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Expect an Increase in Audits of Chiropractic Services!

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Chiropractic Services(April 16, 2018): Chiropractors around the country are again finding their services and claims under intensive scrutiny from Medicare contractors and investigators, despite the fact that only three services even qualify for coverage and payment.  Several weeks ago, the Department of Health and Human Services (HHS), Office of the Inspector General (OIG) released its latest critical assessment of chiropractic services currently being billed to the Medicare program. The agency’s report, entitled “Medicare Needs Better Controls To Prevent Fraud, Waste, And Abuse Related To Chiropractic Services,”[i] reemphasizes the OIG’s prior findings that the Centers for Medicare and Medicaid Services (CMS) still lacks appropriate safeguards to prevent the submission and payment of improper, sometimes fraudulent claims for chiropractic services to the Medicare program.  This article is intended to highlight the government’s concerns and outline the steps that a provider should take to better ensure that any chiropractic services billed to Medicare qualify for coverage and payment.

I. Improper Chiropractic Claims Remain a Problem:

At the outset, it is important to recognize that in recent years, CMS and its program integrity contractors have taken a number of steps to elevate the level of scrutiny placed on questionable chiropractic claims billed to Medicare. Nevertheless, the OIG has taken the position that considerable work still needs to be done in order to better protect the Medicare program from fraudulent, wasteful and abusive chiropractic billings. For example, the average improper payment rate for Medicare Part B services has been estimated at between 9.9%-12.9%. For chiropractic services, the improper payment rate has been estimated to be between 43.9%-54.1%. About half of all chiropractic services covered by Medicare were not supposed to be covered.  The OIG has estimated that of the nearly $450 million spent by Medicare on chiropractic services every year, between $257 million and $304 million in improper payments are being made every year for chiropractic services.[ii] Over a six-year period, $2.9 billion was spent by Medicare on chiropractic services. Theoretically, this means that at least $1.27 billion was wasted over those six years.

  • Submit claims for services that never occurred.
  • Submit claims for services that were medically unnecessary.
  • Bill for services covered by Medicare but provided other services such as a massage or acupuncture.
  • Falsified patient medical records.
  • Provided services to beneficiaries without a valid license.
  • Offered incentives to patients to receive unnecessary services.

During this six-year period, 11[iii] of the chiropractors were incarcerated and over 500 chiropractors were excluded from participation in the Medicare and Medicaid programs by the OIG for various reasons. The OIG remains concerned that inadequate oversight is continuing to allow fraudulent chiropractors to hide their improper billings from regulators

II. What Solutions Has CMS Tried?

In an effort to spur more detailed documentation, CMS implemented the initial treatment date requirement for claims. This requirement has been more effective than the AT modifier requirement, as 7 out of 8 contractors do check to ensure this requirement is met. In that respect, this is a successfully implemented requirement. However, when audited, this requirement has largely failed due to inadequate documentation. Approximately 86% of all claims that included an initial treatment date did not adequately document the medical necessity of the services provided. Once again, it appears that chiropractors are aware that the initial date is necessary for payment and will include the date regardless of the quality of their documentation.

At the urging of the OIG, CMS has made significant efforts to better educate chiropractors on the importance of proper documentation and which chiropractic services are actually covered by Medicare Part B. CMS has create publications, seminars, and an educational video for chiropractors to learn about services that are covered under Medicare Part B and how to meet documentation standards. Unfortunately, either through lack of provider participation or because of difficulties in accessing the information, this initiative has largely failed.  Many chiropractors and beneficiaries remain ignorant with respect to the  medical necessity, documentation and coverage requirements of chiropractic services under Medicare Part B. For example, one of the educational videos created by CMS is supposed to educate chiropractors on how to meet documentation requirements. This video only received 8,898 views between December 2015 and January 2017. Even if we were to assume that every view was by a licensed chiropractor (which is highly unlikely), it only reached a fraction of the chiropractors participating in the Medicare program. CMS will likely need to implement more changes that may lead chiropractors to utilize educational resources and improve documentation.

III. Would A Medical Review Threshold or Service Limit Work?

Approximately 61% of private insurance plans that participate in the federal employee health benefits program (FEHBP) cover chiropractic services. Of the FEHBP private insurance plans that cover chiropractic services, there are limits between 10 and 60 services per year, with the average plan limiting patients to 21 chiropractic services per year. The concept of limiting the number of services a beneficiary has been proposed by the OIG in the past, but CMS did not agree with this solution.

A medical review threshold is a limit on the number or cost of services before a review of medical necessity must be completed to continue coverage of future services. CMS states that contractors may set thresholds for the number of services allowed before medical review, but may not limit the number of services provided. There is no CMS-level medical review threshold, but as mentioned earlier 2 of the 8 contractors have already set medical review thresholds. CMS-level medical review thresholds are already in place for out-patient therapy specialties such as physical therapy and speech-language pathology. The threshold for these two specialties is monetary, at $1,920. After a beneficiary reaches $3,700 in physical therapy or speech -language pathology services, a medical review s needed for the beneficiary to continue treatment.

The OIG conducted a nationwide review of the percentage of “unallowable payments” made for three groups of beneficiaries, divided by the number of services received in a calendar year. The first group received 1-12 chiropractic services in a year, 76% of which were unallowable payments. The second group received between 12-30 chiropractic services in a year, of which 95% were unallowable payments. The final group received more than 30 chiropractic services in a year, of which every single payment was unallowable. It is worth noting that the two contractors that had set a medical review threshold had no beneficiaries in the last category. Based on this assessment, HHS-OIG estimates that a threshold for medical review between 12-30 services would have saved Medicare between $95 million and $447 million between 2013-2015. Additionally, that same threshold would have saved beneficiaries between $24 million and $114 million in out-of-pocket expenses over the same period. 

IV. HHS-OIG Recommendations:

In addition to highlighting issue with the current system, OIG’s report provided a few recommendations for CMS to consider implementing:

  • Work with contractors to educate chiropractors on the training resources that CMS has already made available to them
  • Educate beneficiaries on which chiropractic services are and are not covered by Medicare Part B, and encourage beneficiaries to report chiropractors that are providing services that should not be covered by Medicare.
  • Identify chiropractors with high-service denial rates or aberrant billing practices, estimate the amount of overpayments made through a statistically significant sample, and recover the overpayments
  • Establish a threshold for the number of services that may be provide before a medical review is needed

V. Chiropractic Basics – Medicare Coverage Limitations: 

Chiropractors diagnose and treat subluxation disorders primarily through manual adjustment and manual manipulation of the spine.  CMS defines subluxation as “a motion segment, in which alignment, movement integrity, and/or physiological function of the spine are altered although contact between joint surfaces remains intact”[iv] More simply put, a spinal subluxation is a purported misalignment of the spinal column that can cause pain and other symptoms in patients suffering from this misalignment.  One question that regularly arises when documenting chiropractic services is:

“How does Medicare expect me to show that evidence of subluxation if present?”

In most instances, a Medicare contractor will review a provider’s documentation to determine if an x-ray has been used, or a physical examination was conducted to document subluxation. Each of these diagnostic methods are discussed below:

• Subluxation determination based on an x-ray. If a provider has determined that a subluxation is present based on an x-ray,[v] a Medicare contractor will likely take into consideration when the x-ray was taken and how much time has elapsed before a course of treatment was initiated. As discussed in Local Coverage Determination (LCD) L34009 published by Noridian Healthcare Solutions, LLC (Noridian), the contractor requires that an x-ray must have been taken at a time “reasonably proximate” to the start of care. Noridian considers an x-ray to be reasonably proximate to the initiation of care if it was taken no more than 12 months prior to or 3 months following the initiation of a course of chiropractic treatment. Understandably, Noridian will typically allow a chiropractor to base his / her subluxation determination on an older x-ray if a beneficiary’s medical records show that the patient has suffered from a chronic subluxation condition (such as scoliosis) for longer than 12 months AND there is a reasonable basis to believe that the chronic condition is permanent.

• Subluxation determination based on an a physical examination. If a provider has determined that a subluxation is present based on a physical examination that has been conducted, a CMS contractor is going to review the medical documentation to determine if two of the following four criteria have been identified during the examination of the patient’s musculoskeletal / nervous system, one of which must be either asymmetry / misalignment or range of motion abnormality. The four criteria examined include:

• Pain/tenderness evaluated in terms of location, quality, and intensity;
• Asymmetry/misalignment identified on a sectional or segmental level;
• Range of motion abnormality (changes in active, passive, and accessory joint movements resulting in an increase or a decrease of sectional or segmental mobility); and
• Tissue, tone changes in the characteristics of contiguous, or associated soft tissues, including skin, fascia, muscle, and ligament.

A limited scope of chiropractic services qualify for coverage under Medicare Part B if they are performed by a licensed, qualified chiropractor. Regrettably, CMS still takes the position that most of the various services offered by a chiropractor are “supportive” in nature rather than “corrective.”  In other words, CMS considers most chiropractic services to be “maintenance therapy,” which is not covered under Medicare Part B. As maintenance therapy, CMS does not consider most chiropractic services to be medically necessary.

So what chiropractic services ARE covered under Medicare Part B?  Frankly, not many. CMS specifically limits Medicare Part B coverage to hands-on manual manipulation of the spine for symptomatology associated with spinal subluxation. Additionally, qualifying hand-held manual devices (where the thrust of the force of the device is manually controlled) may also be used by chiropractors in performing manual manipulation of the spine. Notably, Medicare does not recognize any additional charges associated the use of such a hand-held device.

When documenting a covered service, a chiropractor must note the precise level of the subluxation. Depending on the number of spinal regions involved, one of three Current Procedural Terminology (CPT) codes can be billed:

• CPT Code 98940 (for treatment of one or two spinal regions);
• CPT Code 98941 (for treatment of three or four spinal regions); and
• CPT Code 98942 (for treatment of all five spinal regions).

The five regions of the, from the cervical area (neck) to the coccyx (tailbone) are illustrated below:

Chiropractic Services

When providing chiropractic services that are intended to provide active / corrective treatment, Medicare requires chiropractors to append the claim with an AT modifier.  The AT modifier is intended to denote the fact that “Acute Treatment” for subluxation was provided to the beneficiary.  If a chiropractor bills one of the three covered codes without an AT modifier, the service will be automatically denied as not medically necessary when the claim is processed by your Medicare Administrative Contractor (MAC).

In most instances, properly coded chiropractic services (limited to 98940, 98941 and 98942) will qualify for payment.  Having said that, both CMS contractors and OIG have repeatedly found that just because a claim has been appended with the AT modifier does not mean that the chiropractic services billed were in fact, medically necessary. In multiple audits conducted over the last decade, government reviewers have found that chiropractors have failed to properly document the medical need for services billed to Medicare.

Although Medicare has not placed a limit on the number of chiropractic services that a beneficiary can receive, providers who appear to be billing an excessive number of services will quickly be flagged for medical review by a MAC, a Zone Program Integrity Contractor (ZPIC) or a Uniform Program Integrity Contractor (UPIC). It is essential that you carefully document the medical necessity of any services billed. At present, pre-authorization to confirm the medical necessity of a treatment is only required by two MACs. One contractor sets its threshold for medical review as 12 services per month but no more than 30 services per year. The other sets a threshold of 25 chiropractic services per year.

VI. Documenting Chiropractic Services:

It is important to keep in mind that under Title XVIII of the Social Security Act, §1862(a)(1)(A), services must be medically reasonable and necessary in order to qualify for coverage and payment.  Similarly, Title XVIII of the Social Security Act, §1833(e) prohibits Medicare from paying for any claims that lacks the necessary information to process the claim.  Therefore, regardless of whether the determination of a subluxation has been based on an x-ray or a physical examination, a chiropractor must ensure that complete and accurate records of the encounter are taken.

Experience has shown that in the event of an audit by a CMS contractor, the MAC, ZPIC or UPIC auditing chiropractic services will primarily base claims on a provider’s failure to properly document the medical necessity of the services billed. It is therefore essential that you review and understand your documentation obligations when billing for chiropractic claims. As a first step, you need to review:

CMS Medicare Benefit Policy Manual, Pub. 100-2, Chapter 15, Sections 30.5 and 240.
• CMS Medicare Claims Processing Manual, Pub. 100-4 Chapter 12, Section 220.

Moreover, you should continue to periodically review any LCD guidance on chiropractic services that has been issued by your MAC.  Again using Noridian’s LCD guidance as an example, during an initial visit, the MAC expects a provider to document the following six categories of information when providing chiropractic services:

A. Documentation Requirements – Initial Visit. The following documentation requirements apply whether the subluxation is demonstrated by x-ray or by physical examination:

#1. Family History / Past Medical History.
• Symptoms causing patient to seek treatment;
• Family history if relevant;
• Past health history (general health, prior illness, injuries, or hospitalizations; medications; surgical history);
• Mechanism of trauma;
• Quality and character of symptoms/problem;
• Onset, duration, intensity, frequency, location and radiation of symptoms;
• Aggravating or relieving factors; and
• Prior interventions, treatments, medications, secondary complaints.

#2. Description of the Present Illness.
• Mechanism of trauma;
• Quality and character of symptoms/problem;
• Onset, duration, intensity, frequency, location, and radiation of symptoms;
• Aggravating or relieving factors;
• Prior interventions, treatments, medications, secondary complaints; and
• Symptoms causing patient to seek treatment.

Importantly, the “symptoms” covered in your description of the patient’s present illness are required to be directly related to the level of subluxation. When describing a patient’s symptoms:

• The symptoms should refer to the spine, muscle, bone, rib and / or joint and be reported as pain, inflammation, or as signs such as swelling, spasticity, etc.
• The symptoms documented must be related to the level of the subluxation that has been cited. A statement on a claim that there is “pain” is insufficient.

Finally, the location of a patient’s pain must be described and the symptoms documented must be related to the level of the subluxation that has been cited.  Noridian further requires that the location of pain must be described and whether the particular vertebra listed is capable of producing pain in the area determined.

#3. Evaluation of musculoskeletal/nervous system through physical examination.

#4. Diagnosis. The primary diagnosis must be subluxation, including the level of subluxation, either so stated or identified by a term descriptive of subluxation. Such terms may refer either to the condition of the spinal joint involved or to the direction of position assumed by the particular bone named.

#5. Treatment Plan. The treatment plan should include the following:
• Recommended level of care (duration and frequency of visits);
• Specific treatment goals; and
• Objective measures to evaluate treatment effectiveness.

#6. Date of the initial treatment.

B. Documentation Requirements: Subsequent Visits.  The following documentation requirements apply whether the subluxation is demonstrated by x-ray or by physical examination:

#1. History.
• Review of chief complaint;
• Changes since last visit;
• System review if relevant.

#2. Physical exam.
• Exam of area of spine involved in diagnosis;
• Assessment of change in patient condition since last visit;
• Evaluation of treatment effectiveness.

#3. Documentation of treatment given on day of visit.  The patient must have a significant health problem in the form of a neuromusculoskeletal condition necessitating treatment, and the manipulative services rendered must have a direct therapeutic relationship to the patient’s condition and provide reasonable expectation of recovery or improvement of function. The patient must have a subluxation of the spine demonstrated by x-ray or physical exam as described above.

VII.  Conclusion

It has been more than 20 years since the OIG first identified chiropractic billings as a potential fraud and abuse problem.  To their dismay, the AT modifier requirement, initial treatment date documentation requirement, and educational resources have failed to significantly remedy the level of improper claims for chiropractic services being billed to the Medicare program. In light of the OIG’s latest report, chiropractors should expect CMS and its MAC, ZPIC and UPIC contractors to increase their audits of chiropractic claims.  Providers should also expect to see oversight through education, medical review, limits to the number of services, and documentation requirements.

What should you do?  Get back to basicsWhen is the last time you compared your medical necessity, documentation, coding and billing practices to those outlined in your respective LCD and the Medicare Benefit Policy Manual.

Need help?  Give us a call.  Our attorneys are experienced in representing chiropractors in audits and investigations of their Medicaid and private payor claims.

Robert W. Liles Healthcare AttorneyRobert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Liles Parker attorneys represent chiropractors and chiropractic practices around the country in connection with Medicare, Medicaid and private payors claims audits.  We also represent chiropractors in connection with complaints filed against our clients with the State Chiropractic Board.  For a complimentary review and discussion of your issues, you can call Robert at: (202) 298-8750.  


[i] Department of Health and Human Services, Office of Inspector General. Medicare Needs Better Controls To Prevent Fraud, Waste, And Abuse Related To Chiropractic. A-09-16-02042. February 2018.
[ii] CMS’s Supplementary Appendices for the Medicare Fee-for-Service Improper Payment Reports for 2010–2015.
[iii] In one case, when an audit was initiated against a chiropractic practice, the chiropractor supposedly falsely reported a robbery had taken place and that medical records were stolen from his car. This triggered a fraud investigation that led to a 63-month fraud conviction, over $1 million in restitution, and a 23-year exclusion for the chiropractor.
[iv] Medicare Benefit Policy Manual, Chapter 15, §240.1.2.
[v] Noridian will usually permit a previous CT scan MRI to be used as evidence if a subluxation of the spine is demonstrated.

ZPIC Audits / UPIC Audits: The Impact of Transmittal 768 on the Medicare Appeals Process Timeline

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Transmittal 768(April 12, 2018): A big concern with the Medicare appeals process is the ghastly backlog at the Office of Medicare Hearings and Appeals (OMHA) for an Administrative Law Judge (ALJ) hearing coupled with the government’s authority to recoup alleged overpayments after the second level of appeal (reconsideration). There is renewed buzz regarding the backlog and potential recourse given the Fifth Circuit’s decision on March 27, 2018 in Family Rehabilitation, Inc. v. Azar, No. 17-11337, which affirmed the possibility for providers to sue for an injunction to prevent Medicare Administrative Contractors (MACs) from recouping overpayments until administrative appeals are concluded under the collateral-claim exception. But what about the snail-like pace of postpayment reviews at the very beginning of this process?  As discussed below, Medicare’s Transmittal 768 may alleviate this continuing problem to some extent.

I.  Continuing Delays by ZPICs / UPICs in Completing an Initial Review – Overview of the Problem:

Before claims are appealable, they have to be denied on review. A major source of massive extrapolated alleged overpayments are postpayment reviews by Zone Program Integrity Contractors (ZPICs) and their successor Unified Program Integrity Contractors (UPICs). Our experience has been that these reviews usually take many months, even years. This is in spite of the fact that providers are required to turn over the requested records in somewhere between 15 and 30 days, maybe even 45 days if the provider requests an extension. The investigators typically remain tight-lipped throughout the review and investigation process. Inquiries about the status of a review are usually met with no response or cryptic feedback like “The review findings will be provided at the conclusion of the review.” In the meantime, providers are expected to sit on their hands. Then one day, a letter arrives which often reflects an unmanageable alleged overpayment figure for the provider and the provider is left to dispute the alleged overpayment through “Medicare’s Byzantine four-stage administrative appeals process” – in the words of Circuit Judge Jerry E. Smith in Family Rehabilitation, Inc. v. Azar.

II.  New Timelines Under Transmittal 768 for ZPICs / UPICs to Complete a Postpayment Review:

There has been a development that may effectuate speedier postpayment reviews by ZPICs and UPICs. The Centers for Medicare and Medicaid Services (CMS) issued guidance, which imposes a new timeline and requirements on these contractors effective March 1, 2018. Specifically, the transmittal adds the following requirements to Chapter 3 of the Medicare Program Integrity Manual:

the UPICs / ZPICs shall complete postpayment medical review and provide the lead investigator with a final summary of the medical review findings that includes reference to the allegations being substantiated/not substantiated by medical review, reasons for denials, and any observations or trends noted within 60 calendar days” and “[t]he counting for the 60-day time period begins when all of the documentation is received by the UPIC / ZPIC contractor.”

Please note, however, that this is an internal timeline for the contractors (as between the medical reviewer(s) and lead investigator), meaning that providers should not expect to receive the postpayment audit results within 60 days of having submitted the records to the UPIC / ZPIC. However, Transmittal 768 may be useful to put pressure on the contractors when reviews are pending for months or years on end.

For a detailed discussion of the ZPIC program and process, please see: ZPIC Audits.

Healthcare LawyerLorraine A. Rosado, J.D., is a Senior Associate at Liles Parker and has extensive experience representing Medicare providers and suppliers around the country in administrative claims audits, suspension and revocation cases.  She is also performed a number of IRO reviews in connection with annual CIA reviews by HHS-OIG.  Should you have any questions regarding an administrative enforcement action, please feel free to call Lorraine for a free consultation.  She can be reached at: (202) 298-8750.

UPIC Claims Audits of Medicare Services are Underway! Are You Ready?

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UPIC Claims Audits(Updated March 20, 2020):  Historically, the Centers for Medicare and Medicaid Services (CMS) has relied on a network of private contractors to handle the program integrity functions for both the Medicare and Medicaid programs. Over the years, these private contractors have taken on increasingly significant roles in the detection and audit of instances of fraud, waste and abuse in the Medicare and Medicaid programs.  This article examines several of the program integrity contractors currently liable to audit your claims.  These contractors include Unified Program Integrity Contractors (UPICs), Medicare Drug Integrity Contractor (MEDICs) and Supplemental Medical Review Contractors (SMRCs).


I.  Early Historical Background of Fiscal Intermediaries (FIs) and Carriers:

The Medicare and Medicaid program were first enacted into law on July 30, 1965 by President Lyndon B. Johnson. When the programs were subsequently implemented in 1966, the government chose to use private health care payors to process the claims of Medicare beneficiaries.  Private entities were awarded contracts to serve as “Fiscal Intermediaries” and “Carriers.”  Fiscal Intermediaries were responsible for handling Part A claims.  Generally, Part A claims include those associated with hospital care, skilled nursing facility care, non-custodial nursing home care, hospice care and home health services.[1]  In contrast, Carriers were responsible for handling Part B claims.  Unlike Part A, Medicare Part B covers a wide variety of medically necessary outpatient care and treatment services.[2]  It also covered a number of preventative services. Additionally, Medicare Part B covers certain types of supplies and durable medical equipment.  Until 2003, Fiscal Intermediaries and Carriers were responsible for fulfilling a number of Medicare program education, administrative processing and program integrity roles. As described below, upon the enactment of the Medicare Modernization Act (MMA) the duties and responsibilities of Fiscal Intermediaries and Carriers were assumed by Medicare Administrative Contractors (MACs).

II.  Historical Background of Medicare Program Integrity Efforts:

Prior to 1996, funding for Medicare program integrity activities was included in Medicare’s general administrative budget. As such, it had to “compete,” so to speak, with all of the claims-related education and processing programs paid for out of Medicare’s general administrative budget. As you can imagine, this led to a variety of budgetary conflicts and counterproductive competition between programs to obtain an appropriate   share of available program integrity funding. The General Accounting Office (GAO) issued reports in 1993 and 1995 calling for separate, dedicated funding for Medicare program integrity activities.[3]

III. Passage of Health Insurance Portability and Accountability Act (HIPAA) of 1996 – Establishment of Program Safeguard Contractors (PSCs):

On August 21, 1996, the Health Insurance Portability and Accountability Act (HIPAA) was enacted into law.  While HIPAA is practically synonymous with medical privacy among both lay persons and most health care providers, law enforcement’s view of the statute was quite different.  Under HIPAA, both the Department of Justice (DOJ) and the Department of Health and Human Services (HHS), Office of Inspector General (OIG) received sizeable, recurring funding that was to be used solely for the investigation and prosecution of cases involving health care fraud, waste and abuse.

Among its many provisions, HIPAA also established the Medicare Integrity Program (MIP). The MIP was created in an effort to further enhance the ability of the Health Care Financing Administration (HCFA) to detect and deter fraud, waste and abuse in the Medicare program. HCFA (later renamed the Centers for Medicare and Medicaid Services (CMS))[4] has traditionally relied on a network of private contractors to handle the program integrity functions for both the Medicare and Medicaid programs.  As part of the MIP, HCFA created the Program Safeguard Contractor (PSC) program.  From a program integrity standpoint, PSCs were a major step forward.  Among their many duties, PSCs were expressly tasked with identifying potential cases of fraud and making referrals to OIG and DOJ, as appropriate

IV.  Enactment of the Medicare Modernization Act (MMA) of 2003 – Creation of MACs and ZPICs:

The MMA was subsequently signed into law on December 8, 2003.  The MMA greatly simplified the administrative processing of Medicare claims through its implementation of a comprehensive Medicare Fee-For-Service Contracting Reform program.  Under this program, CMS used the competitive bidding process to replace the existing system of Fiscal Intermediaries (responsible for processing Part A claims) and Carriers (responsible for processing Part B claims) with unified administrative claims processing entities known as Medicare Administrative Contractors (MACs), responsible for handling both Part A and Part B claims.[5]

In addition to completely revising the administrative claims processing scheme (through the creation of MACs), the MMA also directed that newly-established Zone Program Integrity Contractors (ZPICs) would take over the responsibility for handling Medicare program integrity functions and activities. A total of seven ZPIC zones were created to work with the MACs in their jurisdiction.  Each of these ZPICs were responsible for performing program integrity functions for Medicare Parts A and B claims.

V.  Establishment of the Medicare Drug Integrity Contractor (MEDIC) Program:

Under the Balanced Budget Act of 1997, Congress authorized the Medicare+Choice program (Medicare Part C).  Under Medicare Part C, CMS contracts with private organizations to provide several types of private health plan options, including managed care plans.[6] The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 subsequently established Medicare Part D, a voluntary outpatient prescription drug program.  In FY 2007, CMS first awarded contracts to several regional MEDICs to address potential fraud and abuse related to the Part D benefit. These functions were later consolidated under a single contractor that is responsible for handling both Part C and D program integrity efforts nationwide, for all 50 states and Puerto Rico.  The contractor responsible for handling Medicare Part C and Part D claims is known as the National Benefit Integrity Medicare Drug Integrity Contractor (NBI MEDIC). In 2018, CMS split the NBI MEDIC functions into two separate contracts, the NBI Medicare Drug Integrity Contract (NBI MEDIC) and the Investigations Medicare Integrity Contract (I-MEDIC).  Generally, these contracts cover the following:

NBI Medicare Drug Integrity Contract (NBI MEDIC): The NBI MEDIC contract has been awarded to Qlarant. Under the NBI MEDIC contract, Qlarant is responsible for handling general plan sponsorship oversight and conducting data analytics designed to identify possible instances of fraud, waste and abuse with respect to the Part C and Part D programs.

Investigations Medicare Integrity Contract (I-MEDIC): The I-MEDIC contract has also been awarded to Qlarant.  The overall strategy of this five-year contract is to detect, prevent and proactively deter fraud, waste and abuse in the Medicare Part C and Part D programs.  As Qlarant notes:

“This work focuses primarily on complaint intake and response; data analysis; assessing leads from various sources; investigative actions; administrative remedies; referrals; and program integrity efforts related to potential FWA from prescribers, pharmacies, and beneficiaries.” 

As we have previously noted, referrals from an NBI MEDIC and I-MEDIC (at this time, both of these contracts are held by Qlarant) are routinely made to the OIG, DOJ and to State Medical Boards whenever evidence of fraud, waste or abuse.  Qlarant may also initiate an audit of your prescribing practices and / or recommend that your Medicare billing privileges be revoked.  It is therefore essential that you contact a qualified health lawyer if you or your practice are audited or investigated by Qlarant (in its role under the NBI MEDIC or I-MEDIC contracts).

VI.  Rise of the Unified Program Integrity Contractors (UPICs):

As detailed in the Comprehensive Medicaid Integrity Plan. Fiscal Years 2014—2018,” issued by CMS, Section 1936(d) of the Social Security Act requires that the HHS Secretary establish a comprehensive plan for ensuring the program integrity of the Medicaid program, on a recurring 5-fiscal year basis.  To this end, CMS developed Unified Program Integrity Contractor (UPIC) program. Unlike earlier program integrity efforts, UPIC contractors have been tasked with conducting Medicare, Medicaid and Medi-Mal investigations and audits of participating health care providers and suppliers in their assigned jurisdictions. Contracts awarding integrated program integrity responsibilities have been awarded to the following UPICs:

  • UPIC Southwestern Jurisdiction Qlarant Integrity Solution, LLC qlarant.com (Colorado, New Mexico, Texas, Louisiana, Arkansas and Mississippi).

  • UPIC Western JurisdictionQlarant Integrity Solutions, LLC qlarant.com (American Samoa, Guam, Northern Mariana Islands, Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming).

  • UPIC Midwest JurisdictionCoventBridge Group com/midwest-upic/ (Iowa, Kansas, Missouri and Nebraska).

  • UPIC Northeast JurisdictionSafeguard Services, LLC safeguard-servicesllc.com/ (Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, Pennsylvania, New Jersey, Delaware, Maryland, District of Columbia, and the counties of Arlington and Fairfax and the city of Alexandria in Virginia). 

  • UPIC Southeastern JurisdictionSafeguard Services, LLC safeguard-servicesllc.com/ (Alabama, Florida, Georgia, North Carolina, Puerto Rico, South Carolina, Tennessee, U.S. Virgin Islands, Virginia and West Virginia).

Each of these UPIC contractors have years of experience supporting the government’s efforts to identify, deter, prevent, and reduce fraud, waste and abuse.

VII.      UPIC Claims Audits of Medicare and Medicaid Services are Currently Underway:

A number of our clients around the country have already received requests for records from the UPIC handling their jurisdiction.  One UPIC in particular, Qlarant has been especially active over the last year in sending out audit letters requesting copies of medical records, dental records and other documentation which supports the specific claims being assessed.  As discussed below, a careful review of any request that you receive may give an indication of how the case arose and whether the contractor’s review is merely claims focused or also includes an assessment of the provider’s business relationships and practices.

Requests for documents sent by UPICs can vary in terms of scope, purpose and due date.  There are several points that should be considered whenever a UPIC request for medical records or dental records is received by a Medicare or Medicaid provider:

  • When must the requested documents be sent to the UPIC? Over the last year, a number of UPIC requests for documents have required that the documentation must be submitted to the contractor within 15 days. This is really frustrating in light of the fact that as set out in the Medicare Program Integrity Manual (MPIM), Section – Time Frames for Submission,[7] the contractor is supposed to give a health care provider 30 days to submit the documents being requested.  Although most ZPICs will readily agree to an extension of time, if they only agree to extend the deadline to 30 days, they really are granting the provider anything, are they?  To date, we have not seen UPIC claims audit requests seeking documents permitting more than 30 days for the documents to be submitted.
  • What types of documents are requested in contractor’s request? Carefully review the nature of the request.  Is the UPIC only seeking administrative and claims-related medical records OR, is the contractor also seeking documentation related to a provider’s business relationships and / or business practices?
  • UPIC Claims Audits:  Most audits (and claims reopenings) by UPICs are generated as a result of data mining.  In these cases, a UPIC often restricts its review efforts (at least initially) to the claims being assessed, along with relevant, associated administrative materials.  Examples of documents sought in these types of review include, but are not limited to:
  1. Copy of claim, if available;
  2. Beneficiary Notice of Liability;
  3. Authorization of Benefits;
  4. Consent for treatment;
  5. Signed HIPAA privacy notification forms;
  6. Signature card including names and signatures of all personnel documenting in the beneficiary’s chart.
  7. Electronic signature policy;
  8. Copy of face sheet with beneficiary contact information;
  9. Signed “Consent for Treatment” authorizing the medical service;
  10. A copy of the beneficiary’s Medicare card;
  11. A legend or list that defines acronyms, symbols or abbreviations used in the medical records;
  12. A completed Advanced Beneficiary Notice (ABN), as appropriate;
  13. Copies of licenses and / or certifications of any personnel documenting in the beneficiary’s medical records. This includes, physicians, nurse practitioners, physician assistants, nurses, and other caregivers that require licensure or certification;
  14. If electronic signatures are used, documentation which shows that the electronic signatures properly authenticated and dated. The UPIC will also typically ask for the provider to show that safeguards are in place to prevent unauthorized access;
  15. Physician orders;
  16. History and physical;
  17. Patient encounter / visit forms;
  18. Physician’s office and Progress Notes;
  19. Consultation reports (if applicable);
  20. Surgical reports (if applicable);
  21. Pathology reports (if applicable);
  22. Pathology reports (if applicable);
  23. Laboratory tests results (if applicable);
  24. Radiology reports (if applicable);
  25. Previous treatments received to include dates, diagnosis for treatment, treatments administered; and the patient’s response to treatment / progress made;
  26. Discharge notes (if applicable);
  27. Any additional medical records or findings that support the claim(s) or service(s) billed;
  • UPIC Requests for Business Records Along with UPIC Claims Audit Information:  In addition to the claims-related documents above, if a UPIC also seeks documents related to a provider’s business practices and / or business relationships (i.e. where does the provider get its referrals AND where does the provider send its referrals), there is greater likelihood that other information has been received by the UPIC which suggests that the provider may be engaging in one or more improper business practices. Providers should exercise extreme caution if this type of information is being sought.  To the extent that a UPIC finds evidence that a provider is engaging in wrongdoing, the contractor is required to make a referral to law enforcement (OIG and / or DOJ).  Examples of the business-related documents that may be sought by the UPIC include:
  1. Copies of any leases;
  2. Please provide a listing of all patients seen on the dates of the claims requested in this audit;
  3. Copies of any Medicare Director agreements;
  4. Name of EHR software used (if applicable);
  5. Name and contact information for third-party billing company (if utilized);
  6. Please provide a sample of each encounter form utilized in your office;
  7. Copy of patient collections for the period at issue which reflects any copayments and / or deductibles collected from the beneficiary;
  8. Names, addresses and phone numbers and former positions of individuals who are no longer employed by the organization and left within the past three years;
  9. If you are associated with or a member of any assignment account, do you also bill under separate provider numbers? If so, list the numbers and describe the reasons for separate billing;
  10. Copies of any consulting agreements or other business agreements with laboratories, imaging centers or any other entity whose services are billed to Medicare;
  11. List all employees or contracted staff (physicians, therapists, physician assistants, nurses, etc.) who render services and bill Medicare under your provider number;
  12. List associates, partners, employees who bill under their own PTAN numbers;
  13. List associates, partners, employees who bill under your PTAN number;
  14. List the name of the manufacturer, model number and purpose of each piece of diagnostic or treatment equipment in your office, e.g. laboratory equipment, diagnostic equipment (x-ray, MRI, EMG, nerve conduction equipment, cardiac tests, other specialty diagnostic equipment, etc.), physical therapy equipment, chiropractic equipment;
  • How many Medicare claims are to be audited?  If 10 or less postpayment claims are being reviewed, more than likely the UPIC is conducting a “Probe Sample” of the provider’s claims.  The purpose of the probe sample is to see if there appears to be a potential problem with the provider’s medical necessity, documentation, coding or billing practices.  If few problems are found, the UPIC will likely issue an “Education Letter” to the provider.  If, however, a significant number of errors are identified, the UPIC will likely expand its audit and issue a subsequent request for the supporting documentation associated with 30 or more claims that have already been paid. If the UPIC’s initial request for records asks for records associated with 30 or more claims (usually billed over a two-year period), there is high likelihood that the UPIC have pulled these claims as part of a “Statistically Relevant Sample.”  As such, the UPIC intends to extrapolated the error rate found to the entire universe of claims.
  • How Should You Respond if Your Organization Receives a UPIC Records Request? If your medical practice, home health agency or hospice is subjected to a UPIC claims audit, we strongly recommend that you immediately contact a qualified health care lawyer.  There are a number of steps you can take at this initial stage in the review that may have a significant impact on whether the UPIC determines that a more in-depth audit is needed.  Moreover, the potential overpayment may also be greatly reduced (depending on the completeness of a provider’s medical records).  Questions?  Give us a call for a free consultation. We can be reached at (202) 298-8750 or toll-free at 1 (800) 475-1906.


Robert W. Liles is a health care attorney experienced in handling prepayment reviews and audits.Robert W. Liles serves as Managing Partner at Liles Parker, Attorneys & Clients at Law.  Our Firm represents health care providers and suppliers around the country in UPIC, ZPIC, RAC and MIC audits.  We also work with providers to develop and implement an effective Compliance Program.  Call Robert for a free consultation.  He can be reached at:  1 (800) 475-1906.

[1] An overview of what is covered under Part A is provided at the following link: https://www.medicare.gov/what-medicare-covers/what-part-a-covers

[2] An overview of what is covered under Part B is provided at the following link: https://www.medicare.gov/what-medicare-covers/what-part-b-covers

[3] GAO, Medicare Spending: Modern Management Strategies Needed to Curb Billions in Unnecessary Payments, GAO/HEHS-95-210 (Washington, D.C.: Sept. 19, 1995); Medicare: Adequate Funding and Better Oversight Needed to Protect Benefit Dollars, GAO/T-HRD-94-59 (Washington, D.C.: Nov. 12, 1993); and Medicare: Funding and Management Problems Result in Unnecessary Expenditures GAO/T-HRD-93- 4 (Washington, D.C.: Feb. 17, 1993).

[4] On September 24, 2001, the Health Care Financing Administration (HCFA) was renamed the Centers for Medicare and Medicaid Services (CMS).  A link to the announcement can be found here: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/AB01133.pdf

[5] With the exception of home health, hospice or DME claims which are processed by specific MACs engaged by CMS to process these specific types of claims.

[6] Medicare Provisions in the Balanced Budget Act of 1997 (BBA 97, P.L. 105-33), Congressional Research Service, 97-802, issued August 18, 1997.  As the report reflects, a Medicare+Choice plan may include:

“(i) a coordinated care plan (including an HMO (with or without a point-of-service plan), a PPO, or a PSO), (ii) a private fee-for-service plan (private FFS),8 or

(iii) a combination of a medical savings account (MSA) plan and contributions to a Medicare+Choice MSA.”

[7] Medicare Program Integrity Manual Section

ZPICS shall notify providers that requested documents are to be submitted within 30 calendar days of the request.”

Please note, prior to its most recent update, Chapter 4, Section 4.1, of the MPIM expressly stated:

“. . . All references to ZPICs shall also apply to Unified Program Integrity Contractor (UPIC) unless otherwise specified in the UPIC [Statement of Work] SOW.”

Medicare Chiropractic Audits are Increasing!

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Medicare Chiropractic Audits(June 5, 2017):   Despite the fact that only three treatment services are covered by Medicare, the number of Medicare chiropractic audits conducted by the Department of Health Human Services (HHS), Office of Inspector General (OIG), has remained high over the last decade and is anticipated to grow throughout 2017 and 2018.  As you are aware, the Department of Health and Human Services (HHS), Office of Inspector General (OIG), concluded that in Fiscal Year 2016 the Improper Payment Rate for chiropractic services was 46.0%.  Even more alarming is the fact that OIG has found that the Improper Payment Rate of chiropractic Part B Medicare claims was the highest of any Part B service type in both FY 2015 and FY 2016.[1]

I.   Medicare Chiropractic Audits are Anticipated to Intensify in FY 2017 and FY 2018:

The already-active Medicare audit landscape facing chiropractors is likely the proverbial “calm before the storm.”  When you think of “Medicare Access and CHIP Reauthorization Act of 2015” (MACRA),[2] it’s likely you first think of the statute’s Quality Payment Program provisions which are intended to tie Medicare’s payments to the quality of the medical being provided.   Unfortunately, the documentation of chiropractic services have the unique distinction of being the only Part B service that are expressly address in MACRA.  A detailed discussion of the documentation requirements for chiropractic services under Medicare Part A will be addressed in a separate article.  The bottom line is simple – chiropractors participating in the Medicare Part B program are strongly encouraged to have a comprehensive assessment of their services conducted as soon as possible.  An overview of the current audit landscape is discussed below.

II.   Almost All Part B Medicare Chiropractic Audits Find Documentation Problems:

As set out in OIG’s Improper Payment Report for FY 2016, when examining the 46% of chiropractic services that were denied, the Centers for Medicare and Medicaid Services (CMS) found that  98.4% of the chiropractic denied claims were denied because of NO DOCUMENTATION or INSUFFICIENT DOCUMENTATION.  We believe that this is due, in large part, to the fact that the clinical reviewers employed by a Zone Program Integrity Contractor (ZPIC) or a Medicare Administrative Contractor (MAC) to audit your chiropractic claims (primarily Registered Nurses), aren’t really qualified to conduct these reviews. Sure, they can read Medicare’s guidelines governing medical necessity, coverage, documentation, coding and billing – but that doesn’t mean that they truly understand what constitutes a “subluxation” or that they can recognize that the patient’s condition warrants manual manipulation. The vast majority of medical reviewers examining your claims have little or no substantive knowledge and training in the field of chiropractic care.  Therefore, why are you surprised that the ZPIC reviewer is now alleging that 80$ – 100% of the claims you have billed to Medicare do not qualify for coverage or payment?

III.   Medicare’s Position with Respect to “Medical Necessity”:

Under Medicare, the definition of “medical necessity” is generally defined under Title XVIII of the Social Security Act, Section 1862(a)(1)(a):  As the statute provides:

“No payment may be made under Part A or Part B for expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”

Despite the fact that chiropractors are recognized as physicians by Medicare, CMS has steadfastly refused to cover most of the traditional care and treatment services that are offered by licensed chiropractors around the country.  Medicare Part B only covers treatment by means of manual manipulation of the spine that is used to correct a subluxation (i.e. spinal manipulation). Moreover, the coverage policies developed by CMS and its contractors make it clear that the agency has restricted the definition of what is considered to be “medically necessary” chiropractic care to only include spinal manipulation services that are active or corrective in nature.

IV.   Maintenance Therapy is Not Covered by Medicare:

CMS has essentially taken the position that maintenance therapy does not qualify as medically necessary care and therefore does not qualify for coverage and payment.   As set out in the Medicare Benefit Policy Manual, Section 30.5.B:

Under the Medicare program, Chiropractic maintenance therapy is not considered to be medically reasonable or necessary, and is therefore not payable. Maintenance therapy is defined as a treatment plan that seeks to prevent disease, promote health, and prolong and enhance the quality of life; or therapy that is performed to maintain or prevent deterioration of a chronic condition. When further clinical improvement cannot reasonably be expected from continuous ongoing care, and the chiropractic treatment becomes supportive rather than corrective in nature, the treatment is then considered maintenance therapy.  (emphasis added).

The fact that chiropractic care used to “prevent deterioration of a chronic condition” remains non-covered is especially frustrating in light of the 2013 settlement in the case Jimmo v. Sebelius.   Earlier this year, the court approved a Corrective Statement that is to be used by CMS to affirmatively discontinue the use of an “Improvement Standard” for Medicare coverage.  Unfortunately, chiropractors and dentists were specifically carved out of this new rule by CMS.  As CMS noted in its January 14, 2014 guidance intended to clarify the agency’s new position after the settlement in Jimmo v. Sebelius, Pub. 100-02 Medicare Benefit Policy.  Transmittal 179 expressly provides that:

Chiropractors and doctors of dental surgery or dental medicine are not considered physicians for therapy services and may neither refer patients for rehabilitation therapy services nor establish therapy plans of care. (emphasis added).

V.   The Types of Chiropractic Services Covered by Medicare are Extremely Limited.

Under Medicare, the types of chiropractic services that are eligible for coverage and treatment are limited to three chiropractor-administered services.  To ensure that claims are processed in in an orderly and consistent fashion, Medicare employs the Healthcare Common Procedure Coding System (HCPCS) developed by the American Medical Association (AMA).  Level I of this standardized coding system is comprised of Current Procedural Terminology (CPT) codes that the AMA maintains.  The CPT uniform coding system consists of descriptive terms and identifying codes that are used primarily to identify medical services and procedures furnished by physicians and other health care professionals.  The CPT codes of the three chiropractic manipulation services that may qualify for payment by Medicare include the following:

98940: Chiropractic Manipulative Treatment (CMT); spinal, one or two regions;

98941: CMT; spinal, three to four regions; and

98942: CMT; spinal, five regions.[3]

To add insult to injury, even though a number of Medicare procedures may be within a licensed chiropractor’s state-defined scope of practice, with the exception of the three services described above, no other diagnostic or therapeutic service furnished by a licensed chiropractor, or under his / her order, is considered a covered service under Medicare.  We have handled a number of cases in recent years where the medical necessity of these manipulative treatments was never challenged by the auditing ZPIC.  Nevertheless, almost all of the otherwise-covered chiropractic claims were denied because the CMS program integrity contractor concluded that the services were improperly documented.  The primary reasons that these claims have been denied have been documentation-related.

VI.   Medicare’s Position with Respect to the Documentation of Chiropractic Services:

When providing one of these three covered services, it is essential that you carefully review Medicare’s current documentation requirements. The documentation mandates described under MACRA are not the necessarily the litmus test you should be applying.  The statutory requirements mandated under MACRA have been reviewed and interpreted by CMS so that appropriate regulations and policies implanting any applicable statutory provisions have been developed.  Additionally, as described in Section IX below, MACs are given some latitude in further defining what they require in terms of documentation.

VII.   Risks in Using a “Travel Card” if Your Practice is Subjected to a Chiropractic Audit:

Chiropractic services primarily documented with a “travel card” are likely to be denied if you are audited by a CMS program integrity contractor. Although it has been a while since we have defended a case of this type, they still occasionally arise.  For decades, travel cards have been used by chiropractors to document the care and treatment services they have provided.  Travel cards were easy and could provide an excellent picture of whether a patient was progressing.  While additional information (such as x-rays and other diagnostic studies) were also recorded in the patient’s medical record, the travel card was, and still is, utilized in a number of practices as a documentation tool.  Unfortunately, if your Medicare claims are ever audited by a ZPIC or MAC, you are likely to face a multitude of problems if you are relying on a travel card to document your services.  Unfortunately, CMS contractors (such as ZPICs and MACs)) don’t know how to read a travel card.  While there may be isolated exceptions to this statement, in the cases we have handled over the last decade, none of the auditors working for a ZPIC or for the MAC had been trained on how to read and interpret a travel card.  Additionally, most travel cards still in use don’t even come close to documenting all of the various points are set out in a MAC’s LCD.  As a result, when auditing chiropractic claims billed to Medicare, they almost always found a 100% error rate.

VIII.   Are Applicable Documentation Requirements Met if We Utilize Both a Travel Card and SOAP Note to Record the Chiropractic Services Provided?

Efforts to address the travel card problem by also documenting their services in a SOAP note format[4] have often been unsuccessful. Many experienced chiropractors love travel cards.  Their ease of use and ability to provide a quick, accurate picture of the patient’s prior care and progress are invaluable in a busy practice.  Recognizing that both government and private payors now require that a more detailed discussion of the patient’s care be documented, some chiropractors also document the care provided in a SOAP note format.  Unfortunately, in the cases we have seen, this approach typically fails to fully document the points that are now required by governmental and private payors alike.

IX.   Basic Rule for Documentation Under the Social Security Act:

Medicare’s documentation requirements are based on the fundamental obligation set out in Section 1833(e) of the Social Security Act which states that:

“no payment shall be made to any provider of services or other person under this part unless there has been furnished such information as may be necessary in order to determine the amounts due such provider or other person under this part for the period with respect to which the amounts are being paid or for any prior period.”  (emphasis added).

X.   Complying with Medicare’s Documentation Requirements:

If you intend to bill Medicare for one of the three manual manipulation services set out above, it is essential that you regularly check to ensure that your documentation practices fully comply with Medicare’s requirements. When is the last time you reviewed the documentation and coverage requirements issued applicable for your jurisdiction?  MACs have been delegated the responsibility for developing Local Coverage Determination (LCD) guidance by the Secretary for the Department of Health and Human Services (HHS) under section 1395y(a)[5] of the Social Security Act.  This responsibility also includes the promulgation of reasonable and necessary coverage determinations.[6] Therefore, in the absence of applicable National Coverage Determination (NCD) guidance,[7] MACs are responsible issuing LCD guidance.  LCDs must adhere with applicable requirements set out under the Social Security Act, federal regulations, CMS rulings, Medicare Manual Provisions, and other forms of guidance.

An overview of the coverage and documentation requirements that must be met when providing Medicare-covered chiropractic services is set out in the Section 240.1. of the Medicare Benefit Policy Manual.  Additionally, the Medicare Program Integrity Manual (PIM), mandates that any LCD that is promulgated must reflect local medical practice within the contractor’s jurisdiction and must be supported by substantial medical evidence.[8]  A CMS contractor must ensure that LCDs are consistent with applicable Medicare statutory provisions, regulations, NCDs, and other federal guidance.[9]

When developing an LCD, MACs also consider medical literature, the advice of medical societies and consultants, public comments, and comments from the Medicare provider community.[10]  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 Food and Drug Administration (FDA) approval process.[11]  Working within these parameters, it is important to recognize that the specific requirements for documenting your chiropractic claims may vary from one MAC region to another.

For instance, National Government Services (NGS) has issued an LCD titled “Chiropractic Services – L27350.” [12]   For chiropractic services to be medically indicated in the region managed by NGS:

“The patient must have a significant health problem in the form of a neuromusculoskeletal condition necessitating treatment, and the manipulative services rendered must have a direct therapeutic relationship to the patient’s condition and provide reasonable expectation of recovery or improvement of function. The patient must have a subluxation of the spine as demonstrated by x-ray or physical exam. (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 240.1.3).”

Under its section titled Limitations, NGS essentially set out the coverage requirements that must be met in order for chiropractic services to qualify for coverage and payment.  Moreover, ICD codes that support medical necessity are laid out in the guidance.  Should you code a chiropractic service with a diagnosis code that does not qualify for coverage, edits in the claims processing programs run by the MAC will automatically identify and deny the claims.

The documentation requirements set out in the LCD issued by NGS are typical of what you are likely to find in your particular region.  Nevertheless, you cannot assume that they are the same.  Check the LCD documentation requirements that have been published by your MAC.  The documentation requirements that are applied by NGS and other MACs are quite extensive.  A chiropractic audit of your Medicare claims will heavily rely on the coverage requirements set out in the LCD covering your region.

XI.   Elements to Review When Assessing Your Claims in Advance of a Medicare Chiropractic Audit:

The best time to assess your compliance with applicable Medicare medical necessity, coverage, documentation, coding and billing requirements is NOW, not after an audit has already been initiated by Medicare.  There are seven elements to be considered when assessing whether any chiropractic claims will qualify for coverage and payment.  These elements are:

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

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

Element #3No 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?

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

Element #5Fully Documented Have the services been properly and fully documented?

Element #6: Properly Coded – Were the services correctly coded?

Element #7: Properly Billed – Were the services correctly billed to Medicare?

XII.  Consultants and Device Manufacturer Representatives:

Take care when conducting an internal review of your documentation and billing practices.  Should you decide to bring in an outside consultant to assist you in preparing for a chiropractic audit, you should be prepared to apply the doctrine of “caveat emptor” (let the buyer beware).  The types of problems our clients have faced when engaging consultants generally fall within one of two categories, both of which are discussed below.

  • If it sounds too good to be true – it probably is!

Unfortunately, some consultants and device manufacturer representatives have used the challenging financial environment now facing chiropractic practices to their advantage.[13]  If a chiropractic consultant claims to have “proprietary” or “special” methods that can raise your billing revenues, or makes similar claims, be careful.

We have represented numerous chiropractic and medical practices over the years that have been led astray by coding and / or billing consultants, device manufacturers and others purporting to have identified supposed legal methods of coding and billing non-covered services so that they will, in fact, pass through the MACs edits and be paid. Years later, the chiropractic practice may learn that the practices they taught to employ are improper and do not qualify for payment.

  • Even Well-Meaning Consultants May Adversely Impact Your Practice.

Imagine for a moment that in an effort to improve your level of regulatory compliance, you have decided to engage a well-known coding and billing consultant to review your medical necessity, coverage, documentation, coding and billing practices. Assuming that the consultant is thorough, chances are that he / she will present you with a list of problems at the end of their review, you need to keep in mind that their findings are not privileged.  In other words, any reports that they issue, work papers that they prepare and actions that they take are discoverable by the government.  As a result, a list of problems identified by a coding or billing consultant can essentially be used as a roadmap for the prosecution.

You should therefore consider having a qualified health lawyer engage the consultant and direct his or her work.  Any reports would be issued to the attorney, not to you or your chiropractic practice. As a result, the work product prepared by the consultant would likely qualify and privileged and would not be discoverable by the government.  Does this mean that any errors, improper claims or other problems identified by the consultant could be “swept under the rug”?  No, not at all, but it may give the practice considerably more latitude in how they ultimately take remedial action.  Improper payments must be reported and repaid to Medicare in a timely fashion.. The problem we typically see is that non-attorneys are imprecise in how they describe a problem.  We have seen reports prepared by well-meaning consultants that are full of hyperbole and characterize certain conduct as possible fraud, when in fact, the actions that led to an overpayment were nothing more than a mere accident, error or mistake.

  • Call Liles Parker if Your Chiropractic Practice is Being Audited.

Liles Parker attorneys are not merely dedicated health lawyers.  We require that our associate attorneys study for and pass the certification requirements to be a Certified Medical Reimbursement Specialist.  Additionally, most of our attorneys and paralegals are Certified Medical Compliance Officers. Our staff has extensive experience conducting pre-audit assessments of provider documentation, coding and billing practices.  To the extent that your practice is undergoing a Medicare chiropractic audit by a UPIC, ZPIC or MAC, it isn’t too late to obtain a favorable result. Our health lawyers have extensive knowledge and experience of the Medicare appeals process, up to and including post-ALJ appeals to the Medicare Appeals Counsel and Federal Court.

Robert W. LilesRobert W. Liles Healthcare Attorney, M.S., M.B.A., J.D., has worked on the provider side in health care management, served as a federal prosecutor and now represents chiropractors and other health care providers around the country in connection with Medicare and private payor audits and investigations.  For a complementary consultation, please call us at: 1 (800) 475-1906.



[1] Chiropractic services were not separately broken out in OIG’s Medicare Fee-For-Service 2014 Improper Payment Report. https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/MedicareFeeforService2014ImproperPaymentsReport.pdf

[2] Effective January 1, 2017.

[3] These three claims are expressly covered in Local Coverage Determination (LCD) guidance issued by National Government Services (NGS) and other Medicare Administrative Contractors (MACs).  For additional information please see:  https://apps.ngsmedicare.com/lcd/LCD_L27350.htm

[4] The acronym “SOAP” is a long-standing approach utilized by a variety of medical disciplines when documenting their evaluation of a patient and the plan of care to be followed.  SOAP stands for Subjective, Objective, Assessment, and Plan.

[5] See 42 U.S.C. § 1395h.

[6] See 42 U.S.C. § 1395ff(f)(2)(B).

[7] 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).”[7]

[8] See 64 Fed. Reg. 22,619, 22,621 (Apr. 27, 1999) (stating that the purpose of local medical review policies is to explain to the public and the medical community “when an item or service will be considered ‘reasonable and necessary’ and thus eligible for coverage under the Medicare statute”); PIM Ch.1, §§ 2.1.B,, 2.3.2.

[9] PIM, supra note 17, at § 2.1.B.

[10] PIM, supra note 17, at §1.2.

[11] See Abbott Laboratories, at 29.

[12] https://apps.ngsmedicare.com/lcd/LCD_L27350.htm

[13] Unscrupulous business consultants are nothing new. Almost 20 years ago, HHS, Office of Inspector General (OIG) recognized this problem and issued guidance to providers outlining its concerns. In June 2001, OIG issued a “Special Advisory” titled “Practices of Business Consultants” which detailed the agency’s concerns in this regard.  As OIG noted, health care providers and suppliers need to be wary of potential:

  • Illegal or Misleading Representations.
  • Promises and Guarantees.
  • Encouraging Abusive Practices.
  • Discouraging Compliance Efforts.

CMS Awards Zone 6 ZPIC Contract to SafeGuard Services

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Audit(August 15, 2015): The Centers for Medicare and Medicaid Services (CMS) has awarded the contract for Zone Program Integrity Contractor (ZPIC) services for Zone 6 to SafeGuard Services, LLC. Zone 6 encompasses Maryland, Delaware, Washington, D.C., Pennsylvania, New Jersey, New York, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire, and Maine. SafeGuard is the current program safeguard contractor (PSC) in this jurisdiction, and its functions as a ZPIC will be similar to its duties as a PSC. SafeGuard is also the ZPIC for Zone 1 (California, Nevada, and Hawaii) and Zone 7 (Florida).

As the new Zone 6 ZPIC, SafeGuard will be responsible for investigating suspected waste, fraud, and abuse among Medicare providers. ZPICs have the authority to conduct unannounced, onsite inspections of providers’ facilities, perform pre-payment and post-payment reviews of claims, impose payment suspensions, recommend to CMS that a provider’s billing privileges be revoked, and refer providers to law enforcement for investigation. In our experience, SafeGuard is among the most aggressive ZPICs in the country.

If you receive correspondence from SafeGuard Services or any other ZPIC, we strongly recommend that you contact an experienced health care attorney as soon as possible. You should never assume that ZPIC audits or inspections are merely “routine.”

Liles Parker attorneys assist all types of providers across the country with responses to Zone 6 ZPIC investigations, audits, and other administrative actions. If you have questions or concerns about a ZPIC investigation, please contact our office for a free consultation.

Liles Parker has offices in Washington DC, Houston TX, McAllen TX and Baton Rouge LA.  Our attorneys represent health care professionals around the country in connection with ZPIC audits of Medicare claims, licensure matters and transactional projects.  Need assistance?  For a free consultation, please call: 1 (800) 475-1906.


Health Integrity Educational Letter Sent to Home Health Agencies in Texas and Oklahoma

November 8, 2013 by  
Filed under Home Health & Hospice

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Has your home health agency received a Health Integrity educational letter?(November 8, 2013):  Health Integrity serves as the Zone Program Integrity Contractor (ZPIC) for Zone 4.  This zone is comprised of Texas, Oklahoma, New Mexico and Colorado.  Generally, Health Integrity has been assigned responsibility for handling Medicare Part A, Medicare Part B, and Durable Medical Equipment (DME) claims.  Health Integrity has been especially aggressive in its review and audit of home health care claims submitted to Medicare for payment by providers within Zone 4.  While prior enforcement efforts have typically included postpayment audits and placing problem providers on suspension, recent enforcement efforts have tended to focus on actions designed to prevent the submission of improper claims in the first place, such as placing a provider on prepayment review. Most recently, home health agencies in Texas and Oklahoma received a Health Integrity educational letter advising targeted specific home health agencies that Medicare is concerned about certain practices of home health providers.  As the letter detailed, home health agencies receiving these letter have been “flagged” by the contractor as:

“[S]ubmitting claims and/or billing patterns indicative of higher risk of aberrant practices in comparison to expectations, standard thresholds, and/or established norms.”

As the Health Integrity educational letter further sets out, there are a number of specific Medicare medical necessity, documentation and other regulatory concerns that are currently under review by the ZPIC.

 I.  Nature of Medicare Concerns Discussed in the Health Integrity Educational Letter:

The various challenges faced by home health agencies may vary from one to agency to another.  Nevertheless, there are a handful of “general” risks facing all home health agencies that are outlined in Health Integrity’s November 1st letter.  These areas of recurring concern include:   

A.    Is the Patient Truly Confined to His / Her Home?

As Health Integrity’s letter states, under Chapter 7 § 30.1 of the Medicare Benefit Policy Manual, a patient’s medical records must accurately reflect that the patient qualified as “homebound” during the specific period under review.  Denials based on lack of homebound status are not new – home health agencies should have a solid handle on these requirements by now.  Having said that, it isn’t merely enough for a patient to merely qualify as homebound – you and your staff need to fully and accurately document the specific clinical facts which support each patient’s homebound status.  Detail is important.  Is the patient ever absent from the home?  If so, what is the reason for the absence?  How long were gone?  In consideration of any absences, does the patient continue to qualify as homebound?  All of these are important questions to be asked.

Importantly, as of November 19, 2013, the Centers for Medicare and Medicaid Services (CMS) will require Medicare beneficiaries to meet two sets of criteria before their home health agency even considers whether they have an ordinary inability to leave home.  As MLN  Matters Number: MM8444 provides:

An individual shall be considered “confined to the home” (homebound) if the following two criteria are met:


The patient must either:

Because of illness or injury, need the aid of supportive devices such as crutches, canes, wheelchairs, and walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence


Have a condition such that leaving his or her home is medically contraindicated.

If the patient meets one of the criteria in Criteria-One, then the patient must ALSO meet two additional requirements defined in Criteria-Two below.


There must exist a normal inability to leave home;


Leaving home must require a considerable and taxing effort.

B.    Are Timely, Valid Physician Orders in the Record Which Support the Care Provided?

How was each patient referred to your home health agency for care and treatment?  What are the qualifications of the referring physician?  Who signed the patient’s “Plan of Care”? When was it received back from the physician? What types of treatment were ordered by the referring physician?  Were any verbal orders documented in the record?  Have all Orders been signed and dated in a timely fashion?  Were all supplemental physicians’ orders signed and dated before the claim was billed to Medicare? If so, identify the orders and list the dates they were signed. Were the services billed properly?

C.    Is there a Need for Skilled Care?      

Documenting a patient’s need for and receipt of “skilled care” has been a perennial problem for many home health agencies.  In most instances, we have found that the agency’s clinical staff has not been properly trained to document skilled care issues. What specific skilled services (e.g. injections, wound care, catheter changes, gait training) were provided to the patient during a particular episode?  Ultimately, home health agencies should re-familiarize themselves with Chapter 7 §§ 40.1, 40.2 of the Medicare Benefit Policy Manual.

D.    Are “Length of Stay” Issues to be Considered?

Data mining is enormously helpful to the government in identifying home health providers whose business and / or clinical practices essentially make them an “outlier” when compared to the practices of their peers.  A patient’s length of stay on service is one of the most common comparisons used by ZPICs when making targeting decisions.  Provide a detailed rationale as to why the patient was admitted to / recertified for home health services at the beginning of this episode.

II.   Why is Our Home Health Agency Receiving a Health Integrity Educational Letter?

Not all home health agencies in Texas, Oklahoma and the rest of Zone 4 received a copy of Health Integrity’s “Educational Letter” dated November 1, 2013.  If your home health agency  received a copy of Health Integrity’s letter, it could be based on the fact that your agency has previously received a number of ADR’s, been placed on prepayment review or been subjected to a prior review or one type or another. Alternatively, your home health agency may have been sent Health Integrity’s letter based solely on the ZPIC’s data mining findings.  Your agency may be an outlier in terms of its business or clinical statistics.  As such, your agency has now been “flagged” by the ZPIC.

In any event, it is extremely important for you to recognize the importance of Health Integrity’s Educational Letter. Pursuant to the Medicare Modernization Act of 2003, 42 U.S.C. § 1395ddd(f)(3), (§ 1893(f)(3) of the Act):

A Medicare contractor may not use extrapolation to determine overpayment amounts to be recovered by recoupment, offset, or otherwise unless the Secretary determines the –

(A)  there is a sustained or high level of payment error; or

(B)  documented educational intervention has failed to correct the payment error.

The CMS Medicare Program Integrity Manual § 3,10.1.4 provides specific guidance on when statistical sampling may be used. As the section states:

“The PSC BI units and the contractor MR units shall use statistical sampling when it has been determined that a sustained or high level of payment error exists, or where documented educational intervention has failed to correct the payment error.”

Both fundamental fairness and a plain reading of both the underlying statute and CMS guidelines require that Medicare overpayment auditors (including Health Integrity) have justification before beginning a statistical sampling of a provider’s Medicare claims.  If the auditors could select anyone for audit without cause, the administrative burden on providers would be extraordinarily high.  Therefore, the justification for a high error rate or failed education must be based on evidence that exists before the sample is selected.  In light of the “Educational Letters” recently sent to home health providers by Health Integrity, the ZPIC will now be free to seek extrapolated damages since they can now allege that continuing problems were not corrected through educational intervention.

III.  How Should Our Home Health Agency Respond to Health Integrity Educational Letter?

If your agency has received a Health Integrity Educational Letter, one option would be for you to just take the information in stride, remind your staff of their regulatory obligations and hope for the best.  A more affirmative approach would be to review your practices and ensure that the concerns set out in Health Integrity’s letter are not problems in your organization.  Should you find that deficiencies are present, remedial action should immediately be taken and any overpayments must be immediately refunded to Medicare.  While the specific approach taken by your home health agency in responding to Health Integrity’s concerns will differ from one organization to another, we believe that it is imperative that all recipients review their practices to help better ensure that Medicare’s regulatory requirements are being met.

Healthcare LawyerRobert W. Liles serves as Managing Partner at Liles Parker, Attorneys and Counselors at Law.  Our firm represents home health agencies and other health care providers around the country in connection with ZPIC enforcement actions, prepayment reviews, postpayment audits, and a wide range of other regulatory matters.  Should you have any questions or concerns regarding your home health agency, please give us a call for a free consultation: 1 (800) 475-1906

Prepayment Reviews and Postpayment Audits are Increasing in Frequency — New Guidance has Been Issued to ZPICs

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RACs and ZPICs are Conducting Prepayment Audits

Prepayment Audits are here to Stay. Is Your Practice Ready?

(September 3, 2013):  On August 21, 2013, the Centers for Medicare & Medicaid Services (CMS) released Transmittal 485/Change Request 8079. This transmittal imposes an obligation on Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs) to notify a health care provider prior to placing them on the provider on prepayment or postpayment review.

There are four major requirements for the notice:

  1. 1.  PSCs and ZPIC must notify providers of a provider-specific review by individual written notice prior to beginning the review.
  2. 2.  The written notice must delineate whether the review is to occur on a prepayment or postpayment basis.
  3. 3.  The contractors are required to maintain a copy of the letter and the date it was mailed.
  4. 4.  Finally, the notification must be mailed the same day the edit request is forwarded to the Medicare Administrative Contractor (MAC).

Benefits of receiving prior notice of a prepayment and/or postpayment review include:

  1. Advance Notice Allows Additional Time for a Health Care Provider to Prepare:   This notice requirement will give a health care provider more time to prepare for review and to determine what kind of assistance they may need in addressing the review, such as outside legal counsel.  As any health care provider who has undergone a prepayment review or a postpayment audit can attest, responding to onsite visits and documentation requests can be very time consuming. This is particularly true when supporting medical documentation is incomplete.  In such a case, you may require affidavits from the rendering provider or even outreach to a network of health care providers involved in the care of a single beneficiary.  Similarly, if you are dealing with documentation that is alleged to be illegible, you may need to which may require transcription or affidavits.

  2. CMS’ Template Letter to be Used by Contractors Leaves Little or No Room for Doubt:  Fortunately, CMS has drafted a template letter for its ZPIC and PSC contractors that is to be sent to providers in order to properly provide them with the mandated notice (see exhibit 45).  We believe this form letter is helpful because (a) health care providers will immediately understand the purpose and implication of the letter upon receipt; and (b) health care providers will know if a review is initiated without the provision of this letter, thereby invalidating the review.

Now, more than ever, it is imperative that you fully understand and comply with your obligations as participating provider in the Medicare program.  Prepayment reviews and postpayment audits are increasing in frequency and are being conducted based on data mining.   Depending on how you “slice and dice” the data, virtually any health care provider can appear to be an outlier.  All health care providers should carefully review their coding and billing practices to ensure that they are fully compliant with applicable statutory and regulatory requirements.  Do your services meet Medicare’s medical necessity requirements?  Are your documentation practices consistent with applicable NCD, LCD, LMRP and Medicare Benefit Policy Manual requirements?  Are you checking to ensure that Medicare’s coverage requirements are being met?  Are your coding and billing practices in full compliance with applicable regulations and requirements?  Finally, are you engaging in any business practices that might otherwise “taint” an otherwise payable claim?  If you cannot answer these questions, you will not be prepared if your practice is placed or prepayment review or subjected to a postpayment audit.

Healthcare LawyerRobert W. Liles, JD, MBA, MS, serves as Managing Partner at the health law firm of Liles Parker.  Our attorneys represent physicians, group practices, home health agencies, hospices and a wide variety of other health care providers around the country.  Please give us a call for a free consultation regarding your situation.  We can be reached at: 1 (800) 475-1906.

The Texas Medical Board Remains Busy Due to High Number of Complaints Filed in 2012

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Medical Board(February 7, 2013):  The Texas Medical Board (Medical Board) was quite busy in 2012.  While the number of disciplinary action taken had dropped in some categories, it rose in others.  In fact, the overall number of complaints filed with the Medical Board was the 2nd highest in the last decade. The Medical Board’s workload numbers for 2012 are now in – a total of 7550 complaints were filed by complainants with the Medical Board against physicians last year.  Notably, this was second highest number of complaints filed in the last decade, only surpassed by the number of complaints filed with the Texas Medical Board in 2011.  Notably, a total of 755 “Informal Settlement Conferences” were conducted by panels assigned by the Medical Board, 85 of which were later advanced to the formal stage, with cases being filed with the State Office of Administrative Hearings (SOAH).  What was the result of this heightened adminstrative activity?  An overview of the disciplinary actions taken is set out below.

I.  Temporary Suspension Actions Were Way Down From 2011:

While the number of disciplinary actions taken against physicians was relatively stable (327) when compared to previous years, the number of “Temporary Suspensions” assessed by the Medical Board was only about a third of the suspension actions taken in 2011 (11 in 2012 versus 32 in 2011).

II.  Probation Placement Actions Were the Highest Number in the Last Decade:  

Notably, 917 physicians were placed on “Probation” by the Medical Board in 2012.  This was the highest number of probation actions taken in the last decade.

III.  Why Are the Number of Complaints Filed with the Medical Board Continuing to Rise?             

At the outset, it is important to keep in mind that Medical Board complaints can be generated in a number of ways. In recent years, the number of complaints filed by disgruntled or unhappy patients has continued to rise. Two of the primary reasons for this increase include:

  • Physicians are treating an educated, consumer driven public.  Now, perhaps more than ever before, patients know their “rights” and will not hesitate to complain if they believe that their concerns have been ignored, their care has been substandard, or that they have been treated unprofessionally by a physician or other licensed clinician.
  • Filing a complaint is as easy as filling out a form.  Moreover, it can literally done online, with relatively little effort on the part of the complainant.  With the advent of the internet, it is easier than ever for a patient (or a member of their family) to file a complaint with Medical Board.  Complaints may now be filed online.

The three primary reasons cited in a complaint against a physician include:

“1. Practice of Medicine Inconsistent with public health and welfare; unprofessional conduct which may endanger the public;

2. Non-therapeutic prescribing/administering of a drug or treatment; and

3. Inability to practice medicine by reason of mental or physical impairment (alcohol or chemical abuse, mental or physical condition).”

Importantly, patients and their families are not the only parties to file complaints with Medical Board against their physician. We have represented a number of physicians in cases brought by another licensee, where it is alleged that a physician has engaged in unprofessional conduct which allegedly triggers the complainant’s statutory obligation to file a complaint against their fellow clinician. While a number of these cases are undoubtedly filed in good faith, we have seen the complaint system “used like a club” by one physician against another because of a personal grudge, a business dispute or even a failed romance.

Finally, physicians need to keep in mind that both Medicare contractors (such as Zone Program Integrity Contractors (ZPICs) and private insurance payor Special Investigative Units (SIUs) are now actively filing complaints with Medical Boards around the country due to payor billing concerns (such as alleged upcoding, double-billing, billing for services not rendered and billing for medically unnecessary services).  In some states, the reverse has occurred.  When a Medical Board has found that a physician has failed to provide adequate supervision or may have engaged in improperly billing, referrals have been made from the Medical Board to the ZPIC in their state.  This often results in a new round of billing reviews and audits by ZPICs (and later SIUs) of the physician’s billing practices.

IV. What Can You Do to Reduce the Likelihood of a Medical Board Complaint?

To the reduce the likelihood of a Medical Board complaint, a physician needs to ensure that he/she is readily accessible to patients and their families.  Moreover, let your patients know that you are interested in hearing their views regarding the quality of care provided, the administrative efficiency of your staff, and any concerns which might arise in connection with the cost of care.  Steps to take would include, but are not limited to:

Listen to your patients.  Many complaints filed with the Medical Board are the result of bad communication practices between a physician and his / her patient.   A patient with a complaint wants an opportunity to share his/her concerns with you.  Listen to your unhappy patients.  Are their grievances legitimate?  You will undoubtedly find that some of their issues are, in fact, valid.  Use this opportunity to improve your organization.  Moreover, by showing your interest in the patient’s complaints, you will serve as a role model for your staff.

Follow-up with your patients. Return their calls if an issue has not been resolved.  Be responsive.  The business of medicine is getting more and more competitive each year.  By resolving a patient’s concerns, you will likely keep the patient as a client and may avoid alienating the patient and giving the patient a reason to still recommend you to their peers.

Don’t be afraid to set up a Complaint Hotline or E-mail Address for patients to lodge any concerns that they might have. Let patients advise you of their concerns rather than feel that they have no choice but to go straight to the Medical Board with their concerns.

Patients often don’t know how to read an “Explanation of Benefits” (EOB) form sent to them by Medicare or their private insurance company. This confusion may lead a patient to believe that your charges are incorrect or that certain billed services were not rendered. Take the time to have someone on your administrative staff explain to patients how charges are likely to show up on their EOB.

Importantly, a number of complaints filed against a physician are the result of statements, improper actions or the failure to take an action by someone on your staff. In many cases, the complaint is caused by your lowest-paid, least trained staff member – your receptionist.  We have worked on cases where the staff member failed to mail out a patient’s lab results in a timely fashion, ultimately resulting in a Medical Board complaint.  Our attorneys have seen cases where an administrative staff member accidentally switched two sets of medical records, resulting in breaches of Personal Health Information (PHI).  The bottom line is this regard is relatively simple – train each and every member of your staff and ensure that they know their obligations and the adhere to practice policies and regulatory requirements.

Finally, develop and implement an effective Compliance Plan. Identify potential weaknesses in your organization and take remedial steps to fix them.

Healthcare LawyerRobert W. Liles, JD, serves as Managing Partner at Liles Parker.  Robert and a number of other firm attorneys have represented physicians in a number of State Medical Board disciplinary investigations and actions around the country.  Already represented? We are more than happy to work with your local counsel and assist him / her in responding to any inquiry or investigation initiated against you by your State Medical Board.  Questions?  Please feel free to call Robert for a free consultation.  He can be reached at: 1 (800) 475-1906.

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

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

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

I.  Overview of the DME Back Brace Reimbusement Environment :  

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

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

To reduce pain by restricting mobility of the trunk;

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

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

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

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

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

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

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

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

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

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

II.  Possible Future DME Claims Audits of Back Braces:

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

III.   Final Remarks:

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

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

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

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

[1] Local Coverage Determination (LCD) for Spinal Orthoses: TLSO and LSO (L11470), January 1, 2010. This is the LCD for one of the four claims processors for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). The other three claims processors have identical LCDs. LCD L11470 was accessed at http://www.medicarenhic.com/dme/medical_review/mr_lcds/mr_lcd_current/L11470_2010-01-01_PA_2010-07.pdf on October 5, 2011.

Medicare Exclusion Screening is Essential to Compliance – Failure to Properly Screen Can be Costly

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(January 14, 2013):  In recent years, we have represented physicians and a range of other health care providers in administrative litigation over “exclusion” related enforcement actions. One of the most severe sanctions available under the Social Security Act stems from the authority to exclude individuals and entities from participation in federal health care programs. Medicare Exclusion is essentially the “nuclear bomb” of administrative sanctions. A provider who is excluded from participation in federal health benefits programs is not merely unable to bill Medicare himself—for all practical purposes he cannot even be employed by a participating provider, in nearly any capacity. The purpose of this article is to examine the government’s authority to exclude a provider from participation and to detail the various bases for taking such an action.

I.   Medicare Exclusion Actions Can Arise in a Number of Ways:

Exclusions from participation in federal health benefits programs are mandatory under certain circumstances and permissive in others. The Department of Health and Human Services first began “excluding” certain individuals and entities from participation in the Medicare program in 1977.  This responsibility was subsequently transferred to HHS’ Office of Inspector General (HHS-OIG) in 1981.  As the below chart reflects, the failure to properly screen for “exclusion” can be quite costly for charitable and for-profit health care organization.

A retrospective review of the CMP actions taken by HHS-OIG against health care providers and organizations as a result of their employment of one or more excluded individuals or parties highlights the government’s continuing interest in these cases.  As these case write-ups reflect, the “bar” to be met by providers is relatively high.  HHS-OIG won’t hesitate to assess significant civil monetary penalties if a health care provider knew or should have known  that one its hires had been “excluded” from participation in Medicare, Medicaid and / or other federal health care program.

II.   List of 2012 CMP Sanctions for the Employment of Excluded Persons:




Amount of CMP    AssessedHHS-OIG  Comments






“The OIG alleged that [Hospital] employed an individual that it knew or should have   known was excluded from participation in Federal health care programs.”


Hospital & Cardiology Practice



“The OIG alleged that {Hospital] and   [Cardiology Practice] employed an individual that they knew or should have known was excluded from participation in Federal health care programs.


Physician d/b/a Physician’s Medical Clinic



“The OIG alleged that Physician employed an individual that he knew or should have   known was excluded from participation in Federal health care programs.”


Home Health Agency



The OIG alleged that [Home Health Agency] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.”





“The OIG alleged that [Hospital] employed an individual that it knew or should have   known was excluded from participation in Federal health care programs.”





“The OIG alleged that [Hospital] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.”


Treatment Center



“The OIG alleged that [Treatment Center] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.”


Neighborhood Health Clinic



“The OIG alleged that [Neighborhood Health Clinic] employed an individual that it knew or should have known was excluded   from participation in Federal health care programs.”





“The OIG alleged that [Hospital] employed an individual that it knew or should have   known was excluded from participation in Federal health care programs.”





“The OIG alleged that [Hospital] employed an individual that it knew or should have   known was excluded from participation in Federal health care programs.”


Surgical Services



After it self-disclosed conduct to the OIG, [Surgical Services] agreed to pay for allegedly violating the Civil Monetary Penalties Law. The OIG alleged that CSS employed an individual that it knew or should have known was excluded from participation in Federal   health care programs.





The OIG alleged that [Hospital] employed an individual that it knew or should   have known was excluded from participation in Federal health care programs.


Community Clinic



The OIG alleged that [Community Clinic] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.



Does not State


The OIG alleged that [Physician] employed an individual that he knew or should   have known was excluded from participation in Federal health care programs.





The OIG alleged that [Hospice] employed an individual that it knew or should   have known was excluded from participation in Federal health care programs.


Home Health Agency

Does Not State


The OIG alleged   that Cooperative employed an individual that it knew or should have known was   excluded from participation in Federal health care programs.


Retail Store with Pharmacy

Does not State


The OIG alleged that [Retail Store with Pharmacy] employed an individual that it knew or should   have known was excluded from participation in Federal health care programs.



Registered Pharmacist



The OIG alleged that [Pharmacist] employed an individual that it knew or should   have known was excluded from participation in Federal health care programs.


Community Hospital

Does not State


The OIG alleged that [Community Hospital] employed an individual that it knew or should have known was excluded from   participation in Federal health care programs.


Eye Surgery Practice



The OIG alleged that [Eye Surgery Practice] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.


Inpatient Treatment Clinic

Does not State


The OIG alleged that [Inpatient Treatment Clinic] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.


Nursing Home Management



“The OIG alleged that [Nursing Home Management] employed an individual that it knew or should have known was excluded from participation in Federal health care   programs.


Podiatry Center

Does Not State


“The OIG alleged that [Podiatry Clinic] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.”


Nursing Home

Does Not State


“The OIG alleged that [Nursing Home] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.”


Medical Center



“The OIG alleged that [Medical Center] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.”


Rehabilitation Center

Does not State


“The OIG alleged that [Rehabilitation Center] employed an individual that it knew or should have known was excluded from participation in Federal health care   programs.”


County Health Center

Does Not State


“The OIG alleged that [County Health Center] employed an individual that it knew or should have known was excluded from participation in Federal health care programs.”





“The OIG alleged that [Durable Medical Equipment Supplier] employed an individual that it knew or should have known was excluded from participation in Federal   health care programs.”

As the above chart reflects, most of the health care providers penalized in 2012 for employing excluded individuals self-disclosed their violation to HHS-OIG.

As review of prior years will confirm, HHS-OIG takes a dim view on health care providers who fail to voluntarily self-disclose such a violation.  For example, in 2010, HHS-OIG investigated a nursing home for possibly employing an excluded party.  The case was referred to HHS-OIG by the state Medicaid Fraud Control Unit (MFCU).  Upon review, HHS-OIG found that the nursing home was impermissibly employing seven individuals who had been excluded from participation in federal health care programs.  While at the nursing home, these individuals were alleged to have furnished items and services for which the provider was paid by federal health care programs.  The provider was required to pay $376,432 to resolve these allegations.  As Lewis Morris, Chief Counsel to the Office of Inspector General stated:

Providers self-disclosing such violations will ultimately pay lower settlement amounts.  .  .  But in cases initiated by the government — such as this one — providers will, as a matter of course, be required to pay more to resolve the matter.

As Mr. Morris further noted: 

This case illustrates yet again that HHS-OIG will pursue CMPs when providers have employed an excluded person for the furnishing of items or services paid for by federal health care programs.

This enforcement example illustrates a number of important lessons for all health care providers who participate in federal health benefits programs, regardless of size.  Several of these lessons include discussed below.

No mention of actual fraud or overpayment was mentioned in this case.  Nevertheless, the employment of excluded individuals was found to be quite serious by HHS-OIG: HHS-OIG won’t hesitate to pursue civil monetary penalties against a provider who employs excluded individuals, despite the fact that no mention is made of any wrongful billings.  Regular screenings of your employees should be made to ensure that none of your employees have been excluded from participation.

The government is serious about self-disclosing problems:  HHS-OIG’s Chief Counsel went out of his way to point out that provider’s who self-disclose will ultimately pay a lower amount of damages to the government.  While we recognize the government’s preference in this regard, should you identify a problem, you should contact legal counsel before making a self-disclosure.  HHS-OIG’s voluntary disclosure protocol has a number of requirements that should be fully assessed prior to deciding to make a disclosure under the program.  To be clear, if you owe money to the government, you must pay it back.  The issue to be resolved is how to go about returning any monies to which you are not entitled.  Depending on the circumstances, a provider may be better off working with their Medicare Administrative Contractor (MAC) to resolve a problem.   In other cases, HHS-OIG’s protocol may be the best option.  Every situation is different and should be carefully assessed before action is taken.

Federal and state law enforcement teams are coordinating their findings — Medicare exclusion cases WILL ultimately be disclosed:   Notably, the violations in this nursing home case were first identified by a state MFCU who then contacted HHS-OIG.  Similarly, we are seeing state Medical Boards advising the Zone Program Integrity Contractor (ZPIC) of actions they are taking against licensed health care providers.  In several cases, the state Medical Board found that the provider was not providing adequate supervision over subordinate Nurse Practitioners and Physician Assistants.  The ZPIC has then used this as a basis to argue that the claims did not qualify for Medicare coverage.

III.  Medicare Exclusion Screening Can Take to Reduce Your Level of Risk:

“Medicare exclusion screening” is perhaps the single easiest compliance task which may be completed by a Compliance Officer.  Nevertheless, many small-to-mid sized providers are not even aware of this requirement.  Of those which are aware, only a fraction bother to check the HHS-OIG, state and GSA databases for exclusion and debarment. Exclusion monitoring must become (if it isn’t already) an integral part of your effective Compliance Program.  Some final thoughts for your consideration include:

Medicare exclusion screening tasks are easy and inexpensive: It takes very little effort for a provider to screen current and prospective employees against HHS-OIG’s list of excluded parties and the General Services Administration’s list of parties who have been debarred from participation in federal contracts.  While the state of New York started the trend, a number of other state Medicaid offices also now require that employees should be cleared through the state Medicaid exclusion databases every month.  This approach is especially prudent in light of the fact that a provider’s failure to screen employees can be quite costly.

When you are conducting a search of federal and state exclusion databases, take care not to overly restrict your search terms.  Once you have cleared an individual’s first name, don’t stop there.  You should also conduct a search of possible nicknames (e.g. “Joe” for “Joseph”).  Finally, try searching using the first initial only of the individual’s first name.  When conducting a search, you should also ensure that you have included combinations of potential first names and any and all possible last names or aliases by which the individual has been known. Be sure and ask the individual to advise you of any and all former names or aliases. Are you also conducting criminal background checks? If so, be sure and review the background check for any other possible aliases or previous last names which may be listed.

When entering into new contracts require that all contractors affirm that they and their employees have not been excluded or debarred from any federal program.  Rather than focusing solely on employees, look at your contractual business relationships as well.

Ensure that your policy and procedures manual has been updated to include this issue.  All employees should be advised that they have an affirmative obligation to tell you if they have been excluded or debarred from a federal program.

 Take care when employing an individual who was allegedly previously excluded from participation in the Medicare program.  In some cases, an individual may have been excluded many years ago and the period of Medicare Exclusion would have theoretically been completed. Keep in mind — exclusions are NOT automatically lifted. If they say that they are no longer excluded, require that they provide you written confirmation of that from HHS-OIG or from their state MFCU.

IV.      Areas of Special Concern:

In summary, Compliance Officers must continually monitor the Medicare Exclusion status of not only applicants for employment, but also existing personnel.  We strongly encourage you to be exception to the rule – screen your applicants, employees and contractors for Medicare Exclusion and debarment on a regular, consistent basis – and document your efforts.

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

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