescriber Risk Assessment Project: In this project, Health Integrity is comparing the controlled substances prescribing practices of physician, nurse practitioners, physician assistants, podiatrists and dentists against those their peers within their primary specialty and location (by state).  If a licensed prescriber is identified as a potential target, Health Integrity may initiate a claims audits of the opioid prescriptions at issue to see whether the orders were medically necessary and appropriate. If evidence of fraud, waste or abuse is identified, Health Integrity may also make referral to federal and state law enforcement for further investigation and prosecution, if justified.  Finally, Health Integrity may also file a complaint against the licensee with the licensee’s state licensing board.  It is this final category of referrals where we have recently been seeing an increase in enforcement activity.

The Quarterly Pharmacy Spike Analysis Project. Health Integrity uses this project to identify “spikes” in the billing patterns of pharmacies from one quarter to another with respect to schedule II through IV controlled substances. While this project is focused on pharmacies, it is important to keep in mind that every one of the prescriptions filled was originally filled by qualified prescriber.  After auditing a pharmacy identified under this project, Health Integrity will automatically turn to the physicians and other prescribers who are alleged to have ordered the scripts to be filled in the first place.

The Quarterly Prescriber Spike Analysis Project. In this project, Health Integrity analyses available databases to identify any billing trends of nationwide prescribers that appear to be unusual of controlled substances, human immunodeficiency virus medications, and antipsychotics. Health integrity also looks for unusual spikes in the quantity of schedule III-V control substances prescribed by qualified physicians, nurse practitioners, physician assistants, podiatrists and dentists.  As a participant in the Medicare program, you are REQUIRED to have an effective Compliance Program in place.  One of the seven essential elements of your Compliance Program is that you are supposed to be monitoring and reviewing claims submitted for coverage and payment. An important component if this internal monitoring process should be an ongoing comparison of your provider’s prescribing practices. If there are spikes, you need to be prepared to explain how and / or why they occurred.

The Transmucosal Immediate Release Fentanyl (TIRF) Drug Project. This project involves the identification of improper payments by Health Integrity that have made by Prescription Drug Plans (PDP) and Medicare Advantage-Prescription Drug (MA-PD) Plans for unapproved uses of these drugs. Health Integrity is also examining whether prescriptions for TIRF have been medically necessary and appropriate. TIRF drugs are typically used by licensed prescribers to achieve pain relief in cancer patients.  We recommend that you carefully monitor your staff prescription practices when it comes to TIRF drugs.  Are the prescriptions related to the care of a cancer patient?  If not, is the medical necessity of this drug fully documented.

The Pill Mill Doctor Project. Health Integrity participated in this project to identify prescribers with a high risk of fraud, waste, and abuse in prescribing schedule II-IV controlled substances. Essentially, Health Integrity is seeking to identify and either audit or refer any prescribers who might be engaged in “pill mill” related prescribing practices.  Over the last few months, both federal and state law enforcement agencies have been actively investigating and prosecuting physicians and others who appear to be engaging in “pill mill” type prescribing practices.

The Trio Prescriber Project. This project is used by Health Integrity to focus on identifying licensed health care providers who prescribe the following three medications to a Medicare beneficiary: (1) an Opioid, (2) a Benzodiazepine, and (3) the Muscle Relaxant carisoprodol. This particular combination of medications is a popular “drug cocktail” used by individuals to heighten the effects of the opioid.  With access to the various CMS claims databases, Health Integrity has been quite effective at determining which prescribers AND beneficiaries may be engaged in these drug cocktail practices.

The Compounding Pharmacy Project. Health Integrity is using data analytics to identify high-rick pharmacies that appear to be billing Medicare for compounded prescription drugs. In 2017 alone, DOJ has prosecuted a number of compounding pharmacies and associated prescribers for various violations of health care fraud and abuse laws.  Are you a licensed physician, nurse practitioner or other qualified prescriber who writes scripts for compounded drugs?  If so, we recommend that you immediately contact your health law counsel to discuss the business relationship between the parties and whether the compounded drug is truly medically necessary.

The Brand Name Drug Project. In its role as NBI MEDIC, Health Integrity is using this audit project to identify abnormal or aberrant Medicare Part D billing practices by independent pharmacies for brand-name prescription drugs, including opioids sold under brand names, such as OxyContin®, Percocet®, Vicodin®, Percodan®, Tylox®, and Demerol®.  Once again, Health Integrity’s initial audit may focus on the independent pharmacy but a collateral audit or referral to law enforcement will likely be made to examine the prescribing practices of the physician or other qualified prescriber.  Why were only expensive, brand name drugs ordered by the prescribing physician?  Why hasn’t the prescriber ordered a drug that is therapeutically equivalent to the expensive name brand drug?  If a referral to law enforcement is made, they will also likely examine the prescriber’s business relationship, if any, with the pharmaceutical manufacturer of the brand name drug(s).

II. How Are NBI MEDIC Investigations Initiated?

As the company President of Health Integrity, Susan Love, testified late last year before the U.S. Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Investigations, the NBI MEDIC performs both “reactive” and “proactive” benefit integrity enforcement audits and investigations.

  • Reactive Audits. The NBI MEDIC’s Fraud Hotline provides one example of the reactive mechanisms that lead to audits and investigations handled by Health Integrity. From 2013-2015, the NBI MEDIC received more than 37,000 calls to their toll-free Fraud Hotline alleging fraud, waste and abuse of the Medicare Part C and Part D programs. The NBI MEDIC also receives complaints by fax, mail and encrypted e-mail through the contractor’s website.  After culling through these complaints, the NBI MEDIC identified more than 24,000 actionable complaints that could be pursued.
  • Proactive Audits. In September 2013, CMS instructed the NBI MEDIC to perform more proactive audits using data analytics to identify and investigate possible violations.  This resulted in an increase in referrals of 520% to law enforcement.

III.  What Actions Can an NBI MEDIC Take After Conducting an Audit?

Should a Health Integrity auditor conclude that a licensed prescriber’s utilization practices of opioids and / or controlled substances are different than those of those their peers, there is significant likelihood that one or more of the following actions will be taken by the NBI MEDIC:

  • Make a Referral to Law Enforcement. Over the past few years, the NBI MEDIC initiated investigations have resulted in more than 1000 referrals to law enforcement.  These referrals are the result of both reactive and proactive investigations conducted by the NBI MEDIC.
  • Conduct a Claims Audit. Health Integrity (as NBI MEDIC) will conduct an audit of your prescribing practices to determine if your prescriptions for opioids and other controlled substances were medically necessary and appropriate.
  • Recommend that Your Medicare Number be Revoked. Notably, since August 2015, the NBI MEDIC has recommended the revocation of Medicare enrollment for 169 providers. This administrative sanction has become more frequent in 2016 and 2017.
  • File a Complaint with Your State Licensing Board. Health Integrity will (as NBI MEDIC) file a complaint against your license with the state. Depending on the nature of your profession, Health Integrity will either file a complaint with the State Medical Board (If you are a physician, osteopath or physician assistant), with the State Nursing Board (if you are a nurse practitioner), with the State Board of Podiatric Examiners (if you are a podiatrist), or with the State Board of Dentistry (if you are a dentist or oral surgeon). These complaints are due, in large part, due to the opioid epidemic currently sweeping the nation. The NBI MEDIC is aggressively monitoring and auditing the prescription of opioids and other controlled substances to Medicare beneficiaries under the Part D program. These audits are typically initiated by NBI MEDIC auditors and analysts who utilize “data mining” to identify potential physician, nurse practitioner and physician assistant targets that may be engaged in prescribing practices that are different from those of prescribers that the NBI MEDIC perceives to be their peers.

IV.  How Can You Reduce Your Level of Regulatory Risk?

As reflected above, if you or your practice is targeted, the range of actions that the NBI MEDIC may take widely varies, depending the contractor’s findings.  Unfortunately, since data mining is one of the primary ways that a potential target is identified for review, the first time that you know find out that your prescribing practices are being assessed could be when you receive notice of an investigation by law enforcement or that a complaint has been filed against your with the state licensing board. This is often the case, regardless of whether the investigating contractor is a Unified Program Integrity Contractor  (UPIC), ZPIC or NBI MEDIC.

How can you reduce your level of regulatory audit risk? As a first step, if you have not already done so, you need to develop and implement an effective Compliance Program.[4]  Assuming that you already have such a program in place, take the time now, before you have a problem,  to assess your prescribing, care and treatment practices.  Are they compliant with applicable standards of care and any state law restrictions that may restrict the time period that controlled substances may be prescribed in non-cancer / non-chronic pain cases?  Does your documentation meet applicable requirements?  Have you documented that the care and treatment decisions made were medically necessary and appropriate?  Were the services properly coded and billed?

NBI MEDICRobert W. Liles is Managing Partner at the health law firm, Liles Parker, PLLC.  With offices in Washington, DC, Houston, TX, McAllen, TX and Baton Rouge, LA, our attorneys represent dental professionals around the country in connection with Medicare / Medicaid audits, Compliance Plan reviews and state peer review actions.  Should you have any questions, please call us for a free consultation.  Robert can be reached at: 1 (800) 475-1906.  

[1] Health Integrity serves as the ZPIC for Texas, Oklahoma, Colorado and Oklahoma.

[2] HHS OIG. “High Part D Spending on Opioids and Substantial Growth in Compounded Drugs Raise Concerns” (OEI-02-16-00290). 6/21/2016. http://oig.hhs.gov/oei/reports/oei-02-16-00290.asp

[3] In March 2016, the Centers for Disease Control and Prevention (CDC) issued its “CDC Guideline for Prescribing Opioids for Chronic Pain – United States, 2016” .  This guideline was intended to provide qualified prescribers of opioids with recommendations designed to reduce opioid-related overdoses and deaths. Although the CDC’s guidelines are voluntary, several states have taken legislative or regulatory action to adopt a number of the recommendations set out in the CDC’s March 2016 guidance.  Examples of these states include Indiana, Ohio, Kentucky and Maryland. Each of these states have adopted, to some degree, the CDC’s recommendations.

[4] The term “corporate compliance program” refers to an initiative that evolved from the Federal Sentencing Guidelines, which were adopted under the Sentencing Reform Act of 1984 (28 U.S.C. § 994).  As set out in the U.S. Sentencing Commission Guidelines, Sentencing for Organizations, lesser criminal sanctions for companies have been specifically recommended for companies that have effective compliance plans in operation. Guidelines for benefiting from a Compliance Plan have been set out as early as 1991.  (56 Fed. Reg. 22762).  As far as civil sanctions are concerned, the Department of Justice’s Civil Division has implemented a similar philosophy of treating defendants more leniently if they have endeavored to implement and follow an effective compliance program.  Finally, an effective compliance program can significantly reduce non-governmental civil exposure by identifying potential practices that may pose litigation risk and taking action to reduce that risk.

UPIC / ZPIC / Health Integrity Opioid Audits and Audits of Other High Risk Drugs.

June 25, 2017 by  
Filed under Health Law Articles

(June 23, 2017):  Opioid audits of the prescribing practices of pain management physicians are on the rise. As the Department of Health and Human Services (HHS), Office of Inspector General (OIG), noted in its report “High Part D Spending o Opioids and Substantial Growth in Compounded Drugs Raise Concerns,” 30% of Medicare beneficiaries have at least one prescription for opioids and the median number of prescriptions received per beneficiary each year is five.[1] Unfortunately, opioid use disorder (addiction) and diversion problems are widespread around the country. Opioid abuse is especially prevalent among Medicare and Medicaid beneficiaries. It has been estimated that 6 out of every 1000 Medicare beneficiaries suffer from opioid use disorder.[2]  The problem is even worse with Medicaid beneficiaries where it is estimated that 8.7 out of every 1000 suffer from opioid use disorder.[3]  The addiction levels among Medicaid patients are more than 10 times as high as patients covered by private insurance.[4]

In light of the above, both federal and state regulators are aggressively investigating and taking administrative, civil and / or criminal action against physicians and other prescribers around the country who are alleged to have engaged in improper opioid and high-risk drug prescription practices when caring for Medicare and / or Medicaid patients.  While the Centers for Medicare and Medicaid Services (CMS) has engaged a number of private companies to conduct program integrity functions, one of the primary organizations that has been awarded these contracts is Health Integrity, LLC (Health Integrity).[5]

I.  Overview of Health Integrity NBI MEDIC, ZPIC and MIC Responsibilities:

The three primary program integrity contracts currently handled by Health Integrity include the following:

  • National Benefit Integrity Medicare Drug Integrity Contract (NBI MEDIC). As the NBI MEDIC, Health Integrity is responsible for investigating and responding to allegations of fraud, waste, and abuse around the country in the Medicare Part C (Medicare Advantage) and Medicare Part D (Outpatient Prescription Drug) programs. In large part due to the opioid epidemic currently sweeping the nation, Health Integrity is aggressively monitoring and auditing the prescription of opioids to Medicare beneficiaries under the Part D program. Opioid audits are typically initiated by Health Integrity auditors and analysts using predictive analytics and other investigative tools to identify potential physicians, nurse practitioners and physician assistants that may be engaged in  opioid prescribing practices that could lead to the abuse of diversion of Medicare Part D drugs.

  • Zone Program Integrity Program Contractor (ZPIC). As a ZPIC, Health Integrity is responsible for reviewing Medicare fee-for-service claims for the states of Texas, Colorado Oklahoma and New Mexico.  In this capacity, Health Integrity is required to employ sophisticated data mining and traditional investigative techniques (e.g. analyses of medical records, patient interviews, follow-up to hotline complaints, referrals from state and federal agencies) to identify potential targets for audit and investigation. Depending on Health Integrity’s findings, a health care provider’s case may be handled as an administrative overpayment, referred to CMS or the Office of Inspector General (OIG) for agency action, OR referred to law enforcement (e.g. U.S. Department of Justice (DOJ) or the appropriate Medicaid Fraud Control Unit (MFCU) for possible criminal enforcement.

  • Medicaid Integrity Contractor (Audit MIC).  As Audit MIC, Health Integrity has been particularly aggressive in conducting auditing specific categories of Medicaid claims that have been associated with improper or abusing billing patterns. Although Medicaid dental claims are ongoing favorite target of MIC auditors around the country, over the past year we have seen a significant increase in the number of opioid audits focusing on a physician’s prescribing practices. 

Collectively, Health Integrity’s efforts have proven effective in the detection and audit of potentially improper prescription drug practices by physicians, nurse practitioners and physician assistants that participate in the Medicare and Medicaid programs.  A first step toward consolidation began in May 2016 with the award of seven Unified Program Integrity Contracts (UPICs) to private company applicants, one of which is Health Integrity.  UPICs are intended to replace ZPICs, legacy Program Integrity Contractors (PSCs), the Medicare-Medicaid data match program (Medi-Medi) and MICs.

This article focuses on several of the prescriber-targeted programs that Health Integrity is currently using to identify Medicare and Medicaid providers for audit or referral to law enforcement.

II.  Opioid Audits / Prescription Drug Audits by Health Integrity:

Health Integrity and other program integrity contractors are dedicating a significant portion of their resources to the audit and investigation of controlled substances and other prescription drugs that the government contends may be subject to abuse or diversion. Several of the projects currently used by Health Integrity to detect waste, fraud, abuse or diversion include:

  • Prescriber Risk Assessment Project This project analyzes the prescribing practices of physicians, dentists, nurse practitioners and physician assistants Schedule II controlled substances (or opioids) prescription drug event record count and Schedule II controlled substances 30-day equivalents. Health Integrity auditors and analysts take this information and compare the prescribing practices of a provider with that of his or her peers. Health Integrity also factors in a prescriber’s primary specialty and geographical location. With this data, Health Integrity is able to readily identify outliers for audit targeting purposes.

  • Quarterly Prescriber Spike Analysis Project Health Integrity auditors and analysts utilize this project to detect unusual billing trends of nationwide prescribers of Schedule II, III, IV and V controlled substances, human immunodeficiency virus medications, and antipsychotics. Simply put, Health Integrity uses this program identify prescribers who have “unusual spikes in billing.”

  • Quarterly Drug Trend Analysis Project Health Integrity’s participation in this project has better enabled the contractor detect and address sudden increases and emerging issues that may arise from one period to another. This program is primarily utilized analyze trends in the utilization of Schedule II, III, IV and IV controlled substances.

  • Transmucosal Immediate Release Fentanyl (TIRF) Drug Project This form of Fentanyl is often used in the management of breakthrough pain in adult cancer patients. In an effort to guard against the unapproved use of this drug, Health Integrity carefully monitors its utilization of this drug to identify improper payments made by Prescription Drug Plans (PDP) and Medicare Advantage-Prescription Drug (MA-PD) Plans.

  • Pill Mill Doctor Project Under this project, Health Integrity uses data analytics to identify prescribers who may be engaged in the prescription of Schedule II-IV controlled substances without a legitimate medical purpose. Prescribers engaged in this type of activity are often referred to as “Pill Mill” doctors. Health Integrity carefully investigates high-risk leads and refers them to law enforcement and plan sponsors for further action.

  • Trio Prescriber Project Health Integrity’s participation in this project is intended to allow the contractor to readily identify providers that prescribe all three of the following to a Medicare or Medicaid beneficiary: (1) an opioid, (2) a benzodiazepine, and (3) the muscle relaxant carisoprodol. Notably, this “cocktail” of drug is often abused due to the fact that both benzodiazepines and carisoprodol can heighten or enhance the effect of the third component of the cocktail — opioids.

III.   What Do These Opioid Audits Mean for the Typical Pain Management Physician?

It is important to keep in mind that all of the projects discussed above share one major weakness – they completely rely on data analytics.  As a result, Health Integrity has based its audit targeting efforts solely on data, without any knowledge of whether the prescribing decision was medically necessary and appropriate or whether the patient’s medical records support the care and treatment decisions made by the physician.

Do you have an effective Compliance Program in place?  In the absence of an active internal auditing and monitoring program, if an audit is initiated by Health Integrity, there is a high likelihood that the contractor will find problems with your documentation.  Unfortunately, we have found this to be the case regardless of whether a practice was still using paper records or had transitioned over to an Electronic Health Records (EHR) system.  Therefore, if you or the physicians in your pain practice regularly prescribe Schedule II through V controlled substances, human immunodeficiency virus medications, antipsychotics, Transmucosal Immediate Release Fentanyl, or the trio cocktail described above,  there is a good chance that those utilization practices are subject to review by Health Integrity or another CMS program integrity contractor.

IV.  Conclusion:

Pain management physicians are under enormous scrutiny by both regulators and licensing authorities around the country.  If you or your practice is audited, we recommend you immediately contact a qualified health lawyer to assist you in navigating the complexities of the audit process.  Every case is different, and your ability to prevail in an audit will depend, in large part on the quality of your medical documentation.  Nevertheless, there are steps you can take early in the audit that can greatly increase the likelihood that Health Integrity or another CMS program integrity contractor will find that your documentation fully meets applicable requirements and the care provided qualifies for coverage and payment.

Robert W. Liles represents pain management physicians in Opioid Audits by ZPICs, UPICs, and state licensing boards. Robert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at Liles Parker, Attorneys and Counselors at Law.  The health law firm Liles Parker represents pain management physicians and practices around the country in connection with ZPIC / UPIC audits.  Opioid audits conducted by ZPICs / UPICs have been especially frequent in 2017.  For a free consultation about your case, please give us a call:  1 (800) 475-1906.

[1] HHS OIG. “High Part D Spending on Opioids and Substantial Growth in Compounded Drugs Raise Concerns” (OEI-02-16-00290). 6/21/2016. http://oig.hhs.gov/oei/reports/oei-02-16-00290.asp

[2] Lembke A, Chen J. Use of Opioid Agonist Therapy for Medicare Patients in 2013. JAMA Psychiatry. 2016; 73(9): 990-992.

[3] Ghate SR, Haroutiunian S, Winslow R, McAdam-Marx C. Cost and comorbidities associated with opioid abuse in managed care and Medicaid patients in the United States: a comparison of two recently published studies. Journal of Pain & Palliative Care Pharmacotherapy. 2010 Sep; 24(3): 251-8.

[4] HHS.gov News. (2016).HHS takes strong steps to address opioid-drug related overdose, death and dependence, Retrieved from, http://www.hhs.gov/about/news/2015/03/26/hhs-takes-strong-steps-to-address-opioid-drug-related-overdose-death-and-dependence.html

[5] http://www.healthintegrity.org/index.html

Home Services (CPT® codes 99341-99350) Billed to Medicare are Actively Being Audited.

June 20, 2017 by  
Filed under Health Law Articles

(June 20, 2017):  As the Department of Health and Human Services (HHS), Office of Inspector General (OIG), signaled in both its 2016 and 2017 Work Plans, the government is concerned about the rapid growth they are seeing in the number of physician home services billed to the Medicare program.  In order to qualify for coverage and patient, physicians providing this type of care are required to document why it is medically necessary to conduct a home visit of a patient in lieu of an office or outpatient visit.  In light of the restrictive nature of these services, the OIG is in the process of conducting assessments of health care organizations that bill the Medicare program for Evaluation & Management (E/M) services provided at a beneficiary’s home, sometimes colloquially referred to as “house calls.”

I.  CPT Codes Used to Bill E/M Home Services in a Patient’s Residence:

Only a limited set of codes may be used to report E/M services rendered to a patient living in their own home or apartment. CPT® codes 99341 through 99350 are used to code for Home Services.  In order to qualify for coverage and payment under the Medicare program, the documentation must show that the E/M guidelines have been met and, in the case of a nonphysician practitioner (NPP), that the home service provided fits within the scope of practice authorized in that state. A description of these codes is outlined below.  Please note, the time estimates indicated are only included in the AMA CPT Codebook descriptions.  They are not included in either the 1995 or 1997 E/M Guidelines.

Home Visit Codes – New Patient:

99341        Low severity problem, 20 min.

99342        Moderate severity problem, 30 min.

99343        Moderate to high severity problem, 45 min.

99344        High severity problem, 60 min.

99345        Patient unstable or significant new problem requiring immediate physician attention, 75 min.

Home Visit Codes – Established Patient:

93347        Self-limited or minor problem, 15 min.

99348        Low to moderate problem, 25 min.

99349        Moderate to high problem, 40 min.

99350        Patient unstable or significant new problem requiring immediate physician attention, 60 min.

These codes cannot be used if the patient resides in a shared living facility or group home.  In order for a home visit to be billed by a physician, the physician must have actually been present in the beneficiary’s home.  These codes only apply in care settings that can be properly coded as Place of Service (POS) 12 (Patient’s Home).  .

II.  Does a Patient Have to be “Homebound” in Order to Qualify for Home Services?

The homebound requirements of Medicare’s home health benefit are not applicable to the provision of home services (as billed under CPT codes 99341 through 99350).  In other words, a Medicare beneficiary does not necessarily have to be “confined to the home” in order for a physician to provide a covered home visit. Nevertheless, the medical record must document why it was medically necessary for the physician or qualified NPP to conduct a home visit in lieu of seeing the patient in the physician’s office or in an outpatient clinic.

III. CMS Contractors are Actively Auditing E/M Services Conducted in a Patient’s Home:

It is important to note that in addition to OIG, several CMS contractors are also actively auditing providers that have billed Medicare for E/M services conducted in a patient’s home.  As with their law enforcement counterparts, these administrative contractors are focusing their audits on whether the home visit was, in fact, medically necessary.  As you will recall, a fundamental Medicare requirement under § 1862(a)(1)(A) of the Social Security Act is that:

“. . . no payment may be made under part A or part B for any expenses incurred for items or services —

(1)(A) which, except for items and services described in a succeeding subparagraph, are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. . .”

With only limited exceptions,[1] the services provided by a physician or an NPP cannot be services that could be provided by a visiting nurse or home health agency under Medicare’s home health benefits program.

Additionally, the decision to provide home visit services must be based on the medical necessity of providing in-home care. Medicare auditors will review the patient’s medical records carefully to determine if, in fact, the patient was unable to come to the physician’s office or an outpatient clinic for care.  Moreover, even if the documentation supports that the patient was unable to come the physician’s office or outpatient clinic on a specific date due to physical or mental disabilities, if the documentation does not support additional in-home visits, they will be denied.

IV.  Know the Coverage Rules and Check Your LCD Covering Home Services:

It is essential that you understand the coverage and billing requirements governing home services as set out in the Medicare Benefit Policy Manual (MBPM) and the Local Coverage Determination (LCD) issued by your Medicare Administrative Contractor (MAC).  LCD requirements may slightly vary from one jurisdiction to another.  Therefore, you need to ensure that your practices fully comply with the LCD requirements applicable to your claims.

When assessing whether one or more home services are medically necessary, Medicare auditors will carefully examine the documentation associated with each visit.  The documentation of each beneficiary encounter must include:

  1. Reason for the encounter and relevant history;
  2. Physical examination findings, and prior diagnostic test results, if applicable;
  3. Assessment, clinical impression, or diagnosis;
  4. Medical plan of care including how the visit will change/changed the care of the beneficiary.

To be clear, a physician or NPP must also obtain a full range of the administrative information normally obtained in an office visit when visiting a new patient.  For instance:

  • Did you provide the patient with necessary HIPAA privacy information? Did the patient complete a “Notice of Privacy Practices” form
  • Have you obtained an executed “Consent for Treatment” form from the patient?
  • Did you obtain a completed intake form for use with new patients?
  • Did you have the patient complete a form outlining their prior medical, family and social history?
  • Did you provide a copy of the organization’s financial policies to the patient?

V. Risk Areas When Billing for Home Services:

If audited, the Medicare reviewer examining your claims will likely deny payment if one of the following reasons for denial is identified:

  1. It appears that one or more of the home services were was conducted for the convenience of the patient, the patient’s family, or the physician, AND the documentation does not reflect that the patient was unable to come to the physician’s office or an outpatient clinic for care.
  2. The medical record does not clearly demonstrate that the patient, his/her family or another clinician involved in the case sought the initial service. In other words, what was the source of this referral?  Was the care solicited by a party representing the home visit organization?
  3. The home services are provided at a frequency that exceeds that which is typically provided in the office and acceptable standards of medical practice.
  4. The home services are not being personally performed by a physician. It is being performed by an NPP but the claim is being billed at the physician’s rate.
  5. The home services are being solely performed by an NPP but only the physician, not the treating NPP, is credentialed with Medicare.
  6.  The specific services provided during the home services could be provided by a visiting nurse or home health agency.

VI.  Conclusion:

Home services (CPT® codes 99341 through 99350) billed to Medicare are currently being audited by multiple CMS contractors around the country and by OIG.  If you receive a request for medical records from a UPIC, ZPIC or MAC, we recommend that you contact a qualified health lawyer as soon as possible.  Depending on the contractor, the records request you receive may be related to a probe audit OR it may require that you send in a larger sample of records, one that the contractor contends is a “statistically relevant sample.”  If that is the case, the contractor will likely seek to extrapolate the error rate found when it reviews your claims records.  It is imperative that you understand the ramifications of such an audit – call your health lawyer immediately.

Robert W. Liles represents health care providers in Medicare home services cases.Robert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at the health law firm Liles Parker, PLLC.  Liles Parker attorneys represent health care providers around the country in connection with Medicare, Medicaid and Private Payor audits.  For a free consultation, please call: 1 (800) 475-1906.

[1] The Medicare Benefit Policy Manual (MBPM), Sec. 60.4, “Services Incident to a Physician’s Service to Homebound Patients Under General Physician Supervision,” outlines very limited circumstances when a physician can provide services that would normally be performed by a home health agency. Should a UPIC, ZPIC or MAC conduct a postpayment audit of these services, their review will focus, in part, on whether a “substantial number of the services provided under this this coverage when they could otherwise have been performed by a home health agency.”



UPIC Audits of Medicare Claims are Underway! Is Your Practice Ready?

June 13, 2017 by  
Filed under Health Law Articles

UPIC Audits(June 12, 2017):  Historically, the Centers for Medicare and Medicaid Services (CMS) has relied on a network of private contractors to handle the program integrity functions for both the Medicare and Medicaid programs.  With respect to Medicare, CMS has utilized Zone Program Integrity Contractors (ZPICs) and to a much lesser extent, Program Safeguard Contractors (PSCs) to perform a wide range of program integrity functions.[1] On the Medicaid side, CMS utilized Medicaid Integrity Contractors (MICs) to handle Medicaid-related program integrity activities.  As discussed below, the Unified Program Integrity Contractor (UPIC) program is now poised to take over all of these responsibilities.

I. Early Historical Background of Fiscal Intermediaries (FIs) and Carriers:

The Medicare and Medicaid program were first enacted into law on July 30, 1965 by President Lyndon B. Johnson. When the programs were subsequently implemented in 1966, the government chose to use private health care payors to process the claims of Medicare beneficiaries.  Private entities were awarded contracts to serve as “Fiscal Intermediaries” and “Carriers.”  Fiscal Intermediaries were responsible for handling Part A claims.  Generally, Part A claims includes hospital care, skilled nursing facility care, non-custodial nursing home care, hospice care and home health services.  In contrast, Carriers were responsible for handling Part B claims.  Unlike Part A, Medicare Part B covers a wide variety of medically necessary outpatient care and treatment services.  It also covered a number of preventative services.  Additionally, Medicare Part B covers certain types of supplies and durable medical equipment.  Since their inception, both Fiscal Intermediaries and Carriers have been responsible for fulfilling a number of Medicare program education, administrative processing and program integrity roles.

II. Early Medicare Program Integrity Funding Efforts:

Prior to 1996, funding for Medicare program integrity activities was included in Medicare’s general administrative budget.  As such, it had to “compete,” so to speak, with all of the claims-related education and processing programs paid for out of Medicare’s general administrative budget.  As you can imagine, this led to a variety of budgetary conflicts and counterproductive competition between programs to obtain a suitable share of available funding.  The General Accounting Office (GAO) issued reports in 1993 and 1995 calling for separate, dedicated funding for Medicare program integrity activities.[2]

III. Passage of HIPAA – Establishment of Program Safeguard Contractors (PSCs):

On August 21, 1996, the Health Insurance Portability and Accountability Act (HIPAA) was enacted into law.  While HIPAA is practically synonymous with “medical privacy” among both lay persons and most health care providers, law enforcement’s view of the statute was quite different.  Under HIPAA, both the Department of Justice (DOJ) and the Department of Health and Human Services (HHS), Office of Inspector General (OIG) received sizeable, recurring funding that was to be used solely for the investigation and prosecution of cases involving health care fraud, waste and abuse.

Among its many provisions, HIPAA also established the Medicare Integrity Program (MIP). The MIP was created in an effort to further enhance the ability of the Health Care Financing Administration (HCFA)[3] to detect and deter fraud, waste and abuse in the Medicare program. As part of MIP, HCFA created the Program Safeguard Contractor (PSC) program.  From a program integrity standpoint, PSCs were a major step forward.  Among their many duties, PSCs were expressly tasked with identifying potential cases of fraud and making referrals to OIG and DOJ, as appropriate.

IV. Enactment of the MMA – Creation of MACs and ZPICs:

The Medicare Modernization Act (MMA) was subsequently signed into law on December 8, 2003.  The MMA greatly simplified the administrative processing of Medicare claims through its implementation of a comprehensive Medicare Fee-For-Service Contracting Reform program.  Under this program, CMS used the competitive bidding process to replace the existing system of Fiscal Intermediaries (responsible for processing Part A claims) and Carriers (responsible for processing Part B claims) with a single administrative claims processing entity known as Medicare Administrative Contractors (MACs).

In addition to completely revising the administrative claims processing scheme (through the creation of MACs), the MMA also directed that newly-established would take over the responsibility for handling Medicare program integrity functions and activities. A total of seven ZPIC zones were created to work with the MAC in their jurisdiction.  Each of these ZPICs have been responsible for performing program integrity functions Medicare Parts A, B, Durable Medical Equipment Prosthetics, Orthotics, and Supplies, Home Health and Hospice and Medicare-Medicaid data matching, in their respective zones.  Notably, Medicare Part C and D program integrity efforts have been assigned to a single national contractor.  The contractor responsible for handling Medicare Part C and Part D claims is known as the Medicare Drug Integrity Contractor (MEDIC).

V. Rise of the UPICs

As detailed in the Comprehensive Medicaid Integrity Plan. Fiscal Years 2014—2018,” issued by CMS, Section 1936(d) of the Social Security Act requires that the HHS Secretary establish a comprehensive plan for ensuring the program integrity of the Medicaid program, on a recurring 5-fiscal year basis.  To this end, CMS developed Unified Program Integrity Contractor (UPIC) program. Unlike earlier program integrity efforts, UPIC contractors have been tasked with conducting Medicare, Medicaid and Medi-Mal investigations and audits of participating health care providers and suppliers in their assigned jurisdictions.

While both ZPICs and MICs are still active around the country, efforts by CMS to consolidate Medicare, Medicaid and Medi-Mal fraud fighting efforts under a single entity are well underway.  Contracts awarding these integrated program integrity responsibilities were awarded to the following UPICs in May 2016:

  • Health Integrity, LLC (Western Jurisdiction)

  • AdvanceMed Corporation (Midwestern Jurisdiction)

  • IntegriGuard, LLC, dba HMS Federal (Indefinite Delivery Indefinite Quantity)

  • Noridian Healthcare Solutions, LLC (Indefinite Delivery Indefinite Quantity)

  • Safeguard Services LLC (North Eastern Jurisdiction)

  • StrategicHealthSolutions, LLC (Indefinite Delivery Indefinite Quantity)

  • TriCenturion, Inc. (Indefinite Delivery Indefinite Quantity)

At first glance, you will likely note that the virtually none of the awardees are new to the business of “program integrity.”  In fact, each of these contractors have previously served as a ZPIC or PSC.  As such, each of these UPIC contractors have years of experience supporting the government’s efforts to identify, deter, prevent, and reduce fraud, waste and abuse.

VI. What is the Practical Difference Between a PSC, ZPIC and UPIC Contractor, if Any?

You may ask, “What is the difference between a PSC, a ZPIC and a UPIC?”  Great question.  With respect to Medicare, the program integrity activities conducted are essentially the same.  In fact, Chapter 4, Section 4.1, of the Medicare Program Integrity Manual (MPIM) expressly states:

 “For this entire chapter, and until such time as all ZPICs are awarded, any reference to ZPICs shall also apply to Program Safeguard Contractors (PSCs), unless otherwise noted. All references to ZPICs shall also apply to Unified Program Integrity Contractor (UPIC) unless otherwise specified in the UPIC [Statement of Work] SOW.”

VII. UPIC Contracts Have Been Awarded and UPIC Audits are Currently Underway:

A number of our clients around the country have already received requests for records from the UPIC handling their jurisdiction.  One UPIC in particular, AdvanceMed, has been especially active over the last six months in sending out audit letters requesting copies of medical records and other documentation which supports the specific claims being assessed.  As discussed below, a careful review of any request that you receive may give an indication of how the case arose and whether the contractor’s review is merely claims focused or also includes an assessment of the provider’s business relationships and practices.

Requests for documents sent by UPICs and their predecessor ZPICs can vary in terms of scope, purpose and due date.  There are several points that should be considered whenever a UPIC or ZPIC request for medical records is received by a Medicare provider:

When must the requested documents be sent to the UPIC or ZPIC? Over the last year, a number of ZPIC requests for documents have required that the documentation must be submitted to the contractor within 15 days. This is really frustrating in light of the fact that under 42 CFR 420.304(b)(1), the contractor is supposed the health care provider 30 days to submit the documents being requested.  Although most ZPICs will readily agree to an extension of time, if they only agree to extend the deadline to 30 days, they really are granting the provider anything, are they?  To date, we have not seen UPIC requests for documents ask that documents be returned to the contractor in less than 30 days.

What types of documents are requested in contractor’s request? Carefully review the nature of the request.  Is the UPIC only seeking administrative and claims-related medical records OR, is the contractor also seeking documentation related to a provider’s business relationships and / or business practices?

  • UPIC Claims Audits:  Most audits (and claims reopenings) by UPICs are generated as a result of data mining.  In these cases, a UPIC often restricts its review efforts (at least initially) to the claims being assessed, along with relevant, associated administrative materials.  Examples of documents sought in these types of review include, but are not limited to:
  1. Copy of claim, if available;
  2. Beneficiary Notice of Liability;
  3. Authorization of Benefits;
  4. Consent for treatment;
  5. Signed HIPAA privacy notification forms;
  6. Signature card including names and signatures of all personnel documenting in the beneficiary’s chart.
  7. Electronic signature policy;
  8. Copy of face sheet with beneficiary contact information;
  9. Signed “Consent for Treatment” authorizing the medical service;
  10. A copy of the beneficiary’s Medicare card;
  11. A legend or list that defines acronyms, symbols or abbreviations used in the medical records;
  12. A completed Advanced Beneficiary Notice (ABN), as appropriate;
  13. Copies of licenses and / or certifications of any personnel documenting in the beneficiary’s medical records. This includes, physicians, nurse practitioners, physician assistants, nurses, and other caregivers that require licensure or certification;
  14. If electronic signatures are used, documentation which shows that the electronic signatures properly authenticated and dated. The UPIC will also typically ask for the provider to show that safeguards are in place to prevent unauthorized access;
  15. Physician orders;
  16. History and physical;
  17. Patient encounter / visit forms;
  18. Physician’s office and Progress Notes;
  19. Consultation reports (if applicable);
  20. Surgical reports (if applicable);
  21. Pathology reports (if applicable);
  22. Pathology reports (if applicable);
  23. Laboratory tests results (if applicable);
  24. Radiology reports (if applicable);
  25. Previous treatments received to include dates, diagnosis for treatment, treatments administered; and the patient’s response to treatment / progress made;
  26. Discharge notes (if applicable);
  27. Any additional medical records or findings that support the claim(s) or service(s) billed;
  • UPIC Requests for Business Records Along with Claims Audit Information:  In addition to the claims-related documents above, if a UPIC also seeks documents related to a provider’s business practices and / or business relationships (i.e. where does the provider get its referrals AND where does the provider send its referrals), there is greater likelihood that other information has been received by the UPIC which suggests that the provider may be engaging in one or more improper business practices. Providers should exercise extreme caution if this type of information is being sought.  To the extent that a UPIC finds evidence that a provider is engaging in wrongdoing, the contractor is required to make a referral to law enforcement (OIG and / or DOJ).  Examples of the business-related documents that may be sought by the UPIC include:
  1. Copies of any leases;
  2. Please provide a listing of all patients seen on the dates of the claims requested in this audit;
  3. Copies of any Medicare Director agreements;
  4. Name of HER software used (if applicable);
  5. Name and contact information for third-party billing company (if utilized);
  6. Please provide a sample of each encounter form utilized in your office;
  7. Copy of patient collections for the period at issue which reflects any copayments and / or deductibles collected from the beneficiary;
  8. Names, addresses and phone numbers and former positions of individuals who are no longer employed by the organization and left within the past three years;
  9. If you are associated with or a member of any assignment account, do you also bill under separate provider numbers? If so, list the numbers and describe the reasons for separate billing;
  10. Copies of any consulting agreements or other business agreements with laboratories, imaging centers or any other entity whose services are billed to Medicare;
  11. List all employees or contracted staff (physicians, therapists, physician assistants, nurses, etc.) who render services and bill Medicare under your provider number;
  12. List associates, partners, employees who bill under their own PTAN numbers;
  13. List associates, partners, employees who bill under your PTAN number;
  14. List the name of the manufacturer, model number and purpose of each piece of diagnostic or treatment equipment in your office, e.g. laboratory equipment, diagnostic equipment (x-ray, MRI, EMG, nerve conduction equipment, cardiac tests, other specialty diagnostic equipment, etc.), physical therapy equipment, chiropractic equipment;

How many Medicare claims are to be audited?  If 10 or less postpayment claims are being reviewed, more than likely the UPIC is conducting a “Probe Sample” of the provider’s claims.  The purpose of the probe sample is to see if there appears to be a potential problem with the provider’s medical necessity, documentation, coding or billing practices.  If few problems are found, the UPIC will likely issue an “Education Letter” to the provider.  If, however, a significant number of errors are identified, the UPIC will likely expand its audit and issue a subsequent request for the supporting documentation associated with 30 or more claims that have already been paid.

If the UPIC’s initial request for records asks for records associated with 30 or more claims (usually billed over a two year period), there is high likelihood that the UPIC have pulled these claims as part of a “Statistically Relevant Sample.”  As such, the UPIC intends to extrapolated the error rate found to the entire universe of claims.

VIII. How Should You Respond if Your Organization Receives a UPIC Records Request?

Should you receive a UPIC records request, we strongly recommend that you immediately contact a qualified health care lawyer.  There are a number of steps you can take at this initial stage in the review that may have a significant impact on whether the UPIC determines that a more in-depth audit is needed.  Moreover, the potential overpayment may also be greatly reduced (depending on the completeness of a provider’s medical records).  Questions?  Give us a call for a free consultation.

UPIC AuditsRobert W. Liles serves as Managing Partner at Liles Parker, Attorneys & Clients at Law.  Our Firm represents health care providers and suppliers around the country in UPIC, ZPIC, RAC and MIC audits.  We also work with providers to develop and implement an effective Compliance Program.  Call Robert for a free consultation.  He can be reached at:  1 (800) 475-1906.

[1] Only a minimum of legacy PSCs are still operating.  Almost all PSC contracts were previously replaced with ZPIC contracts.

[2] GAO, Medicare Spending: Modern Management Strategies Needed to Curb Billions in Unnecessary Payments, GAO/HEHS-95-210 (Washington, D.C.: Sept. 19, 1995); Medicare: Adequate Funding and Better Oversight Needed to Protect Benefit Dollars, GAO/T-HRD-94-59 (Washington, D.C.: Nov. 12, 1993); and Medicare: Funding and Management Problems Result in Unnecessary Expenditures GAO/T-HRD-93-4 (Washington, D.C.: Feb. 17, 1993).

[3] On June 1, 2001, it was announced that the Health Care Financing Administration (HCFA) was being changed to the Centers for Medicare and Medicare Services (CMS).

Chiropractic Audits by Medicare are Increasing!

June 8, 2017 by  
Filed under Featured, Health Law Articles

Chiropractic Audits(June 5, 2017):   Despite the fact that only three treatment services are covered by Medicare, the number of chiropractic audits conducted by the Department of Health Human Services (HHS), Office of Inspector General (OIG), has remained high over the last decade and is anticipated to grow throughout 2017 and 2018.  As you are aware, the Department of Health and Human Services (HHS), Office of Inspector General (OIG), concluded that in Fiscal Year 2016 the Improper Payment Rate for chiropractic services was 46.0%.  Even more alarming is the fact that OIG has found that the Improper Payment Rate of chiropractic Part B Medicare claims was the highest of any Part B service type in both FY 2015 and FY 2016.[1]

I.   Medicare Contractor Audits of Chiropractic Services are Anticipated to Intensify in FY 2017 and FY 2018.

The already-active Medicare audit landscape facing chiropractors is likely the proverbial “calm before the storm.”  When you think of “Medicare Access and CHIP Reauthorization Act of 2015” (MACRA),[2] it’s likely you first think of the statute’s Quality Payment Program provisions which are intended to tie Medicare’s payments to the quality of the medical being provided.   Unfortunately, the documentation of chiropractic services have the unique distinction of being the only Part B service that are expressly address in MACRA.  A detailed discussion of the documentation requirements for chiropractic services under Medicare Part A will be addressed in a separate article.  The bottom line is simple – chiropractors participating in the Medicare Part B program are strongly encouraged to have a comprehensive assessment of their services conducted as soon as possible.  An overview of the current audit landscape is discussed below.

II.   Almost All Medicare Part B Chiropractic Audits Find Documentation Problems.

As set out in OIG’s Improper Payment Report for FY 2016, when examining the 46% of chiropractic services that were denied, the Centers for Medicare and Medicaid Services (CMS) found that  98.4% of the chiropractic denied claims were denied because of NO DOCUMENTATION or INSUFFICIENT DOCUMENTATION.  We believe that this is due, in large part, to the fact that the clinical reviewers employed by a Zone Program Integrity Contractor (ZPIC) or a Medicare Administrative Contractor (MAC) to audit your chiropractic claims (primarily Registered Nurses), aren’t really qualified to conduct these reviews. Sure, they can read Medicare’s guidelines governing medical necessity, coverage, documentation, coding and billing – but that doesn’t mean that they truly understand what constitutes a “subluxation” or that they can recognize that the patient’s condition warrants manual manipulation. The vast majority of medical reviewers examining your claims have little or no substantive knowledge and training in the field of chiropractic care.  Therefore, why are you surprised that the ZPIC reviewer is now alleging that 80$ – 100% of the claims you have billed to Medicare do not qualify for coverage or payment?

III.   Medicare’s Position with Respect to “Medical Necessity.”

Under Medicare, the definition of “medical necessity” is generally defined under Title XVIII of the Social Security Act, Section 1862(a)(1)(a):  As the statute provides:

“No payment may be made under Part A or Part B for expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”

Despite the fact that chiropractors are recognized as physicians by Medicare, CMS has steadfastly refused to cover most of the traditional care and treatment services that are offered by licensed chiropractors around the country.  Medicare Part B only covers treatment by means of manual manipulation of the spine that is used to correct a subluxation (i.e. spinal manipulation). Moreover, the coverage policies developed by CMS and its contractors make it clear that the agency has restricted the definition of what is considered to be “medically necessary” chiropractic care to only include spinal manipulation services that are active or corrective in nature.

IV.   Maintenance Therapy is Not Covered by Medicare.

CMS has essentially taken the position that maintenance therapy does not qualify as medically necessary care and therefore does not qualify for coverage and payment.   As set out in the Medicare Benefit Policy Manual, Section 30.5.B:

Under the Medicare program, Chiropractic maintenance therapy is not considered to be medically reasonable or necessary, and is therefore not payable. Maintenance therapy is defined as a treatment plan that seeks to prevent disease, promote health, and prolong and enhance the quality of life; or therapy that is performed to maintain or prevent deterioration of a chronic condition. When further clinical improvement cannot reasonably be expected from continuous ongoing care, and the chiropractic treatment becomes supportive rather than corrective in nature, the treatment is then considered maintenance therapy.  (emphasis added).

The fact that chiropractic care used to “prevent deterioration of a chronic condition” remains non-covered is especially frustrating in light of the 2013 settlement in the case Jimmo v. Sebelius.   Earlier this year, the court approved a Corrective Statement that is to be used by CMS to affirmatively discontinue the use of an “Improvement Standard” for Medicare coverage.  Unfortunately, chiropractors and dentists were specifically carved out of this new rule by CMS.  As CMS noted in its January 14, 2014 guidance intended to clarify the agency’s new position after the settlement in Jimmo v. Sebelius, Pub. 100-02 Medicare Benefit Policy.  Transmittal 179 expressly provides that:

Chiropractors and doctors of dental surgery or dental medicine are not considered physicians for therapy services and may neither refer patients for rehabilitation therapy services nor establish therapy plans of care. (emphasis added).

V.   The Types of Chiropractic Services Covered by Medicare are Extremely Limited.

Under Medicare, the types of chiropractic services that are eligible for coverage and treatment are limited to three chiropractor-administered services.  To ensure that claims are processed in in an orderly and consistent fashion, Medicare employs the Healthcare Common Procedure Coding System (HCPCS) developed by the American Medical Association (AMA).  Level I of this standardized coding system is comprised of Current Procedural Terminology (CPT) codes that the AMA maintains.  The CPT uniform coding system consists of descriptive terms and identifying codes that are used primarily to identify medical services and procedures furnished by physicians and other health care professionals.  The CPT codes of the three chiropractic manipulation services that may qualify for payment by Medicare include the following:

98940: Chiropractic Manipulative Treatment (CMT); spinal, one or two regions;

98941: CMT; spinal, three to four regions; and

98942: CMT; spinal, five regions.[3]

To add insult to injury, even though a number of Medicare procedures may be within a licensed chiropractor’s state-defined scope of practice, with the exception of the three services described above, no other diagnostic or therapeutic service furnished by a licensed chiropractor, or under his / her order, is considered a covered service under Medicare.  We have handled a number of cases in recent years where the medical necessity of these manipulative treatments was never challenged by the auditing ZPIC.  Nevertheless, almost all of the otherwise-covered chiropractic claims were denied because the CMS program integrity contractor concluded that the services were improperly documented.  The primary reasons that these claims have been denied have been documentation-related.

VI.   Medicare’s Position with Respect to the Documentation of Chiropractic Services.

When providing one of these three covered services, it is essential that you carefully review Medicare’s current documentation requirements. The documentation mandates described under MACRA are not the necessarily the litmus test you should be applying.  The statutory requirements mandated under MACRA have been reviewed and interpreted by CMS so that appropriate regulations and policies implanting any applicable statutory provisions have been developed.  Additionally, as described in Section IX below, MACs are given some latitude in further defining what they require in terms of documentation.

VII.   Risks in Using a “Travel Card” if Your Practice is Subjected to a Chiropractic Audit.

Chiropractic services primarily documented with a “travel card” are likely to be denied if you are audited by a CMS program integrity contractor. Although it has been a while since we have defended a case of this type, they still occasionally arise.  For decades, travel cards have been used by chiropractors to document the care and treatment services they have provided.  Travel cards were easy and could provide an excellent picture of whether a patient was progressing.  While additional information (such as x-rays and other diagnostic studies) were also recorded in the patient’s medical record, the travel card was, and still is, utilized in a number of practices as a documentation tool.  Unfortunately, if your Medicare claims are ever audited by a ZPIC or MAC, you are likely to face a multitude of problems if you are relying on a travel card to document your services.  Unfortunately, CMS contractors (such as ZPICs and MACs)) don’t know how to read a travel card.  While there may be isolated exceptions to this statement, in the cases we have handled over the last decade, none of the auditors working for a ZPIC or for the MAC had been trained on how to read and interpret a travel card.  Additionally, most travel cards still in use don’t even come close to documenting all of the various points are set out in a MAC’s LCD.  As a result, when auditing chiropractic claims billed to Medicare, they almost always found a 100% error rate.

VIII.   Are Applicable Documentation Requirements Met if We Utilize Both a Travel Card and SOAP Note to Record the Chiropractic Services Provided?

Efforts to address the travel card problem by also documenting their services in a SOAP note format[4] have often been unsuccessful. Many experienced chiropractors love travel cards.  Their ease of use and ability to provide a quick, accurate picture of the patient’s prior care and progress are invaluable in a busy practice.  Recognizing that both government and private payors now require that a more detailed discussion of the patient’s care be documented, some chiropractors also document the care provided in a SOAP note format.  Unfortunately, in the cases we have seen, this approach typically fails to fully document the points that are now required by governmental and private payors alike.

IX.   Basic Rule for Documentation Under the Social Security Act.

Medicare’s documentation requirements are based on the fundamental obligation set out in Section 1833(e) of the Social Security Act which states that:

“no payment shall be made to any provider of services or other person under this part unless there has been furnished such information as may be necessary in order to determine the amounts due such provider or other person under this part for the period with respect to which the amounts are being paid or for any prior period.”  (emphasis added).

X.   Complying with Medicare’s Documentation Requirements.

If you intend to bill Medicare for one of the three manual manipulation services set out above, it is essential that you regularly check to ensure that your documentation practices fully comply with Medicare’s requirements. When is the last time you reviewed the documentation and coverage requirements issued applicable for your jurisdiction?  MACs have been delegated the responsibility for developing Local Coverage Determination (LCD) guidance by the Secretary for the Department of Health and Human Services (HHS) under section 1395y(a)[5] of the Social Security Act.  This responsibility also includes the promulgation of reasonable and necessary coverage determinations.[6] Therefore, in the absence of applicable National Coverage Determination (NCD) guidance,[7] MACs are responsible issuing LCD guidance.  LCDs must adhere with applicable requirements set out under the Social Security Act, federal regulations, CMS rulings, Medicare Manual Provisions, and other forms of guidance.

An overview of the coverage and documentation requirements that must be met when providing Medicare-covered chiropractic services is set out in the Section 240.1. of the Medicare Benefit Policy Manual.  Additionally, the Medicare Program Integrity Manual (PIM), mandates that any LCD that is promulgated must reflect local medical practice within the contractor’s jurisdiction and must be supported by substantial medical evidence.[8]  A CMS contractor must ensure that LCDs are consistent with applicable Medicare statutory provisions, regulations, NCDs, and other federal guidance.[9]

When developing an LCD, MACs also consider medical literature, the advice of medical societies and consultants, public comments, and comments from the Medicare provider community.[10]  Like NCDs, an LCD’s coverage guidance on whether an item is medically “reasonable and necessary” means that the item is safe and effective and not experimental or investigational as determined by the Food and Drug Administration (FDA) approval process.[11]  Working within these parameters, it is important to recognize that the specific requirements for documenting your chiropractic claims may vary from one MAC region to another.

For instance, National Government Services (NGS) has issued an LCD titled “Chiropractic Services – L27350.” [12]   For chiropractic services to be medically indicated in the region managed by NGS:

“The patient must have a significant health problem in the form of a neuromusculoskeletal condition necessitating treatment, and the manipulative services rendered must have a direct therapeutic relationship to the patient’s condition and provide reasonable expectation of recovery or improvement of function. The patient must have a subluxation of the spine as demonstrated by x-ray or physical exam. (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 240.1.3).”

Under its section titled Limitations, NGS essentially set out the coverage requirements that must be met in order for chiropractic services to qualify for coverage and payment.  Moreover, ICD codes that support medical necessity are laid out in the guidance.  Should you code a chiropractic service with a diagnosis code that does not qualify for coverage, edits in the claims processing programs run by the MAC will automatically identify and deny the claims.

The documentation requirements set out in the LCD issued by NGS are typical of what you are likely to find in your particular region.  Nevertheless, you cannot assume that they are the same.  Check the LCD documentation requirements that have been published by your MAC.  The documentation requirements that are applied by NGS and other MACs are quite extensive.  A chiropractic audit of your Medicare claims will heavily rely on the coverage requirements set out in the LCD covering your region.

XI.   Elements to Review When Assessing Your Claims in Advance of a Chiropractic Audit.

The best time to assess your compliance with applicable Medicare medical necessity, coverage, documentation, coding and billing requirements is NOW, not after an audit has already been initiated by Medicare.  There are seven elements to be considered when assessing whether any chiropractic claims will qualify for coverage and payment.  These elements are:

Element #1: Medical Necessity – In addressing this element, every treating health care provider should ask the following question: “Were the services administered medically necessary?”

Element #2: Services Were Provided The second issue addressed is whether the services at issue were actually provided.

Element #3No Statutory Violations Are the services “tainted” by any statutory or regulatory violation, such as the Stark Law, federal Anti-Kickback or a False Claims Act violation?

Element #4Meets all Coverage Rules – Do the services meet Medicare’s coverage requirements?

Element #5Fully Documented Have the services been properly and fully documented?

Element #6: Properly Coded – Were the services correctly coded?

Element #7: Properly Billed – Were the services correctly billed to Medicare?

XII.  Consultants and Device Manufacturer Representatives.

Take care when conducting an internal review of your documentation and billing practices.  Should you decide to bring in an outside consultant to assist you in preparing for a chiropractic audit, you shoudl be prepared to apply the doctrine of “caveat emptor” (let the buyer beware).  The types of problems our clients have faced when engaging consultants generally fall within one of two categories, both of which are discussed below.

  • If it sounds too good to be true – it probably is!

Unfortunately, some consultants and device manufacturer representatives have used the challenging financial environment now facing chiropractic practices to their advantage.[13]  If a chiropractic consultant claims to have “proprietary” or “special” methods that can raise your billing revenues, or makes similar claims, be careful.

We have represented numerous chiropractic and medical practices over the years that have been led astray by coding and / or billing consultants, device manufacturers and others purporting to have identified supposed legal methods of coding and billing non-covered services so that they will, in fact, pass through the MACs edits and be paid. Years later, the chiropractic practice may learn that the practices they taught to employ are improper and do not qualify for payment.

  • Even Well-Meaning Consultants May Adversely Impact Your Practice.

Imagine for a moment that in an effort to improve your level of regulatory compliance, you have decided to engage a well-known coding and billing consultant to review your medical necessity, coverage, documentation, coding and billing practices. Assuming that the consultant is thorough, chances are that he / she will present you with a list of problems at the end of their review, you need to keep in mind that their findings are not privileged.  In other words, any reports that they issue, work papers that they prepare and actions that they take are discoverable by the government.  As a result, a list of problems identified by a coding or billing consultant can essentially be used as a roadmap for the prosecution.

You should therefore consider having a qualified health lawyer engage the consultant and direct his or her work.  Any reports would be issued to the attorney, not to you or your chiropractic practice. As a result, the work product prepared by the consultant would likely qualify and privileged and would not be discoverable by the government.  Does this mean that any errors, improper claims or other problems identified by the consultant could be “swept under the rug”?  No, not at all, but it may give the practice considerably more latitude in how they ultimately take remedial action.  Improper payments must be reported and repaid to Medicare in a timely fashion.. The problem we typically see is that non-attorneys are imprecise in how they describe a problem.  We have seen reports prepared by well-meaning consultants that are full of hyperbole and characterize certain conduct as possible fraud, when in fact, the actions that led to an overpayment were nothing more than a mere accident, error or mistake.

  • Call Liles Parker if Your Chiropractic Practice is Being Audited.

Liles Parker attorneys are not merely dedicated health lawyers.  We require that our associate attorneys study for and pass the certification requirements to be a Certified Medical Reimbursement Specialist.  Additionally, most of our attorneys and paralegals are Certified Medical Compliance Officers. Our staff has extensive experience conducting pre-audit assessments of provider documentation, coding and billing practices.  To the extent that your practice is undergoing a chiropractice audit by a UPIC, ZPIC or MAC, it isn’t too late to obtain a favorable result. Our health lawyers have extensive knowledge and experience of the Medicare appeals process, up to and including post-ALJ appeals to the Medicare Appeals Counsel and Federal Court.

Chiropractic AuditsRobert W. Liles, M.S., M.B.A., J.D., has worked on the provider side in health care management, served as a federal prosecutor and now represents chiropractors and other health care providers around the country in connection with Medicare and private payor audits and investigations.  For a complementary consultation, please call us at: 1 (800) 475-1906.




[1] Chiropractic services were not separately broken out in OIG’s Medicare Fee-For-Service 2014 Improper Payment Report. https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/MedicareFeeforService2014ImproperPaymentsReport.pdf

[2] Effective January 1, 2017.

[3] These three claims are expressly covered in Local Coverage Determination (LCD) guidance issued by National Government Services (NGS) and other Medicare Administrative Contractors (MACs).  For additional information please see:  https://apps.ngsmedicare.com/lcd/LCD_L27350.htm

[4] The acronym “SOAP” is a long-standing approach utilized by a variety of medical disciplines when documenting their evaluation of a patient and the plan of care to be followed.  SOAP stands for Subjective, Objective, Assessment, and Plan.

[5] See 42 U.S.C. § 1395h.

[6] See 42 U.S.C. § 1395ff(f)(2)(B).

[7] LCDs are defined as “determination[s] by a [contractor] under. . . part B. . . respecting whether or not a particular item or service is covered. . . in accordance with section 1395y(a)(1)(A).”[7]

[8] See 64 Fed. Reg. 22,619, 22,621 (Apr. 27, 1999) (stating that the purpose of local medical review policies is to explain to the public and the medical community “when an item or service will be considered ‘reasonable and necessary’ and thus eligible for coverage under the Medicare statute”); PIM Ch.1, §§ 2.1.B,, 2.3.2.

[9] PIM, supra note 17, at § 2.1.B.

[10] PIM, supra note 17, at §1.2.

[11] See Abbott Laboratories, at 29.

[12] https://apps.ngsmedicare.com/lcd/LCD_L27350.htm

[13] Unscrupulous business consultants are nothing new. Almost 20 years ago, HHS, Office of Inspector General (OIG) recognized this problem and issued guidance to providers outlining its concerns. In June 2001, OIG issued a “Special Advisory” titled “Practices of Business Consultants” which detailed the agency’s concerns in this regard.  As OIG noted, health care providers and suppliers need to be wary of potential:

  • Illegal or Misleading Representations.
  • Promises and Guarantees.
  • Encouraging Abusive Practices.
  • Discouraging Compliance Efforts.


Payors are Aggressively Auditing Acupuncture Claims.

May 26, 2017 by  
Filed under Featured, Health Law Articles

Acupuncture(May 26, 2017):  Over the past decade, the number of patients utilizing one or more complimentary or alternative care modalities has steadily increased.  As patient demand for such services has grown, the percentage of payors including acupuncture in their plans as a covered service has also increased. For over a decade now, most private payor plans have covered acupuncture services (although the number and frequency of covered treatments is often limited).  While private payors have often included acupuncture as a covered service, traditional Medicare has continued to take the position that acupuncture services are not a covered benefit.  The purpose of this article is to provide an overview of the audit and investigative landscape currently facing acupuncturists around the country.

I.     Private Insurance Audits of Acupuncture Claims.

Many private payors have readily agreed to include acupuncture as a covered benefit in their insurance plans.  Unfortunately, practically none of these payors have issued guidance outlining what needs to be shown in order for acupuncture services to qualify for coverage and payment.  Recent private payor audits of acupuncture services have denied claims based on the following:

  • Medical Necessity. A number of payor plans have effectively conflated “medical necessity” and “coverage.”  As a result, a beneficiary’s plan may take the position that acupuncture is only medically necessary for a limited number of medical and / or mental (such as depression) conditions.  Frankly, what the payor is really saying is that it will only provide coverage for acupuncture services if the underlying condition fits within one of these categories.  To the extent that a licensed acupuncturist determines that acupuncture services would benefit, and is, in fact, medically necessary in the treatment of a patient suffering from a non-covered condition is often immaterial to a payor’s decision of whether it will cover the services.
  • Documentation. At the outset, it is essential to keep in mind that it is highly unlikely that the medical reviewer (typically a nurse) assigned to audit your acupuncture claims will have practical experience and knowledge with acupuncture care and treatment services.  As a result, the medical reviewer has virtually no idea what to look for when assessing your documentation.  This problem is further compounded by the fact that most payors have not detailed their documentation expectations in their provider manuals.  Medical reviewers evaluating your documentation of acupuncture services are therefore free to exercise a high degree of discretion when auditing your records.  What can you do to better document your services?  As a first step, you need to ensure that your documentation practices fully comply with any requirements set out by your State Board of Acupuncture Examiners.[1] Next, check out the provider manual, website and any other guidance issued by a particular payor.  Does it provide specific guidance regarding medical necessity, coverage, documentation, billing and / or coding of acupuncture services?  If so, be sure and comply with the payor’s requirements. Finally, you need to ensure that your documentation practices meet industry practices.
  • Can an Acupuncturist Bill E/M Services? The answer to this question varies from state to state and from private payor to private payor.  For example, using Texas as an example, the Texas State Board of Acupuncture Examiners (Texas Board) has expressly addressed this issue.[2]  Importantly, the Texas Board has stated that the mere use of E/M codes by a licensed acupuncturist “is not fraudulent per se and will not automatically subject licensees to discipline.” In fact, the Texas Board notes that utilization of E/M codes qualify within an acupuncturist’s scope of practice.  Nevertheless, the Texas Board takes no position on whether E/M codes utilized by a licensed acupuncturist may be properly billed to a payor.  Whether or not an insurance company chooses to cover and pay for these types of services is completely up to the payor.  Please keep in mind that a private payor may change its policy regarding the use of E/M codes by non-physician health care professionals at any time.  For instance, in December 2016, UnitedHealthcare Community Plan issued a policy revision stating that it would no longer reimburse E/M codes billed by opticians, surgical technicians, naturopaths and massage therapists.  However, the payor’s policy revision did not include acupuncturists in its list.  As UnitedHealthcare later clarified, Since acupuncturists were not included in the policy revision that occurred in December 2016, E/M codes billed by acupuncturists have not been and will not be denied under the Nonphysician Health Care Professionals Billing Evaluation and Management Codes Policy.”[3]
  • Can an Acupuncturist Bill for E/M Services Provided on the Same Day as Acupuncture Treatment Services? While a number of private payors have chosen to cover E/M services that are properly performed and documented by acupuncturists, you should expect considerable scrutiny if you perform and bill for acupuncture treatment performed on the same date of service as an E/M service. In order to properly bill a separate E/M service, you will need to document that the service went above and beyond the brief assessment that is already expected to be performed as part of the acupuncture treatment. The separate billing of an E/M service and acupuncture treatment on the same date of service would likely only occur on an infrequent basis.  If you are billing these codes on regular basis, we recommend that you carefully review your practices to ensure that the services billed are both medically necessary and warranted in light of the patient’s clinical profile.
  • How is an Acupuncturist Supposed to Bill Units Based on Time? Most private payors require that acupuncture services be billed using one of the following four AMA CPT codes:
    • 97810 (acupuncture, 1 or more needles; without electrical stimulation, Initial 15 minutes of personal one-on-one contact with the patient).

    • 97811 (acupuncture, 1 or more needles; without electrical stimulation, for each additional 15 minutes of personal one-on-one contact with the patient, with reinsertion of needles)

    • 97813 (acupuncture, 1 or more needles; with electrical stimulation, initial 15 minutes of personal one-on-one contact with the patient).

    • 97814 (acupuncture, 1 or more needles; with electrical stimulation, for each additional 15 minutes of personal one-on-one contact with the patient, with reinsertion of needles)

Seems straight forward?  Unfortunately, sometimes it feels like nothing is straight forward when it comes to the coding and billing of acupuncture services. For instance, how many units should be billed if 10 needles are inserted into a patient and retained for 30 minutes?  How many units (and which units) should be billed?  It depends on whether the needles were removed and new needles were reinserted into the patient.

For instance, if the 10 needles originally inserted into the patient remained in the patient for 30 minutes, only one unit of CPT code 97810 can be billed.  Many payors take the position that once the needles are inserted, no additional work is required and one-on-one contact is no longer required.  This remains the case even if an acupuncturist periodically returns to stimulate the needles.  Absent the removal and reinsertion of new needles, no additional units can be billed.

What is meant by the term “one-on-one contact with the patient.”?  This phrase has been interpreted to mean that the acupuncturist is in the room with the patient and is performing a medically necessary activity that is a component of acupuncture.  When calculating the initial 15 minutes, Excellus BCBS permits the inclusion of many preliminary activities.  These include, but are not limited to a review of the patient’s chart, greeting the patient, obtaining an account of the results of the previous treatment, palpation of a patient’s tender points, marking and cleaning insertion sites, inserting needles, and removing needles.[4]

When billing a private payor, it is important that you first determine how the particular payor interprets these coding requirements.  You should not assume that every payor strictly follows the general approach taken expressed in the AMA CPT Codebook.

Perhaps most importantly, when billing time-based units it is imperative that you the total personal contact time spent performing the medically necessary components outlined above and document this time in the treatment note. While many providers disagree with their approach, a number of private payors are actively contesting claims where it appears that an acupuncturist has billed units based on needle retention time rather than active, personal, one-on-one contact involving the provision of substantive acupuncture-related services.

II.     Audits of Acupuncture Services Billed to Federal Health Benefit Programs.

As noted earlier, traditional Medicare does not cover acupuncture services.  As a result, you may initially conclude that contractors working for the Centers for Medicare and Medicaid Services (CMS), such as Zone Program Integrity Contractors (ZPICs) and Medicare Administrative Contractors (MACs) would have little interest in auditing practitioners of such services.  As we have repeatedly seen, such a conclusion would be wrong.

(A) What is Medical Acupuncture?

A number of licensed physicians, podiatrists and dentists around the country have also been trained to provide acupuncture treatment services.  These physicians often employ traditional medical care and supplement this approach with acupuncture treatment services. The care they provide is sometimes referred to as “Medical Acupuncture.”  Many of these medical practitioners are members of the American Academy of Medical Acupuncture[5] (AAMA).  In order to qualify as a “full member” in the AAMA, an applicant must:

  • Be an active, licensed MD, DOs, DPM or DDS in the United States or Canada;

  • Be engaged in the practice of medical acupuncture.

  • Have completed a minimum of 220 hours of formal training in Medical Acupuncture (120 hours didactic, 100 hours clinical), or the equivalent, in an educational program acceptable to the Membership Committee;

Even though an individual may qualify as a member of the AAMA, he / she must also meet state licensure requirements mandated by a state’s Board of Acupuncture Examiners.

(B) E/M Services Conducted by Medical Acupuncturists are Often Misunderstood by CMS Contractors.

ZPIC claims audits of licensed physicians providing Medical Acupuncture care have typically focused on the accompanying Evaluation and Management (E/M) services often performed prior to, and in connection with, the provision of acupuncture.  Based on the assessment and findings of the E/M service performed, a Medical Acupuncturist may conclude that a patient placed on a traditional treatment regimen with or without medications support, would also benefit from medically necessary acupuncture services.  We have seen numerous denied claims where a ZPIC or MAC has alleged that the E/M service provided does not qualify for coverage and payment.  The contractors often argue that the physician’s documentation the E/M services is deficient and / or that the E/M service was not really medically necessary.  Instead, the ZPIC or MAC has suggested that the E/M services billed to Medicare have essentially been nothing more than a sham, provided and billed as a way to receive reimbursement since the acupuncture services subsequently provided did not qualify for coverage and payment.  When defending these providers, we have often found that the E/M service conducted and billed to Medicare was (in our opinion) both medically necessary and appropriate in light of the patient’s clinical profile.  Medical Acupuncturists should assume that their E/M services will be audited by one or more CMS program integrity contractors.  Physicians should ensure that the E/M services conducted are fully documented and are coded and billed at the proper level.

Essentially, the traditional medical services conducted need to be individually assessed, separate and apart from any complimentary care (such as acupuncture) that is subsequently provided.  The question to ask is straightforward“Were the traditional medical services provided and billed to Medicare medically necessary, fully documented, properly coded and accurately billed?”  If so, the decision to complement the traditional care with acupuncture should have no impact on whether or not the medical services qualify for coverage and payment under Medicare.  Unfortunately, it has been our experience that ZPICs and other CMS program integrity contractors are often skeptical of the medical necessity of the medical services conducted.  Frankly, we disagree.  After defending a number of these claims, it is our belief that Medical Acupuncturists have, in fact, typically concluded that a traditional assessment and treatment approach, coupled with complimentary acupuncture care services, are in fact, in the best interests of the patient.

(C) Physical Therapy Services Billed by Clinics That Also Offer Complementary Care are Under the Regulatory Microscope.

As reimbursement rates have dropped, a number of providers have expanded the scope of services offered by their clinics.  It is now quite common to find a clinic that offers licensed physical therapy, acupuncture and massage services to its clientele. These changes have not gone unnoticed by ZPICs.  In fact, it appears that ZPICs and other CMS program integrity contractors remain on the lookout for the improper billing of physical and / or occupational therapy claims to the Medicare program, even though the actual procedures performed have really involved acupuncture or massage therapy services.  Examples of improper billing include, but are not limited to:

CPT Code Billed to Medicare Service Billed that May Qualify for Coverage Under Medicare Actual Service Provided Not Covered by Medicare
CPT Code 97032 Electrical Stimulation “Dry Needling”[6]
CPT Code 97110 Therapeutic Exercises Massage Therapy
CPT Code 97112 Neuromuscular Education Acupuncture
CPT Code 97140 Manual Therapy Massage Therapy

 (D) Federal and State Prosecutors Have Pursued a Number of Health Care Fraud Cases for the Improper Billing of Acupuncture Services. 

While ZPICs and MACs are continuing to dedicate a portion of their time and resources to auditing Medicare claims submitted for coverage and payment by Medical Acupuncturists, it is important to keep in mind that these administrative audits can lead to more serious enforcement action.  Prosecutions have been, and are continuing to be pursued by state and federal law enforcement authorities for acupuncture-related health care fraud.  Examples of acupuncture-related fraud pursued by law enforcement are outlined below:

  • In this early example of acupuncture fraud, the U.S. Attorney’s Office for the Middle District of Florida prosecuted the owners, operators and physician employees of six acupuncture clinics alleged to have fraudulently billed the Medicare program from 1989 through 1993, for non-covered acupuncture treatment services. According to DOJ, the acupuncture clinics “hired physicians to illegally circumvent the Medicare rules prohibiting reimbursement for acupuncture and acupuncture related medical services. The defendants fraudulently back-dated medical and billing records to conceal that they were operating acupuncture clinics and that the medical services rendered were all in conjunction with acupuncture treatments.” [7]
  •  In this 1997 / 1998 case, a physician employee of a hospital improperly billed Medicaid for non-covered acupuncture services related to its drug and alcohol program. As the Department of Health and Human Services (HHS), Office of Inspector General (OIG) noted, “[t]he hospital knew or should have known that Medicaid does not cover acupuncture.”  The case was resolved through civil settlement.[8]
  • In this 2012 case, the owner of two acupuncture clinics and his staff allegedly billed Medicare for non-covered services. The government also alleged that the owner “received kickbacks for providing Medicare beneficiaries’ health identification cards and other personal and medical information to a clinic enrolled as a Medicare provider for physical therapy services” even though the beneficiaries did not receive any services from the clinic. Additionally, the owner’s co-conspirators were alleged to have created false medical documentation in connection with fraudulent claims.[9]
  • In this 2014 criminal case, the owner (who was also a licensed acupuncturist) of this clinic allegedly submitted non-covered acupuncture claims to the Medicare program for payment. Moreover, the clinic was alleged to have billed for massage and physical therapy services that were not performed by licensed physical therapists or physical therapy assistants.  Over a two year period, the clinic was alleged to have submitted more than $1.6 million in fraudulent claims to Medicare and more than $475,000 to Blue Cross Blue Shield for payment.[10]
  • In this 2016 case, the U.S. Attorney’s Office for the Central District of California criminally prosecuted the owner of several companies and was alleged to have “recruited Medicare beneficiaries and provided uncovered services like massage and acupuncture for them. Even though the beneficiaries did not receive actual physical therapy, [the defendant’s] co-conspirators billed Medicare for physical therapy, and then funneled 56 percent of the reimbursement funds back to [the defendant].”[11]

III.     Conclusion.

As the popularity and acceptance of acupuncture increases, we should expect for the number of claims audits and investigations to increase as well.  Now, more than ever, it is essential that you review both your business and clinical practices to better ensure that your care and treatment services fully comply with applicable statutory, regulatory and contractual obligations.  Have you properly established that the acupuncture treatment services are medically necessary?  Are the services fully documented in the patient’s medical records?  Are your coding and billing practices accurate and consistent with the payor’s requirements?  Finally, to the extent that your clinic also bills Medicare or a private payor for medical services, you must ensure that the services billed are, in fact, bona fide medical services, not acupuncture or massage therapy services that have been mischaracterized as physical or occupational therapy.

AcupunctureRobert W. Liles, J.D, M.S., M.B.A., represents health care providers around the country in connection with claims audits and investigations by Medicare, Medicaid and private payors. He also represents licensed providers in connection with complaints filed with State Licensure Boards. For a complimentary consultation regarding your case, please give us a call at:  1 (800) 475-1906. 



[1] For example, a licensed Acupuncturist in Texas must document the following information (as set out under 22 Tex. Admin. Code § 183.10), provides, in part:

Acupuncturists licensed under the Act shall keep and maintain adequate records of all patient visits or consultations which shall, at a minimum, be written in English and include:

(1) the patient’s name and address;

(2) vital signs to include body temperature, pulse or heart rate, respiratory rate, and blood pressure upon initial presentation of the patient, and those vital signs as deemed appropriate by the practitioner for follow-up treatment;

(3) the chief complaint of the patient;

(4) a patient history;

(5) a treatment plan for each patient visit or consultation;

(6) a notation of any herbal medications, including amounts and forms, and other modalities used in the course of treatment with corresponding dates for such treatment;

(7) a system of billing records which accurately reflect patient names, services rendered, the date of the services rendered, and the amount charged or billed for each service rendered;

(8) a written record regarding whether or not a patient was evaluated by a physician or dentist, as appropriate, for the condition being treated within 12 months before the date acupuncture was performed as required by §183.7(a) of this title (relating to Scope of Practice);

(9) a written record regarding whether or not a patient was referred to a physician after the acupuncturist performed acupuncture 20 times or for two months whichever occurs first, as required by §183.7(b) of this title (relating to Scope of Practice) in regard to treatment of patients upon referral by a doctor licensed to practice chiropractic by the Texas Board of Chiropractic Examiners;

(10) in the case of referrals to the acupuncturist of a patient by a doctor licensed to practice chiropractic by the Texas Board of Chiropractic Examiners, the acupuncturist shall record the date of the referral and the most recent date of chiropractic treatment prior to acupuncture treatment; and,

(11) reasonable documentation that the evaluation required by §183.7 of this title (relating to Scope of Practice) was performed or, in the event that the licensee is unable to determine that the evaluation took place, a written statement signed by the patient stating that the patient has been evaluated by a physician within the required time frame . . . .”


[2] http://www.tmb.state.tx.us/idl/ECEA703E-ED1F-11D6-149A-C0CEFFBCF9D7

[3] https://www.uhccommunityplan.com/content/dam/communityplan/healthcareprofessionals/Bulletins/Non-Phys-Bill-Eval-Mgmt-Policy-Codes-Acupuncturist.pdf

4] https://www.excellusbcbs.com/wps/wcm/connect/6e9c5e35-2d2b-4767-b25d-e6e2e82fda67/Excellus+Coding+%26+Billing+for+Acupuncturists+Tip+Sheet+FINAL.pdf?MOD=AJPERES&CACHEID=6e9c5e35-2d2b-4767-b25d-e6e2e82fda67

[5] The American Academy of Medical Acupuncture (AAMA) was first established in 1987 by physicians who had graduated from the Medical Acupuncture for Physicians Training Program at the UCLA School of Medicine. The AAMA has rapidly grown in recent years and now has over 1,300 members.

[6] The question of whether “dry needling” qualifies as acupuncture remains in controversy.  Nevertheless, a number of government and private payors have held that “dry needling” is, in fact, acupuncture.  As such it does not qualify as a covered service under Medicare, regardless of whether a licensed physical therapist or a licensed acupuncturist performs the service.

[7] For additional information on this case, please see:  https://www.justice.gov/opa/selected-cases

[8] Department of Health and Human Services, Office of Inspector General, Semiannual Report, October 1, 1997 – March 31, 1998.  (Page 35). https://oig.hhs.gov/publications/docs/semiannual/1998/98ssemi.pdf

[9] Office of Inspector General, Semiannual Report to Congress, April 2013 – September 2013.  (Page 47).


[10] For additional information on this case, please see: https://www.justice.gov/usao-ndga/pr/norcross-clinic-owner-sentenced-healthcare-fraud

[11]For additional information on this case, please see:  https://www.justice.gov/usao-cdca/pr/brea-man-who-operated-physical-therapy-clinics-sentenced-over-10-years-federal-prison-3


Next Page »