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Home Health Prepayment Reviews are Increasing. Is Your Documentation Compliant?

January 30, 2013 by  
Filed under Home Health & Hospice

Home Health Prepayment Reviews by ZPICs Are Increasing.(January 30, 2013):  Are the home health services you are currently providing compliant with applicable coverage, documentation and medical necessity requirements?  Have you carefully reviewed your current caseload to ensure that each patient does, in fact, qualify as “homebound.”  Do you have an effective Compliance Plan in place to assist you with your efforts?  Now, more than ever before, it is imperative that you understand and follow the rules.  Compliance is not optional — it is required of all participating providers.  Home health agencies in Texas, Oklahoma, Alabama, Georgia and Louisiana are under the microscope.  “Zone Program Integrity Contractors” (ZPICs), such as Health Integrity and AdvanceMed appear to have increased their use of prepayment reviews in recent months in an effort to identify and prevent the billing and payment of non-covered home health claims.  We have received a number of calls regarding the use of this audit tool and have worked with many agencies in an effort to have their prepayment review status reviewed and lifted by the Centers for Medicare and Medicaid Services (CMS).  The purpose of this article is to discuss the various types of “prepayment reviews” which may pursued by a CMS contractor.

I.  What is a Home Health Prepayment Review?

From a technical standpoint, a prepayment review occurs when the “Fiscal Intermediary Standard System” (FISS System) is programmed by a Medicare Administrative Contractor (MAC) with an “edit” which effectively suspends a claim for further review and assessment prior to deciding whether or not a claim should be paid.  Prepayment edits are intended to carve out claims which must be individually reviewed to ensure that the services or supplies at issue qualify for coverage and payment. As reflected below, there are various types and purposes of prepayment edits

Automated Edits (CMS Pub. 100-08, Ch. 3, §3.3.1.2B).  “Automated Edits” are not provider-specific.  Rather they are established to carve out any claims which appear on their face to be incorrect.  For example, a claim may indicated a “Place of Service” that would be inconsistent with the type of procedure at issue.  MACs use a process within the FISS System known as an “Expert Claims Processing System” (ECPS) to set up automated edits. The ECPS reviews claims and decides (based on the edits put into place) whether a claim should be paid, denied or set aside for further review.  If a claim is set aside, a request for additional documentation is sent to the health care provider.  Once the documentation is reviewed, a payment decision is generally made.

New Provider/New Benefit Edits (CMS Pub. 100-08, Ch. 3, §3.1B).  “New Provider Edits” are typically provider-specific.  MACs install these edits to assist in their oversight of new health care providers recently joining the Medicare program as a participating provider. According to at least one MAC, new provider edits are often limited to 20 – 40 claims.  This gives MACs and / or ZPICs an opportunity to help ensure that the provider is properly providing and documenting services billed to Medicare.  “New Benefit Edits” are typically put into place when a new Medicare program benefit is extended and the MACs need to monitor the new claims to help ensure that they are being provided, documented, coded and billed correctly.

Provider Specific Probe Edits (CMS Pub. 100-08, Ch. 3, §3.2.2A).  “Provider Specific Edits” typically identify specific claims billed by a specific provider and sets them aside for further review prior to payment.  Many times, these edits are associated with a specific provider that has experienced a problem before or is suspected of having problems with certain claims for services.  When a provider is subjected to a prepayment probe audit, they typically receive written notice of the review.  This type of prepayment review can arise out of a complaint by a patient, another provider or even another payor.  It may also be generated through data-mining efforts which flag a provider due to their billing patterns.  Prepayment probe audits of this type are initially used to examine a relatively small number of claims in order to see if a problem exists.  If a problem is identified, the prepayment probe audit may then be expanded to include all claims – this type of prepayment audit is generally referred to as a “Provider Specific Targeted Review” (TR).  It may also be extended in duration until the provider can show the MAC or ZPIC that they fully understand the medical necessity and documentation requirements associated with those types of services.  When the provider specific probe edits are complete, and it is found that there is a high incidence of inappropriate billing, a provider may be placed on Targeted Review (TR).

Referral Edits.  In some instances, a provider is placed on prepayment review and a “Referral Edit” is put into place.  A provider is subjected to a referral edits as a result of a referral from another state or federal government agency.  For example, a state surveyor may have identified concerns regarding the quality of care being provided and may have asked a MAC to examine certain services for medical necessity and documentation purposes.  If a provider is subjected to a referral edit, they are typically notified in writing that the review is being conducted.  They may or may not be advised of the identity of the referring agency.

Widespread Edits.  MACs will typically install a “Widespread Audit” in situations where specific types of claims have been identified through data-mining and other analyses as likely to be problematic.  Widespread audits may focus on issues such as:

  • Length of stay.
  • Number of visits.
  • Use of certain modifiers.
  • Certain diagnosis codes.  For example, edit 5023T selects home health claims for diagnosis 401.9 (Hypertension) and a length of stay longer than 120 days.
  • Previous denials for a specific beneficiary.  For example, edit 59BY9 selects home health claims due to previous denial related to a specific beneficiary.

Provider Specific Targeted Review (TR) Edits  are implemented against a specific provider.  This type of prepayment review is typically initiated by a ZPIC. It may be partial (typically a percentage of the claims billed will be pulled for audit) or it may complete.  As you can imagine, this type of prepayment review can wreak havoc on a provider’s finances, depending on their payor mix.  Prepayment reviews of this type may be extended in duration.

II.  What Should Agencies Expect Targeted Home Health Prepayment Reviews are Initiated?

We have worked with a number of home health providers placed on targeted prepayment review.  To be clear, there is no “silver bullet” to getting off of this status and having your payments reinstated.  Moreover, there is no administrative appeal process which may be pursued.  In our experience, the best and fastest way to get off of prepayment review is to work with professionals who understand the issues.  Until a home health agency is able to show a ZPIC that you and your staff fully understand the medical necessity, documentation, coverage, coding and billing requirements applicable to these claims, a targeted prepayment review may last up to a year, or in some cases, even longer.  If you need assistance with these compliance issues, give us a call.

Healthcare LawyerRobert W. Liles and other Liles Parker attorneys have extensive experience assisting health care providers placed on  prepayment review or subjected to a post-payment audit.  Should you have any questions, please call Robert for a free consultation.  He can be reached at: 1 (800) 475-1906.

Options for Responding if Your Practice is Placed on ZPIC Prepayment Review

ZPIC Prepayment Review(September 3, 2012): Zone Program Integrity Contractors (ZPICs) have turned much of their attention to prepayment review, the process by which the Medicare contractor reviews a claim for problems before it is paid. Unlike postpayment review, ZPIC prepayment review does not have an administrative appeals process, making these types of reviews incredibly damaging for a small provider or supplier. In addition, there is no concrete methot for getting off ZPIC prepayment review – it is left essentially to the discretion of the contractor. Couple this with recent rules eliminating the time restrictions for a ZPIC to keep a provider on prepayment review, and the ZPIC could theoretically maintain a prepayment review action forever.

I.  Options for Handling a ZPIC Prepayment Review:

Recently, we noticed that some providers had attempted to turn to the Small Business Association (SBA) to sort out their problems with ZPICs and Medicare. While a creative option, it is not likely a solution that is going to get you very far.  The Centers for Medicare & Medicaid Services (CMS) and its contractors are not obliged to follow the direction of the SBA or many other entities, and even if they were, there is considerable support from the public and the government regarding the prepayment review process in light of the persistent Medicare fraud from which the program suffers. Instead, there are really only two options for responding to prepayment review.

First, you could file a suit for injunctive relief against CMS. For this option, you would hire an attorney to sue the government in the hopes that a federal judge would find that the ZPIC should be restrained from continuing its prepayment review. Normally, you would need to prove at least 3 things to obtain an injunction:

  1. a cause of action against CMS;
  2. a probable right to the relief sought (success on the merits); and
  3. an imminent, irreparable harm.

Unfortunately, proving a cause of action against CMS or a ZPIC can be difficult, as can be proving irreparable harm (that is, something that can not be fixed with money). Just think about it – in what other industry would a consumer get to pay for something first and then find out if the product they bought it broken. But under the current Medicare system, that is exactly what is happening. The government is paying for medical services without seeing if they are legitimate until several years later. So the ZPIC prepayment review process is probably going to be upheld by a federal judge as a fair exercise of the government’s right to protect its funds. Moreover, ZPIC prepayment review does not involved the destruction of property or the loss of life (although there is possibly an access argument that could exist in certain situations), and usually unless one of these two elements is present, there is not “irreparable harm.” Instead, whatever harm actually does occur can be fixed with money. Because of these issues, it can be very hard, if not impossible, to successfully obtain injunctive relief. Add to this the costs and expenses associated with going to federal court, and this is not really a great option.

Second, we’ve developed a strategy to deal with ZPIC prepayment review based on our experience with clients who’ve gone through the process in the past. While this involves a lot of work and some great organizational skills, it is the only true way to get off of ZPIC prepayment review and stay off. Quite simply, you have to attempt to meet the ZPIC’s demands and requirements, until you’ve proven to them that you’ve cleared up any problems associated with your claims. The process can be drawn out, especially when it takes about 4 – 6 months for the ZPIC to make a decision on your first set of claims, but once you know what problems they’ve identified, you can proactively address those problems so that the ZPIC cannot rely on that issue moving forward. Eventually, the ZPIC will have nothing left to criticize, and with some well-placed calls from an attorney, will likely terminate the prepayment review. The lasting benefit of this option, of course, is that your claims should be easily defensible in any administrative, civil, or criminal action that may be brought against you. Through the course of this process, it is important to engage and retain qualified health law counsel to assist and advise you on aspects of the ZPIC prepayment review and specific coding, billing, and medical necessity issues identified.

II.  Final Remarks:

ZPIC prepayment review is hard because there is no proverbial “silver bullet” to end it. And the government is turning to this effective tool more and more often, as it recognizes the fiscal benefits of preserving the Medicare trust fund. Nevertheless, it can cost honest providers tremendous time, energy, and in some cases their business. ZPIC prepayment review generally cuts off the cash flow of either 30, 70, or 100% of a provider’s Medicare claims as the ZPIC reviews those claims, and for most providers, this is too much to bear.  Nevertheless, those providers who have a lot at stake and the resources to survive for a substantial amount of time can and do make it out of ZPIC prepayment review.

Healthcare LawyerRobert Liles counsels providers on prepayment review issues and represents clients in Medicare and Medicaid postpayment appeals. In addition, he advises clients on HIPAA compliance risks, HIPAA breach notification and implementing effective compliance plans. Robert also performs GAP analyses, internal claims reviews, and trains healthcare professionals on compliance issues. For a free consultation, call Robert today at: 1 (800) 475-1906.

CMS To Begin RAC Prepayment Reviews on August 27th.

RAC Prepayment Reviews(August 17, 2012): Beginning August 27, 2012 CMS will begin what has been referred to as the Recovery Audit Prepayment Demonstration (RAPD).  RAPD was initially scheduled to begin January 1 of this year, but was postponed while CMS reviewed comments that it had received.  The demonstration project will now run until August 26, 2015. The demonstration project will involve 11 states – Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri.  CMS has stated that the demonstration will focus on claims with a high risk of fraud, beginning with those involving short stay inpatient hospital services.  Specifically, CMS has announced that the demonstration will initially focus on MS-DRG 312, related to syncope and collapse.  According to CMS’s website, the program will eventually expand to include conditions such as diabetes and transient ischemia.  RAPD will not replace MAC prepayment reviews.  Rather, RACs and MACs ‘will coordinate to avoid duplicate efforts.”

According to CMS, providers with claims identified for RAC prepayment reviews will have 30 days to respond to requests for additional documentation (a/k/a ADRs).  If they do not respond timely, the claim will be denied.  Providers are to receive determinations within 45 days of submitting the relevant documentation.

I.  RAC Prepayment Reviews Process:

While RACs will perform the actual audit, ADRs and review results will come from your MAC.  In this process RACs are supposed to send a “detailed review and results letter,” which presumably will be communicated to the provider as part of the determination.  Providers will have the same appeal rights as with other denied Medicare claims, and according to CMS, claims involved in prepayment denials are not supposed to be part of post-payment reviews by a CMS contractor at a later time.

II.  Additional Thoughts:

This is yet another effort by CMS to address concerns over fraudulent claims on the front end.  Providers in the affected states should adjust their processes for responding to RAC audits to incorporate the demonstration process, including tracking and responding to ADRs and other prepayment requests for additional information within the specified time frames.   Additionally, they should specifically focus their compliance initiatives on review of short stay inpatient claims – especially claims for MS-DRGs that are expected to be covered by the demonstration in its initial stages.  This should include as appropriate pre-submission reviews, audits, and education of staff.  Additionally, providers should remember that unfavorable determinations during RAC prepayment reviews  under the demonstration project may be appealed through the Medicare appeals process, and should be prepared to respond appropriately.

Michael CookAnyone desiring additional information on the demonstration or how to prepare and respond to RAC prepayment reviews should contact Michael Cook in the Washington, DC office of Liles Parker at (202) 298-8750. Michael is a talented health law attorney with years of experience handling Medicare and Medicaid fraud and abuse issues. In addition, he is skilled at representing providers and health systems in negotiations with states, managed care plans, and HHS.

SNF Prepayment Review by ZPICs are Increasing Around the Country

SNF Prepayment Review(August 1, 2012): Medicare fraud and abuse prevention and detection efforts are undertaken, in large part, by Zone Program Integrity Contractors (ZPICs).  Seven program integrity zones were implemented as part of the Medicare Modernization Act, and each ZPIC is responsible for early detection of fraud, waste, and abuse in its respective zone.  As of October 1, 2011, the Centers for Medicare & Medicaid Services (CMS) has awarded contracts in all seven zones.  Currently, only five of seven are operational.

I.  The Number of SNF Prepayment Review Cases is Increasing:

It has been our observation that there has been an upsurge in Medicare prepayment audits of skilled nursing facilities (SNFs) by ZPICs.  The consequences are grave for providers, as the result of these audits is that they are placed on prepayment review for up to a year, which is very costly.  The costs are so high due to the fact that claim determinations are made after the SNF services have been provided, but prior to any claim payment being made.  Recently, CMS proposed that this one year limit be eliminated, making the prepayment review period potentially indefinite, which would be even more devastating for providers.

Unfortunately for providers, ZPICs do not typically inform them before they are placed on prepayment audit.  The SNF often first becomes aware that it has been placed on prepayment review after it submits a claim to the Medicare Administrative Contractor (MAC).  The ZPIC or the MAC then sends the SNF an Additional Documentation Request (“ADR”), which alerts the facility of its prepayment review status, or the SNF may be subject to an unannounced visit from the ZPIC, the purpose of which is to obtain the additional documentation.  Either way, notice is lacking, and SNF providers are often taken by surprise.

Worse yet, ZPICs can take as long as they want to review and make a determination on a given claim.  There is no mandated timeframe.   Only after a claim is reviewed will the provider receive an Explanation of Benefits (“EOB”) from its MAC.  The EOB will indicate whether the claim was approved or denied, and, if the latter, the grounds for denial.  The process can be painfully long, and it puts SNFs at risk of going bankrupt.

II.  Where are SNF Prepayment Reviews by ZPICs Occurring?

Notably, the ZPIC for Oklahoma, Health Integrity, has conducted a number of prepayment reviews of SNFs in its region.  They have focused their audits in Oklahoma City and Tulsa, as well numerous other smaller cities.  Moreover, Health Integrity has been very active in Texas over the last year.  Additionally, AdvanceMed, the ZPIC that services Louisiana for CMS, has undertaken extensive prepayment audits in Baton Rouge and greater central Louisiana.

Getting out of a prepayment review is tricky.  Medicare does not have a formal process through which a provider can contest being placed on prepayment review.   Nor are there guidelines for ‘how-to’ get out of prepayment review.  The only option providers have is to appeal each claim in the Medicare appeals process, adding to the costs of such audits.

Robert Liles represents providers in Medicare post-payment audits and appeals, and similar appeals under Medicaid. In addition, Robert counsels clients on regulatory compliance issues, performs gap analyses and internal reviews, and trains healthcare professionals on various legal issues. For a free consultation, call Robert today at: 1 (800) 475-1906.

Georgia Prepayment Reviews are Being Conducted by AdvanceMed

Georgia Prepayment Reviews are Being Conducted by AdvanceMed

(February 29, 2012): In the past few weeks, AdvanceMed Corporation, the Zone Program Integrity Contractor (ZPIC) for Regions II and V (covering the Northwestern and Southeastern portions of the United States, respectively), appears to have significantly expanded the number of Georgia prepayment reviews it is conducting.  More specifically, AdvanceMed appears to be focusing on hospices, psychiatric services and pain management, practice areas where problems has been identified by the government in the past.  From calls we have received, it does not appear that only metropolitan area providers are under scrutiny.  Rather, Georgia prepayment reviews appear to be occurring throughout the entirety of the State.  To be clear, the government’s increasing use of prepayment review is not surprising — it is consistent with their overall efforts to prevent improper coding and billing practices from occurring in the first place.  The Centers for Medicare & Medicaid Services (CMS) are understandably frustrated with old, tired enforcement tactics which relied on “Pay and Chase” strategies.

I.  As Georgia Prepayment Reviews Move Forward, What Steps Can You Take to Avoid this Initiative?

In most cases, health care providers are targeted and placed on prepayment review because of:  (1) data mining has identified the provider as an “outlier,” or (2) a complaint has been filed against the provider.  The best preventative measure you can take is to design and implement an effective Compliance Plan.  As a first step, you should conduct a “GAP Analysis” to determine whether your operations, coding and billing practices fully meet applicable laws, regulations and guidelines.  If not, remedial action must be taken to put the organization back on the right path.  During this process, you will likely learn how your coding and billing practices compare to those of your peers.  Should you find that your practices result in the organization appearing to be an “outlier,” it is essential that you determine how and why your practices differ from those of similarly situated providers.  You may or may not be doing wrong.  If you are handling claims incorrectly, fix them and return any monies owed to the contractor.  If you believe that your practices are compliant, that’s fine — but you better be prepared to respond to an audit.

II.  Don’t Wait to be Audited – Review Your Practices Now!

Notably, when AdvanceMed places a health care provider on prepayment review, the claims being scrutinized are likely associated with services performed in the last week or two.  This means that providers currently have the opportunity to assess and potentially correct their documentation practices if deficiencies are identified. We recommend that all Georgia providers examine their medical records and critically determine whether they actually meet the relevant criteria for reimbursement.  Pull applicable Local Coverage Determination (LCD) rules and carefully review the medical necessity, coverage and documentation requirements set out in the contractor’s guidance.  Are your documentation, coding and billing practices compliant?

III.  How Should a Georgia Provider Respond if They Have Already Been Placed on Prepayment Review?

The prepayment review process can be long, complex and challenging.  Moreover, the lack of a quick payment turnaround can be devastating on a small practice’s cash flow, and similarly inhibit larger entities from effectively navigating the revenue cycle. This problem is only exacerbated by the fact that AdvanceMed, as a ZPIC, is not obligated to return a decision on prepayment review claims to a provider within a specified time frame. Unlike Medicare Administrative Contractors (MACs), who, according to the Medicare Program Integrity Manual  (PIM) Chapter 3, Section 3.3.1.1 F, must make and issue a decision within 60 days of receiving a medical record for prepayment review, ZPICs are not under the same duty to quickly make decisions on claims. The PIM is entirely silent on what the time frame is for ZPICs to conduct prepayment review and issue notification to the concerned provider. This may result in ZPICs, such as AdvanceMed, taking an inordinate amount of time to complete their prepayment review of your claims.

During this ongoing effort by AdvanceMed, Georgia providers should expect that prepayment review will take 90 – 180 days on average from when AdvanceMed receives the relevant medical records. Moreover, based on average denial rates we have seen in the past, providers should expect that 60 – 75 percent of their claims may be denied by AdvanceMed (although it is not uncommon for us to see denial rates at or approaching 100 percent). Upon denial of these claims, providers then have the right to take these claims through the Medicare administrative appeals process. As some of you may know, this is also a long process which usually culminates in a hearing before an Administrative Law Judge (ALJ). Regardless of your experience in this area, it is important to remember that qualified counsel can greatly assist you in developing and presenting arguments and evidence to the ALJ, as well as ensuring that all supporting documentation is included in the medical record. As AdvanceMed continues its prepayment review initiative in Georgia (and possibly expands this effort into surrounding states), providers should take a second look at their documentation and make sure it passes muster. The time to do this is now, not when AdvanceMed is knocking at your door.

Healthcare LawyerLiles Parker is a full service law firm with attorneys experienced in representing providers in Medicare postpayment audits and counseling providers on prepayment review strategy. Moreover, our firm is skilled at conducting mock audits, compliance reviews and internal audits and investigations to ensure compliance with applicable laws and regulations. For a free  consultation about your case, please feel free to call us at 1 (800) 475-1906.

RAC-Initiated Medicare Prepayment Reviews Will Soon Begin.

(February 7, 2012):  In recent years, physicians and other health care providers have faced a wide number of administrative actions and sanctions levied by contractors working for the Centers for Medicare and Medicaid Services (CMS).  Zone Program Integrity Contractors (ZPICs) have subjected physician practices to Medicare prepayment reviews, postpayment audits, suspension and / or revocation actions.  In contrast, Recovery Audit Contractors (RACs) have exclusively initiated postpayment audit actions in their dealings with physicians and other Medicare providers.  As set out below, this will soon change.   Prepayment reviews will now be conducted by both ZPICs and RACs.  Now, more than ever, it is essential that physicians conduct a long, hard look at their documentation and work practices.  As we will discuss, being placed on prepayment audit can result in serious financial harm a practice.  In some cases, it can even lead to bankruptcy.

I.    RAC Conducted Medicare Prepayment Reviews Will Soon Begin:

Late last week, CMS announced that prepayment reviews by RACs would begin (again) on or after June 1, 2012.  As discussed in previous articles, CMS had originally delayed the program amid significant provider concerns about its operation.

II.   Background of the RAC Program:

RACs have long served an important role in detecting and recovering both Part A and Part B overpayments since the program began in 2005. Utilizing both automatic review edits and complex medical reviews to identify a multitude of claims errors, RACs have greatly assisted the government in its efforts to protect the integrity of the Medicare Trust Fund.  As you know, RACs are paid on a contingency basis, based on the amount of improper payments (either overpayments or underpayments) each RAC identifies and actual recovers. Despite harsh criticism from the provider community, RACs have been successful in their audit and recovery tasks, prompting the federal government to expand their authority to conduct prepayment audits, not merely post-payment reviews.

III.   Demonstration Project of Proposed RAC Prepayment Reviews:

Initially announced on November 15, 2011, CMS’ “RAC Prepayment Review Demonstration Project” was slated to start in 11 states on January 1, 2012, including Florida, California, Mississippi, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri. Through the project, CMS was hoping to ensure that Medicare claims reimbursed by the government were medically necessary and met coding and billing criteria before such claims were paid. Due, at least in part, to significant concerns from providers and hospitals about the substantial administrative burden such review would cause, CMS announced last month that it was indefinitely delaying the RAC Prepayment Review Demonstration Project.

As we noted when CMS first announced this delay, while providers may have considered this postponement a victory, CMS still has numerous other contractors actively performing prepayment review audits each day around the country. At the end of the day, the issue really isn’t whether CMS is going to instruct its contractors to conduct prepayment reviews, it really comes down to whether providers are properly meeting applicable medical necessarily, coverage, documentation, coding and billing requirements.

IV.   Impact of Medicare Prepayment Reviews:

As we have previously discussed, there is no prepayment review administrative appeals process. As a result, providers placed on prepayment review have little recourse to reverse the decision, and often remain on review for four to six months (although we have seen reviews lasting up to a year) or until the provider is able to show their Medicare Administrative Contractor (MAC) that the services billed meet medical necessity, coverage and documentation requirements. Importantly, this determination is entirely based on the respective MAC’s subjective view of the propriety of a provider’s claims.

It is important to note that Medicare prepayment reviews can prove disastrous for physicians and other health care providers who mainly treat Medicare beneficiaries. Being placed on prepayment review can effectively delay payments to a physician for several months, even assuming that the MAC finds the provider’s claims are payable. Often times, providers must also take many of these claims through the administrative appeals process, adding another one to two years before payment is made (again assuming that an Administrative Law Judge ultimately finds your claims to qualify for coverage and payment).

V.   Avoiding Prepayment Review:

With RAC prepayment reviews on their way, providers may consider investing in the time and energy now to make sure their claims meet applicable payment requirements. While there is no “silver bullet” to completely eliminate the risk of prepayment audit, a number of preemptive steps exist to reduce the likelihood of such an occurrence.    Physicians and other health care providers should consider conducting a “gap analysis” of their practice.  In doing so, a provider will learn whether their billed services, and associated documentation, meet medical necessity and coverage requirements.  Physicians should also review their utilization rates of certain procedures and compare these rates to those of their local, regional and national peers. All in all,  physicians need to identify the regulatory benchmarks applicable to their practice, identify where they fail to meet these benchmarks, consider the manner and method to rectify these deficiencies, and add proper procedures and additional risk areas to their Compliance Plan. Such efforts now can leave a physician’s practice in an excellent position to respond to any billing questions by RACs or other Medicare contractors.  While RAC prepayment reviews are just another type of audit in a long list of concerns for providers, don’t underestimate the ability of these RACs to identity errors and deny payment.

VI.   Reading the Tea Leaves:

The government’s rekindled RAC Prepayment Review Program is slated to begin again on June 1, 2012.  With the re-implementation of this project, CMS moves yet another step away from its “pay-and-chase” model.  Among its many advantages, the prepayment review approach greatly reduces the likelihood that the claims being paid by the government are improper. We believe that the scope of RAC and ZPIC prepayment reviews will continue to grow in the near future and will represent a key component of the government’s fraud prevention efforts in years to come.  To be clear, we all agree with the government’s goal of identifying and stamping-out Medicare fraud.  Unfortunately, it has been our experience that many physicians and other Medicare providers have little understanding what CMS and its contractors expect to find when auditing medical records.  As a participating provider in the Medicare program, you are required to know and adhere to all of Medicare’s rules and regulations which apply to your practice and the services that you provide.  Changes in documentation requirements, coverage issues and questions of medical necessity are constantly changing.  Keeping up with these changes can be quite a challenge.

Healthcare lawyerRobert W. Liles is Managing Partner at the health law firm of Liles Parker PLLC.  With offices in Washington, DC, Houston, Texas, San Antonio, Texas and Baton Rouge, Louisiana, Liles Parker attorneys are available to help physicians around the country with Medicare audits which may arise.  Our attorneys have extensive experience conducting “GAP Analyses” and compliance reviews for health care providers of all types. In addition, our attorneys are skilled in assisting providers who have been placed on prepayment review or subjected to postpayment audit. For more information, please call Robert today for a complimentary consultation.  Robert and our other attorneys can be reached at: 1 (800) 475-1906.

RAC Prepayment Review Delays Will Effectively Place the Project on Hold

(January 11, 2012): Health care providers are increasingly finding that their Medicare claims are being placed on prepayment review by one or more Medicare contractor.  As these providers can attest, prepayment review can seriously disrupt a provider’s cash flow, possibly leading to bankruptcy if it is not resolved quickly.  As discussed below, the use of prepayment reviews as an audit toll is likely to increase greatly as Recovery Audit Contractors (RACs) will soon begin also conducting prepayment reviews.

I.  RAC Prepayment Review Delays Have Been Announced by CMS:

Last month, we discussed a new demonstration project by the Centers for Medicare and Medicaid Services (CMS) to test the ability of RACs’ to conduct prepayment reviews of Medicare Part A and B claims. RACs have successfully identified a wide variety of Medicare overpayments in the past and have become one of CMS’ most important post-payment audit tools. In light of their continued success, last November, CMS announced that RACs would also now conduct  prepayment reviews and audits. An initial RAC Prepayment Review Demonstration Project was intended to cover many of the same types of prepayment review as those currently conducted by ZPICs around the country.  The RAC Prepayment Review Demonstration Project was initially slated to be conducted in:

  • Florida
  • California
  • Mississippi
  • Texas
  • New York
  • Louisiana
  • Illinois
  • Pennsylvania
  • Ohio
  • North Carolina
  • Missouri

After CMS announced the RAC Prepayment Review Demonstration Project, it reportedly received an outpouring of concerns regarding the scope of these prepayment reviews and audits.  In consideration of these concerns, yesterday CMS announced that it was indefinitely delaying implementation of the demonstration project, and would give 30 days notice before the RAC Prepayment Review Demonstration Project was reactivated.

II.     Commentary Regarding RAC Prepayment Review Delays:

Importantly, CMS’s decision to delay the RAC Prepayment Review Demonstration Project does not mean that RAC prepayment reviews won’t occur. Moreover, it is essential that health care providers keep in mind that other CMS contractors are already placing a wide variety of Part A and Part B providers on prepayment review.  As before, providers should regularly review their activities to ensure that all regulatory and statutory requirements are being met.

It is important to keep in mind that there is no administrative appeals process or other effective legal remedy to get off prepayment review.  In fact, there is no “silver bullet,” despite what you have heard or been told.  The only way to be taken off of prepayment review is to show the responsible Medicare contractor that your claims fully meet each of Medicare’s myriad statutory and regulatory requirements for coverage and payment.  To that end, there are a number of preemptive steps a provider can take to reduce the chances of being selected for prepayment review in the first place.

To start, we recommend that you (or your qualified legal counsel) conduct a “GAP Analysis” of your claims.  In doing so, you will readily identify any possible deficiencies in your medical necessity assessments, coverage, documentation, coding and / or billing activities.  Moreover, you should consider assessing your utilization rate against the local and national average. For instance, for basic Evaluation and Management (E/M) services, are you or your providers billing higher level codes more often than your peers?  Medicare contractors use this data to identify possible outliers who may be engaging in improper coding and / or billing.  Data mining can also be used by contractors to identify potential problem providers who may need to be audited and / or placed on prepayment review.  Keep in mind, should you identify any overpayments when you conduct a GAP Analysis, you must report the overpayment and return it to the government within 60 days.  Any deficiencies noted in your review can be promptly addressed and added to the risk areas covered in your Compliance Plan.  After taking these steps, you will likely be well situated to respond to any prepayment audits initiated by a Medicare contractor, regardless of whether the contractor is a RAC or another Medicare contractor.

Healthcare AttorneyRobert W. Liles and other Liles Parker attorneys have extensive experience advising health care providers on how to best respond to prepayment reviews and post-payment audits.  Mr. Liles also counsels providers on “GAP Analyses” and provides compliance guidance to home health agencies, physicians, DME suppliers and other health care providers and suppliers.  For more information, please call Robert today for a free consultation.  He can be reached at: 1 (800) 475-1906.