Beware of HHA Compliance Risks in TX and OK

March 19, 2012 by  
Filed under ZPIC Audits

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I.  HHA Compliance Background:

texas-flagOver the past few weeks, several important events and issuances have occurred which should have home health agencies (HHA) in Texas, Oklahoma and the rest of the country rethinking the adequacy of their existing HHA compliance efforts. While the practices of many home health agencies have long been a concern of the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the Centers for Medicare & Medicaid Services (CMS), the government’s apprehension appears to be at an all-time high.  Last week, HHS-OIG issued yet another report recommending that CMS further tighten its oversight of home health providers through the implementation of additional sanctions for non-compliant home health agencies.  Notably, HHS-OIG’s report has been issued on the heels of a significant home health fraud investigation centered in the Dallas, Texas area which was reportedly initiated by Health Integrity, the Zone Program Integrity Contractor (ZPIC) covering Texas and Oklahoma.

II.  HHS-OIG’s Home Health Report of Fraud and Abuse:

On March 2, 2012, HHS-OIG issued a report entitled, “Intermediate Sanctions for Noncompliant Home Health Agencies” which examined CMS’ ongoing efforts to identify and sanction home health agencies that were non-compliant with Medicare’s applicable conditions of participation. As detailed in the report, CMS (formerly known as the Health Care Financing Administration (HCFA)) was directed in 1987 to develop and implement “intermediate sanctions” against home health providers violating Medicare rules. These sanctions were anticipated to include civil monetary penalties (CMPs), Medicare payment suspension, and even appointment of temporary management of a noncompliant agency. Initially required to implement these sanctions under the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987), CMS issued a Notice of Proposed Rulemaking in 1991, but subsequently withdrew this notice in 2000.

CMS has stated that it anticipates publishing new proposed rules in September 2012 addressing these “intermediate sanctions.”  Frankly, home health providers and their associates cannot continue down the current path.  While both CMS and HHS-OIG recognize the important role played by home health agencies in the care and treatment of homebound Medicare beneficiaries, the government has made it abundantly clear that participating providers must fully comply with applicable medical necessity, coverage, documentation, coding and billing rules.  Non-compliant providers are being immediately suspended and / or excluded from participating in the Medicare program.  Moreover, health care providers who engage in nefarious activities are being aggressively prosecuted.

III.  Health Integrity’s Audit of Home Health Agencies:

Since winning the contract in 2009, Health Integrity, the Zone 4 ZPIC covering Texas, Oklahoma, New Mexico and Colorado, has conducted a wide variety of Medicare post-payment audits throughout Zone 4.  To their credit, Health Integrity’s audits have not been limited to merely large metropolitan areas.  Rather, the ZPIC is in the process of “leaving no stone unturned,” conducting audits and reviews of home health agencies throughout Zone 4, regardless of size, revenues and / or location.

To be clear, Health Integrity’s audits have not been limited to only home health services.  The ZPIC has actively reviewed the operational, coding and billing practices of a wide variety of Part B health care providers in Zone 4.  Nevertheless, the ZPIC does appear to have redoubled its audits of home health agencies in Texas and Oklahoma who appear to be outliers through data-mining activities. After reviewing the homebound status of both prior and current patients, clinicians working for Health Integrity have been thoroughly assessing the care and treatment provided by billing home health agencies.  After carefully assessing the medical records forwarded by the home health agency, in many cases Health Integrity has concluded that it is appropriate to seek extrapolated damages based on the post-payment audit conducted.

IV.  Health Integrity is on the Front Line of Home Health Fraud Identification:

Despite the fact that most Texas home health agencies are doing their best to operate within the four corners of the law, there are still a number of providers who are continuing to engage in wrongdoing. Texas home health providers recently received significant negative media coverage for fraudulent and abusive billing practices allegedly committed by agencies within their ranks. As you may have heard, just last week a physician and several home health agency “recruiters” in the Dallas-Fort Worth area were indicted in the largest Medicare fraud scheme in history, allegedly totaling nearly $375 million for home health services either not needed or never provided. Additionally, it was noted that over 75 home health agencies to whom referrals were made have also been implicated in the wrongdoing.  Such an enormous scheme only further demonstrates the fact that fraudulent activity in home health services is continuing, despite the fact that mostTexashome health providers are well-meaning organizations, trying in good faith to provide medically necessary services to our nation’s most sick and disabled. Nevertheless, such accusations only increase suspicion and scrutiny of the entire home health industry in this region.

In a separate incident, a news reporter recently had a healthy, yet elderly, woman pose undercover as a potential home health patient when visiting a physician in South Texas.  The reporter noted tired-nursethat the healthy patient was allegedly improperly diagnosed and certified for home health services. While some providers may be concerned about the use of patients in undercover sting operations such as this, the fact is that improper conduct is occurring, at both the physician referral and the home health agency level, clearly illustrating why law enforcement is concerned that fraud is continuing to occur in this area of practice. In light of these and similar cases, it is clear why Health Integrity appears to be “ramping up” its reviews of home health providers throughout Texas and Oklahoma.

V.  What HHA Compliance Steps Can a Provider Take to Reduce Risk?

To be clear, there is no proverbial “silver bullet” that can be used by a home health agency to avoid the scrutiny of Health Integrity and / or law enforcement.  Every home health agency in Texas and Oklahoma should expect to be audited.  Rather than wait for such an eventuality, home health agencies should affirmatively review their operations, coding and billing practices to ensure that their practices squarely fall within the rules.  Although not all-inclusive, the following five steps can serve as an excellent starting point when preparing for an audit of your agency’s home health claims:

Recommendation #1Don’t assume that your current practices are compliant, check them out! Conduct a “gap” analysis and implement an effective HHA Compliance Plan.  While most, if not all, home health agencies will profess to have an HHA Compliance Plan already in place, the real question is whether the existing plan is “effective,” or merely a sample that was obtained by the agency in the past.  No two home health agencies are alike.  As a first step, a home health provider needs to engage qualified legal counsel to advise the organization on whether the agency is properly operating at a baseline level of HHA compliance.  If not, remedial steps must be taken so that the agency can move forward in a compliant fashion.

As you will recall, Section 6401 of the Affordable Care Act (ACA) (generally referred to as the “Health Care Reform Act”) states, “. . . a provider of medical or other items or services or supplier within a particular industry, sector or category shall, as a condition of enrollment in the program under this Title . . . establish a compliance program.”  Although HHS-OIG has not announced the deadline for home health agencies to meet this requirement, it is only a matter of time before all health care providers who choose to participate in the Medicare program must have an effective HHA Compliance Plan in place in order to remain a participating provider.

Recommendation #2: As you review your claims, you should abide by the following:  First, “If it doesn’t belong to you, give it back.”  Conversely, “If you don’t owe the money, don’t throw in the towel.”  One of the attorneys in our firm is regularly asked to speak at provider conventions around the country.  For years, he has told providers “If it doesn’t belong to you, give it back.”  This simple concept covers a lot of ground when it comes to Medicare overpayments and is the single best policy you can employ as a good corporate citizen.

Audit-Checklist-red-penRecommendation #3Don’t merely focus on your claims.  Are your business practices fully compliant with applicable laws and regulations?  Health Integrity and other ZPICs serve an essential role in identifying overpayments and other wrongdoing by health care providers. While an audit will almost always include a request for medical records, you should keep in mind that Health Integrity will not merely be examining your medical documentation.  Should you receive a request for documents, it will probably be broken into two major parts. The first section will likely be focused on business-related records such as the following: 

“Business contracts or agreements with other providers, suppliers, physicians, businesses or individuals in place during a specific period.  Additionally, any verbal agreements must be summarized in writing.

A listing of all current and former employees (employed during a specific period), along with their hire date, termination date, reason for leaving, title, qualifications, last known address, phone number.

  • A list of all practice locations, along with their address and phone number.
  • Leases.
  • Employment agreements.
  • Medical Director contracts.” 

One purpose of this section is to assist the ZPIC in identifying potential business practices which may constitute a violation of the Federal Anti-Kickback Statute, Stark Laws and / or the False Claims Act.  Should the ZPIC identify a possible violation, it will readily refer the case to CMS, HHS-OIG and / or DOJ, depending on the nature of the potential violation.

In contrast to the first section of the ZPIC’s request, the second section of the request will usually list the patient records and dates of service to be audited.  The number of dates of service audited differs from case to case.  Regardless of whether the ZPIC requests supporting documentation related to 5 claims or 50 claims, it is essential that you never ignore a request for information.  If additional time is needed to assemble the requested information, call the contractor.  Health Integrity has generally been cooperative with providers needing additional time to gather the records being requested.

Recommendation #4Remember learning how to “drive defensively” in high school?  Your documentation practices should be approached in a similar fashion.   When is the last time that you have reviewed the applicable documentation requirements set out in the Medicare Administrative Contractor’s latest Local Coverage Determination guidance covering the services you are providing?  Health Integrity’s auditors are excellent at identifying one or more deficiencies in your documentation. While you may disagree with the ultimate conclusions reached by their clinicians, you should not completely discount their assessments.  Health Integrity’s findings should be carefully analyzed so that any problems with your documentation can be promptly addressed.

Recommendation #5Engage qualified legal counsel and clinical experts to assist with your efforts. If your home health agency is audited, we strongly recommend that you engage qualified legal counsel, with experience handling this specific type of case.  Moreover, don’t be afraid to ask for references and to inquire about the anticipated cost of an engagement.  While it is often difficult to estimate legal costs due to the various factors faced when handling a ZPIC audit case, most experienced health lawyers can give you a range of expected legal fees.

VI.  Conclusion:

While an effective HHA Compliance Plan cannot fully shield an organization from risk, the implementation of, and adherence to, an effective plan can greatly assist your home health agency in identifying weaknesses and taking corrective action before an audit occurs.  Now is the time to ensure that your practices are compliant – after an audit occurs, it may be too late.

Liles Parker is a full service health law firm, providing HHA compliance reviews, “gap analyses” and training to home health providers and their staff.  Our attorneys are also experienced in representing home health providers in the administrative appeal of overpayments identified in the Medicare post-payment audit process. Should you have any questions, please call us today at 1-800-475-1906 for a free consultation. 

MACs Flex Their Muscles with Recent CERT Audit Findings

November 23, 2011 by  
Filed under Medicare Audits

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I.  What is a CERT Audit?

MACs are targeting providers with a CERT AuditThe “Comprehensive Error Rate Testing” (CERT) program was created as a tool for the Centers for Medicare and Medicaid Services (CMS) to assess whether Medicare Administrative Contractors (MACs) are paying claims properly. Essentially, the CERT audit serves as an integral management tool for CMS as well as an important feedback mechanism for the MACs. When problem areas are identified, they can be addressed by Medicare contractors with audit responsibilities.  Notably, several of the MACs around the country have been aggressively reasserting their program integrity roles.

Essentially, MACs write reimbursement checks on behalf of CMS.  As a result, they play a central role in the Medicare reimbursement process. Therefore, when a CERT auditor finds that a MAC has been incorrectly reimbursing providers for claims which may not qualify for coverage, it is very important that the MAC immediately address this system-wide deficiency.

II.  Recent Actions Taken by MACs in Response to CERT Audit Findings

In response to certain CERT audit findings, one MAC recently sent notification to providers of Evaluation and Management (E/M) services explaining that new “stringent corrective actions” will be taken to address some of the more common claims errors identified by the CERT auditors when conducting their reviews of MAC payment practices.  As recent correspondence to a provider reflects, MACs are taking the results of CERT audits quite seriously, and are expanding their program integrity efforts.  As one MAC recently wrote, the contractor stands ready to:

  • Suspend a provider if that provider has “too many” payment errors (it does not state how many is “too many”);
  • “[R]efer every physician” to that region’s ZPIC if those providers continue to bill for services which may constitute payment errors;
  • “[R]efer every physician” to the ZPIC if there is a pattern of past payment errors; and,
  • “[C]onduct prepayment reviews” of future claims, up to 100% of a provider’s claims.

To be clear, none of these potential corrective actions represent new authorities.  Nevertheless, the fact that MACs are now reasserting these points is reflective of CMS’ ongoing concerns regarding the prevalence of improper claims.  Indirectly, CMS is making it crystal clear that as the initial recipient and screener of Medicare claims submitted by providers for payment, MACs play an essential role in screening out improper claims and bad providers.  As Medicare’s primary gatekeepers, MACs are responsible for identifying both improper claims and providers who may be engaged in abusive and / or fraudulent practices.

III.  What Should You Do if You Are Notified of a CERT Audit?

Should you receive a CERT audit request for documents from a CERT Documentation Contractor (CDC), it is important to keep in mind that your practice or clinic is not being accused of fraud or wrongdoing.  Fundamentally, a CERT audit is primarily designed to identify deficiencies and mistakes made by Medicare contractors.  Nevertheless, it is imperative that you take a CERT audit request quite seriously.  At the end of the day, it will be you, not the MAC, who is responsible for any overpayments identified as a result of the audit. Moreover, bad results on a CERT audit may lead to further auditing in the future.

IV.  What Actions Should a Compliance Officer Take to Avoid Being Audited?

As an organization, if you are subjected to a CERT audit, the horse is already out of the barn,” so to speak.  Your goal is to review and monitor your organization’s coding, billing and utilization practices on an ongoing basis so that improper claims are never submitted to your MAC in the first place.   In most cases, you can check your MAC’s website to determine if their CERT auditor has already identified certain areas of concern. For instance, one MAC recently reported that out of 508 errors identified in a CERT audit of certain Medicare claims, the contractor found that:

  • 311 errors were due to “insufficient documentation.”  Notably, a majority of the errors in this category were because the medical record “did not contain a valid physician’s signature” or because a diagnostic test performed “did not contain a valid physician’s order” or an identification of the provider who rendered the service.
  • 132 errors were due to “lack of medical necessity” based on the medical documentation submitted.
  • 37 errors were due to “incorrect coding” (primarily related to laboratory testing).
  • 10 errors were due to “invasive procedures that were assessed to be without medically necessity.”
  • 9 errors were due to an “incorrect procedure code” used when billing the service.
  • 6 errors were the result of “billing for services that were not rendered.”
  • 2 errors were due to “other errors.”
  • 1 error was due to an “incorrect discharge code being used.”

Compliance Officers can take these “general” risk areas, add them to the “practice-specific” risk areas already noted, and take special note of these concerns when conducting internal reviews. The only way to avoid the scrutiny of Medicare’s various administrative contractors (MACs, ZPICs, RACs and CERT auditors) is to avoid payment errors altogether.  While no provider is perfect, the development, implementation and adherence to an effective Compliance Plan can significantly reduce the number of improper claims submitted by a provider to a MAC for reimbursement.

V.  What Actions Should a Compliance Officer Take After Receiving a CERT Audit Letter?

As Compliance Officer, upon receipt of a CERT audit request, you should carefully review the request and take steps to assemble a complete set of medical records and other supporting documentation related to the specific claims at issue.  It is important not only to make sure that your documentation is complete when sending in records to a CERT contractor, but to make sure that compliance is a daily part of your practice. Ensuring that your documentation is appropriate and accurately documents both medical necessity and the level of services performed can greatly assist you in avoiding trouble down the road.

Now, more than ever, it is important that you have an effective Compliance Plan in place.  Your Compliance Plan should explicitly set out your organization’s policies about how to correctly assess the need for, and document the services provided to a Medicare beneficiary. Otherwise, as demonstrated by the tough stance being taken by the MAC discussed above, CERT audits and other Medicare post-payment audits could raise serious problems for your practice.

Robert LilesLiles Parker attorneys represent health care providers in CERT, MAC, ZPIC and RAC audits and investigations.  Our attorneys have extensive compliance experience and can conduct “gap” analyses designed to place your practice or clinic on solid regulatory footing.  To speak with one of our attorneys, call 1-800-475-1906 for a free consultation today.

ZPIC Audit – Ten Recommendations for Audit Preparation

July 24, 2011 by  
Filed under ZPIC Audits

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ZPIC Audit Introduction

ZPIC Audits

Has your Practice, Home Health Agency, Hospice, DME Company or PT / OT / ST Clinic been audited by a Zone Program Integrity Program (ZPIC)?  If not, it may only be a matter of time.  Despite your best efforts to follow Medicare’s directives, your organization may still be identified as an “outlier” by a ZPIC and subjected to a probe review or a full-blown ZPIC audit.  Should you receive a request for records from a ZPIC, being prepared – in advance of receiving a ZPIC audit – can help ensure your organization’s compliance with applicable documentation, coding and billing requirements.  The following recommendations can assist with those efforts:

Recommendation #1:   If you have not already done so, conduct a “gap” analysis and implement an effective Compliance Plan.  Despite the fact that significant strides in compliance have been made by large Medicare providers (such as hospitals and nursing homes),  it has been our observation that most physician practices and small-to-mid sized provider organizations still do not have a tailored Compliance Plan in place.  We recognize that many providers may have copied a draft plan off of the Internet or purchased a sample plan.  While they may fully intend to follow through with personalization of the draft document, in most of the cases we have seen, more pressing events have taken precedence and these providers have not had the time or expertise to complete the project.

Providers who have not put a tailored Compliance Plan in place should immediately do so. As you have likely heard, Section 6401 of the Affordable Care Act (ACA) (generally referred to as the “Health Care Reform Act”) states, “. . . a provider of medical or other items or services or supplier within a particular industry, sector or category shall, as a condition of enrollment in the program under this Title. . .establish a compliance program.”   To be clear, at this time, the Department of Health and Human Services, Office of Inspector General (HHS-OIG) has not announced deadlines effectuating this requirement.  Nevertheless, it is merely a matter of time until all providers who choose to participate in the Medicare program will be required to have an effective Compliance Plan in place.

Rather than wait until the last minute, Medicare providers who have not already done so should immediately take steps to implement an effective plan.  As a first step, providers should review each of the regulatory and statutory provisions related to the specific services being billed to Medicare.  Next, providers should compare their actual documentation, coding and billing practices with Medicare’s rules.  Any gaps between the applicable requirements and a provider’s actual practices must immediately be remedied. Additionally, should these gaps represent an overpayment, the Medicare provider must repay the overpayment to the government within 60 days of identification.

Prior to conducting a gap analysis, we recommend that providers contact their legal counsel for assistance with both the internal review and with the implementation of an effective Compliance Plan.   While no Compliance Plan can prevent a ZPIC audit, the implementation of an effective plan will greatly improve a provider’s likely adherence to Medicare’s rules and regulations should a ZPIC audit be initiated.

Recommendation #2:   Don’t ignore a ZPIC’s request for documents[1]. At the outset, it is important to keep in mind that the ZPICs play an important role in the current enforcement environment.  In addition to  auditing records for possible overpayments, ZPICs are also responsible for identifying fraudulent providers and making referrals to the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the U.S. Department of Justice (DOJ) for further action.  Possible actions taken include, but are not limited to:

  • CMS – Administrative action such as suspension or revocation from the Medicare program.
  • HHS-OIG – Administrative action such as the imposition of Civil Monetary Penalties.  HHS-OIG may also investigate and refer a provider to DOJ for possible civil litigation under the False Claims Act.  Finally, HHS-OIG may investigate and refer a provider to DOJ for criminal prosecution under the Federal Anti-Kickback Act or a host of other statutes.
  • DOJ – May investigate and prosecute a provider for civil and / or criminal violations of law.

Should you receive a request for documents from your ZPIC, in most cases it will broken into two sections.  The first section will likely focused on business-related records, including, but not limited to, copies of: 

“Business contracts or agreements with other providers, suppliers, physicians,  businesses or individuals in place during a specific period.  Additionally, any verbal agreements must be summarized in writing.

A listing of all current and former employes (employed during a specific period), along with their hire date, termination date, reason for leaving, title, qualifications, last known address, phone number.

    • A list of all practice locations, along with their address and phone number.
    • Leases.
    • Employment agreements.
    • Medical Director contracts.” 

The unstated purpose of this portion of the ZPIC’s request is likely to identify potential instances of violations of the Federal Anti-Kickback Statute, Stark and / or the False Claims Act.  Should the ZPIC identify a possible violation, it will readily refer the case to CMS, HHS-OIG and / or DOJ, depending on the nature of the potential violation.

In contrast to the first section of the ZPIC’s request, the second section of the request usually lists the patient records and dates of service to be audited by the ZPIC.  While every case is different, the number of claims requested typically ranges from eight (8) to 100, depending on whether the ZPIC’s request is a “probe review” or a full-blown ZPIC audit.  On occasion, we have seen the number of claims sought can range from 150 to 300.

Never ignore a ZPIC request for records.[2] Importantly, should you fail to respond to the ZPIC’s request, the contractor can recommend to CMS that your organization be suspended[3] from participation in the Medicare program.  Depending on the ZPIC’s concerns, the contractor can also recommend that CMS pursue a revocation action against your organization.  Should you need more time to respond to the ZPIC’s request for supporting documentation, don’t hesitate to request it.

Recommendation #3 Remember learning how to “drive defensively” in high school?  Your documentation practices should be approached in a similar fashion. A ZPIC audit may reveal one or more ways in which your claims do not meet applicable coverage requirements.  While you may very well disagree with their assessments (especially in “medical necessity” determinations), in all likelihood, when you file a request for redetermination appeal (and later, a request for reconsideration appeal), you will find that your Medicare Administrative Contractor (MAC) and your Qualified Independent Contractor (QIC) will agree with the ZPIC’s denial decision.  Rather than endure significant costs and stress when defending against an overpayment assessment, you need to take steps to avoid a denial in the first place. To that end, health care providers should ensure that clinical staff members and the administrative team are fully trained and educated regarding Medicare’s documentation, coding and billing requirements.

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

  • Any applicable Local Coverage Determinations (LCDs).
  • Any applicable National Coverage Determinations (NCDs).
  • Any Local Medical Review Policies (LMRPs).
  • The Medicare Policy Benefit Manual (MPBM).
  • The Medicare Program Integrity Manual (MPIM).
  • Any statutory provisions which cover the services.
  • Any additional guidance issued by Medicare which would apply to these claims.

It is important that you regularly review the government’s latest concerns and any enforcement actions which have been taken.  Additionally, you should read HHS-OIG’s reports so that you may learn from the mistakes being made by similarly situated providers.  Upon doing so, we recommend that you check the list of risk areas in your Compliance Plan and ensure that they reflect both “general” risks and “specific” risks which may be unique to your organization.  Is your organization still in full compliance?  If not, remedial action is likely necessary.

Recommendation #4:  Retain experienced legal counsel to assist with your efforts. When experiencing symptoms of a cardiac problem, most patients wouldn’t turn over their care to a dermatologist.  Instead, they would seek to be evaluated and treated by a cardiologist.  Similarly, if you have a health law problem, would it be wise to rely on advice from an attorney specializing in family law?  Ultimately, that’s your call.  While no attorney can guarantee you success, we believe that an experienced health lawyer is well situated to give you advice regarding a Medicare audit or investigation.   Having said that, it is important to recognize that the field of health law is extraordinarily broad.  Should you be audited by a ZPIC or a Recovery Audit Contractor (RAC), don’t hesitate to ask a health lawyer whether they have handled these types of cases before.  If so, how many times have they represented a provider in a ZPIC audit?  When selecting a lawyer, keep in mind that the legal fees charged by an attorney can vary greatly, depending on a variety of factors.  Don’t be shy – ask how much the representation is likely to cost.  While it is often difficult to estimate legal costs due to the various factors faced when handling matters involving a ZPIC audit, most attorneys can give you a range of expected legal fees.  Finally, be sure and ask for references.  Other providers who have been through an administrative appeal case can provide you with invaluable insights into the process.

Recommendation #5 The administrative appeals process has become quite complicated in recent years.  A ZPIC audit can result in an alleged overpayment of millions of dollars, particularly if the overpayment is extrapolated. Moreover, the ZPIC’s overpayment assessment isn’t usually the end of the story.  While providers often lose at the redetermination and reconsideration levels of appeal, the third level of appeal – before an Administrative Law Judge (ALJ) – is usually your best opportunity to prevail in an administrative appeal.  Over the years, our attorneys have argued cases in front of judges out of each of the field offices of the Office of Medicare Hearings and Appeals (OMHA).   While we may not always agree with their decisions, the ALJs we have practiced before have been professional, fair and more than willing to hear a provider’s arguments in support of payment.

Should you choose to forego legal counsel and represent yourself in an ALJ hearing, keep in mind that even though these hearings are intended to be non-adversarial it can feel quite adversarial during the actual hearing.  Furthermore, these proceedings can be quite complicated.  In most large dollar cases, representatives of the ZPIC are participating in the hearing and arguing their position before the ALJ.  ZPIC representatives can include one or more statisticians (if an extrapolation was conducted), a clinician (usually a Registered Nurse who is experienced in conducting medical reviews) and a lawyer.  In a recent Home Health Agency case we handled, this was precisely what occurred.  Frankly, few providers are experienced in presenting their case and in responding to the arguments raised by statisticians, clinicians and lawyers representing a ZPIC.  As a result, it is strongly recommended that the provider consider engaging an experienced and knowledgable attorney.

Recommendation #6 When reviewing your claims, you should abide by the following:  First, “If it doesn’t belong to you, give it back.”  Conversely, “If you don’t owe the money, don’t throw in the towel.”  For years we’ve told providers If it doesn’t belong to you, give it back.”  This simple concept covers a lot of ground when it comes to alleged Medicare overpayments.  Similarly, if the facts and the evidence shows that the claims should have been paid,  think twice before waiving your right to appeal the denial of these claims.  From a practical standpoint, we have heard of  situations where a provider chooses to “just pay the bill” so that the case will quickly be resolved.  Several providers have commented that when dealing with small dollar assessments, it is just easier to pay the alleged overpayment rather than incur the hassle and expense of contesting the contractor’s denial.  Although we understand the reasoning behind such a decision, you should keep in mind that every claim which is denied by in a ZPIC audit increases a provider’serror rate.”  If you were a ZPIC, PSC, RAC or MAC contractor, would you choose to audit a provider with a low error rate or a high error rate?  In any event, the bottom line is fairly straight forward.  Should you find that you are not entitled to payment for one or more claims, you must repay the money to the government as soon as possible (but no later than 60 days after an overpayment has been identified),  regardless of whether the claim is part of an ongoing or recently completed Medicare audit.  If, however, you are audited and you believe that a ZPIC has incorrectly denied one or your claims, you have the right to appeal the denial of these claims.

Recommendation #7:  Carefully read a ZPIC’s denial decision letter. When you receive a denial decision letter from a ZPIC, carefully review the notice and determine whether the contractor has specifically addressed the reasons for denial associated with each of the claims at issue.  Every ZPIC audit is different.  Over the last few months, one of the ZPICs involved in the cases we are handling has been citing only a general reason for denial (such as “not medically necessary”).  Should the ZPIC in your case not provide sufficient information, you will find it difficult, if not impossible, to address any specific reasons your claims have been denied. Your legal counsel may be able to get the ZPIC to provide additional specificity in connection with their denial reasons.

Recommendation #8:  Don’t forget – shortly after the “demand letter” is sent, any payments you may be expecting may be recouped by your Medicare Administrative Contractor (MAC) A demand letter from your MAC usually follows a few days after you receive a ZPIC’s denial decision letter.  While you have 120 days to file a request for redetermination appeal[4], should you fail to file the request for redetermination within 30 days of the date of the MAC’s demand letter, your Medicare payments may be recouped starting on day 41.  Alternatively, a provider may set up an extended repayment program with the MAC so that the alleged overpayment can be repaid through monthly installments.  We strongly recommend that you set this up.  You will then be able to take advantage of the 120 period permitted to file a redetermination appeal rather than filing a poorly prepared appeal within the 30 day period.  Similar issues (with completely different deadlines) are present at the reconsideration level of appeal — the next level in the administrative appeals process. Once again, these issues can be quite complicated.  We recommend that you discuss available appeals options with your counsel.

Recommendation #9Foster a corporate culture which encourages compliance.  ZPIC audit reviewers have increased their ZPIC audit activities dramatically in numerous areas of the country. South Texas has been especially hard-hit. Providers in Houston, McAllen, Harlingen, Edinburgh, Laredo, Corpus Christi and Brownsville appear to have experienced a recent surge in ZPIC audit activity.  Be aware that ZPIC audit reviewers are looking for aberrations in billing patterns and often target providers based on these variations in coding or billing practices.  Compliance with regulations and consistency in yourmessage to employees is essential. Establishing good intake and records management procedures and continuing employee education and training efforts can facilitate the adoption of an ethical, compliant corporate culture.

Recommendation #10 When drafting a Compliance Plan, providers should include a “Code of Conduct” that is easily understood by employees.  We believe that a “Code of Conduct” should accurately reflect the belief system an organization has pursued and sincerely intends to follow.   In doing so, an organization can engender a compliant corporate culture.  Over the years, we have seen organizational “Codes of Conduct” which range from a succinctly described phrase to discussions of more than a page.

Our favorite “Code of Conduct” is used by Cadets at the United States Military Academy at West Point. Modified for use by health care providers, the “Code of Conduct” reads:

Our clinicians and staff will not lie, cheat, steal, or tolerate those who do.”

This simple yet elegant “Code of Conduct” succinctly lays out a provider’s ethical responsibilities, both with respect to Medicare and in other business dealings.  We recommend that you consider adopting and adhering to this or a similar “Code of Conduct.”

Robert LilesLiles Parker attorneys and staff have extensive experience representing Physicians, Clinics, Home Health Agencies, Hospices, DME Companies, Skilled Nursing Facilities, Chiropractors, Pain Medicine Clinics, Rehabilitative Medicine Clinics and other Medicare providers in connection with a ZPIC audit or audits by  RACs, PSCs, MACs and other contractors.  We also have years of experience assisting providers with “gap” analyses and in implementing an effective Compliance Plan.  Should you have questions about these or other health law issues, please feel free to call us for a complementary consultation.  We can be reached at:  1 (800) 475-1906.  


[1] Infrequently, a ZPIC may choose to conduct a “probe” review rather than a full ZPIC audit.  Probe reviews usually involve a request for the records and supporting documentation related to 10 to 15 claims paid by Medicare.

[2] A ZPIC audit request typically include language similar to the following: “Failure to provide this information or to permit examination and duplication of records could result in a decision by the Office of the Inspector General to exclude you from Medicare, Medicaid and all Federal health care programs.”

[3] 42 C.F.R. §405.372(a)(2).

[4] It is presumed that you received the MAC’s demand letter 5 days after the demand letter is dated.  From a timing standpoint, we strongly recommend that you completely disregard the “5 day” issue unless it is absolutely necessary to rely on it.  Our practice is to make sure that our client’s redetermination appeal is filed (and received) well in advance of the 120 day appeal deadline.

SNF Medicare Denial Letters Follow HHS-OIG Report

April 1, 2011 by  
Filed under Medicare Audits

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I.  SNF Medicare Denial Letters Background

Audit-Checklist-red-pen

The Prospective Payment System (PPS) under which Skilled Nursing Facilities (SNFs) are reimbursed by Medicare has long been criticized by many concerned with curbing waste, fraud, and abuse in the Medicare program. Critics argue that, because the SNF reimbursement rate is prospective in nature and largely commensurate with the extent of skilled services provided to a beneficiary, SNFs will be more likely to provide unnecessary or unreasonable services for beneficiaries, thus increasing their reimbursement. For example, simply increasing the number of minutes of therapy a beneficiary receives (or providing a second or third therapy modality) could upgrade the Resource Utilization Group (RUG) to which the patient has been assigned, thereby resulting in a substantially higher reimbursement rate for the provider. This concern has prompted increased scrutiny of SNF billing practices and resulted in the issuance of SNF Medicare denial letters from Zone Program Integrity Contractors (ZPICs).

II.  Questionable Billing Practices by Skilled Nursing Facilities

The Office of the Inspector General of the Department of Health and Human Services (HHS-OIG) recently released a report entitled “Questionable Billing Practices by Skilled Nursing Facilities”. The three chief objectives of this report were to:

  1. Ascertain the extent to which billing practices by SNFs changed between 2006 and 2008;
  2. Determine the extent to which billing varied by type of SNF ownership in 2008; and
  3. Identify SNFs that engaged in questionable billing practices in 2008.

HHS-OIG analyzed Part A SNF claim line items from 2006 and 2008, including the types of RUGs billed by SNF, beneficiary characteristics, and the average length of stay in the SNF for each beneficiary. OIG specifically focused on SNFs that billed frequently for higher-paying RUGs, namely those falling under the “Rehabilitation” or “Rehabilitation Plus Extensive Services” categories.

Based on the data it reviewed, OIG reached several conclusions regarding the billing practices of SNFs between 2006 and 2008, most notably:

  • The percentage of “Ultra High” therapy RUG placements increased substantially between 2006 and 2008, while RUG assignment rates for all other categories decreased or remained static. This increase in “Ultra High” therapy RUG billing represented approximately $5 billion in additional Medicare payments to SNFs between 2006 and 2008.
  • For-profit SNFs were more likely than non-profit or government SNFs to bill for higher paying RUGs.
  • Three quarters of all SNFs had up to 39% placement rates in “Ultra High” therapy RUGs.

HHS-OIG then outlined several recommendations based on its conclusions, one of which entailed increased oversight of SNFs that bill for higher paying RUGs:

CMS should instruct its contractors to monitor the SNFs billing for higher paying RUGs using the indictors discussed in this report. Specifically, the contractors should determine for each SNF: (1) the percentage of RUGs for ultra high therapy; (2) the percentage of RUGs with high ADL scores, and (3) the average length of stay. CMS should develop thresholds for each of these measures and instruct contractors to conduct additional reviews of SNFs that exceed them. If SNFs from a particular chain frequently exceed these thresholds, then additional reviews should be conducted of the other SNFs in that chain.

Contractors should use this information to target their efforts to more effectively identify and prevent inappropriate billing. Contractors could conduct medical reviews of a sample of claims from SNFs that exceed these thresholds. Contractors could use their findings to recover inappropriate payments, to place certain SNFs on prepayment review, and to initiate fraud investigations.

The message to Medicare contractors is crystal clear: SNFs, especially those that have a significant placement rate for “Ultra High” therapy RUGs, should be increasingly targeted for audits. Expect SNF Medicare denial letters to rise precipitously Meanwhile, OIG has shown no signs of relenting in its scrutiny of SNFs, noting in its 2011 Work Plan that:

We will review the extent to which payments to SNFs meet Medicare coverage requirements . . . We will conduct a medical review to determine whether claims were medically necessary, sufficiently documented, and coded correctly during calendar year (CY) 2009.

Providers should ensure that their medical records and documentation satisfy applicable regulations and that they have an effective compliance plan in place to deter future audits. Otherwise, facilities targeted for review could face the imposition of prepayment review status, SNF Medicare denial letters, payment bans, or even civil monetary penalties (CMPs).

III.        Areas of Focus by Medicare Contractors:

Based on the concerns raised by HHS-OIG, ZPICs, RACs, MACs, and other Medicare contractors conducting audits of SNFs are likely to focus on the following issues:

Proper RUG Placement: SNF care must be provided at the appropriate level. This means that all services are necessary and reasonable and information entered on all Minimum Data Sets (MDS) for each beneficiary is complete and accurate. Contractors will closely scrutinize all RUG assignments, particularly those falling under the “Ultra High” therapy category.

Necessity and Reasonableness of Therapy Care: All therapy services must be consistent with the nature and severity of the beneficiary’s illness or injury. In many instances, contractors may question the therapy modalities provided to a beneficiary, the amount of therapy a beneficiary receives, or even the activities in which a beneficiary participates during therapy.

Provision of Skilled Care: All care provided by an SNF must be “skilled,” meaning that it can only be safely or effective provided by technical or professional personnel, such as nurses or therapists. Contractors will often conclude that skilled care is not supported by documentation that is vague, generic, or repetitive.

Providers should review their medical documentation and related policies to ensure that, at a minimum, all of the elements and requirements discussed above are adequately addressed. There are also a number of additional steps providers can take to limit their liability in any future audits and reduce the chances of receiving the dreaded SNF Medicare denial letters.

IV.        How to Avoid SNF Medicare Denial Letters and What To Do if You Get One

1.  Tailor Each Care Plan to the Beneficiary’s Individual Needs: As discussed above, care provided by an SNF must be necessary and reasonable, meaning that it is consistent with the beneficiary’s illness or injury. This is essentially a principle of proportionality. Providers should ensure that all RUG classifications and care plans created for beneficiaries- especially therapy care plans- are tailored to the beneficiary’s individual needs and designed to address the beneficiary’s functional deficits. Contractors will be on the look out for RUG assignments or care plans that provide for overly extensive services or excessive treatment modalities.

2.  Maintain Detailed Medical Records: SNFs must provide beneficiaries with “skilled” care, so all documentation should be sufficiently detailed to reflect the technical or specialized knowledge of the SNF staff. SNFs should also amply document all activities related to management and evaluation of beneficiary care plans, observation and assessment of beneficiaries’ medical conditions, any beneficiary education services regarding self-care, or any therapeutic exercises conducted with the beneficiary.

3. Ensure that the MDS is Consistent with the Beneficiary’s Clinical Record: The first document a contractor will scrutinize when it questions a RUG placement will be the MDS. Contractors will often argue that the information coded on the MDS is inconsistent with the clinical record. Providers should thus ensure that all data entered on every MDS is supported by the corresponding clinical record. A more robust record will make it much harder for a contractor to successfully challenge a RUG classification.

4. Consult Qualified Counsel: The consequences of an audit can be financially devastating to a provider. In light of increased scrutiny from Medicare contractors and the overall complexity of the medical review process, providers should consult qualified counsel if they have concerns regarding the sufficiency of their medical documentation or a potential audit. Counsel can assist providers with designing and implementing a comprehensive compliance plan or, if necessary, effectively responding to an audit initiated by a Medicare contractor.  Liles Parker attorneys and staff have extensive experience handling both (a) administrative appeals of denied claims in post-payment audits by ZPICs and PSCs, and (b) working with therapy and other providers to devise effective compliance plans and provisions designed to assist these providers in meeting their statutory, regulatory and administrative obligations under the Medicare and Medicaid programs.

In our opinion, Medicare contractors (including ZPICs, PSCs and RACs), acting at the direction of CMS and HSS-OIG, will continue to expand their audit efforts against SNFs, particularly those with a significant number of beneficiaries assigned to “Ultra High” therapy RUGs, and issue SNF Medicare denial letters. Accordingly, SNFs should review the quality and sufficiency of their documentation and implement comprehensive compliance efforts to deter potential audits.  Therefore, it is imperative that affected providers immediately take steps to assess their current practices and take remedial steps to correct any deficiencies identified.

Robert LilesLiles Parker attorneys and staff have extensive experience representing Medicare providers in post-payment audits of therapy and related skilled claims by ZPICs and other contractors.  Should you have questions regarding this article or the appeal of Medicare post-payment audits, please give us a call for complimentary consultation.  We can be reached at 1-800-475-1906. 

2011. . . The Year of Compliance — Avoiding ZPIC Initiated Medicare Suspension Actions

January 11, 2011 by  
Filed under ZPIC Audits

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(January 11, 2011): As you recall at the end of 2010 we identified the “Top Ten Health Care Compliance Risks for 2011.”  The purpose of this and subsequent articles is to analyze two of those risks; Zone Program Integrity Contractors (ZPICs) and Payment Suspension Actions. Over the next few days we will be discussing these two risk areas in depth.

I. Overview:

As discussed in our “Top Ten” article, we anticipate that ZPICs will ratchet up their use of provider suspension actions in 2011.  At the close of 2010, there already appeared to be an increase in the use of suspension actions by ZPICs in South Texas and in other areas of the country.  In many instances, these actions were the result of sophisticated data mining techniques by ZPICs.  While cases are initiated in a variety of ways (including, but not limited to whistleblower complaints, anonymous reports to the government’s fraud hotline, etc.), data mining is a key tool relied on by ZPICs and government agencies for targeting purposes.

After analyzing the data, ZPICs often send out requests for information or conduct site visits of health care provider facilities.  These requests and / or site visits can result in medical reviews, demands for alleged overpayments, or lead to referrals to one or more government investigative agencies (such as the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), the State Medicaid Fraud Control Unit (MFCU) and / or the Federal Bureau of Investigation (FBI)). Since established, ZPICs have clearly met their goal of developing “innovative data analysis methodologies for detecting and preventing Medicare fraud and abuse.”  Rather than pursuing merely administrative overpayment cases, over the last six months, we have noted an increase in the number of cases referred to law enforcement for fraud investigation.  While seven ZPIC zones have been identified, only three companies have been awarded ZPIC contracts at this time.  Where ZPIC contracts remain pending, Program SafeGuard Contractors (PSC) are typically still operating and are conducting essentially the same duties as their ZPIC counterparts.  The seven ZPIC zones include:

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

The following map reflects zones where the ZPIC contractor is currently operating.  Each of the ZPICs listed below are actively sending out requests for information and / or conducting site visits.  In a number of instances, the ZPICs have been noted to be suspending providers from the Medicare program based on variety of alleged statutory and / regulatory violations.

ZPICs have been very active in their site visits which have brought about Medicare suspension and revocation actions. In some cases, these site visits have resulted in allegations of “fraud or willful misrepresentation” with ZPIC’s contacting of CMS for approval to place the provider on payment suspension.  In tomorrow’s article, we will be examining the primary reasons cited by the Centers for Medicare and Medicaid Services (CMS) when placing a provider on payment suspension status.

Robert LilesRobert W. Liles serves as Managing Partner at Liles Parker.  Robert and our other attorneys have extensive experience representing health care providers in ZPIC initiated actions.  Should your Physician Practice, Home Health Agency, Hospice Company, Physical / Occupational / Speech Therapy Clinic, Ambulance Company, Therapy Company, Pain Clinic be subjected to a ZPIC audit, give us a call for a free consultation.  We can be reached at: 1 (800) 475-1906.

ZPIC Audits Seeking to Extrapolate Damages. Is Your Legal Counsel Experienced?

July 20, 2010 by  
Filed under Medicare Audits

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(July 20, 2010): In recent years, we have seen agents for the Centers for Medicare & Medicaid Services (CMS) increasingly rely on statistical extrapolation in ZPIC audit cases. In early cases, we successfully invalidated countless extrapolations by identifying relatively basic reasons for why the calculations were inconsistent with accepted statistical principles and practices.  Now, however, providers should expect for ZPIC audits to ultimately result in a team of staff from the ZPIC (such as a statistician, an attorney and a clinician) attending and participating in the Administrative Law Judge (ALJ) hearing in an effort to have their extrapolation calculations approved by the Court.

Regardless of whether you are providing Home Health, Hospice or Durable Medical Equipment services, if your organization is facing an extrapolated ZPC audit, it is strongly recommended that you engage qualified, experienced legal counsel to represent your interests as early in the appeals process as possible.  Your legal counsel can then engage an experienced expert statistician to assess the contractor’s actions and assist with the attorney’s efforts to have the extrapolation thrown out by either the Qualified Independent Contractor (QIC) or the ALJ hearing your case.  Before you engage counsel, you should consider asking the following questions:

Has the attorney ever handled large, complex contractor audits before? Some firms will happily take your case, despite the fact that they have little or no experience in this area of health law. Don’t pay for your attorneys to learn how to handle a case. While every case is different, an experienced firm will have developed a number of arguments and defenses that may be readily used in your case without having to conduct costly, extensive legal research.

Can the firm provide client references who are willing to speak with you about the quality of work performed on their Medicare statistical extrapolation case?

Who will be working on your case? Will it be an inexperienced Associate attorney or one of the partners who has actually fought and won a multitude of Medicare overpayment claims and cases where the damages have been extrapolated by the contractors?

What are the credentials of the attorneys and paralegals who will be working on your case? Have they ever worked on the side of the government? One of our attorneys served as an Assistant U.S. Attorney for many years, ultimately being selected to serve as the First National Health Care Fraud Coordinator for the Department of Justice, Executive Office for U. S. Attorneys. In addition to a law degree, he also holds a Master’s in Health Care Administration. To fully appreciate the challenges faced by health care providers, you need an attorney who understands both the legal constraints and the practical business risks faced by health care providers.

In several of the ZPIC audit appeals cases we have handled, the alleged error rate has exceeded 90%.  With the resulting alleged damages often in the millions of dollars, few health care providers are in a position to merely pay such an assessment.  Instead, they need experienced legal counsel to defend their interests and set out the reasons why these claims should qualify for coverage and payment. When handling these cases, it is essential that you challenge both the denial of claims and the extrapolation itself (as appropriate).

Robert W. Liles serves as Managing Partner at Liles Parker.  Robert and our other attorneys have extensive experience defending health care providers in cases where ZPICs have sought to impose extrapolated damages.  Should you have any questions regarding these issues, don’t hesitate to contact Robert for a complementary consultation.  He can be reached at:  1 (800) 475-1906.

South Texas Medicare Providers Are Under the ZPIC Audit Microscope

July 16, 2010 by  
Filed under ZPIC Audits

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(July 16, 2010):  The number of ZPIC audits being conducted in Texas appears to be increasing with each passing day.  Health Integrity LLC, the Zone auditor responsible for Zone 4, is proving to be an active auditor of physician practices, physical therapy services, home health care, and other types of Medicare covered treatment in the region.

Even in a nationwide environment of intensifying oversight, Medicare providers in South Texas are under particularly close scrutiny.  According to a study by the Dartmouth Institute for Health Policy & Clinical Practice, updated as recently as May 12, 2010, “even after price adjustment, Miami and McAllen Texas are the highest cost regions in the country.” (Emphasis added).  And don’t forget that ZPIC auditors are essentially being “graded” based on the amount of overpayments recovered, along with the number of enforcement actions handled and referred to law enforcement.

As many Medicare providers in South Texas can attest, the folks at Health Integrity are becoming a familiar sight in their offices and clinics — reportedly conducting extensive on-site ZPIC audits with little if any notice.  To their credit, most health care providers have reported that Health Integrity’s representatives have been reasonable in their requests when conducting an on-site review, typically taking a sample of certain records and asking that the remaining records be sent within a reasonable amount of time after the visit.  Nevertheless, health care providers should take care when responding to the ZPIC’s requests for information.  While a provider may have an obligation to cooperate with the ZPIC, you should contact your counsel to ensure that your rights are protected while still fully meeting your obligations as a Medicare participant.

Notably, ZPIC audits are not limited to post-payment assessments.  ZPIC audits are now occurring as “prepayment reviews”.   A prepayment audit can effectively delay a provider’s cash flow up to six months (and in some cases even longer).  Given the GAO’s recommendation last month that CMS put more emphasis on automated prepayment review, we expect to see this audit tool continuing its precipitous rise for the near future.

Home health providers and other South Texas health care providers in McAllen, Harlingen, Brownsville, Laredo and Corpus Christi, should not wait until their home health claims are under the microscope.  If you have not already done so, we strongly recommend that you implement an effective Compliance Plan covering the services you provide and the claims that you bill to Medicare.

Robert W. Liles serves as Managing Partner at the Firm.  Robert and other Liles Parker attorneys represent health care providers around the country.  ns regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert or one of our other attorneys at 1 (800) 475-1906.

Don’t Take ZPICs’ Extrapolation Calculations at Face Value — Can Their Results Be Readily Reproduced? Don’t Fail to Address These and Other Deficiencies in the Contractor’s Actions

July 14, 2010 by  
Filed under ZPIC Audits

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(July 14, 2010): Imagine a ZPIC or PSC hands you a claims analysis rife with alleged errors, an indecipherable list of statistical formulas, and an extrapolated recovery demand that will cripple your practice or clinic.  What steps should you take to analyze their work?  Based on our experience, providers can and should carefully assess the contractor’s actions, use of formulas and application of the RAT-STAT program when selecting a statistical sample and extrapolating the alleged damages based on the sample pulled.  Over the years, we have challenged the extrapolation of damages conducted by Medicare contractors around the country, covering tens of thousands of claims.  Regardless of whether you are providing Partial Hospitalization, Evaluation and Management, Home Health, Physical Therapy, Surgical or other services, it is imperative that you work with experienced legal counsel and statistical experts to analyze the statistical sampling and extrapolation steps taken by the contractor. Should you succeed in invalidating the extrapolation, the whole games changes.  The question is – “How can you go about fighting an extrapolation calculation?”

One method is to show that the contractor’s auditor failed to identify a Statistically Valid Random Sample (SVRT).  Among the first steps is you should take is to retain experienced legal counsel to review the Medicare contractor’s actions.  Notably, there are a multitude of legal arguments which may be asserted (depending on the specific facts in your case).  Our firm has worked with several outstanding statistical experts over the years, each of which has a proven track record of analyzing the contractor’s actions and identifying any flaws made by the ZPIC or PSC when extrapolating damages.    

Notably, Section 3.10.4.2 of CMS’ Medicare Program Integrity Manual establishes that the contractor is obligated to fully document the statistical methods an auditor employs:

“The PSC or ZPIC BI [Benefit Integrity] unit or the contractor MR [Medical Review] unit shall identify the source of the random numbers used to select the individual sampling units. The PSC or ZPIC BI unit or the contractor MR unit shall also document the program and its algorithm or table that is used; this documentation becomes part of the record of the sampling and must be available for review.  (emphasis added)

The PSC or ZPIC BI units or the contractor MR units shall document all steps taken in the random selection process exactly as done to ensure that the necessary information is available for anyone attempting to replicate the sample selection.  (emphasis added)

ZPIC and PSC statisticians must be able show their work to the extent that a reviewer can attempt to “replicate” their actions and determine whether or not the steps taken were consistent with accepted principles and practices of statistical sampling.  The failure of a ZPIC or PSC statistician to fully and properly document his actions may serve as the basis for seeking to invalidate the extrapolation. The calculation of a valid statistical sample and the extrapolation of damages by ZPIC and PSC statistician is a highly complex process. After handling many extrapolated damages cases, we have found that few ZPIC or PSC statisticians fully meet their obligations to document the steps taken and / or conduct the process in a proper fashion, consistent with accepted statistical sampling procedures.  Should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you in the process.  Your legal counsel can then engage a qualified statistician to assess the contractor’s actions.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Texas Psychiatrist Indicted and Arrested

July 9, 2010 by  
Filed under HEAT Enforcement

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(July 9, 2010):  On June 14, 2010 the U.S. Attorney’s Office for the Western District of Texas announced that a Federal Grand Jury had returned a 99-count indictment against a pain management physician who operated clinics in San Antonio and El Paso.  The physician was charged with 21 counts of health care fraud, 20 counts of false statements relating to health care fraud matters, 21 counts of mail fraud, 16 counts of wire fraud, 4 counts of unlawful distribution of a controlled substances and 16 counts of money laundering.  The indictment alleges that the physician “caused to be submitted claims for reimbursement of peripheral nerve injections, facet injection procedures and Level Four office visits–typically involving 25 minutes of face-to-face time between patient and physician–which never were performed.”  Instead, the U.S. Attorney’s Office alleges that the physician performed “prolotherapy” on his patients — a procedure that Federal health care benefit programs do not reimburse. 

Notably, an indictment is merely a charge and is not considered to be evidence of guilt. In issuing this indictment, the Texas HEAT task force, comprised of Federal prosecutors and investigative agencies,  have continued to ramp up efforts to investigate and prosecute allegations of health care fraud.  Notably, the use of “prolotherapy,” a relatively new therapeutic approach, has been supported by some of the best known clinics and physicians in the country. 

While this case has yet to fully develop, it again points out that health care providers must take care when utilizing new approaches, despite the fact the therapeutic technique may be considered to be state-of-the-art.  Unfortunately, Medicare may take years to recognize and cover some techniques.  In the mean time, it is essential that providers take care when coding and billing for procedures that may not clearly qualify for coverage under applicable Medicare and / or contractor guidance.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

PPACA Creates a Minefield for Medicare Providers Who Fail to Promptly Return Medicare Overpayments

July 9, 2010 by  
Filed under Medicare Audits

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(July 9, 2010):  Does the failure to promptly return a Medicare overpayment warrant liability under the False Claims Act (FCA)?  Congress thinks so.  The Patient Protection and Affordable Care Act (PPACA) creates new obligations under the FCA whereby a Medicare provider who fails to timely report and refund an overpayment may be subject to substantial damages and penalties.

Section 6402 of the PPACA requires Medicare providers, including physicians and partial hospitalization providers, among others, to a) return and report any overpayment, and b) explain, in writing, the reason for the overpayment.

This law creates a minefield for physicians and other Medicare providers.  First, providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later.  Of course, the PPACA does not actually explain what it means to “identify” an overpayment.

Nonetheless, the PPACA makes this reporting and repayment requirement an “obligation” under the FCA.  Pursuant to the Fraud Enforcement and Recovery Act of 2009 (FERA) amendments to the FCA, an individual or entity may be liable if he or it “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”  Thus, providers who fail to meet their 60 day “obligation” may be subject to monetary penalties of up to $11,000 per claim, and treble damages.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

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