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

June 25, 2017 by  
Filed under Health Law Articles

(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. http://oig.hhs.gov/oei/reports/oei-02-16-00290.asp

[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] HHS.gov News. (2016).HHS takes strong steps to address opioid-drug related overdose, death and dependence, Retrieved from, http://www.hhs.gov/about/news/2015/03/26/hhs-takes-strong-steps-to-address-opioid-drug-related-overdose-death-and-dependence.html

[5] http://www.healthintegrity.org/index.html

DME Audits are Back! Are Your Claims Compliant?

December 22, 2015 by  
Filed under Featured, Health Law Articles

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.

Lorraine Ater, J.D., CMCO, CMRS

Lorraine Ater, JD, CMCO, CMRS

Lorraine 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.

Ophthalmology Audits: Is Your Practice Ready for a Medicare Audit?

October 26, 2015 by  
Filed under Featured, Health Law Articles

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 (SMERC) responsibility for adding ophthalmology providers to their list of “targets” for 2016 and 2017. Is your ophthalmology practice ready for a Medicare audit?

I. Overview of the Issue — Why 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 SMERCs around the country as these audits are initiated. It is important to keep in mind that when these audits are initiated, neither ZPICs nor SMERCs 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 an Ophthalmology Audit?

Significant increases in CMS contractor (likely ZPIC and / or SMERC) 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.



Ismail Cropped 14Attorney Ismail Laher focuses on solving complex issues for Health Care Providers. Mr. Laher assists clients to better understand their option strategically on on a a wide variety of issues in civil and criminal proceedings, complex civil litigation, compliance audits & reviews, practice management and strategic client counseling. He also serves in the role of General Counsel on an as needed basis. Mr. Laher is a graduate of Harvard Business School and Georgetown Law  and was previously an associate attorney with Jones Day law firm in their Washington, DC office.  Mr. Laher focuses his practice on regulatory compliance oversight, practice management and strategic client counseling. He can be reached directly at 202-596-7863 or at ext 111 at the office 202-298-8750.

Predictive Modeling is Proving to be an Invaluable Targeting Tool for ZPIC Audits and RAC Audits.

February 14, 2013 by  
Filed under Compliance, Health Law Articles

FPS is being used by ZPICs to target providers.

ZPICs are using data mining tools to Identify health care providers with potentially improper billing patterns.

(February 14, 2013): With the passage of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Department of Justice (DOJ) and the Department of Health & Human Services, Office of Inspector General (HHS-OIG) were allocated dedicated funding to be devoted to the identification, prevention and prosecution of health care fraud.  These law enforcement agencies were given sufficient funding to significantly ramp-up the number of investigations and prosecutions for violations of civil and criminal fraud violations.  Over the last 15 years, various additional statutes have been passed (such as the Affordable Care Act (ACA)) which have provided both new investigation and prosecution efforts with even more funds and tools to facilitate the identification and review of improper claims.

 I.       CMS’ use of Predicting Modeling/Analytics has Facilitated the Agency’s Improper Payment Prevention Efforts:

 While both the DOJ and HHS-OIG have remained at the forefront of innovation when it comes to identifying and prosecuting post-payment cases involving alleged fraud, it is important to keep in mind that the Centers for Medicare & Medicaid Services (CMS) launched an ambitious national project of its own in 2010 which was designed not merely to collect overpayments from improper providers, but also to “obstruct” wrongdoers from committing fraud in the first place.  Essentially, CMS has adopted a number of the predictive modeling tools that have been used for many years by credit card companies to thwart thieves.  For instance, if you live in Houston Texas, rarely travel and never purchase alcoholic beverages, a credit card issuer will find it odd that your credit card is now being used in New York City to purchase expensive champagne.  Practically all credit card issuers carefully track their card members’ buying habits and the locations where purchases are made.  When a vendor tries to run such a charge, the credit care issuer may place the transaction on hold, ask to speak to the card holder, or call the card holder to verify that their card has not been stolen.  While the identification strategies may differ, CMS is essentially employing these same tools to identify potentially fraudulent individuals and entities who are seeking to be admitted to the Medicare program.  Moreover, CMS contractors now use these modeling tools to identify specific claims which appear to be improper, thereby blocking their payment in the first place so that the government is not later forced into another “Pay and Chase” situation.

Ultimately, CMS has made it clear that the agency’s old method of “Pay and Chase” is becoming more and more obsolete with each passing day.  As sad as it is, CMS cannot risk the integrity of the Medicare Trust Fund by continuing to employ a pay and chase strategy.  Instead, CMS is now focusing its efforts on keeping bad actors out of the Medicare program in the first place.  A key part of their new strategy involves the effective use of a relatively new (it is now one year old) Fraud Prevention System (FPS) to identify potential instances of health care fraud prior to the payment of such claims.  CMS’ use of FPS can greatly reduce the likelihood of wrongdoers being able to enroll in the Medicare system.

What is FPS?  Essentially, CMS’ FPS initiative allows CMS (and its contractors such as Zone Program Integrity Contractors (ZPICs) and Recovery Audit Contractors (RACs) to conduct state-of-the-art predictive modeling and data analytics of Medicare claims in an effort to ferret out possible fraud.  Notably, CMS now systematically applies this and similar tools to Medicare claims on a nationwide basis.

 II.   First Year Results of FPS:

Over the course of its first year in operation, CMS has reported the following accomplishments as a result of their use of FPS:

  •  Met and exceeded legislative requirements and timeline.
  • Implemented the FPS nationwide, better coordinating fraud-fighting efforts across program integrity contractors’ jurisdictions.

  • Developed complex and sophisticated FPS models as a result of nationwide implementation, strong stakeholder partnerships, and a rigorous governance process.
  • Achieved a positive return on investment (ROI), saving an estimated $3 for every $1 spent in the first year.
  • Prevented or identified an estimated $115.4 million in payments.
  • Generated leads for 536 new investigations by CMS’s program integrity contractors and augmented information for 511 pre-existing investigations. 

III.   CMS “Twin Pillars” Approach Towards Fighting Health Care Fraud:

According to CMS, the agency’s adaptation of FPS represents the first of its “Twin Pillars” approach toward fighting health care fraud.  As CMS writes:

“The pillars represent an integrated approach to program integrity—preventing fraud before payments are made, keeping ineligible providers and suppliers and other bad actors out of Medicare in the first place, and quickly taking administrative actions to stop payments to and/or remove wrongdoers from the program once they are detected.”

CMS’ second pillar is represented by the agency’s “Automated Provider Screening (APS) system.  The APS system facilitates the rapid identification of identifies ineligible health care providers and durable medical equipment suppliers both BEFORE they can enroll in the Medicare system and their enrollment and when their eligibility status changes (possibly due to loss of licensure, criminal conviction or exclusion).

To their credit, CMS has now implemented significant changes to the screening and enrollment process which will undoubtedly reduce the number of potential fraudulent claims submitted to the Trust Fund for payment.

IV.   Predictive Modeling and Data Analytics are Providing Targeting Data for ZPIC Audits and RAC Audits:

Using FPS for predictive modeling and data analytic purposes can be effective targeting tool, thereby providing ZPICs and RACs with a narrowed list of health care providers who are outliers (in terms of the services they are providing or their coding/billing practices) to be audited.  ZPIC audits can take a number of forms, ranging from an unannounced visit to a provider’s place of service to a review which results in the ZPIC’s recommendation to CMS that a provider’s Medicare number should be revoked or suspended.

Over the course FPS’ first year, CMS estimates that it has “stopped, prevented, or identified an estimated $115.4 million in payments.”  When compared to the cost of the program, CMS calculated that FPS resulted in an estimated savings, prevention or recovery of $3 for every $1 spent.

During this same time period, CMS’ use of FPS resulted in 536 new investigations by agency  program integrity contractors (including ZPIC audits) and helped provide additional support for approximately 511 investigations which had been initiated prior to the implementation of FPS.  Importantly, CMS indicated that FPS has helped them target wrongdoers, focus their audit and investigative resources, and take administrative action against health care providers suspected of engaging in fraudulent or improper activities (administrative action might include temporary suspension from the program or revocation of a provider’s Medicare number – both of which are extremely serious and are likely to result in the bankruptcy of a company).

V.     Conclusion:

For many years now, we have strongly recommended that health care providers actively engage in a “gap analysis” of their business, care, coding and billing practices.  Without such an analysis, it is extremely difficult for a provider to know (with any real level of certainty) whether they are currently “compliant” with applicable laws, rules and regulations OR whether they are merely continuing down the wrong path.  A gap analysis is an integral part of an effective Compliance Plan and Program.  If you have not already done so, we encourage you to initiate this process so that you can learn whether your current practices may appear to be aberrant to CMS or its program integrity contractors.

robert_w_lile-150x150Robert W. Liles serves as Managing Partner at Liles Parker, a boutique health law firm.  Liles Parker attorneys represent health care providers around the country and are more than happy to work with your local counsel, if needed.  Should you have any questions regarding these issues, call Robert for a free consultation.  He can be reached at:  1 (800) 475-1906.

ZPIC Audits of DME Suppliers Billing for Back Braces are Likely to Further Intensify

February 5, 2013 by  
Filed under Health Law Articles



(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:

Provide back support.

Reduce back pain.

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.         Background:  

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.       Recent Concerns Identified by HHS-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 (HHS-OIG).  As HHS-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, HHS-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    HHS-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 HHS-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 Enforcement Actions — ZPIC Audits:

              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.     Conclusion:

               DME suppliers have been under the proverbial “microscope” for some time now.  The recent deficiencies noted by both HHS-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 HHS-OIG or the Department of Justice so that law enforcement can initiate an investigation of the supplier.

robert_w_lile-150x150Robert 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 http://www.medicarenhic.com/dme/medical_review/mr_lcds/mr_lcd_current/L11470_2010-01-01_PA_2010-07.pdf on October 5, 2011.

ZPIC Audits of Specialty Dental Practices are Here! Is Your Dental Practice Ready?

January 18, 2013 by  
Filed under Dental Law Articles

MP900185167 (2)(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).  Additional PSC duties included::

Identifying and researching problem claims.

 Placing providers on pre-payment review.

Conducting post-payment claims reviews of providers.

Conducting overpayment determinations of claims reviewed.

Developing potential fraud cases and referring them to HHS-OIG.

Responding to requests from law enforcement and other entities.

Conducting pre-payment review of providers on suspension.

Conducting provider education activities related to fraud activities.

Conducting data analysis activities in support of fraud detection and investigation.

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 Dental Practices Expected to Have a Compliance Plan or Program in Place?

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 (HHS-OIG) wrote that the guidance was not merely intended to cover medical doctors, but also a wide variety of other clinical professionals.  As HHS-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, HHS-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.               Conclusion:

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.

Robert LilesRobert W. Liles, Esq., is Managing Partner at the health law firm, Liles Parker, PLLC.  With offices in Washington, DC, Houston, TX, McAllen, 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

Continuing ZPIC Audits of Home Health Agencies

HHS-OIG’s 2013 Workplan reflects that more intense ZPIC audits are on the way for HHAs, Hospice Providers and DME Suppliers.

ZPIC Audits on the Rise

ZPIC Audits Checklist(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.

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 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. 

What Do ZPIC Audits Reveal?

ZPIC audits of HHAs 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

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 LilesRobert 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.

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

November 12, 2012 by  
Filed under Health Law Articles, Medicare Overpayments

(November 12, 2012):  New legislation, if enacted, could have a major effect on RAC audits, but will the Medicare Audit Improvement Act of 2012 change anything about ZPIC audits of physicians, providers, and suppliers?

I.      The AHA Supports the “Medicare Audit Improvement Act of 2012.”  Is this Legislation Going to Help Physicians or Not?

Medicare Audit Improvement ActOn October 16, 2012, a new bill was introduced by Representative Sam Graves (R-MO) entitled the “Medicare Audit Improvement Act of 2012.” This legislation was immediately supported by the American Hospital Association (AHA), which called the act “much needed guidance for medical necessity audits, keeping auditors out of making medical decisions that should be between patients and their physicians.”

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

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

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

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

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

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

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

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

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

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

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

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

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

 Robert Liles

Robert W. Liles is the Managing Partner at the health law firm, Liles Parker PLLC.  Liles Parker attorneys represent a wide variety of health care providers around the country.  Liles Parker has offices in Washington, DC, Houston, TX, McAllen, TX and Baton Rouge La. 

Robert is a nationally-recognized speaker and is a respected health care lawyer.  He is “AV” rated by Martindale-Hubbell.  Robert handles health care compliance reviews, internal audits, Medicare and Medicaid post-payment overpayment appeals, fraud and abuse investigations, and a number of other health care matters. He also assists providers in responding to prepayment audits conducted by ZPICs (and now RACs).  Should you have any questions, please feel free to call Robert today for a complimentary consultation.  Robert and our other attorneys can be reached at 1-800-475-1906.


Payments to ZPICs from CMS Have Been Significant

Standard ZPIC Payment Methods:

ZPIC Payments from CMS(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 the results CMS intends, it may lose its lucrative 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.

What Do Payments to ZPICs from CMS Look Like?

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.

Robert LilesRobert 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

September 21, 2012 by  
Filed under Medicare Overpayments

(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.

Robert 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.

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