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Home Health Compliance Risks are a Significant Issue for Texas and Oklahoma Agencies

March 21, 2012 by  
Filed under Home Health & Hospice

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Agencies Should Fully Evaluate Their Home Health Compliance Risks.

(March 21, 2012): Over the past few weeks, several important events have occurred which should have home health agencies in Texas, Oklahoma and the rest of the country rethinking the adequacy of their existing compliance efforts. The home health compliance practices of many agencies have long been a concern of the Department of Health and Human Services, Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS).  It is therefore essential that agencies assess their home health compliance risks.  Last week, the OIG issued yet another report recommending that CMS further tighten its oversight of home health compliance through the implementation of additional sanctions for non-compliant home health agencies.  Notably, OIG’s report has been issued literally “on the heels” of a significant home health fraud investigation centered in the Dallas, Texas area which was reportedly initiated by Health Integrity, the Zone Program Integrity Contractor (ZPIC) covering Texas and Oklahoma.

I. The OIG’s Home Health Report of Fraud and Abuse:

On March 2, 2012, the OIG issued a report entitled, “Intermediate Sanctions for Noncompliant Home Health Agencies” which examined CMS’ ongoing efforts to identify and sanction home health agencies that were non-compliant with Medicare’s applicable conditions of participation. As detailed in the report, CMS (formerly known as the Health Care Financing Administration (HCFA)) was directed in 1987 to develop and implement “intermediate sanctions” against home health providers violating Medicare rules. These sanctions were anticipated to include civil monetary penalties (CMPs), Medicare payment suspension, and even appointment of temporary management of a noncompliant agency. Initially required to implement these sanctions under the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987), CMS issued a Notice of Proposed Rulemaking in 1991, but subsequently withdrew this notice in 2000.

CMS has stated that it anticipates publishing new proposed rules in September 2012 addressing these “intermediate sanctions.”  Frankly, home health providers and their associates cannot continue down the current path.  While both CMS and the OIG recognize the important role played by home health agencies in the care and treatment of homebound Medicare beneficiaries, the government has made it abundantly clear that participating providers must fully comply with applicable medical necessity, coverage, documentation, coding and billing rules.  Non-compliant providers are being immediately suspended and / or excluded from participating in the Medicare program.  Moreover, health care providers who engage in nefarious activities are being aggressively prosecuted.

II.  Health Integrity’s Audit of Home Health Agencies:

Since winning the contract in 2009, Health Integrity, the Zone 4 ZPIC covering Texas, Oklahoma, New Mexico and Colorado, has conducted a wide variety of Medicare post-payment audits throughout Zone 4.  To their credit, Health Integrity’s post-payment audits have not been limited to merely large metropolitan areas.  Rather, the ZPIC is in the process of “leaving no stone unturned,” conducting home health compliance audits and reviews throughout Zone 4, regardless of size, revenues and / or location.

To be clear, Health Integrity’s audits have not been limited to only home health services.  The ZPIC has actively reviewed the operational, coding and billing practices of a wide variety of Part B health care providers in Zone 4.  Nevertheless, the ZPIC does appear to have redoubled its audits of home health compliance for Texas and Oklahoma providers who appear to be outliers through data-mining activities. After reviewing the homebound status of both prior and current patients, clinicians working for Health Integrity have been thoroughly assessing the care and treatment provided by billing home health agencies.  After carefully assessing the medical records forwarded by the home health agency, in many cases Health Integrity has concluded that it is appropriate to seek extrapolated damages based on the Medicare post-payment audit conducted.

III. Health Integrity is on the Front Line of Home Health Fraud Identification:

Despite the fact that most Texas home health agencies are doing their best to operate within the four corners of the law, there are still a number of providers who are continuing to engage in wrongdoing. Texas home health providers recently received significant negative media coverage for fraudulent and abusive billing practices allegedly committed by agencies within their ranks. As you may have heard, just last week a physician and several home health agency “recruiters” in the Dallas-Fort Worth area were indicted in the largest Medicare fraud scheme in history, allegedly totaling nearly $375 million for home health services either not needed or never provided. Additionally, it was noted that over 75 home health agencies to whom referrals were made have also been implicated in the wrongdoing.  Such an enormous scheme only further demonstrates the fact that fraudulent activity in home health services is continuing, despite the fact that most Texas home health providers are well-meaning organizations, trying in good faith to provide medically necessary services to our nation’s most sick and disabled. Nevertheless, such accusations only increase suspicion and scrutiny of the entire home health industry in this region.

In a separate incident, a news reporter recently had a healthy, yet elderly, woman pose undercover as a potential home health patient when visiting a physician in South Texas.  The reporter noted that the healthy patient was allegedly improperly diagnosed and certified as qualified for home health services. While some providers may be concerned about the use of patients in undercover sting operations such as this, the fact is that improper conduct is occurring, at both the physician referral and the home health agency level, clearly illustrating why law enforcement is concerned that fraud is continuing to occur in this area of practice. In light of these and similar cases, it is clear why Health Integrity appears to be “ramping up” its reviews of home health providers throughout Texas and Oklahoma.

IV.  What Steps Can an Agency Take to Home Health Compliance Risks?

To be clear, there is no proverbial “silver bullet” that can be used by a home health agency to avoid the scrutiny of Health Integrity and / or law enforcement.  Every home health agency in Texas and Oklahoma should expect to be audited.  Rather than wait for such an eventuality, home health agencies should affirmatively review their operations, coding and billing practices to ensure that their practices squarely fall within the rules.  Although not all-inclusive, the following five steps can serve as an excellent starting point when preparing for an audit of your agency’s home health claims:

Recommendation #1  Don’t assume that your current practices are compliant, check them out! Conduct a “gap” analysis and implement an effective Compliance Plan.  While most, if not all, home health agencies will profess to have a Compliance Plan already in place, the real question is whether the existing plan is “effective,” or merely a sample that was obtained by the agency in the past.  No two home health agencies are alike.  As a first step, a home health provider needs to engage qualified legal counsel to advise the organization on whether the agency is properly operating at a baseline level of compliance.  If not, remedial steps must be taken so that the agency can move forward in a compliant fashion.

As you will recall, 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.”  Although HHS-OIG has not announced the deadline for home health agencies to meet this requirement, it is only a matter of time before all health care providers who choose to participate in the Medicare program must have an effective Compliance Plan in place in order to remain a participating provider.

Recommendation #2 As you review 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 Medicare overpayments and is the single best policy you can employ as a good corporate citizen.

Recommendation #3 Don’t merely focus on your claims.  Are your business practices fully compliant with applicable laws and regulations?  Health Integrity and other ZPICs serve an essential role in identifying overpayments and other wrongdoing by health care providers. While an audit will almost always include a request for medical records, you should keep in mind that Health Integrity will not merely be examining your medical documentation.  Should you receive a request for documents, it will probably be broken into two major parts. 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 employees (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.” 

One purpose of this section is to assist the ZPIC in identifying potential business practices which may constitute a violation of the Federal Anti-Kickback Statute, Stark Laws 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 will usually list the patient records and dates of service to be audited.  The number of dates of service audited differs from case to case.  Regardless of whether the ZPIC requests supporting documentation related to 5 claims or 50 claims, it is essential that you never ignore a request for information.  If additional time is needed to assemble the requested information, call the contractor.  Health Integrity has generally been cooperative with providers needing additional time to gather the records being requested.

Recommendation #4:  Remember learning how to “drive defensively” in high school?  Your documentation practices should be approached in a similar fashion.   When is the last time that you have reviewed the applicable documentation requirements set out in the Medicare Administrative Contractor’s latest Local Coverage Determination guidance covering the services you are providing?  Health Integrity’s auditors are excellent at identifying one or more deficiencies in your documentation. While you may disagree with the ultimate conclusions reached by their clinicians, you should not completely discount their assessments.  Health Integrity’s findings should be carefully analyzed so that any problems with your documentation can be promptly addressed.

Recommendation #5 Engage qualified legal counsel and clinical experts to assist with your efforts. If your home health agency is audited, we strongly recommend that you engage qualified legal counsel, with experience handling this specific type of case.  Moreover, don’t be afraid to ask for references and to inquire about the anticipated cost of an engagement.  While it is often difficult to estimate legal costs due to the various factors faced when handling a ZPIC audit case, most experienced health lawyers can give you a range of expected legal fees.

V.  Conclusion:

While an effective home health Compliance Plan cannot fully shield an organization from risk, the implementation of, and adherence to, an effective plan can greatly assist your home health agency in identifying weaknesses and taking corrective action before an audit occurs.  Now is the time to ensure that your practices are compliant – after an audit occurs, it may be too late.

Robert Liles Healthcare LawyerLiles Parker is a full service health law firm, providing compliance reviews, “gap analyses” and training to home health providers and their staff.  Our attorneys are also experienced in representing home health providers in the administrative appeal of overpayments identified in the post-payment audit process. Should you have any questions, please Robert W. Liles at 1 (800) 475-1906 for a free consultation.

Data Mining Tools Can Help Identify Possible Problems

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Data Mining Tools(February 8, 2012):  While we all know that many Medicare post-payment audits are often generated as a result of sophisticated data mining analyses, the particular elements of concern which may give rise to a specific provider audit are not always so clear.  Health care providers interested in compliance can use data mining assessment tools to help determine how their coding and billing practices “stack up” when compared to the practices of their peers working in the same specialty area.  One question to be addressed is whether your coding and billing practices make you appear as an  “outlier.” If, in fact, you are an outlier, you should expect to be audited by the Centers for Medicare and Medicaid Services (CMS) or one of its contractors.  To be clear, just because you are an outlier does not necessarily mean that you are engaging in improper conduct.  Nevertheless, if you are an outlier, we strongly recommend that carefully analyze practices in an effort to identify why your practices differ from those of your peers.  Perhaps you are, in fact, improperly coding or billing for services rendered.  If so, you will need to determine the scope of any overpayment and work with your legal counsel to promptly reimburse the government.  As we have repeatedly advised our clients, “If it isn’t your’s, give it back.” If your practices appear to be correct, what other reasons my explain why your practices differ from those of your peers.

I.  Data Mining Tools You Can Use to Assess “Risk”:

While you can’t completely eliminate the risk of an audit, there are several tools that can help your organization determine how your utilization rates compare to those of your peers.  Among these data mining assessment tools is one of our personal favorites – DecisionHealth’s “E/M Bell Curve Data Book,” which gives a visual overview of the Center for Medicare and Medicaid Services’ (CMS’) Evaluation and Management (E/M) data rates for 59 different specialties. For instance, a general practitioner can look at his established patient office visits (CPT© codes 99211 – 99215) and compare his utilization rates to the national average for the same CPT© codes. This data can be extremely useful in assessing an office’s billing practices and patterns and give confidence to a provider whose rates are similar to the national average.

Another effective data mining assessment tool, especially for non-E/M practices, such as home health agencies and hospices, is the “The Dartmouth Atlas of Health Care,” which provides a variety of data tools to evaluate Medicare spending by county. Not only does this interactive website have average-spending-per-Medicare-beneficiary maps, it also has a tool which allows providers to examine national and state benchmarks for a variety of statistics. These include Medicare reimbursements, hospice, skilled nursing facility, and home health agency utilization rates, surgical procedures and more. Applied correctly, this data can be instrumental in a practice’s self-evaluation and gives providers significant insight into their own billing patterns.

II.      Know Your Appeal Rights:

Unfortunately, staying compliant with Medicare rules and regulations and avoiding audit can be a constant and ever-evolving challenge. Even with the best data mining tools, physicians, group practices, clinics, home health agencies and other providers may still find themselves subject to Medicare post-payment and / or prepayment audit by a Zone Program Integrity Contractor (ZPIC) or by another one of CMS’ contractors.  ZPICs, Recovery Audit Contractors (RACs) and other Medicare-contractors reviewers are highly knowledgeable and skilled at what they do.  They are experienced in handling audits and are quite good at identifying deficiencies in your documentation, regardless of how minor those deficiencies might be.  While it is essential to understand your obligations as a Medicare participant, it is equally important to understanding how and why practices get audited.  Moreover, it is also necessary to know how to appeal an adverse determination that you sincerely feel is unwarranted.

Healthcare lawyerRobert W. Liles and other health law attorneys at Liles Parker PLLC have significant experience handling a wide range of health law matters and cases, ranging from transactional projects to representing health care providers in administrative appeals of Medicare post-payment audits.  For more information, feel free to call Robert for a free consultation.  Call Robert today at: 1 (800) 475-1906.

CMS’s New Physician Compare Website to Report on Provider Performance

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(November 15, 2011): The New Physician Compare Website Will Allow Patients to Check on PerformanceLast year, the Centers for Medicare and Medicaid Services (CMS) launched their Physician Compare website.  CMS’s Physician Compare website allows beneficiaries to research their health care providers. The Affordable Care Act (commonly referred to as “Health Care Reform”) mandated that CMS launch such a website and that it implement physician performance metrics on the site no later than January 1, 2013.

I.      What Will the “Physician Compare” Website Permit?

In theory, the Physician Compare website will serve as an invaluable tool for researching Medicare providers in any locality, even allowing for specific criteria searches such as languages spoken, group practice locations, education history, hospital associations and whether a provider accepts the Medicare-approved amount as payment in full on all claims (obviously patients are still responsible for any copayments and deductibles which might be due).  Moreover, by including information from the Physician Quality Reporting System (PQRS),the Physician Compare website has been designed to encourage health care professionals to enhance and improve the quality of care they provide to Medicare beneficiaries.

II.  Health Care Providers Have Raised a Number of Concerns Regarding the Physician Compare Website:

Since its inception, the Physician Compare” website has raised  a number of concerns for some health care providers.  Clerical mistakes from the Medicare Provider Enrollment, Chain, and Ownership System (PECOS) could be duplicated on the site, resulting in health professionals not showing up in locality searches.  It could also result in misinformation about current staff members and incorrect Medicare participation status being listed on the website.

III.  Current Status of the Physician Compare Website:

Currently, the Physician Compare website only states whether a physician “successfully participated” in the PQRS, but soon the site will be expanded to include actual performance results from the program, ensuring a higher level of scrutiny in physician evaluations.

IV.  Summary:

Why is this important to you?  As a health care provider, your reputation is one of the most important aspects of your business. With this in mind, it is more important than ever to maintain a positive image and relationship with both your patients and the government.  While you can never completely eliminate mistakes, you can work to reduce the likelihood that mistakes may occur.  Compliance initiatives designed to ensure correct information reporting with Medicare, quality documentation and accurate coding and billing serve as an important first step to combating future errors.

Robert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Robert has extensive experience working with physicians and other health care providers to develop and implement effective Compliance Plans and Programs.  Robert can work with and train your staff on coding, billing, documentation and medical necessity issues.  Questions?  Call Robert today for a free consultation at: 1 (800) 475-1906.

Conducting a Gap Analysis / Mock Audit: An Essential Compliance Tool for Your Practice

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Health Care Providers Should Conduct a GAP Analysis / Mock Audit of Their Claims. (November 15, 2011): Understandably, health care providers have grown weary of government audits, malpractice issues, peer reviews and private payor assessments.  In an effort to reduce their potential liability, many providers are now regularly utilizing Gap Analyses Mock Audits to test their preparedness for audit.  In doing so, they have been able to identify and correct potential problems before they result in more serious problems.  The purpose of this brief article is to discuss the process of conducting a preliminary or mock audit of your medical records, documentation, coding and / or billing practices so that remedial measures can be taken if deficits are identified.


I.     “How Much is Enough” When You Are Implementing an Effective Compliance Program?

Drafting and implementing an effective compliance plan, conducting a GAP Analysis and training your staff on compliance issues are essential steps toward the peace of mind compliance can bring. But the question remains — how do you know when you’ve done enough?

In the end, the answer is that you can never do enough to completely eliminate all the risks, but you can minimize those risks and limit your possible exposure through the implementation of, and adherance to, an effective compliance plan. Mock audits can be used as a way of “testing” your compliance initiatives.

II.     How is a Gap Analysis or Mock Audit Conducted?

In a mock audit, an individual or team acts as a government agency or contractor (such as a ZPIC, RAC or MAC), and visits the practice or facility unannounced.  The mock auditor would then pull a random set of records to conduct a documentation analysis (often including both medical records and business arrangement records). Once the records are pulled, an analysis of the relevant findings is completed. These results would then be discussed with practice management so that the relevant strengths and potential areas of concern can be addressed.

III.     What is the Goal of a Gap Analysis or Mock Audit?

The goal is to test both your staff’s reaction to the exercise, as well as their understanding of what may be expected in a real audit. Moreover, the documentation analysis may be invaluable, revealing weak points in the facility’s documentation activities.  You may also learn that some of your forms (such as your Encounter Form) are defective. Finally, you will likely learn more about the various training needs of your staff.  A mock audit may also ferret out problems that management didn’t know or didn’t realize existed.  You may learn that a business arrangement or relationship is questionable or that your staff has been relying on the wrong LCD or other guidance when documenting and billing for services.  Fundamental problems such as illegibility and missing signatures may also be identified.  In any event, the results of a mock audit can be used by the practice to bolster and support its compliance initiatives.

IV.     Sound Like a Good Idea?  So, what’s the First Step?

Sound like a good idea?  Before you embark on a mock audit, you should contact your attorney and discuss any privilege issues which may exist.  As a final point, keep in mind that should you identify an overpayment, it must be returned to the government within 60 days of identification and reconciliation.  Otherwise, the overpayment could constitute a violation of the False Claims Act.

Healthcare AttorneyRobert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Robert and other attorneys at Liles Parker are experienced at conducting “gap analyses” and “mock audits” of physician practices, home health agencies, hospice agencies and other non-hospital provider entities.  Should you have any questions about conducting a mock audit or would like to learn more about having Liles Parker attorneys assist your practice, please call us for a free consultation.  Robert can be reached at:  1 (800) 475-1906.

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

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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.”

Healthcare AttorneyOur 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.