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UPIC / ZPIC / Health Integrity Opioid Audits and Audits of Other High Risk Drugs.

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(June 23, 2017):  Opioid audits of the prescribing practices of pain management physicians are on the rise. As the Department of Health and Human Services (HHS), Office of Inspector General (OIG), noted in its report “High Part D Spending o Opioids and Substantial Growth in Compounded Drugs Raise Concerns,” 30% of Medicare beneficiaries have at least one prescription for opioids and the median number of prescriptions received per beneficiary each year is five.[1] Unfortunately, opioid use disorder (addiction) and diversion problems are widespread around the country. Opioid abuse is especially prevalent among Medicare and Medicaid beneficiaries. It has been estimated that 6 out of every 1000 Medicare beneficiaries suffer from opioid use disorder.[2]  The problem is even worse with Medicaid beneficiaries where it is estimated that 8.7 out of every 1000 suffer from opioid use disorder.[3]  The addiction levels among Medicaid patients are more than 10 times as high as patients covered by private insurance.[4]

In light of the above, both federal and state regulators are aggressively investigating and taking administrative, civil and / or criminal action against physicians and other prescribers around the country who are alleged to have engaged in improper opioid and high-risk drug prescription practices when caring for Medicare and / or Medicaid patients.  While the Centers for Medicare and Medicaid Services (CMS) has engaged a number of private companies to conduct program integrity functions, one of the primary organizations that has been awarded these contracts is Health Integrity, LLC (Health Integrity).[5]

I.  Overview of Health Integrity NBI MEDIC, ZPIC and MIC Responsibilities:

The three primary program integrity contracts currently handled by Health Integrity include the following:

  • National Benefit Integrity Medicare Drug Integrity Contract (NBI MEDIC). As the NBI MEDIC, Health Integrity is responsible for investigating and responding to allegations of fraud, waste, and abuse around the country in the Medicare Part C (Medicare Advantage) and Medicare Part D (Outpatient Prescription Drug) programs. In large part due to the opioid epidemic currently sweeping the nation, Health Integrity is aggressively monitoring and auditing the prescription of opioids to Medicare beneficiaries under the Part D program. Opioid audits are typically initiated by Health Integrity auditors and analysts using predictive analytics and other investigative tools to identify potential physicians, nurse practitioners and physician assistants that may be engaged in  opioid prescribing practices that could lead to the abuse of diversion of Medicare Part D drugs.

  • Zone Program Integrity Program Contractor (ZPIC). As a ZPIC, Health Integrity is responsible for reviewing Medicare fee-for-service claims for the states of Texas, Colorado Oklahoma and New Mexico.  In this capacity, Health Integrity is required to employ sophisticated data mining and traditional investigative techniques (e.g. analyses of medical records, patient interviews, follow-up to hotline complaints, referrals from state and federal agencies) to identify potential targets for audit and investigation. Depending on Health Integrity’s findings, a health care provider’s case may be handled as an administrative overpayment, referred to CMS or the Office of Inspector General (OIG) for agency action, OR referred to law enforcement (e.g. U.S. Department of Justice (DOJ) or the appropriate Medicaid Fraud Control Unit (MFCU) for possible criminal enforcement.

  • Medicaid Integrity Contractor (Audit MIC).  As Audit MIC, Health Integrity has been particularly aggressive in conducting auditing specific categories of Medicaid claims that have been associated with improper or abusing billing patterns. Although Medicaid dental claims are ongoing favorite target of MIC auditors around the country, over the past year we have seen a significant increase in the number of opioid audits focusing on a physician’s prescribing practices. 

Collectively, Health Integrity’s efforts have proven effective in the detection and audit of potentially improper prescription drug practices by physicians, nurse practitioners and physician assistants that participate in the Medicare and Medicaid programs.  A first step toward consolidation began in May 2016 with the award of seven Unified Program Integrity Contracts (UPICs) to private company applicants, one of which is Health Integrity.  UPICs are intended to replace ZPICs, legacy Program Integrity Contractors (PSCs), the Medicare-Medicaid data match program (Medi-Medi) and MICs.

This article focuses on several of the prescriber-targeted programs that Health Integrity is currently using to identify Medicare and Medicaid providers for audit or referral to law enforcement.

II.  Opioid Audits / Prescription Drug Audits by Health Integrity:

Health Integrity and other program integrity contractors are dedicating a significant portion of their resources to the audit and investigation of controlled substances and other prescription drugs that the government contends may be subject to abuse or diversion. Several of the projects currently used by Health Integrity to detect waste, fraud, abuse or diversion include:

  • Prescriber Risk Assessment Project This project analyzes the prescribing practices of physicians, dentists, nurse practitioners and physician assistants Schedule II controlled substances (or opioids) prescription drug event record count and Schedule II controlled substances 30-day equivalents. Health Integrity auditors and analysts take this information and compare the prescribing practices of a provider with that of his or her peers. Health Integrity also factors in a prescriber’s primary specialty and geographical location. With this data, Health Integrity is able to readily identify outliers for audit targeting purposes.

  • Quarterly Prescriber Spike Analysis Project Health Integrity auditors and analysts utilize this project to detect unusual billing trends of nationwide prescribers of Schedule II, III, IV and V controlled substances, human immunodeficiency virus medications, and antipsychotics. Simply put, Health Integrity uses this program identify prescribers who have “unusual spikes in billing.”

  • Quarterly Drug Trend Analysis Project Health Integrity’s participation in this project has better enabled the contractor detect and address sudden increases and emerging issues that may arise from one period to another. This program is primarily utilized analyze trends in the utilization of Schedule II, III, IV and IV controlled substances.

  • Transmucosal Immediate Release Fentanyl (TIRF) Drug Project This form of Fentanyl is often used in the management of breakthrough pain in adult cancer patients. In an effort to guard against the unapproved use of this drug, Health Integrity carefully monitors its utilization of this drug to identify improper payments made by Prescription Drug Plans (PDP) and Medicare Advantage-Prescription Drug (MA-PD) Plans.

  • Pill Mill Doctor Project Under this project, Health Integrity uses data analytics to identify prescribers who may be engaged in the prescription of Schedule II-IV controlled substances without a legitimate medical purpose. Prescribers engaged in this type of activity are often referred to as “Pill Mill” doctors. Health Integrity carefully investigates high-risk leads and refers them to law enforcement and plan sponsors for further action.

  • Trio Prescriber Project Health Integrity’s participation in this project is intended to allow the contractor to readily identify providers that prescribe all three of the following to a Medicare or Medicaid beneficiary: (1) an opioid, (2) a benzodiazepine, and (3) the muscle relaxant carisoprodol. Notably, this “cocktail” of drug is often abused due to the fact that both benzodiazepines and carisoprodol can heighten or enhance the effect of the third component of the cocktail — opioids.

III.   What Do These Opioid Audits Mean for the Typical Pain Management Physician?

It is important to keep in mind that all of the projects discussed above share one major weakness – they completely rely on data analytics.  As a result, Health Integrity has based its audit targeting efforts solely on data, without any knowledge of whether the prescribing decision was medically necessary and appropriate or whether the patient’s medical records support the care and treatment decisions made by the physician.

Do you have an effective Compliance Program in place?  In the absence of an active internal auditing and monitoring program, if an audit is initiated by Health Integrity, there is a high likelihood that the contractor will find problems with your documentation.  Unfortunately, we have found this to be the case regardless of whether a practice was still using paper records or had transitioned over to an Electronic Health Records (EHR) system.  Therefore, if you or the physicians in your pain practice regularly prescribe Schedule II through V controlled substances, human immunodeficiency virus medications, antipsychotics, Transmucosal Immediate Release Fentanyl, or the trio cocktail described above,  there is a good chance that those utilization practices are subject to review by Health Integrity or another CMS program integrity contractor.

IV.  Conclusion:

Pain management physicians are under enormous scrutiny by both regulators and licensing authorities around the country.  If you or your practice is audited, we recommend you immediately contact a qualified health lawyer to assist you in navigating the complexities of the audit process.  Every case is different, and your ability to prevail in an audit will depend, in large part on the quality of your medical documentation.  Nevertheless, there are steps you can take early in the audit that can greatly increase the likelihood that Health Integrity or another CMS program integrity contractor will find that your documentation fully meets applicable requirements and the care provided qualifies for coverage and payment.

Robert W. Liles represents pain management physicians in Opioid Audits by ZPICs, UPICs, and state licensing boards. Robert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at Liles Parker, Attorneys and Counselors at Law.  The health law firm Liles Parker represents pain management physicians and practices around the country in connection with ZPIC / UPIC audits.  Opioid audits conducted by ZPICs / UPICs have been especially frequent in 2017.  For a free consultation about your case, please give us a call:  1 (800) 475-1906.

[1] HHS OIG. “High Part D Spending on Opioids and Substantial Growth in Compounded Drugs Raise Concerns” (OEI-02-16-00290). 6/21/2016.

[2] Lembke A, Chen J. Use of Opioid Agonist Therapy for Medicare Patients in 2013. JAMA Psychiatry. 2016; 73(9): 990-992.

[3] Ghate SR, Haroutiunian S, Winslow R, McAdam-Marx C. Cost and comorbidities associated with opioid abuse in managed care and Medicaid patients in the United States: a comparison of two recently published studies. Journal of Pain & Palliative Care Pharmacotherapy. 2010 Sep; 24(3): 251-8.

[4] News. (2016).HHS takes strong steps to address opioid-drug related overdose, death and dependence, Retrieved from,


DME Audits are Back! Are Your Claims Compliant?

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ZPICs are Conducting DME Audits

DME audits by ZPICs are on the rise. Is your DME company ready?

(December 22, 2015): The number of durable medical equipment (DME) audits conducted by Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs) have surged in recent years. Medicare contractors have gradually increased their scrutiny of DME suppliers’ claims. This has resulted in increased postpayment audits of DME suppliers’ claims and associated overpayment demands made against DME suppliers. A previously unenforced standard is being enforced: DME suppliers are responsible for maintaining patient medical documentation that establishes the medical necessity for the DME item. In addition to the documents traditionally required to be maintained by DME suppliers – i.e., physician (or dispensing) orders, Detailed Written Orders (DWO), Certificates of Medical Necessity (CMN), DME Information Forms (DIF), and proofs of delivery (POD) – DME suppliers are also expected to obtain and review supporting medical documentation from the ordering physician, including office visit progress notes, radiology reports, and so on. Yes, you heard that correctly – even though DME suppliers are not themselves allowed to decide whether a DME item is medically necessary for a specific beneficiary, they are required to obtain and assess  patient medical documentation from the ordering physician to ensure that the documentation supports the medical necessity for the DME item ordered prior to distribution of that item. If DME suppliers do not secure and maintain this medical documentation, they can and are being held liable for DME supplies they have distributed which has been found non-covered because the documentation on record with the DME supplier does not support the medical necessity for the DME item distributed to the patient.

ZPICs and other Medicare program integrity contractors have been actively enforcing this rule through postpayment audits.  For example, the number of DME audits initiated by Health Integrity, LLC, the ZPIC for Zone 4 (which includes Colorado, New Mexico, Oklahoma, and Texas); and TriCenturion, Inc. in its capacity as the PSC for DME Jurisdiction A (which is comprised of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Washington, DC), have increased over the past year and will be rising in 2016.

I. Medicare guidelines expressly require that DME suppliers maintain sufficient documentation to establish the medical need for the DME item ordered.  ZPIC audits of DME claims will be focusing on this mandate.

Most DME suppliers understand that there are certain fundamental pieces of “supplier documentation” that they are required to maintain as a condition of payment. Medicare guidelines, for example, provide that DME suppliers must have on file a dispensing order, a DWO, a CMN (if applicable), a DIF (if applicable), and a POD for each DME item the supplier distributes. However, fewer DME suppliers are aware of the requirement that they must maintain sufficient ordering provider medical documentation from the patient’s medical record. Medicare guidelines provide that, “The supplier should also obtain as much documentation from the patient’s medical record as they determine they need to assure themselves that coverage criteria for an item have been met.” This language may at first blush seem permissive. However, the Medicare guidelines leave no room for doubt that the supplier is required to maintain this medical documentation, or else risk liability for any overpayment associated with the claim: “If the information in the patient’s medical record does not adequately support the medical necessity for the item, the supplier is liable for the dollar amount involved unless a properly executed ABN of possible denial has been obtained.” (emphasis supplied). Therefore, if you are not doing so already, you need to institute a policy whereby you collect medical records immediately upon receipt of a physician order. It is our strong recommendation that you do not distribute an item unless and until you have received the necessary medical records. The time-consuming nature of this task and the delay in distribution of the DME item is far less painful than the probable extrapolated overpayment demand resulting from a postpayment medical review audit that will likely take years and significant financial resources to defend against.

II. Time is the enemy — If you fail to secure the requisite ordering physician documentation prior to the distribution of the DME item, it will be much more difficult to secure down the line.

The nature of postpayment auditing is that the claims can be quite old, sometimes as old as four years (or even longer if fraud or similar fault is suspected!). If a DME supplier has not been vigilant about collecting medical records, this could pose a real problem. There are two major issues that DME suppliers face in this regard: (1) physicians are unwilling or cannot produce the medical documentation when it is requested after so much time has passed; and (2) physicians do produce the medical documentation requested but the documentation blatantly does not support the medical need for the DME item that was supplied. In regard to the latter, an example of this type of situation is where a patient has been prescribed a back brace for low back pain or lumbago but the medical record associated with the date of the order does not discuss back pain or back-related issues and does not even reference the order for the back brace. Believe it or not, we have seen this type of situation over and over again. In either scenario, there is nothing the DME supplier can really do to rectify the missing or deficient medical records. The DME supplier, and not the physician, is then stuck with the liability if a Medicare contractor audits your DME claims and determines the claims are non-covered.

III. The Office of Inspector General’s Work Plan for Fiscal Year 2016 highlights renewed interest in adequate DME supplier documentation.  DME audits will be a focus in the upcoming year.

The United States Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently released its Fiscal Year 2016 Work Plan. This annual publication identifies new and ongoing investigative, enforcement, and compliance activities HHS-OIG has decided to allocate resources to. For 2016, HHS-OIG has added the review of Medicare Part B payments for orthotic braces to its agenda. Specifically, HHS-OIG intends to determine whether DME suppliers’ claims were medically necessary and were supported in accordance with Medicare requirements because prior OIG work indicated that some suppliers were billing for items that were medically unnecessary “or were not documented in accordance with Medicare requirements.” (emphasis supplied). There are also ongoing agenda items pertaining to power mobility devices and nebulizer machines (and related drugs) to ensure supplier compliance with Medicare requirements. Based on the Work Plan, DME suppliers should expect that postpayment medical review audits will continue, if not increase, this coming fiscal year.

IV. DME audits are here to stay but there are a number of steps a supplier can take to reduce their level of risk.

DME audits in 2016 aren’t mere speculation — they are a certainty. Fortunately, even though this requirement is burdensome, there are steps DME suppliers can take to mitigate their risk. These include,

  • Instituting a policy whereby you collect patient medical records immediately upon receipt of a physician order. As discussed previously, you should not distribute a DME item unless and until you have received the necessary medical records. Again, the time-consuming nature of this task and the delay in distribution of the item will be far less painful than the probable extrapolated overpayment demand based on a contractor’s audit that will likely take years and significant financial resources to defend against.
  • Educating your team, including your local representatives, regarding the documentation that you need on file in order to distribute an item.
  • Educating the provider community about what you need in order to process a DME item for distribution.
  • Hiring a third-party like a health care attorney to audit a sample of your claims on an annual basis (or more frequently, depending on the size of your company and the types of DME items your company distributes).
  • Regularly checking up on and reviewing payor guidance. For example, you should regularly be searching the Medicare Local Coverage Determination database for guidance on all Current Procedural Terminology codes billed by your company.

Implementing these measures will be critical to the ongoing success of your company.

Healthcare LawyerLorraine Ater, JD is a health law attorney with the firm, Liles Parker, Attorneys & Counselors at Law.  She is also a Certified Medical Compliance Officer (CMCO) and a Certified Medical Reimbursement Specialist (CMRS).  Lorraine represents DME suppliers and a wide variety of health providers around the country in connection with Medicare, Medicaid and private payor audits.  Liles Parker is a boutique health law firm with offices in Washington DC, Houston TX, McAllen TX and Baton Rouge LA.  Need assistance?  For a free consultation, please call: 1 (800) 475-1906.

Medicare Ophthalmology Audits: Is Your Practice Ready?

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Medical-Insurance-Audit(October 26, 2015): Last month, the Department of Health and Human Services (HHS), Office of Inspector General (OIG) released a study entitled “Questionable Billing for Medicare Ophthalmology Services.” As the study findings reflect, the OIG concluded that for the year 2012, approximately $171 million of the Medicare payments made that year for ophthalmology services were improper. As a result, OIG has recommended that the Centers for Medicare & Medicaid Services (CMS) increase the oversight of its contractors over ophthalmology providers. From a practical standpoint, this means that CMS will be shortly tasking either its Zone Program Integrity Contractors (ZPICs) and / or Supplemental Medical Review Contractor (SMRC) responsibility for adding ophthalmology providers to their list of “targets” for 2016 and 2017. Is your practice ready for a Medicare ophthalmology audit?

I. Overview of the Issue — Why Medicare Ophthalmology Audits are on the Horizon:

Ophthalmology medical services are for treatments concerning the eye. Medicare Part B covers medical services and treatment for the eye provided by licensed eye specialists, including ophthalmologists and optometrists. Medicare Part B covers ophthalmology services that are reasonable and necessary for the diagnosis or treatment of an individual’s condition. Social Security Act, § 1862(a)(1)(A).

The OIG Report identified two specific eye conditions which generate the most payments for ophthalmology services under Medicare Part B: (1) wet age-related macular degeneration (wet AMD) and (2) cataracts. Wet AMD is the abnormal growth of blood vessels under the retina and macula (which is a small area at the center of the retina) which bleed and leak fluid, distorting central vision. Wet AMD is the leading cause of vision loss for people over the age of 65. Cataracts develop from the build-up of protein on the eye’s lens that causes the lens to become cloudy.

In 2012, Medicare paid $6.7 billion to 44,960 providers for services that screened for, diagnosed, evaluated, and treated wet AMD or cataracts. The OIG examined approximately 34 million paid claims billed by the 44,960 providers. When it did so, the OIG found that 1,726 ophthalmology providers were allegedly involved in questionable Medicare claims billing practices. These providers were paid $768 million for ophthalmology services in 2012. $171 million of this amount were paid for services connected to questionable billing practices investigated by the OIG. Of that amount, $91 million were for procedures to treat wet AMD, and $39 million for complex cataract surgeries. Notably, the OIG did not conduct a medical record review of the providers’ claims. Presumably, these medical reviews will now be conducted by ZPICs and / or SMRCs around the country as these audits are initiated. It is important to keep in mind that when these audits are initiated, neither ZPICs nor SMRCs will be limited to reviewing only wet AMD and cataract claims. It is therefore essential that you ensure that your documentation, medical necessity, coding and billing practices fully comply with applicable requirements.

II. Identified Deficiencies with “Wet AMD” Medicare Services and Claims:

Medicare covers several services for diagnosing and evaluating wet AMD, as well as for treating wet AMD. These services include fluorescein angiographies (i.e., procedure injecting dye for photographing blood vessels in the back of the eye) for wet AMD diagnoses. These services also include laser surgery, biologic injections and administration of drugs for wet AMD treatment. One of the more common biologic treatments for wet AMD is Lucentis.

Of the 1,726 ophthalmology providers the OIG associated with questionable billing practices in 2012, 261 of these providers treated or serviced the condition of wet AMD. Medicare paid these ophthalmology providers $91 million for procedures that treat wet AMD, including Lucentis injections and laser surgeries. These services represented a majority (53%) of the Medicare payments the OIG connected to questionable billing practices. With respect to Lucentis injections, the OIG found that 209 providers billed for Lucentis injections at a greater frequency than every 28 days, which is the standard frequency for such injections. The OIG also found that providers billed for Lucentis injections beyond the maximum annual dosing recommendation per eye. Finally, The OIG found that several ophthalmology providers billed Medicare for laser surgeries following an injection or drug administration for an unusually high percentage of beneficiaries at frequencies within the 28-day waiting period. How do your practices compare with the problematic claims identified by the OIG?

III. Identified Deficiencies with Cataract Services Billed to Medicare:

Medicare paid $3.5 billion in 2012 for services that screen for, diagnose, evaluate, or treat cataracts, which is the leading cause of blindness. Medicare covers several types of surgeries that treat cataracts. Medicare pays a higher rate for especially difficult cataract surgeries, which are called complex cataract surgeries. In 2012, Medicare paid an average of approximately $900 for each complex cataract surgery and $700 for each regular cataract surgery. Medicare paid an average of $200 more per complex cataract surgery than per regular cataract surgery in 2012 because complex cataract surgeries require more resources to perform.

Of the 1,726 providers, the OIG associated with questionable billing practices in 2012, 580 of these providers billed for claims of complex cataract surgery. The OIG reported that these providers billed at an unusually high percentage of their overall claims for complex cataract surgery. Medicare paid these providers $39 million for complex cataract surgeries in 2012. Notably, the government’s concerns in this regard appear to be totally based on the fact that these 580 ophthalmology providers have utilization rates that make them an outlier.

IV. Additional Questionable Billing Issues for Ophthalmology Providers:

In its September 2015 report, the OIG also found a significant number of ophthalmology providers with unusually high billing for tests to diagnose wet AMD and for ophthalmology claims using modifiers. Modifiers are used to separate certain services related to eye surgeries that can often lead to greater Medicare payment, if coded properly. The OIG identified approximately $41 million in paid claims in this area.

The OIG also found that seven geographic areas in the country had an unusually high amount of ophthalmology services associated with questionable billing practices: Huntington, West Virginia; Vineland, New Jersey; Salisbury, Maryland; Miami, Florida; Grand Rapids, Michigan; Fresno, California; and Cincinnati, Ohio. A significant amount of the questionable billing practices in these cities were associated with Lucentis injections for wet AMD. The OIG found that the percentage of Medicare payments associated with its measures of questionable billing were about twice as high in these seven cities compared to the national average.

The OIG also found that 821 out of the 44,960 providers who billed Medicare for ophthalmology services in 2012 were not listed in the CMS databases as eye specialists (i.e., ophthalmologists, optometrists or ambulatory surgery centers). Medicare paid these providers approximately $2 million in 2012 for ophthalmology services, including payments for major evasive eye surgeries. The OIG indicated that ophthalmology services billed by these providers may be of poor quality.

V. OIG Recommendations with Respect to Ophthalmology Providers.

In concluding its report, the OIG recommended five specific measures for increased monitoring by CMS: (1) increasing oversight of providers who demonstrated questionable billing practices for the use of Lucentis in treating wet AMD; (2) instructing CMS contractors to adopt the measures and methodology employed by the OIG in its Report as well as increasing monitoring in the seven cities identified in the Report with the unusually high number of questionable billing practices; (3) inputting the measures employed by the OIG in its Report into the CMS Fraud Prevention System; (4) reviewing local policies for billing ophthalmology services in Medicare when there is a lack of a national policy to promote uniformity in the billing practices of providers; and (5) reviewing payments for ophthalmology services that are inconsistent with providers’ specialties.

The OIG also referred the specific providers identified in its Report for questionable billing practices for ophthalmology services in 2012 to CMS to conduct further review and possible enforcement or administrative action. The OIG also referred the providers who were not listed in CMS databases as eye specialists that billed Medicare for major eye surgeries. Finally, the OIG requested that CMS and/or its contractors review medical records, review billing patterns and/or conduct unannounced site visits. CMS concurred with both recommendations.

VI. How Should Your Practice Respond to a Medicare Ophthalmology Audit?

Significant increases in CMS contractor (likely ZPIC and / or SMRC) initiated ophthalmology audits are on the horizon. As CMS continues to tighten up its monitoring activities in an effort to cut down on instances of perceived fraud, waste and abuse in the Medicare system, the scrutiny placed on ophthalmology documentation, medical necessity, coding and billing practices are fully compliant with applicable requirements. Does your ophthalmology practice have an effective Compliance Plan in place? If not, we strongly recommend that you get one! The implementation of an effective Compliance Plan, along with the performance of a “GAP Analysis” can greatly assist you in identifying possible areas of vulnerability where improvements in your practices are needed.

robert_w_lilesRobert W. Liles, JD, MS, MBA serves as Managing Partner at Liles Parker, Attorneys and Counselors at Law. Robert represents health care providers and suppliers of all sizes around the country in connection with a full range of ZPIC prepayment reviews, postpayment audits, suspension and revocation actions. He also handles False Claims Act cases. For a complimentary consultation, please call Robert at: 1 (800) 475-1906.




DME Claims Audits of Back Braces by OIG, MACs, and ZPICs are Likely to Further Intensify

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DME Claims Audits of Back Braces Are Expected (February 5, 2013): A “back orthosis” is type of brace that is placed on the outside of a patient’s body and is intended to help stabilize a patient’s spine. In some instances, it is used to limit motion. In others, it is used to address a structural deformity which may exist (such as scoliosis).  There are three primary uses of this type of brace. It is typically utilized to: (a) Provide back support; (b) Reduce back pain’ and (c) Facilitate the healing of a patient’s spine.  As discussed below, the ordering of a back orthosis is usually done by a qualified treating physician. In most cases, the brace is then “fitted” by a qualified DME supplier and billed to Medicare, Medicaid or another responsible payor. Claims for orthotic devices of this type billed to Medicare under HCFA’S Common Procedure Coding System (HCPCS) code L0631. The description for this type of device includes the following:

“Lumbar-sacral orthosis, sagittal control, with rigid anterior and posterior panels, posterior panels, posterior extends from sacrococcygeal junction to a T-9 vertebra, produces intracavitary pressure to reduce load on the intervertebral discs, includes straps, closures, may include padding, shoulder straps, pendulous abdomen straps, pendulous abdomen  design, prefabricated, includes fitting and adjustment.”

I.  Overview of the DME Back Brace Reimbusement Environment :  

As one would imagine, there are a wide variety of orthotics for the back being sold by DME suppliers at any one time. While many braces of these products are custom-fitted, some are little more than general-use orthotic products for the back which do not require individualization.

A.  Basic Coverage Requirements In order to qualify for coverage by Medicare, an orthosis used on the back must be prescribed for one of the following indications:

To reduce pain by restricting mobility of the trunk;

To facilitate healing following an injury to the spine or related soft tissue;

To facilitate healing following a surgical procedure on the spine or related soft tissue, or

To otherwise support weak spinal muscles and/or a deformed spine.[1]  

B.  Medicare Billing Requirements.   In order to bill Medicare, a DME supplier must have a written order from a physician indicating that the device is reasonable and necessary for the patient. Most Medicare patients obtain their brace from a DME supplier.  DME suppliers obtain their stock from manufacturers and wholesalers of the device.

C.  Audits of DME Claims Resulted in a Number of Concerns Being Identified by the OIG.  In recent years, the cost of these products to the Medicare program has greatly increased. A number of concerns with this device have been identified by the Department of Health and Human Services, Office of Inspector General (OIG).  As the OIG noted in its recent report titled: “Medicare Supplier Acquisition Costs for L0631 Back Orthoses,” OEI-03-11-00600 (December 2012), these concerns include:

Cost to the Medicare program.  In its December 2012 report, the OIG stated that “[f]rom 2008 to 2011, Medicare claims for L0631 back orthoses more than doubled, increasing Medicare allowances from $36 million to more than $96 million.

The acquisition cost to DME suppliers is far lower than Medicare’s allowable reimbursement for this type of device.  As HHS-OIG noted    The OIG also found that the Medicare-allowed amount paid to DME suppliers for an   L0631 was $919, despite the fact that the average supplier acquisition cost was only $191.

Many DME supplier have failed to fit and adjust the devices.  While the definition of L0631 clearly includes “fitting and adjustment” approximately one-third of the DME suppliers billing Medicare for these types of braces did not report that they had provided fitting and adjustment services.

Practically all DME suppliers only provided “general instruction” to patients on their use of back orthoses.  As OIG’s report reflects, approximately 93 percent of all DME suppliers did not provide any additional services regarding the use of the L0631 brace. 

D.  Results of a Widespread Prepayment Probe.  Noridian Administrative Services, Inc. (Noridian) is a Durable Medical Equipment, Medicare Administrative Contractor (DME MAC), and is responsible for handling claims in Jurisdiction D.   In mid-December 2012, Noridian posted its findings associated with a recent “Widespread Prepayment Probe Review of Spinal Orthoses (HCPCS L0631 and L0637).” As the contractor noted, out of 101 claims for L0631, 96 were denied after being reviewed and assessed.  The primary reasons for denial were lack of medical necessity, lack of supporting documentation and lack of proof of delivery. Similar deficiencies were noted in their analysis of L0627.

II.  Possible Future DME Claims Audits of Back Braces:

Based on their probe audit findings, Noridian has announced that it will now be initiating a widespread targeted review on HCPCS codes L0631 and L0637.”  While administrative review of these claims is imminent, it is important to keep in mind that HHS-OIG will likely continue its assessment of these specialized claims.  As a participating DME supplier, you are obligated to fully comply with all of the applicable rules and regulations governing the medical necessity, coverage, documentation, billing and coding of these back orthoses.  When is the last time you have compared your practices with the requirements set out in your applicable Local Coverage Determination (LCD) guidance?

III.   Final Remarks:

DME suppliers have been under the proverbial “microscope” for some time now.  The recent deficiencies noted by both the OIG and Noridian will likely further intensify the  oversight imposed on DME suppliers.  Now, more than ever, it is essential that you develop and implement an effective Compliance Program which addresses these and other DME supplier risk areas.  If you are audited by a Zone Program Integrity Contractor (ZPIC), your DME company may be facing a myriad of administrative sanctions if your practices do not fully conform with the rules.  ZPIC administrative enforcement actions have included:

  • Seeking permission from the Centers for Medicare and Medicaid Services (CMS) to suspend a DME supplier.
  • Seeking permission from CMS to revoke a DME supplier’s Medicare number.
  • Placing a DME supplier on prepayment review.
  • Initiating a post-payment ZPIC audit of prior paid DME claims.

Should a ZPIC believe that a DME supplier’s conduct is best addressed at a higher level, the contractor may refer its concerns to the OIG or the Department of Justice so that law enforcement can initiate an investigation of the supplier.

Healthcare LawyerRobert W. Liles and other Liles Parker attorneys have extensive experience representing DME suppliers in ZPIC audits of all types.  Should you have any questions, please call Robert for a free consultation.  He can be reached at: 1 (800) 475-1906.

[1] Local Coverage Determination (LCD) for Spinal Orthoses: TLSO and LSO (L11470), January 1, 2010. This is the LCD for one of the four claims processors for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). The other three claims processors have identical LCDs. LCD L11470 was accessed at on October 5, 2011.

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.

A CMS ZPIC Contract is Quite Lucrative

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CMS ZPIC Contract(September 26, 2012):  From the start, Zone Program Integrity Contractors (ZPICs) have worked to separate themselves from their proverbial “bounty hunter” peers – Recovery Audit Contractors (RACs). As you may know, ZPICs are paid on a contractual basis by the Centers for Medicare & Medicaid Services (CMS), instead of by how much money they return in overpayments, as the RACs are. But as we’ve explained, the incentives are still there – if the ZPIC doesn’t produce positive results, it may lose its lucrative CMS ZPIC contract altogether. So, even though they are not traditional “bounty hunters,” ZPICs are still driven by those same financial interests. And many would argue that shows up in how they approach Medicare claims reviews.

The largest ZPIC, holding two CMS ZPIC contracts and covering nearly half the country, is AdvanceMed Corporation, an NCI company. A closer look at the contractor’s payments reveals some pretty interesting information, none more interesting than the fact that AdvanceMed has been paid nearly half a billion dollars by the Federal government to perform healthcare audit services (specifically $467,087,923). The majority of this money has been awarded in just the past few years, from 2009 to the present.

While we’ve previously mentioned that AdvanceMed appears to have received over one hundred million dollars for one contract (and a similar amount for their second primary contract), it also looks like AdvanceMed receives “option” bonuses, which make up a large percentage of the rest of AdvanceMed’s receipts. In all likelihood, AdvanceMed’s contract with CMS (and other ZPIC contracts with CMS) outline certain opportunities for CMS to further compensate AdvanceMed for exceptional work. This would be called an “option” and when CMS pays AdvanceMed (often around $5 – $15 million), it is referred to as “exercis[ing] an option” by the Federal government. AdvanceMed has received a half-dozen “option” bonuses during 2012 alone, worth approximately $33 million, and many more in year prior.

So it is not entirely accurate to say that ZPICs are not “bounty hunters” unlike RACs. While they do have a primary contract that guarantees payment over a certain period, they do have to renew that contract periodically with CMS (requiring that they continue to meet certain overpayment recovery standards) and they also have the potential for earning extra bonuses. Providers should consider this fact carefully when communicating with AdvanceMed or other ZPICs during a Medicare audit.

Healthcare LawyerRobert W. Liles represents health care 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, conducts internal reviews, and trains healthcare professionals on various legal and compliance issues. For a free consultation, call Robert today at 1-800-475-1906.

Seven Elements of a Payable Claim are an Essential Tool When Preparing for a ZPIC Audit

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Payable Claim(September 21, 2012):  Each year, our attorneys and paralegals review and assess literally thousands of Medicare claims which have been audited (and denied) by Zone Program Integrity Contractors (ZPICs) and other contractors working for the Centers for Medicare and Medicaid Services (CMS).  As intensive ZPIC audits continue, it is essential that health care providers review their processes to better ensure that services provided fully comply with applicable coverage, coding and billing requirements.  While defending physicians and other health care providers in ZPIC audits and government reviews, we have identified a relatively straight-forward approach for determining whether a particular claim qualifies for coverage and payment.  Generally, we refer to this approach as an examination of the Seven Elements of a Payable Claim.Notably, this has proven to be extremely helpful tool when developing an effective Compliance Plan for a client.  As set out below, physicians and other non-hospital health care providers can often use this approach to determine whether specific services billed to Medicare, Medicaid, and/or private payors should be paid.

I.  Seven Elements of a Payable Claim:

A discussion of the seven elements which must be carefully assessed for each and every claim is provided below:

Element #1: Medical Necessity — In addressing this element, a treating health care provider should ask the following question: Were the services administered medically necessary?”

When considering this question, it is important to keep in mind that the medical necessity is essentially a “standalone” determination, separate from each of the other elements.  In other words, a physician may find that a specific course of treatment is medically necessary in light of a patient’s clinical profile and needs.  Nevertheless, just because a certain treatment regime is medically necessary does not mean that it will be covered by one or more payors.  Over the years, we have seen numerous instances where a physician determined that a course of treatment was medically necessary but it was not covered by Medicare, Medicaid, or a private payor plan.

We believe that this element constitutes the most important question to be answered by a provider.  Services which are not medically necessary should never be performed.  However, a provider may choose to provide medically necessary services regardless of whether he or she anticipates a payor to find that the care qualifies for coverage and payment.

Element #2: Services Were Provided The second issue addressed is whether the services at issue were actually provided.

As you can imagine, regardless of the fact that services ordered were medically necessary, the services must actually be administered in order for those services to be billed and paid.  Absent clear, unambiguous evidence that services were provided, they should not be submitted for reimbursement.  Equally important, services must actually be provided at a level of quality consistent with Medicare’s expectations or the expectations of the covering payor.

Element #3 No Statutory Violations Are the services “tainted” by any statutory or regulatory violation, such as the Stark Law, federal Anti-Kickback or a False Claims Act violation?

When examining whether a claim is “payable,” you need to remember that even though the medical service at issue may have been medically necessary and qualified for payment, if it is the result of an illegal activity, it will be tainted and will likely not qualify for payment.  Therefore, when you are reviewing a service or claim, you must consider whether there is any indication of possible statutory or regulatory violations.  For instance, is there any evidence that the service or claim is linked in any way to a breach of the federal Anti-Kickback Statute or Stark’s prohibition against improper self-referrals?  Similarly, is the service or claim associated with a possible violation of the civil False Claims Act?  The bottom line is fairly straight-forward: it is insufficient to merely show that a claim appears to meet the payor’s basic billing rules.  Rather, a broad view of the service or claim should be made to better ensure that it is not otherwise non-payable due to a statutory breach.

Element #4:  Meets all Coverage Rules – Do the services meet Medicare’s coverage requirements?

The next point to be addressed when auditing a claim is to determine whether or not it is covered under a payor’s plan.  It is important to keep in mind that a service or claim can be medically necessary yet still not qualify for coverage and payment.   Ultimately, every service or claim, regardless of whether the beneficiary is a Medicare, Medicaid, or private plan participant, must be examined to see if it qualifies for coverage.

In making coverage determinations, CMS has interpreted the phrase reasonable and necessary to reflect that the item or service in question is safe and effective and not experimental or investigational.[1]  CMS stated that the relevant tests for applying these terms are whether the item or service has been proven safe and effective based on authoritative evidence, or alternatively, whether the item or service is generally accepted in the medical community as safe and effective for the condition for which it is used.[2]  A device is investigational if it has not been approved by the Food and Drug Administration (FDA) through a premarket approval process or the “510(k) certification process.”[3]  Additional guidance to be reviewed includes any applicable National Coverage Determination rules, and any relevant Local Coverage Determination provisions:

National Coverage Determination Rules (NCDs):  In its most general form, the Secretary of the U.S. Department of Health and Human Services (HHS) may articulate “reasonable and necessary” standards through formal regulations that have the force and effect of law throughout the administrative process.[4]  More specifically, the Secretary may publish a formal administrative ruling in the Federal Register setting forth how Medicare statutes and regulations are to be applied in particular circumstances.[5]  These regulations and administrative rulings are binding at all stages of the administrative process.[6]  The first type of formal regulations are publications known as National Coverage Determinations (NCDs).[7]  NCDs are national policy statements that grant, limit, or exclude Medicare coverage for a particular item or service and apply nationally to all Medicare beneficiaries who meet the criteria for coverage.[8]  More precisely, NCDs are determination[s] by the Secretary with respect to whether or not a particular item is covered nationally by Medicare.[9]  NCDs conditions for which a service is considered to be covered (or not covered) and are usually issued as a program instruction.[10]  NCDs are often published detailing how a particular patient population may or may not receive Medicare reimbursement for a covered item or service.[11]  Thus, NCDs relate only to issues of coverage.  NCDs do not reflect a determination of the amount of payment made for a particular item or service.[12]  Moreover, any interested party, including beneficiaries, may make an external request for a new NCD.[13]  Most of these external requests, however, are made by organizations such as drug, device, or medical product manufacturers or by professional medical organizations, providers, or suppliers.[14]  In addition, CMS may make its own internal request if it determines that an NCD is “in the interest of the general health and safety of Medicare beneficiaries.”[15]   Importantly, because of the judicial deference given to the Secretary in making his or her coverage determinations, all requirements set forth within an NCD are binding on coverage determinations made by Medicare Administrative Contractors (MACs) and Administrative Law Judges (ALJs) during the appeals process.[16]  Finally, the Secretary may further define when and under what circumstances services may be covered (or not covered) under the reasonable and necessary standard through coverage provisions in interpretive manuals.[17] Manual instructions are often issued in the form of program memoranda, such as the “Medicare Program Integrity Manual.”

Local Coverage Determinations  (LCDs) The Secretary of HHS may also delegate its responsibilities, under section 1395y (a), to Medicare contractors.[18]  Therefore, in the absence of an NCD, MACs are responsible for promulgating their own reasonable and necessary coverage determinations.[19]  These determinations are published as Local Coverage Determinations (LCDs).  LCDs are defined as determination[s] by a [contractor] under. . . part B. . . respecting whether or not a particular item or service is covered. . . in accordance with section 1395y(a)(1)(A).”[20]  MACs make these coverage determinations by applying the Act and federal regulations, as well as additional guidance provided by CMS in the form of Rulings, Medical Manual Provisions, and other forms of guidance.[21]  In fact, the vast majority of coverage decisions are made at the local level by clinicians who work with the MACs during the claims review process.[22]  CMS’ Medicare Program Integrity Manual (PIM) outlines how LCDs are to be promulgated.  Each LCD must reflect local medical practice within the contractor’s jurisdiction and must be supported by substantial medical evidence.[23]  MACs develop LCDs by considering medical literature, the advice of medical societies and consultants, public comments, and comments from the Medicare provider community.[24]  Like NCDs, an LCD’s coverage guidance on whether an item is medically “reasonable and necessary” means that the item is safe and effective and not experimental or investigational as determined by the FDA approval process.[25]  The contractor must also ensure that LCDs are consistent with the Medicare statute, regulations, NCDs, and other applicable federal guidance.[26]  The PIM also requires that contractors engage in a notice and comment process before publishing coverage policies.[27]  Unlike NCDs, ALJs and the Medicare Appeals Council (Appeals Council)—not to be confused with the Medicare Administrative Contractor (MAC)—are not bound by LCDs or CMS program guidance, such as program memoranda and manual instructions.[28]  However, they will give substantial deference to these policies if they are applicable to a particular case.[29]  This deference is due to interpretations that arise under a complex and highly technical regulatory program,” where even “the identification and classification of relevant criteria necessarily require significant expertise, and entail the exercise of judgment grounded in policy concerns.”[30]  If either an ALJ or the Appeals Council declines to follow a policy in a particular case, the ALJ and/or Appeals Council decision must explain the reasons why the policy was not followed.[31]  An ALJ or Appeals Council decision to disregard that policy applies only to the specific claim being considered and does not have precedential effect.[32]  Furthermore, an LCD made by one MAC is not binding on the other Medicare contractors across the country.[33]  The Secretary of HHS is also responsible for overseeing the evaluation of new LCDs to determine whether they should be adopted nationally and to what extent can consistency be achieved among LCDs.[34]  Because LCDs are established by each individual MACs, variances between LCDs are common.  Notably, while assessing common coverage and documentation requirements from one region to another, we have found that the differences between one LCD and another can be significant.  Finally, if there is no NCD or LCD in place, contractors may make individual claim determinations,” including whether a particular item or service meets the statutory requirement of being reasonable and necessary”.[35]

Challenging NCDs and LCDs:  When a beneficiary is confronted with a denied claim and wishes to challenge that denial, the beneficiary has the option of pursuing review through the claims appeal process, seeking review of the applicable LCD or NCD, or both.[36]  However, any challenge to an NCD or LCD is distinct from the general Medicare claims appeal process set forth in 42 U.S.C. § 405(g).[37]  In fact, challenging these determinations permits an aggrieved beneficiary to seek review of an entire policy or provision rather than just a specific claim denial.[38]  Nevertheless, when the LCD review process was created, the existing claims appeal procedures remained unaltered.  As a result, a beneficiary who wishes to challenge an NCD or LCD still has access to a de novo review by ALJ or to federal district court review, if necessary.[39]  When challenging an NCD or LCD, ALJs and the Appeals Council are responsible for reviewing the reasonableness of these determinations under certain guidance.  In determining whether LCDs or NCDs are valid, the adjudicator must uphold a challenged policy (or a provision or provisions of a challenged policy) if the findings of fact, interpretations of law, and applications of fact to law by the contractor or CMS are reasonable based on the LCD or NCD record and the relevant record developed before the ALJ or the Appeals Council.[40]  As previously indicated, NCDs are determinations promulgated by the Secretary and are therefore given substantial deference when challenged.  Nevertheless, the administrative appeals process affords this same level of deference to LCDs, despite the fact that these determinations are published by independent, private MACs.  42 C.F.R. § 405.1062(a) affirms that ALJs and the Appeals Council are not bound by LCDs or CMS program guidance, such as program memoranda and manual instructions but will also give substantial deference to these policies if they are applicable to a particular case.  In doing so, the ALJs or the Appeals Council must apply the same “reasonableness standard” when conducting a challenge to an LCD as it does to an NCD.[41]  What exactly constitutes a “reasonableness standard”?  In Subject: NCD Complaint—Intraocular Lens (CMS Ruling 05-01),[42] the Appeals Council acknowledged a complaint challenging an NCD that barred coverage of presbyopia-correcting intraocular lenses (PC-IOL) inserted after cataract surgery.  After reviewing the NCD Record and the challenger’s contentions, the Board upheld the validity of the NCD.[43]  The Board outlined its standard of review for an NCD appeal and acknowledged that Section 1869(f)(1)(A)(iii)(I) of the Act limited its review of an NCD “to evaluat[ing] the reasonableness” of the NCD.[44]  Section 1869(f)(1)(A)(iii)(III) also provides that the Board “shall defer only to the reasonable findings of fact, reasonable interpretations of law, and reasonable applications of fact to law by the Secretary.”[45]  The Board recognized that this reasonableness standard required it to uphold the challenged NCD “if the findings of fact, interpretations of law, and applications of fact to law” by CMS are reasonable based on the NCD record and the relevant record developed before it.[46]  The Board also noted that federal regulations provide a two-stage process for reviewing a challenged NCD.  First, if it found the NCD record to be complete and adequate to support the validity of the NCD, it would issue a decision to uphold the NCD.  This would effectively end its review process.  On the other hand, if the Board found that the NCD record was incomplete and inadequate to support the validity of the challenged NCD, it would conduct a review process that permitted discovery and evidence submission, as well as a formal hearing, if necessary.[47]  “Policy Articles” are closely related to LCDs, though they are distinct documents.  While LCDs contain only the reasonable and necessary language, Policy Articles contain any non-reasonable and necessary language a Medicare contractor wishes to communicate to providers.  These Articles essentially provide additional details for coverage requirements and reimbursement procedures.  And while Policy Articles are not LCDs, the Appeals Council has recognized a “long-standing practice to afford some deference” to these articles published by the MACs.[48]  Ultimately, while challenges to the specific claims denials and challenges to the various coverage determinations follow different administrative appeals processes, the adjudicatory entities all afford the Secretary’s decisions substantial deference due to the complex nature of the Medicare program.  As a result, beneficiaries have a significant hurdle in trying to overturn any adverse decision.

          To be clear, there is no “silver bullet” that can be used by a health care provider to avoid the scrutiny of contractors and law enforcement.  Every small- and mid-sized provider should expect to be audited.  Rather than wait for such an eventuality, your organization should affirmatively review its operations, coding, and billing practices to ensure that its practices fall within the rules.

Element #5Full and Complete Documentation – Have the services rendered been properly and fully documented?

It is essential that you pull each and every regulatory issuance, along with any guidance issued by the state which sets out the documentation requirements associated with a particular service or claim.  After auditing literally thousands of claims, we have found that over a majority of the health care providers we have audited have never fully researched and reviewed applicable  documentation requirements.  As clinical reviewers of both Medicare and Medicaid, Recovery Audit Contractors (RACs) and ZPICs are quick to states in hearings before an Administrative Law Judge, “If it isn’t documented, it didn’t happen.”   When made during a hearing by a RAC or ZPIC, this point is quite effective—it is extremely difficult for a provider to prove that a service was provided if there is insufficient documentation of the work conducted in the patient’s medical records.  Therefore, research, review, and confirm the precise documentation requirements to be met, then ensure that you take the time to fully and accurately document the work you have performed.

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

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

  • Any applicable National Coverage Determinations (NCDs).
  • Any applicable Local Coverage Determinations (LCDs).
  • Any Local Medical Review Policies (LMRPs).
  • The Medicare Policy Benefit Manual (MPBM).
  • The Medicare Program Integrity Manual (MPIM).
  • Any statutory provisions which cover the services.
  • Finally, any additional relevant guidance issued by Medicare which relates to the services at issue must also be carefully reviewed.

Element #6: Proper Coding – Were the services rendered correctly coded?

Unfortunately, even if the foregoing rules have been met, it is quite simple to make a coding mistake, therefore invalidating the claim.  The coding rules are both complicated and dynamic, potentially changing from year to year.  We recommend that you either engage a qualified third-party billing company to assist you with coding and billing or ensure that your in-house staff members handling these duties are experienced and provided regular opportunities for updated training.

Element #7: Proper Billing Practices – Were the services rendered correctly billed to Medicare?

As a final requirement, health care providers must ensure that the services or claims performed fully meet Medicaid and Medicare’s billing rules.  Once again, you need to ensure that your staff is properly trained to handle the organization’s billing responsibilities. As you review your billing practices, you should abide by the following:  First, “If it doesn’t belong to you, give it back.”  Conversely, “If you don’t owe the money, don’t automatically throw in the towel.”  One of the attorneys in our firm is regularly asked to speak at provider conventions around the country.  For years, we have told health care providers If it doesn’t belong to you, give it back.”  This simple concept covers a lot of ground when it comes to Medicare overpayments and is the single best policy you can employ as a good, compliant corporate citizen.

In summary, in order to qualify for payment, a claim must meet each of the seven components set out above.

II.     Handling Deficiencies:

The likelihood that your practice or organization will be subjected to a Medicare or Medicaid audit is increasing every day.  As a participating provider in one or more federal health care programs, you have an affirmative obligation to ensure that your claims are properly provided, documented, coded, and billed.  Unfortunately, many health care providers have never researched and reviewed the proper rules covering the care and treatment services they provide.  When conducting a “gap analysis” of your organization, a sample of your claims is an important proactive step you can take to help ensure that your current practices are fully compliant with applicable laws and regulations; such analyses do not have to be statistically significant.  Should you identify deficiencies, remedial steps should be taken (immediately) so that future claims for care and treatment will meet all applicable requirements.  Keep in mind—any identified overpayments must be repaid promptly to the government in order to avoid possible False Claims Act liability.

III.    Final Thoughts:

We strongly recommend that you foster a corporate culture which encourages coding and billing compliance.  ZPICs and RACs have increased their audit activities dramatically in numerous areas of the country.  Your organization’s compliance with federal and state regulations, coupled with a consistent message to your employees, is essential. Establishing good intake and records management procedures, and continuing employee education and training efforts, can greatly facilitate the adoption of an ethical, compliant corporate culture.

Healthcare LawyerRobert W. Liles represents health care 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, conducts internal reviews, and trains healthcare professionals on various legal and compliance issues. For a free consultation, call Robert today at 1 (800) 475-1906.

[1] 54 Fed. Reg. 4302-02 at 4304 (Jan. 30, 1989) and United States ex. rel. Colquitt v. Abbott Laboratories, 2012 WL 1081453, 29 (N. D. Tex. March 30, 2012); 42 C.F.R. § 411.15(o).

[2] 60 Fed. Reg. 48417-01 (Sept. 19, 1995).

[3] Under the § 510(k) certification process, a manufacturer must submit to the FDA a premarket notification submission, commonly known as a 510(k) notice, before a device may be introduced into interstate commerce.  21 U.S.C. § 360(k); 21 C.F.R. § 807.81 (2010).  The 510(k) notice must include, among other things, proposed labeling sufficient to describe the device, its intended use, and the directions for its use; a statement indicating the device is similar to or different from other products of comparable type in commercial distribution; and a statement that the submitter believes, to the best of the submitter’s knowledge, that all information in the 510(k) notice is truthful and accurate, and that no material fact has been omitted.  21 C.F.R. § 807.87(e)-(h), (k).

Along with the 510(k) notice, a manufacturer must submit a “510(k) summary,” which “shall be in sufficient detail to provide an understanding of the basis for a determination of substantial equivalence [to previously cleared devices].”  Id. § 807.92(a).  Among the information that must be contained in a 510(k) summary is “[a] description of the device …, including … the significant physical and performance characteristics of the device, such as device design, material used, and physical properties.”  Id. § 807.92(a)(4).  The 510(k) summary must also include “[a] statement of the intended use of the device … including a general description of the diseases or conditions that the device will diagnose, treat, prevent, cure, or mitigate.” Id. § 807.92(a)(5).

[4] Willowood of Great Barrington, Inc. v. Sebelius, 638 F.Supp. 2d 98, 105 (D. Mass. 2009); 42 U.S.C. §§ 1395ff(a)(1), 1395hh.

[5] 42 C.F.R. § 401.108.

[6] 42 C.F.R. §§ 401.108(c), 405.1063.

[7] 42 U.S.C.

HHS-OIG Finds ZPICs May Have Conflicts of Interest

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ZPIC Conflicts of Interest May be Present According to OIG(September 13, 2012):  Many physicians and other health care providers around the country are reeling from post-payment and pre-payment assessments conducted by Zone Program Integrity Contractors (ZPICs).  As ZPIC audits are being conducted, an issue has recently arisen regarding their independence.   According to a recent report issued by the  Office of Inspector General (OIG), the independence of certain ZPIC contractors may possibly be hampered by the fact that there were one or more ZPIC conflicts of interest.  According to OIG, a ZPIC “could be in the position of evaluating work performed or associated with its own company.” For instance, one ZPIC’s parent company had a contract with a Medicare Part D plan sponsor to provide technological implementation and operations. Another ZPIC’s parent company owned Medicare Part C and D plans which were at work throughout the country. Another ZPIC applicant’s parent company was also a Medicare Part C and D plan sponsor in the zones for which the ZPIC had submitted a proposal.

Nevertheless, the OIG found that each one of these potential ZPIC conflicts of interest had in some way been “mitigated.” This is done through screening processes and other techniques, by which those who bid on government contracts and perform the actual auditing duties of the ZPIC are not the same as those administer the company’s (or parent company’s) other programs. We’ve previously discussed some of the Medicaid contractors for various “hot-spot” cities, such as Baton Rouge and Houston, and you might find it interesting to note that a lot of Medicaid claims processing contractors or benefit integrity contractors are companies that you will readily recognize.  in fact, chances are that you have a copier or computer from one of them. Many of these large conglomerates have found that securing a bid for a Medicare or Medicaid contract can be a lucrative business, but because they are so large, there are often conflicts between the various divisions.

Looking specifically at OIG’s report, the report itself does not name names. Although it does not identify which companies specifically had conflicts, it does instead note that two of the five ZPIC contracts currently awarded have actual conflicts of interest. This can be a scary thought — what kinds of incentives do the people reviewing my claims for payment or denial have? Could they deny my claims for care and treatment because my practice is in a certain state or region, but pay similar claims so that their claims processing department has better numbers? Well, perhaps, but frankly that’s a stretch.  After defending physicians and other health care providers in more ZPIC audits than I can remember, one thing is far certain — the ZPICs we have gone up against aren’t going to let anything stand in their way from denying a claim which they believe should not have been paid.  Although we may not agree with their assessment regarding the propriety of a claim, that much is certain.

I.  Effects on ZPIC Claim Review:

At the end of the day, a ZPIC is a ZPIC and a RAC is a RAC. These Medicare contractors are designed to identify problematic claims, review them with a critical eye, and deny them if they don’t meet stringent technical and medical requirements. The simple fact that the ZPIC’s parent company owns other health care operations is probably not enough to affect the judgment of individual nurses and reviewers responsible for examining your claims in connection with post-payment audits or pre-payment reviews. These individuals are trained to critically assess your documentation and make a determination whether it meets applicable coverage, coding and billing requirements.  ZPIC nurses and auditors do not typically deviate from Medicare’s guidelines.  As a result, “close calls” almost always result in a denial. Over the years, we have worked on many cases where the ZPIC denied 100% of the claims in the sample reviewed.  Moreover, ZPICs often cite multiple reasons for denying a claim, usually relying on both a technical aspect (missing signature/legibility) and a medical aspect (medically unnecessary service/documentation does not support the level billed). It’s been our experience that a strong and thorough review of the medical records and the ZPIC’s allegations can often identify legitimate arguments in support of payment, despite the fact that multiple reasons for denial may have been cited.

II. CMS Changes to the ZPIC Bidding Process:

As the OIG’s report reflects, it appears that CMS failed to adequately screen ZPICs and their subcontractors before awarding them contracts.  As the report states:

“[C]urrently, CMS does not use a written policy or standard checklist to facilitate its review of Organizational Conflict of Interest Certificates. In addition, we found no documentation showing that CMS conducted a review of some offerors’ and subcontractors’ certificates. In some cases, even after CMS had requested revised certificates, required conflict and financial interest information was still missing.”

In other words, it appears that CMS’ efforts to pre-screen ZPICs for possible and actual conflicts were incomplete. As a result, OIG recommended that CMS develop more formal policies and procedures for reviewing conflict of interest problems and that CMS require bidders to more thoroughly note any actual or potential conflicts.

III.  Final Thoughts:

While these identified conflicts may raise questions about the accuracy of the bidding process, these discrepancies will not impact the legitimacy of any ZPIC audit you may have pending.  Physicians and other health care providers must continue to take ZPIC and similar audits seriously.  Although some ZPIC audits may only cover a few claims, many others may involve a statistically-relevant sample of the provider’s claims where the alleged damages are ultimately extrapolated by the contractor.  ZPIC audits are serious business, regardless of any findings suggesting that conflicts of interest may exist.  Don’t wait until the last minute — engage qualified legal counsel to represent your practice or company in this process.  When choosing legal counsel to represent you in connection with a ZPIC audit, it is essential that your lawyers have extensive knowledge of the process and experience representing providers in these specialized and complex administrative proceedings.  Our attorneys would be happy to provide you with health care provider references who have gone through this process and exited the other side in one piece.

Healthcare LawyerRobert W. Liles represents physicians and other health care providers in Medicare post-payment / pre-payment audits and in the administrative appeals process.  He also represents health care providers in similar Medicaid cases.  Robert has extensive experience in health law and is often asked to speak at national conferences around the country on these issues.  He assists clients with regulatory compliance issues, performs gap analyses, conducts internal reviews, and trains healthcare professionals on various legal and regulaory issues. For a free consultation, call Robert today at 1-800-475-1906.

Medicare Audits in Miami, FL

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(August 28, 2012): In this  feature, we focus on particular Medicare audits and appeals information for various ZPIC audit and RAC audit hotspots around the country. Check back in for information about Medicare audits and appeals in your city.

Medicare Audits in Miami, FL:

At-a-Glance Information:

Miami Population: 408,750 (2011 Census)
Medicare Administrative Contractor (MAC) (Parts A/B): First Coast Service Options, Inc.
DME MAC (Region C): CIGNA Government Services Administrators LLC
Zone Program Integrity Contractor (ZPIC): Safeguard Services
Recovery Audit Contractor (RAC):  Connolly Consulting Associates, Inc.
Medicaid Contractor: HP Enterprise Services
State Healthcare Investigative Service: Florida Agency for Health Care Administration (AHCA) Office of Inspector General (OIG)

Medicare Audits and Fraud Enforcement in Miami, FL:

Medicare’s fraud enforcement in Florida (and especially in Miami and the surrounding areas), have consistently remained a focus of the government’s investigation and prosecution efforts. Long considered the “epicenter” of healthcare fraud, the federal government has actively pursued administrative, civil, and criminal cases throughout the region. While at times this activity may appear to be unstoppable, it is important to keep in mind that the Miami area and surrounding townships have a disproportionately high number of Medicare eligible individuals.  Is the which occurs in this area actually be proportional to that which occurs in the rest of the country?  Regardless of the answer, it is important that ALL health care providers ensure that their activities fully comply with Medicare’s participation, coverage, coding and billing rules.  Compliance is not an option — it is mandatory, regardless of your payor mix.  Do you have an effective Compliance Plan in place?  Have you recently conducted a review of your business, treatment and billing activities to better ensure compliance?  If not, a comprehensive review should be conducted and any deficiencies must be immediately remedied.

Medicare contractors, including RACs and ZPICs, frequently audit providers in Miami and other cities in Florida, including Orlando, Fort Lauderdale, and Tampa Bay. If you receive a letter indicating you are being audited or investigated, it is important to seek the advice of counsel quickly, as these letters usually set out deadlines by which you must respond.

As a final point, if you are audited by a ZPIC, RAC, or a federal or state law enforcement agency, we recommend that you retain experienced and qualified legal counsel to assist in responding to an audit.  Qualified legal counsel at your side can help ensure that all of your rights are preserved and that your responses and obligations to the government are timely and adequately met.

Healthcare LawyerDavid Parker represents providers in Medicare post-payment audits and appeals, and similar appeals under Medicaid. In addition, David 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 David today at 1 (800) 475-1906.

Medicare Administrative Appeals Process – An Overview for New Providers

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(August 15, 2012):  Is this your first time being audited by a Medicare Administrative Contractor (MAC) or a Zone Program Integrity Contractor (ZPIC)?  If so, the brief outline below can provide a handy summary of the Medicare appeals process.

I.  Step 1 – Request for Information:

Medicare Administrative Appeals ProcessIn most instances, a health care provider will receive notice of a Medicare post-payment audit by mail, either from the provider’s MAC or the ZPIC responsible for handling that region. This initial correspondence is significant. From this letter, a provider can usually surmise whether the initial review is merely a probe audit or an allegedly statistically relevant review.  Perhaps most importantly, a provider can typically learn the scope of the contractor’s review.  While many requests for documentation are limited to medical records and claims-related documentation, we are now seeing an increase in the number of audits where the ZPIC or MAC has also requested copies of “business” records, such as a listing of current and past employees, copies of contracts, and other materials which can assist the government in determining whether a provider is currently (or has) engaged in conduct which might violate the federal Anti-Kickback Statute or the Stark law.

While many providers feel comfortable responding to a MAC or ZPIC’s request for information, they do not always realize that pre-emptive steps can be taken at this point to help them present their documentation in its best light.  Equally important, a provider may not fully appreciate the importance of maintaining an accurate record for the Medicare appeals process.  Efforts to improperly supplement or correct an incomplete medical record can expose a provider to criminal liability. Providers must understand the rules. Don’t inadvertently turn a mere overpayment matter into a criminal case.

II.  1st Level of Appeal – Re-determination:

After assessing the documentation submitted, a MAC or ZPIC will then notify a provider in writing of their results.  Please note, if the initial Medicare audit was conducted by a ZPIC, you will first receive the ZPIC’s results – a demand letter from your MAC will likely arrive within a few days.  The Medicare audit decision letter and its attachments will identify any claims found to qualify for coverage and payment and should discuss why any denied claims did not Medicare’s payment requirements.

The MAC’s demand letter serves as a “revised initial determination.”  Unfortunately, a large part of the Medicare post-payment audits conducted by ZPICs find that the majority of claims should not have been paid.  Upon receipt of the MAC’s demand letter, you have 120 days to file an appeal with your MAC for re-determination. However, to avoid recoupment, you should file this appeal within 30 days of the date written on the MAC’s letter.  Rather than risk having monies recouped, the best practice is just to ensure that your appeal is received within 30 days of the date of the demand letter.  The first level of the Medicare administrative appeals process involves a contractor from the Centers for Medicare & Medicaid Services (CMS), highlighted on the HHS organizational chart in yellow.

III.  2nd Level of Appeal – Reconsideration:

After receiving a re-determination decision from the MAC (which, like the ZPIC’s finding, is usually unfavorable), you have 180 days to file a request for reconsideration with the Qualified Independent Contractor (QIC) assigned to your area. During this process, the QIC will review the documents you’ve submitted and make an independent determination about the propriety of coverage and payment for the claims at issue. To avoid recoupment at this level, you need to file an appeal within 60 days of the date of the re-determination decision.  Once again, the best practice is to base your filing deadline on the date of the QIC’s decision letter. This level of the Medical administrative appeals process  also involves a CMS contractor, again highlighted on the HHS org chart.

IV. 3rd Level of Appeal – Administrative Law Judge Hearing:

While the QIC sometimes issues favorable decisions, it often agrees with the contractors below and upholds the denial of your Medicare claims. At this point, you should file an appeal with an Administrative Law Judge (ALJ). This must be done within 60 days from the date of receipt of the QIC’s reconsideration decision letter. Keep in mind, in order to qualify to file the ALJ appeal, you must meet all other statutory requirements (such as an amount in controversy over $130). Notably, it has been our experience that the ALJ level of the Medicare appeals process has been the most reasonable and provider-friendly, although each ALJ is different. This level of appeal goes through the Office of Medicare Hearings and Appeals (OMHA), which is highlighted on HHS’ org chart.

V.   4th Level of Appeal – Medicare Appeals Council

If the ALJ decision is unfavorable and you choose to appeal (or in some cases, the decision is provider-favorable and the Administrative QIC (the AdQIC) asks for a review), the next level of the Medicare appeals process is the Medicare Appeals Council (the Council). The Council is made up of senior ALJs with significant skill and experience in Medicare administrative matters. The Council generally looks at errors of law and abuses of discretion, similar to an appellate court. There are also a number of statutory bars that an appellant must overcome to have the Council review its case. The Council is part of the Departmental Appeals Board (DAB), which is highlighted on the HHS chart here.

VI. 5th Level of Appeal – Federal District Court

If a provider has not yet obtained the relief they seek at the lower levels of appeal, they may appeal the unfavorable Medicare claims decision to a Federal District Court (usually the district the provider’s office is in, although it is possible that a provider may also appeal to the Federal District Court for the District of Columbia, since the Secretary of HHS is located here). Importantly, the District Court looks at Medicare appeals cases with a high degree of deference to the Agency’s determination. That is, the District Court Judge will often side with CMS and HHS unless the lower ALJ’s decision was “arbitrary and capricious” or “against the substantial weight of the evidence.” In the legal world, these are incredibly difficult standards to overcome, and providers generally do not have a great deal of success in court, especially considering the costs of the litigation. Nevertheless, it is an option that exists for dissatisfied providers. Since the District Court is not a part of HHS, it is not included in HHS’ organizational chart.

VII.  Final Remarks:

As you can imagine, the Medicare appeals process is ultimately much more complicated than this brief outline may suggest.  Representatives of the auditing ZPIC, the MAC and / or the QIC may choose to participate in the ALJ hearing in order to present their arguments in support of denial. Although these proceedings are technically non-adversarial,” these hearings can be both stressful and complicated, especially when both sides support their arguments with statistical and clinical experts. In any event, ALJs are experts at cutting through the smoke and determining whether claims do, in fact, qualify for coverage and payment.

While we recommend that providers avail themselves of the Medicare post-payment appeals process, it is essential that prior to filing an appeal, providers critically examine their claims and associated documentation.  Like it or not, sometimes the Medicare contractors are right – some claims shouldn’t be paid.   At the end of the day, providers need to conduct an honest assessment.  Does a particular claim truly qualify for coverage and payment?  If not, its post-payment denial should not be appealed.  As we always say, “if it’s not yours, give it back.” That is, if you can’t make a good faith argument about why certain claims are payable, they probably aren’t. Similarly, unrelated to the appeals process, have you identified claims that were erroneously paid?  It is often a good idea to consult with qualified health law counsel before reporting and returning an overpayment or going through the Medicare appeals process.

Robert LilesHealthcare Lawyer 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.

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