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CBRs for Spinal Orthoses (CBR201803): What Do You Need to Know?

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CBR201803(April 12, 2018): The Centers for Medicare & Medicaid Services (CMS) utilizes a variety of private contractors to process Medicare claims and conduct both administrative and program integrity audits of claims submitted by healthcare providers and suppliers.  At the present time, CMS has contracted with eGlobalTech (eGT) to analyze data and prepare “Comparative Billing Reports (CBRs) of various services and claims billed to the Medicare program. eGT works directly with another CMS contractor, Palmetto GBA (Palmetto), to conduct the statistical work that is necessary to complete the CBR process. The latest report to be issued by eGT is CBR201803.

I.  eGT is Currently Distributing CBRs ” CBR201803 ” to Spinal Orthoses Suppliers:

The most recent CBR review initiated by eGT has been focused on Spinal Orthoses Suppliers. On April 2, 2018, eGlobalTech sent out letters to affected suppliers around the country advising them of the initiation of CBR201803: Spinal Orthoses Suppliers. This CBR is focused on orthotic suppliers that have billed the Medicare Part B program for both off-the-shelf and custom-fitted prefabricated spinal orthoses (commonly referred to as “braces”[1]) in claims with dates of service from October 1, 2016 to September 30, 2017.[2]  CBR201803 focuses on the following Healthcare Common Procedure Coding System (HCPCS) codes:

Prefabricated Custom-Fitted Spinal Orthoses.[3]

L0627: Lumbar orthosis, sagittal control, with rigid anterior and posterior panels
L0631: Lumbar-sacral orthosis, sagittal control, with rigid anterior and posterior panels
L0637: Lumbar-sacral orthosis, sagittal-coronal, with rigid anterior and posterior panels

Prefabricated Off-the-Shelf-Fitted Spinal Orthoses.[4]

L0642: Lumbar orthosis, sagittal control, with rigid anterior and posterior panels
L0648: Lumbar-sacral orthosis, sagittal control, with rigid anterior and posterior panels
L0650: Lumbar-sacral orthosis, sagittal-coronal, with rigid anterior and posterior panels

 II.  The Improper Billing of Medicare Claims for Spinal Orthoses Has Been a Long-Standing Problem for CMS:

The initiation of CBR201803 is merely the government’s most recent attempt to address long-standing problems that have repeatedly been identified in connection with the coverage, coding and billing of spinal orthoses by authorized Medicare suppliers.  As eGT has noted on its website (and in correspondence with affected suppliers), Lumbar-Sacral Orthoses have been on the government’s Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMSPOS) list of “Top 20 Service Types with Highest Improper Payments” as far back as 2013. In fact, as set out in the most recent assessment of improper billing data by the Department of Health and Human Services (HHS), entitled “2017 Medicare Fee-for-Service Supplemental Improper Payment Data,” the estimated improper error rate for Lumbar-Sacral Orthoses was 52.5%. The magnitude of this problem is easily seen when compared with the overall improper payment rate for ALL Medicare claims which has been estimated at 9.5%.  Finally, it is worth noting that the HHS Office of Inspector General (OIG) identified concerns with the billing of orthotic braces in both its 2016 and 2017 Work Plans.[5]

III.  How Were Spinal Orthoses Suppliers Categorized this Review?

At last count, more than 6,000 qualified DME suppliers billed Medicare Part B for spinal orthoses under one of the six HCPCS codes outlined above.  In an effort to define peer groups for general comparison purposes, DMEPOS suppliers and physicians / non-physicians were assigned to a specialty peer group, based on their assigned Medicare Specialty Code and whether or not the provider / supplier was likely to have orthotist training The following categories were used by eGT:

 Peer Group#1:  DMEPOS Supplier Not Likely to Have Orthotist Training 
Medicare Specialty CodeMedicare Provider / Supplier Type Description
A6Medical Supply Co. with Respiratory Therapist
B1Oxygen Supplier
54Medical Supply Co. — Other
58Medical Supply Co. with Registered Pharmacist
63Portable X-Ray Supplier
87All Other Suppliers
 Peer Group#2:  DMEPOS Supplier Likely to Have Orthotist Training 
Medicare Specialty CodeMedicare Provider / Supplier Type Description
B3Medical Supply Co. with Pedorthic Personnel
51Medical Supply Co. with Certified[6] Orthotic Personnel
52Medical Supply Co. with Certified Prosthetic Personnel
53Medical Supply Co. with Prosthetic / Orthotic Personnel
 Peer Group#3:  Physician / Non-Physician Not Likely to Have Orthotist Training 
Medicare Specialty CodeMedicare Provider / Supplier Type Description
01General Practice
02General Surgery
08Family Practice
11Internal Medicine
16Obstetrics / Gynecology
19Oral Surgery (Dentists Only) (LLP)
30Diagnostic Radiology Head
40Hand Surgery
41Optometry (LLP)
48Podiatry (LLP)
84Preventative Medicine
93Emergency Medicine
94Interventional Radiology
99Unknown Physician Specialty
 Peer Group#4:  Physician / Non-Physician Likely to Have Orthotist Training 
Medicare Specialty CodeMedicare Provider / Supplier Type Description
B2Pedorthic Personnel
12Osteopathic Manipulative
20Orthopedic Surgery
23Sports Medicine
25Physical Medicine and Rehabilitation
35Chiropractic (LLP)
55Individual Orthotic Personnel
56Individual Prosthetic Personnel
57Individual Prosthetic / Orthotic Personnel
65Physical Therapist in Private Practice
67Occupational Therapist in Private Practice
70Single or Multispecialty Clinic or Group Practice
72Pain Management

CBR contractors (eGT and Palmetto) then calculated statistics for each of the separate peer groups.  As the categories reflect, the CBR contractors separated suppliers from providers and then further stratified the two primary groups by whether or not they were “likely” to have orthotist training.  While the CBR contractors expressly recognized that an individual may be specially trained to custom fit beneficiaries with a medically necessary orthosis, for the purposes of this review, they still ultimately categorized both suppliers and providers by Medicare specialty code based on the contractors’ assessment of whether a specific specialty was likely to have specialized orthotist training.[7] Unfortunately, there are likely a number of instances where eGT’s presumption of whether a supplier has orthotist training may be just plain wrong.

IV.  Why Was My DME Company Included in this Review?

A Comparison of Your Billing Percentages for Each of the Six HCPCS Categories of Spinal Orthoses.  As a first step, the CBR contractors compared each supplier’s billing patterns, by HCPCS code, with those of other suppliers in their peer specialty group.  To the extent that a supplier’s utilization ratios were aberrant when compared to the ratios of their peers, the supplier was more likely to be sent a CBR.

The Percentage of Allowed Services Defined as Custom-Fitted.  Another primary assessment conducted by the CBR contractors is whether the percentage of spinal orthoses submitted for payment by a supplier was billed as a “custom fitted” brace.  The percentage of custom-fitted braces billed by a specific supplier was compared to the percentage billed to their DME MAC contractor by other suppliers in their respective peer specialty group.  Each supplier’s percentage of custom-fitted brace billings were also compared to the national average.  If a specific supplier’s percentage was deemed to be “significantly higher” than one of these peer groups, it was one step closer to being sent a CBR.

The Percentage of Allowed Services Submitted without a Visit to the Referring Provider within 90 Days of the DMEPOS Service Date.  Another factor analyzed by the CBR contractors is whether a significant percentage of beneficiaries fitted (either custom-fitted or off-the-shelf) for a brace by a specific supplier had not been seen by their referring provider within 90 days of the DMEPOS service date (the date that the spinal orthosis order was filled by the DMEPOS supplier).  Simply stated, red flags are going to be raised if you fill a prescription / order for a brace and the patient hasn’t seen his / her referring provider within the previous 90 days.[8]  Once again, the CBR contractor compared each specific supplier’s percentage to the percentage billed to their DME MAC contractor by other suppliers in their respective peer specialty group.  Each supplier’s percentage of custom-fitted brace billings were also compared to the national average.

The Average Allowed Charges per Beneficiary for the One-Year Period.  The CBR contractors also examined the average allowed charges of each supplier billed to Medicare per beneficiary and compared this number to average allowed charges of other suppliers in their peer specialty group.  If a supplier’s average allowed charged were significantly higher than that of their peers, it was more likely to be issued a CBR.

V.  The Results of an Assessment by eGT:

After reviewing the utilization and billing practices of each spinal orthoses supplier, if a specific supplier’s measures were considered to be Significantly Higher than their peers in at least one of the three factors discussed above, the supplier was issued a CBR.

  1. Supplier is significantly higher than at least one of its peer groups on at least one of the measurements studied;
  2. Supplier is near or above the 45th percentile in allowed charges ($5,000); and
  3. Supplier had at least ten beneficiaries.

VI. Responding to a CBR:

If your company received a CBR, you likely noted the fact that eGT may expressly state in its reports that “no reply is necessary.”   While that may technically be the case, after handling CBRs for many years, our experience (and the collective experience of our associates) has been that your organization is much more likely to be audited if you do not respond and address any misconceptions or incorrect positions about your billing pattern stated by the contractor in its report.

To be clear, if you receive a CBR, you need to immediately take steps to validate or invalidate eGT’s findings.  If, in fact, your billing practices have been improper, you have an affirmative obligation to take steps to remedy any deficiencies. Additionally, the risk issues identified by eGT should be incorporated into your existing Compliance Program and should be taken into account when you perform periodic internal claim audits and monitoring functions.

VII.  Get Ready for Follow-Up Audits by ZPICs / UPICs!

Although your claims haven’t yet been audited, if you received one of these reports an audit of your claims may be right around the corner.  While it has been our experience that responding to a CBR is helpful, (and may reduce your chances of having a prepayment or postpayment Zone Program Integrity Contractor (ZPIC) or Uniform Program Integrity Contractor (UPIC) audit) if eGT has based its assessment on incorrect assumptions, there are no guarantees that a CMS program integrity contractor won’t still choose to initiate an audit of your claims for one or more braces billed to Medicare.

As a CBR recipient, you need to recognize that your organization has been identified as an outlier and there is significant likelihood that your spinal orthoses claims will be audited in the near future by a ZPIC or a UPIC, especially if you have not taken steps to identify and correct any misconceptions about your billing practices that the CBR contractor has made.

Now, more than ever, it is essential that suppliers review their documentation and ensure that they are fulling complying with all applicable requirements to show that each brace was medically necessary, fully documented, properly coded and billed.  For instance, as set forth under the Medicare Program Integrity Manual:

“All DMEPOS items…require detailed written orders prior to billing. Detailed written orders may take the form of a photocopy, facsimile image, electronically maintained, or original ‘pen-and-ink’ document. The written order must be sufficiently detailed, including all options or additional features that will be separately billed or that will require an upgraded code. The description can be either a narrative description (e.g., lightweight wheelchair base), or a brand name/model number. All orders must clearly specify the start date of the order.”

The failure to fully document the delivery of a brace is another significant risk faced by spinal orthoses suppliers.  ZPICs and UPICs routinely refuse payment citing this reason for denial.  As discussed in the Medicare Program Integrity Manual:

“Suppliers are required to maintain proof of delivery documentation in their files. Proof of delivery documentation must be maintained in the supplier’s files for 7 years (starting from the date of service).” 

Pursuant to 42 C.F.R. Sec. 424.57(c)(12), proof of delivery:

Must be responsible for the delivery of Medicare covered items to beneficiaries and maintain proof of delivery. (The supplier must document that it or another qualified party has at an appropriate time, provided beneficiaries with necessary information and instructions on how to use Medicare-covered items safely and effectively).”[9]

VIII.  Potential Liability for Non-Compliance:

After receiving a CBR, you may soon find that your supplier claims will be subject to  prepayment or postpayment audit by a ZPIC or UPIC. Alternatively, you may merely receive an “Additional Document Request” (ADR) from a CMS contractor.  ADRs aren’t uncommon and most suppliers have received multiple such requests since becoming a participating supplier in the Medicare program.  Nevertheless, in recent years, ADRs have taken on a new level of importance. ZPICs and UPICs aren’t hesitating to place a supplier on 100% prepayment review if the documentation submitted in response to an ADR results in the denial of one or more claims.

Similarly, if a supplier is placed on prepayment review and a significant percentage of your claims are denied when the associated supporting documentation is submitted, there is much higher risk that your claims will be subjected to a postpayment audit.  In some cases, a high error rate identified in a prepayment or postpayment audit has led to the suspension of Medicare supplier’s billing privileges. Unfortunately, this “snowball effect” of cumulative adverse administrative actions may not be over. In accordance with 42 C.F.R. Sec. 424.57(e), a CMS contractor may recommend to the agency that your billing privileges are “revoked” if a supplier is found not meet applicable conditions of payment:

“Failure to meet standards. CMS will revoke a supplier’s billing privileges if it is found not to meet the standards in paragraphs (b) and (c) of this section. (The revocation is effective 15 days after the entity is sent notice of the revocation, as specified in §405.874 of this subchapter.)” 

IX. Conclusion:

Despite what you may have been told, CBRs are far from benign.  If a provider or supplier has received a CBR (such as, but not limited to CBR201803), it may be a harbinger of future administrative audits or in more serious cases, a possible civil and / or criminal investigation of your billing practices.  While every case is different, if the CBR contractor’s CBR findings (as outlined in their letter to your organization) are incorrect, it is typically in your best interests to correct the record.  Our attorneys are experienced in assessing these matters and can assist your organization is putting its best foot forward when responding to a CBR, the receipt of an ADR, prepayment review or postpayment audit.  Give us a call for a free consultation.  1 (800) 475-1906.

Robert W. Liles Healthcare AttorneyRobert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at the law firm of Liles Parker, Attorneys & Clients at Law.  Robert represents providers and suppliers around the country in ZPIC / UPIC audits, Medicare suspension actions and revocation cases.  For a complimentary consultation, please call: 1 (800) 475-1906.

[1] As set out in the Chapter 15, Section 130 of the Medicare Benefit Policy Manual, braces are “rigid and semi-rigid devices which are used for the purpose of supporting a weak or deformed body member or restricting or eliminating motion in a diseased or injured part of the body.”

[2] eGT’s analysis is based on a snapshot of claims in the Integrated Data Repository as of January 24, 2018.

[3] As set out in the Joint DME MAC Publication, a “Custom-Fitted Orthosis,” is defined as:

  • Devices that are prefabricated.
  • They may or may not be supplied as a kit that requires some assembly. Assembly of the item and/or installation of add-on components and/or the use of some basic materials in preparation of the item does not change classification from OTS to custom fitted.
  • Classification as custom fitted requires substantial modificationfor fitting at the time of delivery in order to provide an individualized fit, i.e., the item must be trimmed, bent, molded (with or without heat), or otherwise modified resulting in alterations beyond minimal self-adjustment.
  • This fitting at delivery does require expertise of a certified orthotist or an individual who has equivalent specialized training in the provision of orthosis to fit the item to the individual beneficiary.

[4] Off-the-shelf (OTS) orthotics are defined as:

  • Items that are prefabricated.
  • They may or may not be supplied as a kit that requires some assembly. Assembly of the item and/or installation of add-on components and/or the use of some basic materials in preparation of the item does not change classification from OTS to custom fitted.
  • OTS items require minimal self-adjustmentfor fitting at the time of delivery for appropriate use and do not require expertise in trimming, bending, molding, assembling, or customizing to fit an individual.
  • This fitting does not require expertise of a certified orthotist or an individual who has equivalent specialized training in the provision of orthoses to fit the item to the individual beneficiary.

[5] In both its 2016 and 2017 Work Plans, OIG noted that it would be reviewing the reasonableness of Medicare payments for orthotic braces when compared to the amounts paid by other non-Medicare payers..

[6]A “certified” individual is someone who is certified by either the American Board for Certification in Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist Certification.

[7] As set out in Appendix C of the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Quality Standards, “Individuals supplying the item(s) set out in this appendix must possess specialized education, training, and experience in fitting, and certification and/or licensing.”  While the CBR contractors expressly recognized that an individual specially trained to custom fit beneficiaries that have a medical need for an orthosis.

[8] To determine this, the CBR contractor checks to see if the referring provider billed for a Part B visit within 90 days of the service date of the DMEPOS claim.

[9] https://www.gpo.gov/fdsys/pkg/CFR-2005-title42-vol2/pdf/CFR-2005-title42-vol2-sec424-57.pdf

Revocation of Your Medicare Billing Privileges

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Revocation of Your Medicare Billing Privileges

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

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

 Revocation of your Medicare Billing Privileges

I. Background:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

IV.  A Look at the Regulatory Bases for Revocation:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

V.  Impact of a Medicare Revocation Action:

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

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

VI.  Appealing a Medicare Revocation Action:

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

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

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

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

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

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

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

VII.  Conclusion:

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

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


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

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

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

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

[4] 42 C.F.R. § 424.510(a).

[5] 42 C.F.R. § 424.510(d)(2)(ii).

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

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

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

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

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

[11] 42 CFR §424.535(c)

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

CMS Awards Zone 6 ZPIC Contract to SafeGuard Services

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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.


Recovery Audit Contractor Changes will be Major in 2014

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(May 7, 2013):  The Recovery Audit Contractor (RAC) program is slated to undergo significant changes in 2014.  As discussed below, non-hospital health care providers and suppliers are likely to find the Medicare appeals process more complex than ever as RACs enter into the process in an effort to defend their denial decisions.

I.  Background of the RAC Program:

The RAC program was first established as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). The program’s stated purpose was to detect and correct improper payments made by the Medicare program to health care providers and suppliers. RACs were initially restricted to performing only post-payment audits of paid Medicare claims.  Importantly, the post-payment audits conducted by RACs were not intended to replace ongoing post-payment review efforts already underway by Medicare Administrative Contractors (MACs), Zone Program Integrity Contractors (ZPICs), Benefit Integrity Support Centers (BISCs) or the Department of Health and Human Services, Office of Inspector General (HHS-OIG).

II.  The RAC Demonstration Project:

The RAC demonstration project was initially limited to three states, California, Florida, and New York.  The demonstration project was subsequently expanded to also include Massachusetts, South Carolina and Arizona. Congress later extended the scope of the RAC program, making it a permanent, nationwide initiative under Section 302 of the Tax Relief and Health Care Act of 2006. While a number of physicians, home health agencies and durable medical equipment (DME) companies have, in fact, been subjected to audit by a RAC, the primary focus of RACs around the country has remained hospitals and other large institutional Medicare providers.

III.  Expansion of RAC Duties:

With the passage of the Affordable Care Act (ACA) in 2010, the program was further expanded to cover Medicaid claims processed by State programs around the country. Most recently, the Centers for Medicare and Medicaid Services (CMS) has authorized RACs to conduct “prepayment reviews” of “certain types of claims that historically result in high rates of improper payments.”  Prepayment reviews by RACs are currently focused on seven states where high populations of fraud and error-prone providers have been identified.  These seven states include:

1. Florida
2. California
3. Michigan
4. Texas
5. New York
6. Louisiana
7. Illinois

Additionally, CMS has authorized RACs to conduct prepayment reviews of short inpatient stays in four additional states.  These states include:

8. Pennsylvania
9. Ohio
10. North Carolina
11. Missouri

One purpose of this change is to move away from a “pay and chase” system of review where potential overpayments have already been paid by the government. Instead, RACs will now be conducted prepayment audits, like their ZPIC and MAC counterparts – thereby preventing possible overpayments from being paid in the first place.

 IV.  Upcoming Changes to the RAC Program:

 Over the next year, health care providers and suppliers are likely to find that RACs are both more active and more likely to remain actively involved in overpayment cases appealed by Medicare providers and suppliers.  Several upcoming changes include:

RAC prepayment audits will likely be expanded to beyond the 11 states now authorized.

RAC contract with CMS currently run through February 2014. The new RAC contract period will be extended to cover the period 2014 to 2018. 

There are currently four RACs operating around the country. CMS is planning on expanding program to include a fifth contractor. The existing four contractors will continue cover their designated regions while the new fifth contractor will assume responsibility for identifying overpayments by home health agencies, hospices and DME suppliers. 

If a health care provider or supplier challenges an alleged overpayment (identified by a RAC) through the administrative appeals process, CMS will now be requiring that RACs actively defend their assessments in the appeals process.

As the 2013 Statement of Work (SOW) for RACs provides:

“For any Recovery Auditor-identified improper payment that is appealed by the provider, the Recovery Auditor shall provide support to CMS throughout the administrative appeals process and, where applicable, (during) a subsequent appeal to the appropriate federal court. This includes participating or taking party status at the administrative law judge (ALJ) level of appeal in a minimum of 25 percent of the cases that reach this level.”

V.  Conclusion:

The upcoming changes to the RAC program outlined above are likely to dramatically impact the administrative appeals process.  As it currently stands, ZPICs are typically the only CMS to attend ALJ hearing as a “participant.”  Although ALJ hearings are intended to be non-adversarial proceedings, the participation of ZPIC personnel in the hearing process has sometimes transformed a hearing into a hotly-contested event.  The participation of RAC personnel in ALJ hearings are similarly likely to complicate the proceedings. In light of these changes to the appeals process, we strongly recommend that health care providers and suppliers engage qualified, experienced legal counsel to represent their interests in the administrative appeals process.

RAC Contract ChangesRobert W. Liles and other Liles Parker attorneys have extensive experience representing health care providers and suppliers around the country in the Medicare administrative appeals process.  Should you have any questions regarding this process, please call Robert for a free consultation.  He can be reached at 1 (800) 475-1906.  

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

January 30, 2013 by  
Filed under Home Health & Hospice

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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, §  “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.

Medicare Dental Audits are Being Conducted by ZPICs. Is Your Specialty Dental Practice Ready?

January 18, 2013 by  
Filed under Dental Audits & Compliance

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Medicare Dental Audits are Being Conducted by ZPICs(January 18, 2013): Specialty dental practices around the country are receiving audit letters from “Zone Program Integrity Contractors” (ZPICs), contractors working for the Centers for Medicare and Medicaid Services (CMS). This latest audit focus by ZPICs is rather surprising in light of the fact that very few dental procedures qualify for Medicare coverage and payment.  The purpose of this article is to examine this occurrence and discuss how a dentist should respond if his specialty dental practice is audited by a ZPIC.


I.  Dental Coverage Under Medicare – Background:

Historically, Congress has affirmatively included specific language designed to limit the types of dental services that would qualify for coverage and payment under the Social Security Act (Act).  As Section 1862 (a)(12) of the Act states:

“where such expenses are for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth, except that payment may be made under Part A in the case of inpatient hospital services in connection with the provision of such dental services if the individual, because of his underlying medical condition and clinical status or because of the severity of the dental procedure, requires hospitalization in connection with the provision of such services.” (emphasis added).[1]

Notably, the exclusion of dental services from Medicare is nothing new.  Dental services were carved out of coverage when Medicare was first passed.  Moreover, the exclusion was extraordinarily broad – it was not merely limited to “routine dental services.”  It was not until 1980 that Congress decided to make an exception for inpatient hospital services which were required as a result of serious dental needs which required hospitalization.  At present, Medicare covered dental services are essentially limited to cases where the dental services are:

“. . . an integral part either of a covered procedure (e.g., reconstruction of the jaw following accidental injury), or for extractions done in preparation for radiation treatment for neoplastic diseases involving the jaw. Medicare will also make payment for oral examinations, but not treatment, preceding kidney transplantation or heart valve replacement, under certain circumstances.”  (emphasis added).[2]

II.  A Brief Overview of the Creation of ZPICs:

On August 21, 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA).  While most health care providers think of “privacy” when HIPAA is mentioned, the legislation was historic in its scope, greatly expanding the government’s investigative and enforcement authorities and providing ongoing funding for the future.  HIPAA’s overall purpose was to protect the financial integrity of the Medicare Trust Fund and the statute has greatly facilitated the government’s efforts in this regard.

One of HIPAA’s most important provisions established the Medicare Integrity Program (MIP). MIP.  The purpose of MIP was to strengthen CMS’ ongoing efforts to identify, pursue and prosecute health care fraud.  Additionally, the statute was intended to deter potential future fraud. As part of this program, CMS established a new type of contractor, known as “Program Safeguard Contractors” (PSCs). These new contractors essentially assumed many of the program integrity functions previously handled by Carriers (Part B) and Fiscal Intermediaries (Part A).  

Over the next decade (prior to their replacement by ZPICs), PSCs aggressively pursued alleged Medicare overpayments from physicians, home health agencies, hospice companies, behavioral health centers, and other health care providers around the country.

On December 8, 2003, Congress passed and the President signed the Medicare Modernization Act (MMA) into law. Section 911 of the MMA provided for significant reform of the existing  Medicare Fee-For-Service contracting program. Among its many changes, the Carrier / Fiscal Intermediary system was replaced with a consolidated new type of administrative contractor known as a “Medicare Administrative Contractor” (MAC).  Seven program integrity zones were created and MACs were selected to administer most Part A and Part B programs for these zones.

The MMA also created new program integrity contractors to perform the audit and review functions in these seven zones.  Zone Program Integrity Contractors (ZPICs) were established to handle program integrity functions in these zones for Medicare Parts A, B, Durable Medical Equipment Prosthetics, Orthotics, and Supplies, Home Health and Hospice and Medicare-Medicaid data matching.  In recent years, ZPICs have largely replaced most of the PSCs around the country.  Any work being performed by PSCs (if any are still operating) will eventually be replaced by ZPICs.

Medicare Part C and D program integrity efforts are handled separately.  A single national contractor (at this time, Health Integrity) was selected to serve as the “Medicare Drug Integrity Contractor” (MEDIC).  CMS remains responsible for all aspects of the Medicare program and manages these private contractors, overseeing the work that they perform on the government’s behalf. The following zones are currently being handled as indicated below:

  • Zone 1      SafeGuard Services: CA, NV, American Samoa, Guam, HI and the Mariana Islands.
  • Zone 2      AdvanceMed: AK, WA, OR, MT, ID, WY, UT, AZ, ND, SD, NE, KS, IA, MO.
  • Zone 3       Cahaba: MN, WI, IL, IN, MI, OH and KY.
  • Zone 4 –      Health Integrity: CO,      NM, OK, TX.
  • Zone 5      AdvanceMed: AL, AR, GA, LA, MS, NC,      SC, TN, VA and WV.
  • Zone 6 –      Under Protest: PA, NY, MD, DC, DE and ME, MA, NJ, CT, RI, NH and VT.
  • Zone 7      SafeGuard Services: FL, PR and VI.

III.  Are Practices Prepared for Medicare Dental Audits?

Unfortunately, very few dental practices have developed and implemented an effective Compliance Plan or Compliance Program.  Is one needed?  We believe that every dental practice should have an effective Compliance in place.  Notably, when issuing compliance guidance to individual and small physician practice groups, the Department of Health and Human Services, Office of Inspector General (OIG) wrote that the guidance was not merely intended to cover medical doctors, but also a wide variety of other clinical professionals.  As the OIG wrote:

“[f]or the purpose of this guidance, the term ‘‘physician’’ is defined as: (1) a doctor of medicine or osteopathy; (2) a doctor of dental surgery or of dental medicine; (3) a podiatrist; (4) an optometrist; or (5) a chiropractor, all of whom must be appropriately licensed by the State.” [3] Furthermore, the OIG has stated that “[m]uch of this guidance can also apply to other independent practitioners, such as psychologists, physical therapists, speech language pathologists, and occupational therapists.”[4] (emphasis added).

It is important to keep in mind that a Compliance Plan or Program is far more extensive that merely policies and procedures covering health information privacy (HIPAA) and OSHA requirements.  Every dental practice must also have effective procedures in place to guard against the commission of fraud or abuse against public payors, private payors and patients.  Moreover, your staff must be trained to identify potential problems so that remedial steps can be taken to correct a potential or actual problem.

IV.  How Will a ZPIC Auditor Look at Your Dental Claims for Services?

It is essential to keep in mind that the viewpoint of an auditor, when reviewing the medical records supporting a certain dental claim, is not the same as that of the treating dentist.  An auditor’s perspective is that of someone who is trying to determine:  Was the dental service really needed? Was it provided?  Should we cover it?  As you can see, the viewpoint of the auditor when assessing the sufficiency of medical documentation may be very different from that of the treating dentist.

In assessing the appropriateness of a claim and its associated documentation, we have developed a checklist that we refer to as “The Seven Elements of a Payable Claim.”  In auditing your dental services, a ZPIC auditor will likely apply a similar approach.  Here are the seven elements:

Element #1Medical Necessity of Dental Services Provided. An auditor will likely start by deciding whether a particular service was medically necessary.  To avoid having a ZPIC auditor deny one or more of your dental services based on an alleged lack of medical necessity, your documentation must clearly show that the services were reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”[5]  Sound simple?  Not really. This is often an issue in dispute upon appeal, especially since the auditor is likely not a licensed dentist.

Element #2: Were the Dental Services Actually Provided.  While dental services may be found to be medically necessary based on the clinical needs of the patient, your documentation still needs to show that the services were, in fact, rendered.  This can be especially problematic when dealing with the few complex dental services that are covered under Medicare.  Regardless of whether the patient is sedated, he / she likely has only a basic idea of what you are doing in their mouth.  When they receive their Explanation of Benefits (EOB) form, outlining the services charged to Medicare, they are unlikely to recognize half of the charges.  As you can imagine, this confusion can lead to complaints to Medicare and an audit of your records.

Element #3Were the Dental Services “Tainted” for Any Reason?  In other words, are the dental services problematic because of a violation of law, such as the Anti-Kickback Statute, False Claims Act or other statutory provision.

Element #4 Do the Dental Services Qualify for Coverage?  Despite the fact that the dental services provided may be medically necessary, they still may not qualify for coverage and payment.  Coverage is a “standalone” element.  It can change from year to year and from payor to payor.

Element #5 Is Your Documentation of the Dental Services Complete? Be sure and pull all of the regulations and any other guidance issued by CMS, the MAC handling your zone and any other statutory guidance which may set out the documentation requirements associated with a particular dental service or claim.  Remember, ZPIC reviewers take the position that “If it isn’t documented, it didn’t happen.”   As a participating provider in the Medicare program, you are required to fully meet Medicare’s documentation requirements.

Element #6: Are your Dental Services Properly Coded?  Importantly, even if all of the foregoing requirements have been met, it is still quite simple for a dentist to make a coding mistake, thereby possibly invalidating the claim for dental services. Have your staff members been trained on dental coding requirements?  As the American Dental Association (ADA) notes:

“Accurate recording and reporting dental treatment is supported by a set of codes that have a consistent format and are at the appropriate level of specificity to adequately encompass commonly accepted dental procedures. These needs are supported by the Code on Dental Procedures and Nomenclature (Code). The Code is periodically reviewed and revised to reflect the dynamic changes in dental procedures that are recognized by organized dentistry and the dental community as a whole” (emphasis added).

The Code on Dental Procedures and Nomenclature is commonly referred to as the “CDT” code book.  Like its medical cousin, the Current Procedural Technology (CPT), which is published by the American Medical Association (AMA), the CDT code book provides a dynamic set of coding guidelines to be followed by dental administrative personnel.  Regular training of your staff is essential to help ensure accuracy and consistency in high qualify coding.

Element #7: Did You Bill for the Dental Services Rendered Correctly? The seventh and last element is “billing.”  Assuming that each of the previous elements have been correctly addressed and met, has your staff correctly billed for the dental services rendered to the patient, private payor or public payor responsible for payment? r Billing Practices – Were the services rendered correctly billed to Medicare?  None of are perfect.  Mistakes occur.  Your biller may accidentally double-bill a payor for a service.  Alternatively, your biller may accidentally bill for the wrong code. When faced with an overpayment remember:  If it doesn’t belong to you, give it back.”  Virtually NO overpayments belong to a dentist or a dental practice.  Any unclaimed overpayments which are either refused by a private payor (sounds odd but it occurs), or cannot be returned for other reasons (perhaps the patient to whom the refund was owed has died), is likely required to be turned over to your state’s “escheat” fund.  Failure to turn over unclaimed monies in a prompt fashion can subject a dental practice to fines.  In some states, it can even result in criminal action.

V.  Final Remarks Regarding Medicare Dental Audits:

In conclusion, it is important for dentists and other health care providers to recognize and accept the fact that full “compliance” with government rules, regulations and requirements isn’t necessarily something that comes naturally. When documenting a certain procedure, a specialty dentist is likely to include any and all information in the record which (in his or her professional opinion) should be documented to fully account for the patient’s clinical profile or condition, the reason for their visit and services you provided (along with a possible discussion of your decision process).  As set out above the perspective of a ZPIC auditor is likely to be much more comprehensive.

Is your practice ready for a ZPIC audit?  Do you have an effective Compliance Plan in place? Call Liles Parker for assistance in preparing for a ZPIC audit or responding to a ZPIC audit of your dental services.  We can also assist you in the development and implementation of an effective Compliance Plan.

Healthcare LawyerRobert W. Liles, Esq., is Managing Partner at the health law firm, Liles Parker, PLLC.  With offices in Washington, DC, Houston, TX, San Antonio, TX and Baton Rouge, LA, our attorneys represent home health agencies, physicians and other health care providers around the country in connection with Medicare / Medicaid prepayment reviews, post-payment audits, Compliance Plan reviews and state peer review actions.  Should you have any questions, please call us for a free consultation.  Robert can be reached at: 1 (800) 475-1906.  


[2] Ibid.

[3] Id.; see also 42 U.S.C. 1395x(r).

[4] Id.

[5] Section 1862 (a) (1) (A) of the Social Security Act

ZPIC Home Health Audits are Slated for the Future

November 19, 2012 by  
Filed under Home Health & Hospice

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(November 19, 2012): Zone Program Integrity Contractors, better known also as “ZPICs,” are continuing to focus on home health agencies (HHAs), hospice providers, and DME companies as the subject of their Medicare audits. Based on input from both the Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS), ZPIC audits have expanded in both scope and intensity. In particular, ZPIC audits have been focused on HHAs in Texas, Oklahoma, Louisiana, and Florida.

I.  The OIG’s 2013 Workplan Lists Home Health Services as a Continuing Concern:

With the recent release of OIG’s 2013 Workplan, which reinforced that HHAs and hospice providers continued to be subject to intense government scrutiny, expect that ZPIC audits will increase among these industries. It has been our experience that ZPIC audits closely follow the identified target areas in OIG’s annual Workplans, and this year will be no exception. Each year, OIG, the Department of Justice (DOJ), CMS, and CMS contractors receive more funding to tackle Medicare fraud, waste, and abuse, and this translates to increased enforcement efforts across the board, including ZPIC audits. Remember that ZPIC audits and other recovery actions are money-makers for the government; in one estimate, the government made 1 dollar for every 19 cents it spent on healthcare fraud enforcement and recovery. Multiply this by several million and you’ll see that these audit programs will only continue to expand, as they produce great returns for the federal government. 

II.  Primary Problems Areas Identified in ZPIC Home Health Audits: Do ZPIC Audits Reveal?

ZPIC home health audits generally reveal two distinct problems: that patients are not home-bound and/or the services provided were not skilled services, and were therefore not medically necessary. While our attorneys have had tremendous success in overturning denials of these reasons, providers should proactively review and update their documentation practices to reduce the risk of claims denials in the first place. While ZPIC auditors excel at identifying reasons for denial, excellent documentation can prevent even the pickiest auditor from denying a medically necessary claim.

Homebound denials are common when patients still have some ability to ambulate.  ZPICs interpret the relevant home-bound provisions to require that patients never leave their homes and are generally unable to get out of bed. However, the rules don’t state this, instead recognizing home-bound status as requiring patients to have a “considerable and taxing effort” to leave the home. Congress has specifically stated that attempts by home-bound patients to live a normal life (going to church, visiting family) that are rare or infrequent should not be penalized in non-coverage of claims.  As a result, ALJs have been receptive to our attorneys’ arguments about the home-bound status of the patients of our HHA clients.

ZPIC auditors also deny claims based on lack of skilled nursing services. This applies especially to instances of medication management, healthcare education, and diabetes care issues. Often times, ZPIC audits apply an extremely strict standard to what is or is not skilled care, and this is where appropriate documentation can make all the difference in the world. There is no doubt that the nurses of most HHAs are providing a comprehensive and medically necessary set of services for their clients that go beyond simply making sure the patient is taking their vitamins. The problem, though, is that this information is not effectively captured. It is important for HHAs to ensure their nurses are appropriately trained on the documentation requirements in various Medicare jurisdictions.

III. Final Remarks:

Whether it is documentation review and training before a ZPIC audit, or representation in appealing ZPIC audit denials, Liles Parker attorneys have the skills and understanding to provide effective assistance to HHAs and other healthcare providers facing this challenge.

Robert Liles is the managing member of Liles Parker PLLC, based out of our Washington, D.C. office. Robert has extensive experience handling ZPIC audits, compliance program reviews, internal audits, Medicare and Medicaid overpayment appeals, and other health care compliance projects. Should you have any questions, please feel free to call Robert today for a complimentary initial consultation at 1-800-475-1906.

Choosing the Right ZPIC Audit Appeals Attorney: Who is Best for You?

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An experienced ZPIC Audit Appeals Attorney Can Assist You With Your Audit.(July 19, 2012): Choosing the right ZPIC audit appeals attorney to represent your practice  is possibly the most important step you can take to protecting your rights during the ZPIC audit and appeals process. Indeed, who your representative is in ZPIC cases can make all the difference in the world. It is not enough to choose an attorney who is experienced. Instead, you should consider retaining an attorney who is experienced in this specific area of the law, and has the proven skills, talent, and expertise it takes to successfully argue for coverage and payment.

While many attorneys and consultants may say that they are experts in this area, have they been before Administrative Law Judges (ALJs) in all 4 of the Office for Medicare Hearings and Appeals (OMHA) field offices? Do they consistently file appeals or defend against appeals filed with the Medicare Appeals Council? Do they know the Medicare appeals process forward and back, and the nuances and expected outcome of each? These are just some things to keep in mind when asking an attorney whether they are really the right fit for you and your practice.

I.  How Can a ZPIC Audit Appeals Attorney Help With Your Case?

Unfortunately, many ZPIC audit appeals end up as “bet-the-farm” litigation, meaning that either the provider wins, and stays in business, or if the provider loses, the alleged overpayment found by the ZPIC is so huge that they are forced to shut their business down. As part of this, you should ensure that your attorney is comfortable with understanding and arguing against complex statistical extrapolations, which ZPICs use to greatly increase the alleged overpayment in most cases. Also be sure to ask your attorney whether they consistently work with statistical consultants who are recognized experts in their field, and consistently qualify as experts before ALJs.

II.  Final Remarks:

Finally, make sure that you choose an attorney who is well-versed in the variety of legal arguments that providers often rely upon to reduce or eliminate their overpayment liability. There are a number of statutory waivers, as well as due process considerations, that can be critical to convincing a judge or the Medicare Appeals Council that you should not have to pay an overpayment. Only a ZPIC audit appeals attorney with a significant degree of know-how in this regard will be in an appropriate position to advise you about these options.

Again, think carefully when retaining a ZPIC audit appeals attorney – it can be the biggest decision you make.

Healthcare LawyerRobert 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.


Healthcare Data Mining Audits: Impact on Medicare Providers and Suppliers

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(June 27, 2012):  Healthcare data mining has become quite routine.  For instance, in a recent case involving a Missouri psychologist, the provider was indicted and arrested on two counts of healthcare fraud and forgery. At the heart of this case was the fact that the psychologist allegedly submitted claims to Medicare and Medicaid that were virtually impossible for a single individual to perform. In fact, the indictment stated that the physician worked every day except for Christmas from mid-2008 to early 2012, when he was arrested. In other words, he worked three and a half years straight, seven days a week, with only four Christmases away from the practice. Obviously, this data raised a few red flags for Medicare fraud fighters. As both interest and concern in the provision of national health care has risen, the current administration has aggressively pursued fraudsters who have improperly billed Medicare, Medicaid and private health plan payors. Not surprisingly, additional funding has accompanied these increased investigative and prosecutorial efforts.

As the government has increased its pressure on fraudulent providers, both law enforcement organizations such as the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and contractors of the Centers for Medicare & Medicaid Services (CMS) have become increasingly adept at identifying and pursuing fraudulent and / or potentially fraudulent billing activities by abusive health care providers.

I.     How is the Government Using Healthcare Data Mining Audits?

Generally, the two primary targeting tools used by CMS contractors and law enforcement to identify wrongdoing are:  (1) Data Mining, and (2) Complaints.  This article focuses on the first targeting tool, the use of healthcare data mining. We will address “complaints” in detail in a later article.

At the outset, it is important to keep in mind that the government has been accumulating utilization, coding and billing data since the passage of the Medicare and Medicaid programs in 1965 as part of Title XVIII of the Social Security Act. Over the past 40 years, the government has carefully studied this data, identifying trends and noting irregularities. Both HHS-OIG and CMS contractors (including, but not limited to Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs), and Medicaid Integrity Contractors (MICs)) are able to effectively use data mining to analyze various aspects of the coding and billing data submitted by billing health care providers. These entities employ experts in database management and use  sophisticated techniques to “slice and dice” the Medicare and Medicaid billing and coding data.  In doing so, they are able to compare providers by practice area, geography, time, and a practically endless number of other factors. They can then effectively identify any “outliers” which may be present when their billing patterns are compared to those of their peers.

For instance, in the case described above, healthcare data mining has become quite common.  It was clearly used to review the psychologist’s claims history and determine that what he was billing was likely both impossible and fraudulent.  Nevertheless, it is important to always keep in mind that although data mining may strongly suggest that a provider is engaging in improper conduct, at the end of the day, an outlier is merely a provider whose billing patterns differ from those of his / her peers.  A review of the documentation must still be conducted to ascertain whether, in fact, fraudulent conduct has occurred.  While ZPICs and MICs handle the majority of the data mining work being conducted, when the data appears to suggest that fraudulent conduct is taking place, providers should expect HHS-OIG and possibly the Department of Justice or the Federal Bureau of Investigations to step into investigation.  Unfortunately, while data mining can detect aberrant patterns in billing data, it can’t explain them, and often times, this leaves well-intentioned providers facing scrutiny if their billing history appears aberrant for an otherwise innocent reason.  For instance, a specialist who is renowned in his area of practice may be referred serious, highly complex patients by his peers. This could result in his billing patterns appearing to be different from those of similarly-situated physicians.  Despite the fact that there is an innocent explanation for the specialist’s billing patterns, the data alone may appear to suggest that fraud is taking place.  Health care providers should take affirmative steps to determine whether their coding and billing patterns are “normal” or whether their practices are irregular when compared to other providers.

To be clear, just because your coding and billing practices differ from those of your peers does not necessarily mean that you are engaging in improper conduct.  Nevertheless, if you are an outlier, we strongly recommend that you carefully analyze your internal practices in an effort to identify why your utilization history differs 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 yours, give it back.” Upon review, if your coding and billing practices appear skewed, you need to be ready to explain why your utilization rate is different if audited by a CMS contractor or investigated by law enforcement.

II.    Helpful Tools When Conducted an Internal Assessment:

If you are a Compliance Officer, part of your responsibilities includes the identification and repayment of any improper billings. 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 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 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.

III.     How Should You Respond to Healthcare Data Mining Audits?

Staying fully compliant with all of Medicare’s and / or Medicaid’s rules and regulations can be a quite a challenge.  Nevertheless, as a participating provider, you have affirmatively agreed to meet that obligation.  As providers are constantly reminded, serving as a participating provider is a privilege, not a right.  Unfortunately, even with the best tools, physicians, group practices, clinics, home health agencies and other providers may still find themselves subject to Medicare post-payment and / or prepayment audits by a ZPIC (and now by a RAC). Reviewers and auditors employed by Medicare contractors are highly experienced, knowledgeable and skilled in assessing the propriety of a claim.  They have years of experience handling audits and are quite good at identifying deficiencies in your documentation, regardless of how minor you may believe those  deficiencies might be.  While it is essential to understand your obligations as a Medicare participant, it is equally important to understand how and why practices get audited.  As discussed in earlier articles, while you may not be able to avoid an audit, you can do your very best to help ensure that upon review, a CMS contractor will find that your practices fully meet Medicare rules and regulations.  The development, implementation and adherence to an effective Compliance Plan is the single best step you can take to avoid regulatory problems.

Healthcare LawyerRobert Liles is the managing member of Liles Parker PLLC. Robert represents providers in Medicare providers around the country in postpayment 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.

OMHA Changes ALJ Hearing Case System

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(March 2, 2012):  Likely recognizing the enormous disparity in Administrative Law Judge (ALJ) hearing workloads for its various Field Offices, the Office of Medicare Hearings and Appeals (OMHA) recently switched to a Central Docketing System for all pending and new appeals. Under this new system, all ALJ hearing requests will be sent to OMHA’s Central Office in Cleveland, OH. Each ALJ appeal will subsequently be assigned to one of the Field Offices – Irvine,  CA, Miami, FL or Arlington, VA – or to ALJs in the Central Office. Despite assigning appeals to different offices, OMHA is not breaking these appeals into their component parts – individual claims –  so “big box” cases will still be handled during one ALJ hearing.

OMHA While each appeal will likely be assigned to an office randomly, OMHA will likely base these assignments on current workloads at each of its offices. Therefore, a provider in Texas, Oklahoma  or Louisiana, who would previously have always gone before an ALJ in the Miami Field Office, may end up at an ALJ hearing in any of OMHA’s four offices. While this may be disconcerting at first, the typical ALJ hearing is conducted by phone or video-teleconference nowadays, meaning that the ALJ’s location doesn’t substantially affect how a case is handled. While it may be more difficult to ascertain the procedural habits of a single ALJ (such as in what order to present information or how formal each ALJ hearing session is), an experienced health lawyer will still be able to ably represent your interests since appeals and hearings are generally handled in the same fashion,

In any event, regardless of whether the assigned ALJ is in Cleveland, OH, Arlington, VA, or in one of the other Field Offices, you should seriously consider retaining qualified legal counsel.  In recent years, representatives of the Zone Program Integrity Contractor (ZPIC), the Medicare Administrative Contractor (MAC) and / or the Qualified Independent Contractor (QIC) are frequently choosing to participate in ALJ hearings, arguing why the claims at issue should not be paid (and effectively supporting the results of their earlier ZPIC audit).  Although the proceeding is technically “non-adversarial,” ALJ hearings can become quite contentious.  An experienced lawyer can assist you in understanding the process so that you may more effectively present your arguments in support of payment.  As new rules and administrative guidance comes out regarding the Medicare post-payment audit appeals process, check back with us for more information.

Healthcare LawyerLiles Parker is a full service health law firm with several offices around the country. Representing providers in all stages of Medicare post-payment appeals, including ALJ hearings, our attorneys are well-versed in the administrative appeals process and capable of aggressively handling your case. In addition, we conduct compliance program advising and implementation, as well as mock audits, staff training and health care business transactions. Please call Robert W. Liles at 1 (800) 475-1906 for a complimentary consultation today.

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