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CMS Awards Zone 6 ZPIC Contract to SafeGuard Services

Audit(August 15, 2015): The Centers for Medicare and Medicaid Services (CMS) has awarded the contract for Zone Program Integrity Contractor (ZPIC) services for Zone 6 to SafeGuard Services, LLC. Zone 6 encompasses Maryland, Delaware, Washington, D.C., Pennsylvania, New Jersey, New York, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire, and Maine. SafeGuard is the current program safeguard contractor (PSC) in this jurisdiction, and its functions as a ZPIC will be similar to its duties as a PSC. SafeGuard is also the ZPIC for Zone 1 (California, Nevada, and Hawaii) and Zone 7 (Florida).

As the new Zone 6 ZPIC, SafeGuard will be responsible for investigating suspected waste, fraud, and abuse among Medicare providers. ZPICs have the authority to conduct unannounced, onsite inspections of providers’ facilities, perform pre-payment and post-payment reviews of claims, impose payment suspensions, recommend to CMS that a provider’s billing privileges be revoked, and refer providers to law enforcement for investigation. In our experience, SafeGuard is among the most aggressive ZPICs in the country.

If you receive correspondence from SafeGuard Services or any other ZPIC, we strongly recommend that you contact an experienced health care attorney as soon as possible. You should never assume that ZPIC audits or inspections are merely “routine.”

Liles Parker attorneys assist all types of providers across the country with responses to Zone 6 ZPIC investigations, audits, and other administrative actions. If you have questions or concerns about a ZPIC investigation, please contact our office for a free consultation.

Liles Parker has offices in Washington DC, Houston TX, McAllen TX and Baton Rouge LA.  Our attorneys represent health care professionals around the country in connection with ZPIC audits of Medicare claims, licensure matters and transactional projects.  Need assistance?  For a free consultation, please call: 1 (800) 475-1906.

 

CMS Issues Instructions on the Impact of Sequestration on Survey and Certification Activities – How Will it Affect Providers?

Impact of Sequestration(May 20, 2013) In April, 2013, CMS issued S&C: 13-23-ALL which discusses the impact of sequestration on survey and certification activities.  This action could directly and significantly affect providers. First, the memo instructs that providers who elect not to take assignment of provider agreements during acquisitions may face longer wait-times for on-site surveys that are necessary for Medicare participation.  This will place more pressure on providers to accept assignment and will increase the risk of successor liability.  Thus, providers who might otherwise have considered declining assignment and now take assignment will need to increase the intensity of their due diligence during the acquisition period, and also make stronger provisions in the purchase agreement for such things as “buckets” and escrow accounts.

There may be longer wait times for IPPS exclusions or requests to add locations for existing providers.  This includes longer wait-times for on-site surveys and certification activities for branches or secondary locations to an existing home health agency, hospice, hospice inpatient units, outpatient PT extension sites, swing beds or ESRD services, and new exclusions from IPPS for rehabilitation, psychiatric units or hospitals.

States will now be required to obtain Regional Office approval before conducting second revisit surveys and Central Office approval before conducting third or fourth revisit surveys, and there may be loner wait times before revisits are conducted.  What is not specified is any tolling of statutory time frames for denial of payment for new admissions or termination.  This will place even greater pressure on providers to ensure continuing compliance and strong survey management.

Special Focus Facilities (“SFF”) will also be affected. States are instructed to schedule a final “last chance” onsite visit for facilities that have been on the SFF list for more than 18 months, which may result in termination unless the survey “reveal[s] appropriate improvement or unless there is a major new development that CMS concludes is very likely to eventuate in timely and enduring improvement in the quality of care or safety.”  Additionally, states are instructed to review the progress of all facilities on the SFF list for more than 12 months and to discuss with CMS staff the plan for further action.  Finally, no new facilities will be selected for the SFF list until further notice.  The result is stated to speed final resolution, but “temporarily reduce” the number of SFFs.

The memo also instructs states to discontinue all further Tier II targeted surveys for home health agencies but to continue to ensure that no agency goes without a survey for more than three years.  Finally, there are requirements for Critical Access Hospitals, Life Safety Code in nursing facilities, organ transplant program surveys, and compliant investigations of hospitals.

Liles Parker attorneys have a wealth of experience in addressing survey and certification issues in a wide variety of areas.  Anyone seeking guidance in the area should contact Michael Cook at (202) 298-8750 for a free consultation.

The Medicare Audit Improvement Act Appears Promising at First Glance. Is it Really the Answer?

Is the Medicare Audit Improvement Act Really Going Help Health Care Providers?(November 12, 2012): The AHA Supports the Medicare Audit Improvement Act of 2012.  Is this Legislation Going to Help Physicians or Not?  On October 16, 2012, a new bill was introduced by Representative Sam Graves (R-MO) entitled the “Medicare Audit Improvement Act of 2012.” This legislation was immediately supported by the American Hospital Association (AHA), which called the act “much-needed guidance for medical necessity audits, keeping auditors out of making medical decisions that should be between patients and their physicians.”

 

I.  What Will the Medicare Audit Improvement Act Require?

If passed, the law would require that the Secretary for the Department of Health and Human Services (HHS) implement certain regulations with respect to HHS’s national audit programs (such as those conducted by Recovery Audit Contractors (RACs) and Zone Program Integrity Contractors (ZPICs)).  Notably, these regulations would specifically require that CMS (and through the agency, its various Medicare contractors) take number of steps designed to better address a number of long-standing concerns expressed by physicians, hospitals and other health care providers participating in the Medicare Program.  Unfortunately, as discussed below, these proposed changes would primarily apply to Part A services — not the Part B services administered and billed by most non-hospital Medicare participating providers.  Proposed changes include:

  • Establishing a consolidated limit for all medical record requests;
  • Implementing financial penalties against audit contractors for poor performance;
  • Improving transparency of Medicare contractors like RACs and ZPICs;
  • Modifying the recent Part A to Part B Rebilling Demonstration Project;
  • Allowing, as appropriate, rebilling of denied inpatient claims as outpatient claims; and
  • Requiring physician review of Medicare denials.

This law is primarily in response to the recent outcry by hospitals and health systems regarding the practices of RACs when evaluating short-stay inpatient admissions. In these situations, RACs have been alleged to have denied inpatient claim outright, without giving credit for services provided on the outpatient side that would otherwise be covered and eligible for some payment. While the Part A to Part B Rebilling Demonstration Project has attempted to remedy this, it is slow-moving and only open to a limited number of providers who are willing to give up their appeal and other rights. As such, the Medicare Audit Improvement Act would give additional relief to hospitals burdened by these audits.

II.     The Medicare Audit Improvement Act and Part B Payments:

If enacted, this legislation will have a significant impact on hospital audits conducted by Medicare contractors.  Importantly, the definition of “Medicare contractor” under the proposed Act is quite broad and includes Medicare Administrative Contractors (MACs), RACs, and ZPICs.  However, the Medicare Audit Improvement Act is intended to only apply to Part A services.  Since most non-hospital health care providers participating in the Medicare program (including, but not limited to: physicians, clinicians, therapists, DME suppliers, and other health care professionals) provide Part B services, this legislation is not expected to provide any relief.

III.  The Medicare Audit Improvement Act Seeks to Penalize Contractors Who Fail to Conduct Their Duties Appropriately.  Is This Fair?

As a review of the bill will show, sections of the legislation, including those related to contractor transparency, financial penalties, and limiting records requests, apply specifically to RACs and do not apply to other “Medicare contractors” as defined under the statute.  Moreover, even if passed, this legislation will have little, if any, impact on Medicare Part B providers.  Is it fair to only penalize RACs for “poor performance”?  Should ZPICs be penalized if claims they deny are ultimately found to be payable?  Don’t answer just yet. . . .

Over the years, we have handled numerous cases where a Medicare contractor denied a claim on the basis of “lack of documentation” or on another basis that is clearly contradicted by a review of the documentation sent to the contractor for assessment.  We share our clients’ concerns — these cases often reflect a fundamental error on the part of the contractor.  Nevertheless, once a claim is denied by a ZPIC or RAC, a provider virtually no ability to have an audit terminated.  Instead, a provider’s only option is to press their concerns and lay out their arguments in support of payment through the administrative appeals process.

IV.  While ZPICs and RACs Occasionally Miss Evidence Clearly in a File, Providers Need to Keep The Contractor’s Actions in Perspective:

Stepping back for a moment and considering contractor audits as an impartial observer rather than as an advocate for our clients can be quite helpful in understanding the frustration sometimes exhibited (albeit in a professional fashion) by ZPIC representatives during hearings before an Administrative Law Judge (ALJ).  As ZPIC reviewers have pointed out in prior hearings, when assessing whether a claim should be paid, they are obligated to apply the applicable medical necessity, coverage, documentation, coding and billing guidelines published by the Centers for Medicare and Medicaid Services (CMS) and its MACs.  This guidance is often in the form of Local Medical Review Policies (LMRPs), Local Coverage Determination (LCD) issuances, and a variety of other publications issued by the government and its agents.  While not discussed, it has become abundantly clear that ZPICs are not intended to exercise their personal judgment when assessing a providers claims.  Rather, their mandate is to apply the above-discussed guidelines.  In contrast, ALJ’s enjoy a significantly broader degree of discretion.  Although they will undoubtedly consider these same guidelines, based on other reasons, an ALJ may ultimately hold that a claim should be paid.   Additionally, in some instances, by the time a claim is heard by an ALJ, records cited by a ZPIC as “missing” have later been found and supplemented into the record by a provider.  With this new information, an ALJ may decide to overturn a prior denial.  Furthermore, it is not at all uncommon for a ZPIC to deny a claim because the physician’s handwriting (and Progress Note) could not be read.  In several cases, we have been able to remedy this deficiency by having the notes as issue “transcribed” and typed out so that a reviewer can easily read the entries.  Once transcribed, an ALJ may have additional information upon which to consider whether a claim should be paid.  Finally, it is essential to keep in mind that the ALJ level is the first time that a provider will have an opportunity to tell its side of the story, thereby addressing and refuting a ZPIC’s concerns.

V.  What Should You Do to Prepare for a Prepayment Review or Postpayment Audit by a Medicare or Medicaid Contractor?

In light of the above, we believe that this issue is much more complicated than it may initially seem.  ZPICs and RACs are far from perfect.  They miss documents and evidence when conducting their reviews and their failure to fully review a record can lead to the improper denial of a claim.  Nevertheless, many times ZPICs and RACs do, in fact, have a basis for initially denying a claim  — you and I may not agree with their assessment, but in most instances they are likely to have at least a colorable argument in support of their denial decision.  The mere fact that an ALJ later overturns a denial does not necessarily mean that the ZPIC has acted improperly.  As described above, the record and arguments reviewed by an ALJ can greatly vary from the information first sent to, and considered by, the ZPIC.

As we have previously discussed, physicians and their staff members need to go back to the basics.  Examine your Local Coverage Determination (LCD) provisions which cover everything from “medical necessity” to documentation requirements for certain services. Read the 1995 and 1997 E/M Guidelines Dust of your copy of the Medicare Benefit Policy Manual.  Unfortunately, physicians are going to continue to experience problems in this regard until they read, understand and apply the same guidelines as those utilized by the RACs and ZPICs.  Internal Audits, ongoing education and training are the key to reducing your error rate and improving your compliance with applicable rules and regulations.  Don’t wait until you are facing an audit — examine your documentation practices NOW  and take remedial action to repay any overpayment which may be owed and educate your staff so that any identified deficiencies do not reoccur.

Healthcare Lawyer

Robert W. Liles is the Managing Partner at the health law firm, Liles Parker PLLC.  Our attorneys represent a wide variety of health care providers around the country.  Robert handles health care compliance reviews, internal audits, Medicare and Medicaid post-payment overpayment appeals, fraud and abuse investigations, and a number of other health care matters. He also assists providers in responding to prepayment audits conducted by ZPICs (and now RACs).  Should you have any questions, please feel free to call Robert today for a complimentary consultation.  Robert and our other attorneys can be reached at: 1 (800) 475-1906.

 

Data Mining is Being Used for ZPICs Targeting Purposes

ZPIC Targeting

(November 16, 2011):  Many providers believe that their practice is a normal one – average billings, average patient load, costs of care which are consistent with industry standards – and that they need not be concerned with undergoing a Medicare post payment audit for being a “statistical outlier.” As you may know, Medicare and Medicaid contractors rely heavily on “data mining” to identify potential audit targets. With data mining, Zone Program Integrity Contractors (ZPICs) and other program integrity contractors working for the Centers for Medicare and Medicaid Services (CMS) can look at historical billing data, as well as billing date from regional and local peers of a particular provider, and determine if that particular provider’s billings appear suspect.

I.  What Role Does Data Mining Play in ZPIC Targeting?

While a provider might think its billing is in line with or below that of its peers, it is very important to remember that the Medicare post payment auditors are experts in “slicing and dicing” the data in so many ways that virtually every provider could show up as an outlier. For instance, perhaps the cost per patient, cost per procedure or cost per service plotted high, or maybe the total number of services per patient was high. For length-of-stay (LOS) providers, perhaps the total number of days of service on average was high or the billings per day ended up being high.

II.  Are Your Coding Utilization Ratios Different Than Those of Your Peers?

Moreover, even if a provider thinks they run a “tight ship,” a lot of Medicare claim reimbursement is dictated by the medical necessity of the services provided to each patient. For instance, a provider may have a string of highly complex, highly demanding patients, who need more in-depth care. These same providers may have gained a local reputation for handling high complexity cases, thereby resulting in higher-than-average billing practices.  When a program integrity conducts data mining, outliers will quickly be identified and targeted for audit. Today, ZPICs and other Medicare auditors are actively looking out for providers with aberrant billing practices and have many ways of interpreting the relevant information to justify their audit decisions.

Healthcare AttorneyRobert W. Liles, J.D., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Mr. Liles has extensive experience handling Medicare prepayment and postpayment audits and appeals. For more information or to speak to Mr. Liles, please call 1 (800) 475-1906 today for a free consultation.

RAC Audits of Physician Practices, Home Health, Hospice, and DME Providers, are Expected to Increase.

June 25, 2010 by  
Filed under Home Health & Hospice

RAC Audits of Physician Practices are Expected to Increase.(June 25, 2010): The purpose of this series of articles is to assess the Recovery Audit Contractor (RAC) Program from the perspective of physicians, home health, hospice, durable medical equipment (DME) providers, and other relatively small Medicare providers.  As many non-hospital providers will acknowledge, early cries of wolf by law firms and consultants did a fine job of initially publicizing the RAC threat.  Unfortunately, the threat of a RAC audit now appears to be largely ignored by non-hospital providers due to the seemingly widespread sense that RACs will likely continue to focus their efforts on large, institutional Medicare providers – the ultimate “low hanging fruit” in terms of potential Medicare overpayments. RACs are, in fact, a real threat to physicians and other small Medicare providers, despite the fact the contractors have passed over these providers in the past.

I.  Recent CMS Efforts to Promote RAC Audits of Physician Practices and Other Non-Hospital Providers:

Over the last six weeks, the Centers for Medicare and Medicaid Services (CMS) has sponsored nationwide conference calls titled “Nationwide RAC 101 Call” specifically aimed at physicians, home health, hospices, and DME providers. Further, CMS conducted two general nationwide conference calls discussing the RAC program that were open to all Medicare providers.

These seemingly innocent informational calls were in fact extraordinarily significant, servicing almost as a “touchstone” for CMS and its RAC auditors.  With the completion of these nationwide teleconferences, outreach has now been completed and CMS can affirmatively state that these non-hospital providers have been given multiple opportunities to learn about the RAC program and prepare for a RAC audit.   All states are now eligible for review.

While CMS must still approve “issues” prior to their widespread review by the RACs, the contractors now have the billing data that they need to analyze and identify possible targets.

As physicians and other non-hospital providers prepare for possible audit, it is helpful to review hospitals’ experiences when preparing for and responding to a RAC audit.  On June 22, 2010, the American Hospital Association (AHA) released its findings that the RAC program is having a widespread impact on almost all hospitals, even though many have not even been subjected yet to a RAC audit.[1] In fact, for the first quarter of 2010 alone:

  • 84% of responding hospitals reported that RACs impacted their organization;

  • 49% of responding hospitals reported increased administrative costs; and

  • 17% of the hospitals using external resources to address RACs hired consultants at an average cost of almost $92,000.

So, what do providers and non-hospital Medicare providers need to know about RACs?  This multi-part series will address the following:  First, the purpose and impact of RACs; Second, how to respond to RACs when they come calling; Third, some of the emerging issues for physicians and other small Medicare providers regarding RACs.

II.   What is a RAC?

The RAC program was created by Section 306 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).  Operating under the direction of the Department of Health and Human Services (HHS), RACs are independent third-party contractors tasked with identifying and correcting improper past Medicare payments.  Each of four RACs has jurisdiction over a separate region of the United States.

After a three year demonstration in which RACs identified $1.03 billion in improper Medicare fee-for-service payments, the program became permanent earlier this year.  RACs join scores of other Medicare audit contractors.  CMS created the following table to clarify the role RACs are supposed to play compared to other contractors.[2] However, as we will see later in this series, these roles are not clearly delineated and the overlap in the review process can create substantial confusion and waste.

Role of Medicare Review Contractors

Improper Payment FunctionContractor Performing Function
Preventing future improper payments through pre-pay review and provider educationMedicare claims processing contractors
Detecting past improper paymentsRACs
Measuring improper paymentsCERT [Comprehensive Error Rate Testing]
Performing higher-weighted DRG [diagnosis related group] reviews and expedited coverage reviewsQIOs [Quality Improvement Organization]

RACs are highly incentivized to hunt for evidence of overpayments in high-cost categories of service and to needle out errors that have nothing to do with actual patient care. RACs are paid on a contingency basis so it stands to reason that, during the initial program demonstration, only 4% of improper payments identified were underpayments.  This “bounty hunter” approach also helps to explain why prior audits have focused almost exclusively on high-cost inpatient care services. Recent GAO testimony shed light on this situation and may cause RAC audits or other contractors to shift their focus to entities that do not have hospitals’ long history of review and compliance, namely physicians and other relatively small Medicare providers.  Finally, a substantial percentage of overpayments collected by RACs during the demonstration program resulted from preventable coding errors, countering the myth that CMS is primarily focused on weeding out unnecessary service claims.

Providers in Region C may want to consider that the AHA found hospitals in that region, encompassing nearly 40% of all U.S. hospitals including those in Texas, Florida, and Virginia, reported the highest number of medical records requested, the highest amount of dollars targeted in medical record requests, and the highest number of denied claims (47% of the $2.47 million in denied claims reported in the first quarter of 2010).

III. Are There Any Safeguards to Protect Physicians and Other Small Group Providers From RAC Audits?

Based on the demonstration program, numerous providers and others have expressed concern that RACs are overly aggressive auditors.  Despite some improvements, concerns about the RAC process are likely to persist.  As recent testimony by the GAO Health Care Director pointed out, the oversight of RACs leaves something to be desired.

Changes have been made to reduce the RACs’ unintended incentive to drive up fees (through the improper denial of claims). RACs are now required to pay back their contingency fee if the claim is overturned at any level of appeal, rather than just the first level as in the demonstration program.

Additionally, there are some limitations in place regarding the RACs’ ability to overwhelm providers with record requests.  RACs may not request records more frequently than every 45 days and, for instutitional providers, their requests are limited to 1% of all claims submitted for the previous calendar year.  This is an overall limit, however, meaning that a RAC may determine the composition of the records in an additional document request.  They can – and do – request categories of records up to the limit even if the request is disproportionate the provider’s business.

Finally, none of these improvements address the concern that the first several levels of the appeals process do not provide meaningful recourse for the overly aggressive auditing.

Read A Look at RACs — Part II

Read A Look at RACs — Part III

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.


[1] Available at http://www.aha.org/aha/content/2010/pdf/Q1RACTracResults.pdf

[2] Available at http://www.racaudits.com/uploads/RAC_Demonstration_Evaluation_Report.pdf.

GAO Testimony Recommends CMS Improve Enrollment, Payment, and Oversight Procedures

GAO Testimony(June 23, 2010): Yesterday we told you about recent GAO testimony before Congress regarding the impact of health care reform on HHS enforcement efforts.  On the same day, GAO Health Care Director Kathleen M. King offered Congress testimony that made clear that the Centers for Medicare & Medicaid Services (CMS) continue to face substantial challenges to preventing Medicare fraud and Medicaid fraud, waste, and abuse.  The GAO’s recommendations signal that home health agencies (HHAs) and suppliers of durable medical equipment (DMEs) are likely targets of future audits and that contractors require improved oversight.

King critiqued the enrollment process for prospective HHAs, saying, “We found that the screening process was not thorough.  This may have contributed to a rapid increase in the number of HHAs that billed Medicare in certain states with unusually high rates of billing patterns indicative of fraud and abuse.” (emphasis added).   Similarly, GAO found that the DME enrollment process contains persistent weaknesses.   King assessed that the effectiveness of new enrollment screening authorities provided in the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA) “is unknown and will depend on CMS’ implementation.”

HHAs and DMEs are also identified as vulnerable services that do not receive adequate post-payment review by recovery audit contractors (RACs).  “Because RACs are paid on a contingent fee based on the dollar value of the improper payments identified, during the demonstration RACs focused on claims from inpatient hospital stays, which are generally more costly services.”  Recall that RACs are bounty hunters, explaining their limited focus on classes of high-value claims.  GAO recommends CMS direct other contractors to focus on high vulnerability items and services that RACs are known to overlook.

Next, targeting drug plan sponsors, King reminded Congress of a 2008 GAO study showing that the sponsors covering one-third of all Medicare prescription drug plan enrollees had not completely implemented CMS’ required compliance plan elements and fraud prevention measures.  Although CMS published a final rule to address this failing in April 2010, GAO continues to identify the improved oversight of drug plan sponsors and other contractors as a major need.

Ultimately, GAO offered recommendations to CMS regarding improvement of (1) enrollment screening processes, (2) pre-payment claims review, (3) post-payment claims review, (4) contractor oversight, and (5) the process for addressing identified vulnerabilities.  Regular observers will notice, however, that several of GAO’s June 2010 recommendations are virtually identical to recommendations that date back as far as September 2005 and that are not yet implemented.

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.