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We Defend Healthcare Providers Nationwide in Audits & Investigations

Ten Recommendations to Improve Medicare Compliance and Prepare for a ZPIC Audit

Improve Medicare Compliance(July 24, 2011): Has your Texas physician practice, home health agency, hospice, DME company or PT / OT / ST clinic been audited by a Zone Program Integrity Program (ZPIC)?  If not, it may only be a matter of time.  Despite your best efforts to follow Medicare’s directives, your organization may still be identified as an “outlier” by a ZPIC and subjected to a probe review or a full-blown audit.  Should you receive a request for records from a ZPIC, being prepared — in advance of receiving a ZPIC request— can help ensure your organization’s compliance with applicable documentation, coding and billing requirements.  The following recommendations can assist with those efforts:


Recommendation #1  If you have not already done so, conduct a “gap analysis” and implement an effective Compliance Program.  Despite the fact that significant strides in compliance have been made by large Medicare providers (such as hospitals and nursing homes),  it has been our observation that most physician practices and small-to-mid sized provider organizations still do not have a tailored Compliance Plan in place.   To be clear, we recognize that many providers may have copied a draft plan right off of the internet, or may have purchased a sample plan from a vendor.  While they may fully have intended to follow through with personalization of the draft document, in most of the cases we have seen, more pressing events have taken precedence and providers have not had the time or expertise to complete the project.

Providers who have not put together a Compliance Plan should immediately do so. As you have likely heard, Section 6401 of the Affordable Care Act (ACA)(generally referred to as the “Health Care Reform Act”) states, “. . . a provider of medical or other items or services or supplier within a particular industry, sector or category shall, as a condition of enrollment in the program under this Title. . .establish a compliance program.”   To be clear, at this time, the Department of Health and Human Services, Office of Inspector General (HHS-OIG) has not announced deadlines effectuating this requirement.  Nevertheless, it is merely a matter of time until all providers who choose to participate in the Medicare program will be required to have an effective Compliance Plan in place.

Rather than wait until the last-minute, Medicare providers who have not already done so should immediately take steps to implement an effective plan.  As a first step, providers should review each of the regulatory and statutory provisions related to the specific services being billed to Medicare.  Next, providers should compare their actual documentation, coding and billing practices with Medicare’s rules.  Any gaps between the applicable requirements and a provider’s actual practices must immediately be remedied. Additionally, should these gaps represent an overpayment, the Medicare provider must repay the overpayment to the government within 60 days of identification.

Prior to conducting a gap analysis, we recommend that providers contact their legal counsel for assistance with both the internal review and with the implementation of an effective Compliance Plan.   While no Compliance Plan can prevent an audit, the implementation of an effective plan will greatly improve a provider’s likely adherence to Medicare’s rules and regulations should a ZPIC audit be initiated.

Recommendation #2:   Don’t ignore a ZPIC’s request for documents[1]. At the outset, it is important to keep in mind that ZPICs play an important role.  In addition to  auditing records for possible overpayments, ZPICs are also responsible for identifying fraudulent providers (and potentially fraudulent providers) and making referrals to the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the U.S. Department of Justice (DOJ) for further action.  Possible actions taken include, but are not limited to:

  • CMS — Administrative action such as suspension or revocation from the Medicare program.
  • HHS-OIG – Administrative action such as Civil Monetary Penalty action.  HHS-OIG may also investigate and refer a provider to DOJ for possible civil litigation under the False Claims Act.  Finally, HHS-OIG may investigate and refer a provider to DOJ for criminal prosecution under the Federal Anti-Kickback Act or a host of other statutes.
  • DOJ – May investigate and prosecute a provider for civil and / or criminal violations of law.

Should you receive a request for documents from your ZPIC, in many cases it will broken into two sections.  The first section will likely be focused on business related records such as the following: 

“Business contracts or agreements with other providers, suppliers, physicians,  businesses or individuals in place during a specific period.  Additionally, any verbal agreements must be summarized in writing.

A listing of all current and former employes (employed during a specific period), along with their hire date, termination date, reason for leaving, title, qualifications, last known address, phone number.

    • A list of all practice locations, along with their address and phone number.
    • Leases.
    • Employment agreements.
    • Medical Director contracts.” 

The unstated purpose of this portion of the ZPIC’s request is likely to identify potential instances of violations of the Federal Anti-Kickback Statute, Stark and / or the False Claims Act.  Should the ZPIC identify a possible violation, it will readily refer the case to CMS, HHS-OIG and / or DOJ, depending on the nature of the potential violation.

In contrast to the first section of the ZPIC’s request, the second section of the request usually lists the patient records and dates of service to be audited by the ZPIC.  While every case is different, the number of claims requested typically ranges from 8 – 100, depending on whether the ZPIC’s request is a “probe review” or a full-blown audit.  On occasion, we have seen the number of claims sought can range from 150 – 300.

Never ignore a ZPIC request for records.[2] Importantly, should you fail to respond to the ZPIC’s request, the contractor can recommend to the CMS that your organization be suspended[3] or from participation in the Medicare program.  Depending on the ZPIC’s concerns, the contractor can also recommend that CME pursue a revocation action against your organization.  Should you need more time to the ZPIC’s request for supporting documentation, don’t hesitate to request it.

Recommendation #3:  Remember learning how to “drive defensively” in high school?  Your documentation practices should be approached in a similar fashion.   ZPIC auditors are excellent at identifying one or more ways in which your claims do not meet applicable coverage requirements.  While you may very well disagree with their assessments (especially in “medical necessity” determinations), in all likelihood, when you file a request for redetermination appeal (and later, a request for reconsideration appeal), you will find that your Medicare Administrative Contractor (MAC) and your Qualified Independent Contractor (QIC) agree with the ZPIC’s denial decision.  Rather than endure significant costs and stress when defending against an overpayment assessment, you need to take steps to avoid a denial in the first place. To that end, health care providers should ensure that clinical staff members are fully trained and educated regarding Medicare’s documentation, coding and billing process.

We recognize that “perfect documentation” is neither required nor realistic to expect from your clinical staff.  Nevertheless, using published reports of other cases, you can show your clinicians that ZPICs  enforce a strict application of Medicare’s documentation and coverage requirements.  Through education and training, your clinical staff will understand why it is imperative that they review, understand and comply with:

  • Any applicable Local Coverage Determinations (LCDs).
  • Any Local Medical Review Policies (LMRPs).
  • The Medicare Policy Benefit Manual (MPBM).
  • The Medicare Program Integrity Manual (MPIM).
  • Any statutory provisions which cover the services.
  • Any additional guidance issued by Medicare which would apply to these claims.

It is important that you regularly review the government’s latest concerns and any enforcement actions which have been taken.  Additionally, you should read HHS-OIG’s reports so that you may learn from the mistakes being made by similarly situated providers.  Upon doing so, we recommend that you check the list of “risk areas” in your Compliance Plan and ensure that they reflect both general “risks” and “specific risks” which may be unique to your organization.  Is your organization still in full compliance?  If not, remedial action is likely necessary.

Recommendation #4:  Retain experienced legal counsel to assist with your efforts. When experiencing symptoms of a cardiac problem, most patients wouldn’t turn over their care to a dermatologist.  Instead, they would seek to be evaluated and treated by a Cardiologist.  Similarly, if you have a health law problem, would it be wise to rely on advice from an attorney specializing in family law?  Ultimately, that’s your call.  While no attorney can guarantee you success — we believe that an experienced health lawyer is well situated to give you advice regarding a Medicare audit or investigation.   Having said that, it is important to recognize that the field of health law is extraordinarily broad.  Should you be audited by a ZPIC or a Recovery Audit Contractor (RAC), don’t hesitate to ask a health lawyer whether they have handled these types of cases before.  If so, how many times have they represented a provider in a ZPIC overpayment case?  When selecting a lawyer, keep in mind that the legal fees charged by an attorney can vary greatly, depending on a variety of factors.  Don’t be shy – ask how much the representation is likely to cost.  While it is often difficult to estimate legal costs due to the various factors faced when handling a ZPIC audit case, most attorneys can give you a range of expected legal fees.  Finally, be sure and ask for references.  Other providers who have been through an administrative appeal case can provide you with invaluable insights into the process.  As a final point, on numerous occasions, our firm has been retained to work with a provider’s existing legal counsel.  We are more than happy to do so and can effectively work with your counsel in a fashion which avoids duplication of efforts yet allows our experience and expertise to be applied to your case.

Recommendation #5:  The administrative appeals process has become quite complicated in recent years.  ZPIC audits can result in alleged overpayments running into the millions of dollars. Moreover, the ZPIC’s overpayment assessment (and the associated “demand” letter sent by a MAC) isn’t usually the end of the story.  While providers often lose at the redetermination and reconsideration levels of appeal, the third level of appeal – before an Administrative Law Judge (ALJ) – is usually your single best opportunity to prevail in an administrative appeals action.  Over the years, our attorneys have argued cases in front of judges out of each of the field offices of the Office of Medicare Hearings and Appeals (OMHA).   While we may not always agree with their decisions, the ALJs in whose courts we have practiced have been professional, fair and more than willing to hear a provider’s arguments in support of payment.

Should you choose not to engage legal counsel and represent yourself in an ALJ hearing, keep in mind that even though these hearings are intended to be non-adversarial,”  it can feel quiteadversarial” during the actual hearing.  Furthermore, these proceedings can be quite complicated.  In most large dollar cases, representatives of the ZPIC are participating in the hearing and arguing their position before the ALJ.  ZPIC representatives can include one or more statisticians (if an extrapolation was conducted), a clinician (usually a Registered Nurse who is experienced in conducting medical reviews) and a lawyer.  In a recent Home Health Agency case we handled, this was precisely what occurred.  Frankly, few providers are experienced in presenting their case and in responding to the arguments raised by statisticians, clinicians and lawyers representing a ZPIC.  As a result, it is strongly recommended that the provider consider engaging an experienced and knowledgable attorney.

Recommendation #6 When reviewing your claims, you should abide by the following:  First, “If it doesn’t belong to you, give it back.”  Conversely, “If you don’t owe the money, don’t throw in the towel.”  One of the attorneys in our firm is regularly asked to speak at provider conventions around the country.  For years, he has told providers “If it doesn’t belong to you, give it back.”  This simple concept covers a lot of ground when it comes to alleged Medicare overpayments.  Similarly, if the facts and the evidence shows that the claims should have been paid,  think twice before waiving your right to appeal the denial of these claims.  From a practical standpoint, we have heard of  situations where a provider chooses to “just pay the bill” so that the case will quickly be resolved.  Several providers have commented that when dealing with small dollar assessments, it is just easier to pay the alleged overpayment rather than incur the hassle and expense of contesting the contractor’s denial decision.  Although we understand the reasoning behind such a decision, you should keep in mind that every claim which is denied by a ZPIC (and which remains denied) increases a provider’serror rate.”  If you were a ZPIC, PSC, RAC or MAC contractor, would you choose to audit a provider with a low error rate or a high error rate?  In any event, the bottom line is fairly straight forward.  Should you find that you are not entitled to payment for one or more claims, you must  repay the money to the government as soon as possible (but no later than 60 days after an overpayment has been identified),  regardless of whether the claim is part of an ongoing or recently completed Medicare audit.  If, however, you are audited and you believe that a ZPIC has incorrectly denied one or your claims, you have the right to appeal the denial of these wrongfully denied claims.

Recommendation #7:  Carefully read a ZPIC’s denial decision letter. When you receive a denial decision letter relied upon by a ZPIC, carefully review the notice and determine whether the contractor has specifically addressed the reasons for denial associated with each of the claims at issue.  Every ZPIC is different.  Over the last few months, one of the ZPICs involved in the cases we are handling has been citing only a general reason for denial (such as “not medically necessary”).  Should the ZPIC in your case not provide sufficient information, you will find it difficult, if not impossible, to address any specific reasons your claims have been denied.   Your legal counsel may be able to get the ZPIC to provide additional specificity in connection with their denial reasons.  Alternatively, legal counsel may be able to argue that the ZPIC’s failure to provide specific reasons for denying your claims is a clear violation of your due process rights.

Recommendation #8 Don’t forget – shortly after the “demand letter” is sent, any payments you may be expecting may be recouped by your Medicare Administrative Contractor (MAC).   A demand letter from your MAC usually follows a few days  after you receive a ZPIC’s denial decision letter.  While you have 120 days to file a request for redetermination appeal (as outlined in he MAC’s demand letter)[4], should you fail to file the request for redetermination appeal within 30 days of the date of the MAC’s demand letter (not 30 days after receiving the demand letter!), your Medicare payments will be recouped starting on day 41.  Alternatively, a provider may set up an extended repayment program with the MAC so that the alleged overpayment can be repaid through monthly installments.  We strongly recommend that you set this up.  You will then be able to take advantage of the 120 period permited to file a redetermination appeal rather than try and file a poorly prepared set of arguments within the previously discussed 30 day period.  Similar issues (with completely different deadlines) are present at the reconsideration level of appeal — the next level in the administrative appeals process. Once again, these issues can be quite complicated.  We recommend that you discuss available appeals options with your legal counsel.

Recommendation #9: Foster a corporate culture which encourages compliance.  ZPICs have increased their audit activities dramatically in numerous areas of the country.  The Southern District of Texas (especially South Texas) has been hit hard in recent months.  Providers in Houston, McAllen, Harlingen, Edinburgh, Laredo, Corpus Christi and Brownsville appear to have experienced a recent surge in audit activity.  Be aware that ZPICs are looking for aberrations in billing patterns and often target providers based on these variations in coding or billing practices.  Compliance with regulations and consistency in your “message” to employees is essential. Establishing good intake and records management procedures, continuing employee education and training efforts, can facilitate the adoption of an ethical, compliant corporate culture.

           And, last but not least,

Recommendation #10 When drafting a Compliance Plan, providers should include a “Code of Conduct” that is easily understood by all employees.  We believe that a “Code of Conduct” should accurately reflect the belief system an organization has pursued and sincerely intends to follow.   In doing so, an organization can engender a compliant corporate culture.  Over the years, we have seen organizational “Codes of Conduct” which range from a succinctly described phrase to discussions which take up more than a page.

Our favorite “Code of Conduct” (which also happens to be the “Code of Conduct” adopted by our law firm) is used by Cadets at the United States Military Academy at West Point. Modified for use by health care providers, the “Code of Conduct” reads:

Our clinicians and staff will not lie, cheat, steal, or tolerate those who do.”

This simple, yet elegant “Code of Conduct” succinctly lays out a provider’s ethical responsibilities, both with respect to Medicare and in their other business dealings.  We recommend that you consider adopting and adhering to this or a similar “Code of Conduct.”

Our attorneys have extensive experience representing physicians, clinics, home health agencies, hospices, DME companies, skilled nursing facilities, chiropractors, pain medicine clinics, rehabilitative medicine clinics and other Medicare providers in connection with audits by ZPICs, MACs and other contractors.  We also have years of experience assisting providers with “gap analyses” and in implementing an effective Compliance Program.  Should you have questions about these or other health law issues, please feel free to call Robert W. Liles for a complementary consultation.  Robert can be reached at:  1 (800) 475-1906.  


[1] Infrequently, a ZPIC may choose to conduct a “probe” review rather than a full audit.  Probe reviews usually involve a request for the records and supporting documentation related to 10 – 15 claims paid by Medicare.

[2] ZPIC requests for audit information typically include language similar to the following: “Failure to provide this information or to permit examination and duplication of records could result in a decision by the Office of the Inspector General to exclude you from Medicare, Medicaid and all Federal health care programs.”

[3] 42 C.F.R. §405.372(a)(2).

[4] It is presumed that you received the MAC’s demand letter 5 days after the demand letter is dated.  From a timing standpoint, we strongly recommend that you completely disregard the “5 day” issue unless it is absolutely necessary to rely on it.  Our practice is to make sure that our client’s redetermination appeal is filed (and received) well in advance of the 120 day appeal deadline.

The OIG Found that More than Half of All Power Wheelchair Claims Paid by Medicare were Improper.

Power Wheelchair Claims are Being Audited by Medicare. Is Your Documentation Complete and Proper?(July 16, 2011):  As Zone Program Integrity Contractor (ZPIC) audits of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) companies continue to climb, the Department of Health and Human Services, Office of Inspector General (HHS-OIG), has now reported that more than one-half of the recent power wheelchair claims by Durable Medical Equipment (DME) suppliers were improper during the period audited.  Notably, this will likely reinforce the likelihood and frequency that ZPICs across the country will continue to focus a considerable portion of their resources on DME companies, especially those whose sell power wheelchairs.


I.  ZPIC Audits Are Likely to Continue Climbing in Light of the OIG’s Report:

As the OIG’s July 2011 report details, approximately 61% of the power wheelchair claims billed to Medicare during the period reviewed were either medically unnecessary or lacked sufficient documentation for the OIG to determine medical necessity.   Collectively, these improper billings accounted for $95 million of the $189 million paid by Medicare for power wheelchairs.

II. Types of Problems Noted with Power Wheelchair Claims:

In reviewing these Medicare power wheelchair claims, the OIG conducted a random sample of 375 claims.  The OIG’s review included both standard and complex wheelchairs.  Based on records submitted by DME suppliers, the OIG found that:

  • 9% of all power wheelchairs were medically unnecessary
  • 52% had claims with insufficient documentation to determine medical necessity.

A number of specific problems are outlined in the OIG’s July 2001 report.  Two of the most significant concerns included:

  • Some Medicare patients received power wheelchairs when only a manual wheelchair, cane, or walker was needed.
  • Many of the claims were for power wheelchairs appeared to be justified and medically necessary based on suppliers’ records. However, when the OIG examined the corresponding ordering physicians’ records, most of these same power wheelchairs were found to be either:
    • Medically unnecessary, or
    • Insufficiently documented, or
    • Undocumented.

Essentially, the suppliers’ records were either unsupported, or, in some cases, were contradicted by the related ordering physicians’ medical documentation.

III.  Summary of the OIG’s Findings:

The OIG’s July 2011 report is especially significant in light of the fact that the agency previously issued two prior reports based on the same sample of power wheelchairs.  While the earlier reports noted that there significant coding and documentation requirements, this recent report focuses on supplier compliance deficiencies.  Summarizing its findings among the three reports, the OIG noted that 80% of the power wheelchair claims sampled did not meet Medicare’s documentation and / or coverage requirements. The OIG concluded its report by saying:

“Although CMS has taken steps since 2007 to decrease errors among suppliers of power wheelchairs and other DME, Medicare has paid significantly more in recent years for power wheelchairs than it did in 2007. These increases may indicate that CMS continues to pay for power wheelchairs that are not medically necessary and/or have claims that do not meet documentation requirements.”

IV.  Practical Impact of the OIG’s Findings:

As a participating provider, power wheelchair suppliers have an obligation to ensure that their claims fully comply with Medicare’s coverage and billing requirements.  Unfortunately, as the OIG’s report reflects, most of the power wheelchair claims paid by Medicare have not met these requirements.

From a practical standpoint, the OIG’s findings are not new – both physicians prescribing power wheelchairs and the suppliers of this equipment have repeatedly failed to either meet Medicare’s documentation requirements or show that this equipment is medical necessity for the care of the patient and that less expensive assistive devices (such as a cane, walker or manual wheelchair) are insufficient to meet the patients’ medical needs.  As a result, these claims have been regularly examined by various government law enforcement agencies (e.g. OIG, the Federal Bureau of Investigation and the U.S. Department of Justice) and CMS’ contractors (e.g. ZPICs), and DME Medicare Administrative Contractors (DME MACs)).  With the release of this report, suppliers will likely find their practices under extended scrutiny.

Both physicians who prescribe power wheelchairs and DMEPOS suppliers who fill these prescriptions must ensure that their practices fully comply with applicable statutory and regulatory requirements.  As discussed below, the completion of agap analysis is an essential element of an effective Compliance Plan.

V.  Conducting a Gap Analysis of Your Power Wheelchair Claims Documentation Before an Audit is Conducted:

From a compliance standpoint, unless they have recently done so, all power wheelchair suppliers should immediately conduct a gap analysis to determine whether their practices fully comply with applicable statutory and regulatory requirements. Gap analyses are routinely used in practically every industry to assist Compliance Officers and others in identifying corrective actions that need to be taken in order to bring an entity’s practices to an acceptable baseline of compliant operations.  Gap analyses conducted by health care providers must analyze two aspects of their practices in order to ensure compliance.  These include:

Requirement #1:  A review of their documentation, coding and billing practices.  Additionally, the evidence must reflect that the power wheelchair billed was medically necessary and appropriate.

Requirement #2: A review of the supplier’s business practices to ensure that the supplier is not committing violations of the Federal Anti-Kickback, Stark or other statutory enforcement requirements.

This article focuses on the first set of requirements set out above.  Every gap analysis begins with a review of applicable statutory and regulatory provisions.  Additionally, suppliers must assess Medicare’s latest guidance covering documentation, coding and billing requirements.  In addition to issuances by CMS, Local Coverage Determinations (LCD’s), Local Medical Review Policies (LMRP’s) must be reviewed so that specific regional directives are also identified.

Upon completing an analysis of the regulatory landscape, suppliers must next conduct a baseline assessment of its existing documentation, coding and billing practices. At this point in the process, a supplier can compare its practices with the government’s requirements. This process is often referred to as a gap analysis. In this fashion, a supplier is able to use this performance measurement tool to determine the extent to which action must be taken to bring the supplier’s practices up to the desired level of compliance.

VI.  CMS’s Power Wheelchair Documentation Requirements:

As an initial starting point, power wheelchair suppliers should examine the “Face-to-Face Examination Checklist” that has been issued by CMS in MLM Matters Number SE1112.  As the guidance reflects, Power Wheelchairs are one of several devices collectively classified as “Power Mobility Devices” which qualify for coverage under Medicare Part B.

CMS has defined “Power Mobility Devices” as covered items of DME which include a Power Wheelchair or a Power Operated Vehicle (POV) that a beneficiary uses in the home. Effective May 5, 2005, CMS revised its national coverage policy to create a new class of DME.  This new class of equipment was identified as “Mobility Assistive Equipment” (MAE), which included a continuum of technology–  from canes to power wheelchairs.

            A.        Ordering / Treating Physician Requirements.

           Regardless of how they are described, prescribing or ordering physicians are the proverbial “front-line” in the claims process. These physicians are responsible for determining whether a PMD is medically necessary and appropriate.  If so, the physician must:

Provide the power wheelchair supplier with supporting documentation consisting of portions of the medical record essential for supporting the medical necessity for the PMD in the beneficiary’s home. In order to document the need for a PMD there are a few specific statutory requirements that must be met before the ordering physician can issue a written prescription for the equipment: 

“1. An in-person visit between the ordering physician and the beneficiary must occur. This visit must document the decision to prescribe a PMD.  

2. A medical evaluation must be performed by the ordering physician. The evaluation must clearly document the patient’s functional status with attention to conditions affecting the beneficiary’s mobility and their ability to perform activities of daily living within the home. This may be done all or in part by the ordering physician. If all or some of the medical examination is completed by another medical professional, the ordering physician must sign off on the report and incorporate it into their records.  

3. Items 1 and 2 together are referred to as the face-to-face exam. Only after the face-to-face examination is completed may the prescribing physician write the prescription for a PMD. This prescription has seven required elements and is referred to as the seven-element order which must be entered on the prescription only by the physician.  

4. The records of the face-to-face examination and the seven-element order must be forwarded to the PMD supplier within 45 days of the completion of the face-to-face examination. 

5. CMS’ National Coverage Determination requires consideration as to what other items of mobility assistive equipment (MAE), e.g., canes, walkers, manual wheelchair, etc., might be used to resolve the beneficiaries mobility deficits. Information addressing MAE alternatives must be included in the face-to-face medical evaluation.”  (MLM SE 1112, page 2 of 7). 

Once the above requirements have been met, an ordering physician can properly issue a prescription for a PMD.

            B.        Ordering / Treating Physician Requirements.

As MLM SE 1112 reflects, the following checklist is not to be used as a substitute for a patient’s underlying medical records.  Having said that, the checklist serves as a helpful tool for verifying that an ordering physician’s documentation (as reflected by the patient’s medical records) are both complete and sufficient to meet Medicare’s coverage requirements.  The following information should be fully documented in the patient medical records:

Documentation of “History” Component

The medical record for the patient includes the following history:

_____ Signs/Symptoms that limit ambulation;

_____ Diagnoses that are responsible for these signs/symptoms;

_____ Medications or other treatment for these signs/symptoms;

_____ Progression of ambulation difficulty over time;

_____ Other diagnoses that may relate to ambulatory problems;

_____ How far the patient can ambulate without stopping and with what assistive device, such as a cane or walker;

_____ Pace of ambulation;

_____ History of falls, including frequency, circumstances leading to falls, what ambulatory assistance (cane, walker, wheelchair) is currently used and why it is not sufficient;

_____ What has changed in the patient’s condition that now requires the use of a power mobility device;

_____ Reason for inability to use a manual wheelchair; such as assessment of upper body strength;

_____ Why does the patient need a power wheelchair rather than each level of mobility assistive equipment (a cane, walker, optimally configured manual wheelchair, scooter)?

_____ What are the reasons that the patient should not or could not use a cane, walker, optimally configured manual wheelchair or power operated vehicle (scooter) in the home to satisfy their needs? and

_____ Description of the home setting, including the ability to perform activities of daily living in the home, as well as the ability to utilize the PMD in the home.

Documentation of Examination Component

The physical examination is relevant to the patient’s mobility needs and the medical record for the patient contains:

_____ Weight and Height

_____ Musculoskeletal examination

• Arm and leg strength and range of motion;

_____ Neurological examination

• Gait

• Balance and coordination

• If the patient is capable of walking, the report should include a documented observation of ambulation (with use of cane or walker as appropriate).

VII.  Conclusion:

DMEPOS suppliers have an obligation to ensure that power wheelchairs billed to Medicare fully meet the program’s documentation, coding and billing requirements. To that end, it important that suppliers carefully examine both their relationships with prescribing suppliers and the documentation of medical necessity associated with any claims billed to Medicare.  Importantly, it isn’t merely a paper-only exercise which requires that you “document” medical necessity – a patient must actually require this type of assistive device.  Therefore, the documentation must accurately reflect a patient’s diagnosis, signs / symptoms and clinical limitations which limit ambulation and necessitate the use of a power wheelchair.

At the end of the day, both the physician who “certifies” that a power wheelchair is medically necessary and the DME supplier who “fills” the prescription for the chair can be help liable for submitting an invoice for a wheelchair that is not medically necessity.  If your DME company is subjected to a ZPIC audit of the power wheelchairs and other devices / supplies it has billed to Medicare, it is ESSENTIAL that you are able to show that the device at issue was, in fact, medically necessary.  Waiting until you have been audited by a ZPIC to request supporting documentation from an ordering physician is too late.  By that time, a physician may have closed his practice, passed away, or lost the documentation you need.  DME suppliers should approach documentation like we were taught as young adults to approach driving:  “Drive Defensively.” Assume you will eventually be audited — make sure your documentation is accurate and complete.  How should you respond if a physician cannot provide sufficient documentation?  Don’t fill the prescription!

robert_w_lile-150x150Robert W. Liles, Esq., serves as Managing Partner at Liles Parker.  Robert and other attorneys at our health law firm have extensive experience representing health care providers in ZPIC audits of post-payment claims and in assisting providers get off of prepayment review.  Additionally, we can assist with the development and implementation of an effective Compliance Program.  Should you have questions, please call Robert for a complimentary initial consultation.  He can be reached at:  1 (800) 475-1906.

Healthcare Providers Aren’t Covered Under the Red Flag Rules

Red Flag Rules(December 12, 2010):  Under the “Fair and Accurate Credit Transaction Act of 2003,” the Federal Trade Commission (FTC) was required to establish regulations mandating that “creditors” and “financial institutions” develop and implement Identity Theft Prevention Programs.  These programs were aimed at identifying, detecting and responding and, ultimately, preventing identify theft from occurring in connection with “covered accounts” maintained or handled by creditors and financial institutions.  The patterns, practices and / or specific activities which could indicate that identify theft was occurring was referred to by the FTC as “Red Flags.”  The program was therefore commonly known as the “Red Flags Rule.”  Since enacted, the legislation has been widely criticized by health care providers and their professional associations, lawyers, accountants and other professionals who argued that the definition of “creditor” was overly broad and was never intended to cover their work / organizations.  After facing both lawsuits and growing Congressional concerns, the FTC delayed enforcement of the rule so that Congress could consider limiting the scope of the rule.

Both the House and the Senate have recently passed the “Red Flag Program Clarification Act of 2010.”  President Obama is expected to sign the legislation before the end of the year.  As Senator Christopher Dodd commented after the bill was passed, this legislation:

“makes clear that lawyers, doctors, dentists, orthodontists, pharmacists, veterinarians, accountants, nurse practitioners, social workers, other types of healthcare providers and other service providers will no longer be classified as ‘creditors’ for the purposes of the Red Flags Rule just because they do not receive payment in full from their clients at the time they provide their services, when they don’t offer or maintain accounts that pose a reasonably forseeable risk of identity theft.”

While most health care providers will be thrilled to hear of these changes (few businesses, regardless of type, want to be covered by the Red Flags Rule), it is essential to recognize that identity theft is, in fact, a growing problem.  Therefore, the most prudent course would be for Compliance Officers to incorporate procedures into their Compliance Plan which will help prevent identity theft from taking place.  Moreover, should it occur, your practice should have procedures in place to help minimize any adverse impact from such an occurrence.

Liles Parker attorneys provide health law advice to health care providers around the country.  Our attorneys have extensive experience working with providers to establish effective Compliance Plans for a wide range of organizations.  Identify theft is yet another risk area to be considered when reviewing and / or revising your Compliance Plan.  Please feel to call us for a free consultation.  We can be reached at 1 (800) 475-1906.         


Under Health Care Reform Legislation, Stark Law Whole Hospital and Rural Provider Exceptions are Changing

October 22, 2010 by  
Filed under Compliance

Stark Law Whole Hospital Exception(October 22, 2010):  It’s not exactly breaking news to anyone in the hospital industry that the U.S. Congress and the regulators at the Center for Medicare and Medicaid Services seem bent on preventing or eliminating physician referrals to hospitals in which they invest. With the passage of health reform legislation in March of this year, Congress approved yet another round of sweeping measures designed to eliminate or prevent the growth of physician investment in hospitals to which they refer by drastically changing both the rural provider and whole hospital ownership exceptions to the Stark Law. Here are a few key points to be aware of if you invest or work in a physician-owned hospital and you rely on the Stark Law rural provider or whole hospital exceptions to protect physician-investor referrals to the facility:

1. No new physician-owned hospitals after December 31, 2010 – The new law imposes a total moratorium on Medicare certification of new physician-owned hospitals that would rely on either of these exceptions to protect investor referrals unless they have a provider agreement in place as of December 31, 2010.

2. Cap on Total Physician Ownership Percentage – Health reform legislation capped total physician investment in existing Medicare-certified facilities at whatever total percentage physician ownership a facility had on March 23, 2010, the date the law was passed. Physician owners can still buy and sell their interests, but total physician ownership may not exceed the capped amount. If your physician investors have increased their total ownership percentage since March 23, 2010, they will have 18 months from that date to take action to comply with the new law.

3.  No Bed Increases Without An Exception from CMS – The legislation also froze the number of beds a physician owned, Medicare-certified hospital may have unless it is granted an exception by CMS to increase its capacity. The new law defines the basic criteria for an exception, but CMS has until December 31, 2012 to promulgate regulations implementing the exception process. You may not put new beds into service and continue to have physician investors refer to your facility until your hospital has been granted an exception.

4. New Disclosure and Reporting Requirements – There were a host of new disclosure and reporting requirements added by the legislation, including mandatory disclosures to patients referred or treated by an investor, public disclosures on hospital websites and in public advertising about physician ownership, and an annual report to the Secretary of the Dept. of Health & Human Services that identifies all physician and non-physician owners or investors in a hospital, as well as the nature and extent of their ownership and investment interests. Also, the law includes a mandate for the Secretary of HHS to post on its website all investment information reported pursuant to these new requirements.

5. New Patient Safety Requirements – Finally, there are new patient safety requirements that mandate a disclosure to, and written acknowledgement from, all patients regarding whether a physician is available on-site, 24-hours a day, as well as a requirement that the hospital provide assessment and initial treatment for all patients and the capacity to refer and transfer patients to hospitals with the capability to treat the needs of each patient that can’t be appropriately treated on-site.

CMS recently proposed regulations implementing most of the above described legislative changes.

Jennifer Papapanagiotou, J.D., is a Partner at Liles Parker, Attorneys & Counselors at Law.  She is an experienced health care attorney with more than a decade of experience assisting providers with structuring or re-structuring their businesses and contractual relationships to comply with Federal and State health care fraud and abuse laws, including the Stark Law. Should you have questions regarding the Stark Law, the Anti-Kickback Statute, or the myriad other health care fraud and abuse laws and regulations, please give us a call at 1 (800) 475-1906.

CMS Publishes Stark Self-Disclosure Protocol

CMS Has Published Its Stark Self-Disclosure Protocol(September 30, 2010): The Health Care Reform Act has dramatically changed the future of health care for millions of Americans.  While many of its provisions are directed at access and affordability issues, a significant portion of the Act addresses various loopholes in existing statutory and regulatory provisions aimed at fighting health care fraud.  One of these statutes is the “Physician Self-Referral Statute,” Section 1877 of the Social Security Act, also known as “Stark.”  Section 6409 of the Health Care Reform Act required that the Secretary, Health and Human Services (HHS) work with HHS’ Inspector General of HHS to establish a Medicare self-referral disclosure protocol.  Last week, CMS published its Stark Self-Referral Protocol to be used by providers when disclosing Stark violations.  Notably, this protocol is specifically limited to Stark issues.

As the Stark Self-Disclosure protocol discusses:

“Participation in the SRDP [self-referral disclosure protocol] is limited to actual or potential violations of the physician self-referral statute. The OIG’s Self-Disclosure Protocol is available for disclosing conduct that raises potential liabilities under other federal criminal, civil, or administrative laws. See. 63 Fed. Reg. 58399 (Oct. 30, 1998); OIG’s Open Letter to Health Care Providers, March 24, 2009. For example, conduct that raises liability risks under the physician self-referral statute may also raise liability risks under the OIG’s civil monetary penalty authorities regarding the federal anti-kickback statute and should be disclosed through the OIG’s Self-Disclosure Protocol. Disclosing parties should not disclose the same conduct under both the SRDP and OIG’s Self-Disclosure Protocol.”

When evaluating the self-disclosures made, CMS has stated that it will consider the following factors in its assessment of whether or not to reduce any amounts that may be owed due to violations of the Stark statute.  These include:

(1) The nature and extent of the improper or illegal practice;

(2) The timeliness of the self-disclosure;

(3) The cooperation in providing additional information related to the disclosure;

(4) The litigation risk associated with the matter disclosed; and

(5) The financial position of the disclosing party.

 Importantly, there are no guarantees.  CMS has no obligation to reduce any amounts that may be owed.   The Stark statute can be quite complicated and providers facing Stark issues should discuss these points with qualified legal counsel when deciding whether or not to use the self-disclosure protocol.

Liles Parker attorneys are experienced in assessing business arrangements which may implicate the Stark statute.  Should you have questions regarding Stark or this self-disclosure protocol, please give us a call at:  1 (800) 475-1906.  

ZPICs and PSCs are Enforcing Strict Medicare Signature Requirements

Medicare Signature Requirements(August 4, 2010):  Is your practice complying with Medicare signature requirements? Earlier this year, the Centers for Medicare and Medicaid Services (CMS) issued updated guidance, Change Request (CR) 6698, to be used by Medicare contractors (including Medicare Administrative Contractors, affiliated contractors, CERT contractors, ZPICs and PSCs) when conducting claims reviews of medical documentation submitted by Medicare providers.  CMS reportedly issued this guidance to “clarify and update” various sections of the Program Integrity Manual.  Importantly, this guidance is not intended to supplant any existing specific requirements that may be contained in LCDs or other CMS manuals which may address specific signature requirements (such as signature and timeliness requirements which must be made in connection with Treatment Plans or Plans of Care prepared by health care providers in both private pracice and in clinics.   Several examples of the strict approach that CR 6698 requires include:

  •  For medical review purposes, Medicare requires that services provided / ordered be authenticated by the author.  The method used shall be a hand written or an electronic signature.  Stamp signatures are not acceptable. 

Our comments:  Despite the fact that “stamp signatures” have been problematic for years, we are still seeing cases where a provider has continued to use a stamp of his signature on orders and at the end of record entries. Get rid of signature stamps in your office or clinic!  Contractors that may be looking for an excuse to deny your claims will readily do so if your have used a stamp instead of documenting your signature by hand. 

  •  If there are other reasons for denial, unrelated to signature requirements, the reviewer shall not proceed to signature authorization.  If the criteria in the relevant Medicare policy cannot be met but for a key piece of medical documentation which contains a missing or illegible assessment, the reviewer shall proceed to the signature assessment. 

 Our comments This requirement reinforces the fact that Medicare reviewers are required to assess the adequacy of medical documentation (and presumably of medical necessity), separate and apart from their review of the signature itself.  Once they determine that the medical documentation is otherwise acceptable for coverage purposes, then they will assess whether the signature meets applicable requirements.

  •  If the signature is missing from an order, ACs, MACs, PSCs, ZPICs and CERT shall disregard the order during the review of the claim.

 Our comments This requirement can be extremely harsh, especially when considering the fact that many claims depend on an initial order by a referring or ordering physician.  If in the absence of such an order, the claim will be denied, it becomes readily apparent that providers must be especially diligent in their review of orders to ensure that each one is properly signed.

 These examples represent only a few of the many examples and changes highlighted in CR 6698.  We strongly recommend that you review these changes with each of the providers in your practice or clinic to ensure that everyone is aware of how CMS expects its contractors to proceed when conducting medical reviews.

Should you have any questions regarding these changes to the signature requirements, don’t hesitate to contact us. Liles Parker attorneys have extensive experience representing health care providers in both post-payment and pre-payment audits.  Our attorneys are also experienced in assisting providers with the development and implementation of an effective Compliance Plan.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.




Identity Theft — Red Flags Rule — Treating Doctors Like Banks Is Delayed Once Again

Has Your Practice Implemented the Red Flags Rule?(July 5, 2010): The Federal Trade Commission (FTC) has agreed to once again delay enforcement of its illogical and onerous identity theft Red Flags rule with respect to physicians. The Red Flags rule arose under the Fair and Accurate Credit Transactions Act of 2003 and requires “financial institutions” and “other creditors” to develop written plans to detect identify theft in their day-to-day operations.  Under the FTC’s interpretation of the rule, physicians who permit patients to pay after they have rendered medical service are transformed into “creditors.”Extension of the rule to physicians has been delayed several times as the extent of the burden on health care providers has become clear.  As recently as May 28, the FTC made note of the concerns:

“At the request of several Members of Congress, the [FTC] is further delaying enforcement of the ‘Red Flags’ Rule through December 21, 2010, while Congress considers legislation that would affect the scope of entities covered by the Rule….The Commission urges Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the Rule and obviate the need for further enforcement delays.”

The June 25th agreement arises in connection with a suit filed against the FTC last month by the American Medical Association (AMA) and others seeking to prevent enforcement of the Red Flags rule and alleging that the FTC overreached its bounds in seeking to enforce the rule against physicians.   A similar complaint by the American Bar Association (ABA) is currently making its way through the appeals process after the U.S. District Court for the District of Columbia enjoined enforcement of the rule against lawyers.  Until a ruling is issued in the ABA case, the AMA case will be held in abeyance and physicians will be safe from the Red Flags rule.

Health Care AttorneyShould you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Your Next “Patient” May be an Undercover Agent Performing a Medicare Audit on Your Practice.

Is a Medicare Secret Shopper Audit Taking Place at Your Practice? Have You Implemented Effective Compliance Measures?

(April 10, 2010): As the American Medical Association (AMA) recently reported on March 22nd, 2010, health care providers may find themselves subjected to a Medicare Secret Shopper audit by fellow health care providers and others hired by the government to conduct undercover reviews and investigations.  In a speech he made March 10th, 2010, President Obama expressed interest in a proposal by Senator Tom Coburn, M.D. (R-OK) to have physicians and other health professionals go undercover and pose as patients to root out fraud. Apparently, President Obama included it among with several other Republican proposals which were considered when the recently passed Health Care Reform Bill was enacted.  Dr. Coburn tried to amend the Senate health reform bill with a provision that would direct the Department of Health and Human Services (HHS) to establish a demonstration project for undercover investigations.  While a number of demonstration projects were ultimately included in the legislation, it isn’t clear if this is one of them.

I.  Undercover Medicare Secret Shopper Audit by Patients: AMA’s Response:

Not surprisingly, the AMA has dismissed the idea of paying physicians to pretend to be patients in an effort to smoke out criminal activity.  As the AMA responded:

“The AMA has zero tolerance for health fraud, but there’s no evidence that the undercover-patient tactic would be effective or efficient in finding fraud. . . We are partnering with HHS and the Justice Dept. to address fraud, and we strongly recommend the government target areas where fraud occurs most, instead of wasting physician time that could be better spent caring for real patients.” (AMA President J. James Rohack, M.D.)

Notably, Medicare Secret Shopper audits and investigations are nothing new.  Both HHS and DOJ have used individuals posing as patients or employees in investigations for as long as health care fraud has been prosecuted by the government.

II.  Does The Performance of Undercover Medicare Secret Shopper Audits Affect Your Compliance Plan?

Theoretically, the proverbial “facts are the facts.”  In other words, it really shouldn’t matter if you know you are being subjected to a Medicare Secret Shopper audit or not.  Nevertheless, from a compliance standpoint, treating another health care provider could conceivably present a number of additional risks not normally encountered in a standard billing and coding Medicare audit.  Moreover, this may raise quality of care issues due to differences in professional opinion, variances in standards of care, etc.  In any event, all physicians should work with their legal counsel to develop and implement an effective Compliance Plan and Program.  Hopefully, in doing so, it won’t matter who enters your office — a bona fide patient or an undercover physician — your care will be equally excellent.

Healthcare LawyerRobert W. Liles, Esq. is Managing Partner at Liles Parker.  Should you have any questions regarding compliance issues, don’t hesitate to contact us.  For a complimentary consultation, you may call Robert or one of our other health lawyers at: 1 (800) 475-1906.

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