The process of Medicare contractors – such as Zone Program Integrity Contractors (ZPIC) and Recovery Audit Contractors (RAC) – issuing adverse medical review findings and Medicare Administrative Contractors (MAC) subsequently demanding repayment of alleged overpayments can be very daunting for providers. This is particularly true when Medicare contractors employ statistical sampling methodologies which expand overpayment sums to a designated universe of claims beyond just the actual claims reviewed. A few thousand dollars worth of claims suddenly becomes tens or even hundreds of thousands of dollars. In many instances, providers will choose to appeal adverse determinations, ready to defend the good faith provision of services based on the medical needs of its patients. Understanding the financial implications and timeline of an overpayment assessment is hugely important. Should the provider pay the overpayment up front? If the provider can’t pay the overpayment sum immediately, how can it work with Medicare to repay the sum in a financially feasible manner? What if the provider doesn’t want to repay the overpayment – what steps will Medicare take? These questions are best addressed in reverse order.
I. Recoupment: Short-term Strategies for Delaying
Medicare expects providers to repay any overpayment as quickly as possible. If Medicare does not receive payment within 40 calendar days from the date of the MAC’s first demand letter, Medicare will recoup the full overpayment amount beginning on day 41, meaning the overpayment will be recovered from current payments due or from future claims submitted. There are multiple ways to delay recoupment, including by submitting a rebuttal to your MAC within 15 days of the initial demand letter (no guarantee) and filing appeal requests for the first two levels of appeal within specified time frames. Specifically, a provider must file the first level appeal – called the redetermination level – within 30 days of the initial demand letter to prevent recoupment through the time that a redetermination decision issues. If the redetermination decision is unfavorable, the provider must file the second level appeal – called the reconsideration level – within 60 days of the redetermination decision. If the reconsideration decision is also unfavorable, Medicare will initiate recoupment 30 days after the reconsideration decision is issued. If the reconsideration is partially favorable, and the overpayment sum requires recalculation, recoupment will begin 30 days after the recalculated demand.
It is important for providers to understand that even while recoupment is stalled, interest accrues starting with the date of the initial demand letter and is assessed every 30 days thereafter. While capitalization does not occur, the interest rate is quite high, at 10.50% as of January 21, 2015. Even if a provider is successful at postponing recoupment, the reality is that if a provider is at all unsuccessful through the first two levels of the Medicare administrative appeals process, recoupment will begin if the provider does not repay the overpayment and the provider likely must wait years to have a hearing scheduled before an Administrative Law Judge. Given that interest accrues and recoupment delay measures are really a short-term strategy, providers should use these tactics to buy time for serious financial planning. If a provider can repay some or all of the overpayment upon demand, the provider can lower or prevent the interest penalty, not to mention control the repayment process.
II. Extended Repayment Schedule or Cede to Recoupment?
A provider can set up an Extended Repayment Schedule (ERS) at any time once the first demand is made. If an unfavorable reconsideration decision is issued and the provider has not repaid the overpayment or established an ERS, the provider has two choices: allow Medicare to recoup or request an ERS. As long as a provider continues to appeal, Medicare cannot refer the debt to the Department of Treasury. Interest continues to accrue during recoupment and recoupment can be devastating to a provider whose payer mix is heavily weighted toward Medicare, effectively halting income. If an ERS is put into place, interest accrual ceases. Medicare also takes into consideration the financial hardship that an overpayment debt obligation imposes on a provider, and depending on whether the debt imposes a “hardship” or an “extreme hardship” on a provider, the ERS can be as long as 60 months. For a provider who is not a sole proprietor, the ERS application process can be tedious. The list of documents needed to support financial hardship is extensive, including balance sheets, income statements, cash flow statements, and lists of restricted cash funds, investments, and notes and mortgages payable. If a provider cannot establish genuine hardship, an ERS will be rejected or modified to reflect what Medicare believes is an appropriate repayment schedule based on the provider’s financials. Any repayments made under an ERS do not accrue interest in favor of the provider, if the provider is successful at reducing or eliminating the overpayment upon appeal; likewise, interest does not accrue in favor of Medicare either.
III. Controlling the Overpayment: Paying the Overpayment Upon Demand
If a provider is able to repay some or all of the overpayment upon demand, the provider has better control over the repayment process during the administrative appeals process, even if the provider adamantly disagrees with the overpayment assessment. The provider can avoid or limit recoupment and interest accrual. The provider will get its money back if it wins on appeal, though not with interest. Of course, if the provider does not win, Medicare keeps the money.
It is important for providers to understand the financial landscape of an overpayment demand. A provider familiar with the recoupment timeline and repayment options can immediately assess its finances and determine the best strategy for addressing the alleged overpayment during the administrative appeals process.
Do you have the policies and procedures in place to effectively deal with a Medicare Recoupment? Have you received correspondence from a ZPIC or RAC auditor and have delayed responding?
Lorraine Ater, Esq. is a health law attorney with the boutique firm, Liles Parker, Attorneys & Counselors at Law. 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 government audits of Medicaid and Medicare claims, licensure matters and transactional projects. Need assistance? For a free consultation, please call: 1 (800) 475-1906.
I. Background of AdvanceMed Transaction:
AdvanceMed has a new parent. Last week, it was announced that NCI, Inc., one of the nation’s most successful information technology companies, had acquired the outstanding capital stock of AdvanceMed Corporation (AdvanceMed), an affiliate of CSC. While the acquisition went largely unnoticed by the health care provider community, the transaction may, in fact, be quite significant.
With this acquisition by NCI, a recognized powerhouse in information technology, Medicare and Medicaid providers should expect AdvanceMed’s expertise in data mining and investigations to continue to grow. As AdvanceMed continues to fine-tune its data mining efforts and further expands its ability to conduct “Predictive Modeling,” providers will likely find their actions under the microscope like never before. It is therefore imperative that all health care providers immediately implement an effective Compliance Plan or further enhance their current compliance efforts.
NCI first announced its plans to acquire AdvanceMed last February. As NCI’s February 25th News Release noted:
“The Obama Administration has emphasized reducing fraud, waste, and abuse in Federal entitlements. AdvanceMed is ideally positioned to support the program integrity initiatives of CMS and other Federal Government agencies. . . We are extremely pleased to have AdvanceMed join NCI and believe that this acquisition will provide NCI an outstanding platform to address this rapidly growing market opportunity.”
In recent years, AdvanceMed has positioned itself to where it now has multiple contracts with the Federal government. AdvanceMed serves as the Zone Program Integrity Contractor (ZPIC) for Zone 2 and Zone 5. Additionally, the contractor also serves as a Comprehensive Error Rate Testing (CERT) contractor. On the Medicaid side, AdvanceMed serves as a Medicaid Integrity Contractor (MIC). While a host of other contractors have been awarded contracts covering other zones and program areas, AdvanceMed’s growth has been undeniably impressive.
As NCI announced in its April 4th “News Release” covering the acquisition:
“AdvanceMed is a premier provider of healthcare program integrity services focused on the detection and prevention of fraud, waste, and abuse in healthcare programs, providing investigative services to the Centers for Medicare and Medicaid Services (CMS). Serving CMS since 1999, AdvanceMed has grown rapidly, demonstrating the value and return on investment of the Federal Government’s integrity program activities.
AdvanceMed employs a strong and experienced professional staff, which leverages sophisticated information technology, data mining, and data analytical tools, to provide a full range of investigative services directed to the identification and recovery of inappropriate Medicare and Medicaid funds. AdvanceMed supports healthcare programs in 38 states with a staff of more than 450 professionals, including information specialists, nurses, physicians, statisticians, investigators, and other healthcare professionals.
AdvanceMed has multiple contracts with CMS under the Zone Program Integrity (ZPIC), Program Safeguard (PSC), Comprehensive Error Rate Testing (CERT), and Medicaid Integrity (MIC) programs. All of these programs are executed under cost plus contract vehicles. The largest contracts-ZPIC Zone 5 and ZPIC Zone 2-were awarded in late 2009 and 2010 and have five-year periods of performance.
The acquisition price was $62 million. Included within the price is a recently completed, state-of-the-art data center to support the ZPIC Zone 5 and ZPIC Zone 2 contracts. Additionally, NCI will make a 338(h)(10) election, enabling a tax deduction, which is expected to result in a tax benefit with an estimated net present value of approximately $6 million to $8 million. NCI expects the transaction to be slightly accretive to 2011 earnings.
As of the end of March 2011, AdvanceMed has a revenue backlog of approximately $300 million with approximately $51 million of that amount being currently funded. Revenue for the trailing 12 months ending March 31, 2011, is estimated to be approximately $51 million, all of which was generated from Federal Government contracts, and 99% of the work performed as a prime contractor. NCI’s AdvanceMed 2011 revenue, covering the nine-month period of April 2, 2011, to December 31, 2011, is estimated to be in the range of $43 million to $47 million (the equivalent of $57 million to $63 million on a full 12-month basis), with the midpoint reflecting a full-year growth of approximately 16%. . .”
II. Overview of the ZPIC Program:
Under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), CMS was required to take a number of steps intended to streamline the claims processing and review process:
- Using competitive measures, CMS was required to replace the current Medicare Fiscal Intermediaries (Part A) and Carriers (Part B) contractors with Medicare Administrative Contractors (MACs).
- After setting up the new MAC regions, CMS created new entities, called Zone Program Integrity Contractors (ZPICs).
- These actions were intended to consolidate the existing program integrity efforts. Over the last 2 — 3 years, ZPICs have been taking over PSC audit and enforcement activities around the country.
At the time of transition, there were twelve PSCs that had been awarded umbrella contracts by CMS. As these contracts have expired, CMS has transferred the PSCs’ fraud detection and deterrence functions over to ZPICs. Of the seven ZPIC zones established in the MMA, CMS has awarded contracts for a number of the zones. CMS is still working to issue awards for the final ZPIC zones. The seven ZPIC zones include the following states and / or territories:
- Zone 1 – CA, NV, American Samoa, Guam, HI and the Mariana Islands.
- Zone 2 – AdvanceMed: AK, WA, OR, MT, ID, WY, UT, AZ, ND, SD, NE, KS, IA, MO.
- Zone 3 – MN, WI, IL, IN, MI, OH and KY.
- Zone 4 – Health Integrity: CO, NM, OK, TX.
- Zone 5 – AdvanceMed: AL, AR, GA, LA, MS, NC, SC, TN, VA and WV.
- Zone 6 – PA, NY, MD, DC, DE and ME, MA, NJ, CT, RI, NH and VT.
- Zone 7 – SafeGuard Services: FL, PR and VI.
In many instances, these changes have been nothing more than a name change. ZPIC responsibilities are generally the same as those currently exercised by PSCs. While ZPIC overpayment review duties have not appreciably changed, the number of civil and criminal referrals appear to be increasing. In our opinion, ZPICs clearly view their role differently than that of their PSC predecessors. ZPICs clearly view themselves as an integral part of the law enforcement team, despite the fact that they are for-profit contractors. In consideration of their ability to recommend to CMS that a provider be suspended or have their Medicare number revoked, or even refer a provider to law enforcement for civil and / or criminal investigation, providers should take these contractors quite seriously.
Both ZPICs and PSCs have traditionally asserted that unlike their RAC counterparts, they are not “bounty hunters.” ZPICs are not paid contingency fees like RACs but instead directly by CMS on a contractual basis. Nevertheless, common sense tells us that if ZPICs aren’t successful at identifying alleged overpayments, the chances of a ZPIC’s contract with CMS being renewed are likely diminished. AdvanceMed’s recent announcement shows that they are a very profitable entity and are paid on a “cost-plus” basis (leaving room for bonuses and other incentives). Additionally, experience has shown us that despite the fact that ZPICs are expected to adhere to applicable Medicare coverage guidelines, a ZPIC’s interpretation and application of these coverage requirements may greatly differ from your understanding of the same provisions.
In recent years, ZPICs have been aggressively pursuing a wide variety of actions, including but not limited to:
- Pre-Payment Audit. After conducting a probe audit of a provider’s Medicare claims, the ZPIC may place a provider on “Pre-payment Audit” (also commonly referred to as “Pre-Payment Review”). Unlike a post-payment audit, there is no administrative appeals process that may be utilized by a provider for relief. Having said that, there are strategies that may be utilized by a provider which may assist in keeping the time period on pre-payment review at a minimum.
- Post-Payment Audit. Audits conducted by ZPICs primarily involve Medicare claims that have already been paid by the government. In many cases, the ZPICs appear to have conducted a strict application of the coverage requirements, regardless of whether a provider’s deviation from the rules is “de minimus” in nature. In doing so, it is not unusual to find that a provider has failed to comply with each and every requirement. Depending on the nature of the initial sample drawn, a ZPIC may extrapolate the damages in a case, significantly increasing the the alleged overpayment. In doing so, the ZPIC is effectively claiming that the “sample” of claims audited are representative of the universe of claims at issue in an audit.
- Suspension. While the number of suspension actions taken by ZPICs has steadily increased in recent years, Medicare providers should expect to see this number continue to grow. Under the Affordable Care Act (often informally referred to as the “Health Care Reform” Act), CMS’ suspension authority has greatly expanded.
- Revocation. As with suspensions, we have seen a sharp increase in the number of Medicare revocation actions taken over the last year. The reasons for revocation have varied but have typically been associated with alleged violations of their participation agreement. In some cases, the ZPIC contractors found that the provider has moved addresses and did not properly notified Medicare. In other cases, a provider was alleged to have been uncooperative during a site visit. Finally, there were a number of instances where the provider allegedly did not meet the “core” requirements necessary for their facility to remain certified.
- Referrals for Civil and Criminal Enforcement. ZPICs are actively referring providers to HHS-OIG (which can in turn refer the case to the U.S. Department of Justice (DOJ) for possible civil and / or criminal enforcement) when a case appears to entail more that a mere overpayment. However, just because a referral is made doesn’t mean that it will prosecuted. In many instances, HHS-OIG (and / or DOJ) will decline to open a case due to a variety of reasons, such as lack of evidence, insufficient damages, etc.).
III. Steps Providers Can Take Now, Before They are Subjected to a ZPIC Audit:
In responding to a ZPIC audit, it is important to remember that although they may not technically be “bounty hunters,” it is arguably to their benefit to find that an overpayment has occurred. These overpayments are often based on overlapping “technical” (such as an incorrect place of service code) and “substantive” (such as lack of medical necessity) reasons for denial. In recent years, the level of expertise exercised by ZPICs is often quite high — noting multiple reasons for denial and concern.
Unfortunately, the reality is that most (if not all) Medicare providers will find themselves the subject of a ZPIC, CERT, RAC or other type of claims audit at some point in the future. In our opinion, the single most effective step you can take to prepare for a contractor audit is to ensure that your organization has implemented and is adhering to an effective Compliance Plan. Several general points to consider also include:
Keep in mind your experiences with PSCs and other contractors. The lessons you have learned responding to PSC, CERT and RAC audits can be invaluable when appealing ZPIC overpayments. As you will recall, the appeals rules to be followed are virtually the same.
Monitor HHS-OIG’s Work Plan. While often cryptic, it can be invaluable in identifying areas of government concern. Are any of the services or procedures your organization currently provides a focus of HHS-OIG’s audit or investigative?
Keep an eye on RAC activities. Review the service-specific findings set out in annual RAC reports. Review targeted areas carefully to ascertain whether claims meet Medicare’s coding and medical necessity policies.
You never realize how bad your documentation is until your facility is audited. While many providers start out “over-documenting” services (to the extent that there is such a thing), a provider’s documentation practices often become more relaxed as time goes on – especially when the provider has not been audited for an extended period of time. In such situations, both physicians and their staff may fail to fully document the services provided. Moreover, the care taken to ensure that all supporting documentation has been properly secured may have also lapsed over the years.
Review your documentation. Imagine you are an outside third-party reviewer. Can an outsider fully appreciate the patient’s clinical status and the medical necessity of treatment? Are the notes legible and written is a clear fashion? Compare your E/M services to the 1995 or 1997 Evaluation and Management (E/M) Guidelines – have you fully and completely documented the services you provided? If dealing with skilled services, have you fully listed and discussed both the need for skilled services and the specific skilled services provided?
IV. Closing Thoughts:
Imagine a ZPIC 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, particularly the use of formulas and application of the RAT-STATS program when selecting a statistical sample and extrapolating the alleged damages based on the sample. Over the years, we have challenged the extrapolation of damages conducted by Medicare contractors around the country, including tens of thousands of claims. Regardless of whether you are a Skilled Nursing Facility providing skilled nursing and skilled therapy services, an M.D. or D.O. providing E/M services, a Home Health company or a Durable Medical Equipment (DME) company, it is imperative that you work with experienced legal counsel and statistical experts to analyze the actions take by a ZPIC.
Liles Parker attorneys and staff have extensive experience representing a wide range of Medicare providers in audits by ZPICs, PSCs and other contractors. Should you have questions regarding an inquiry from a ZPIC, PSC or RAC that you have received, please feel free to give us a call for a complimentary consultation. We can be reached at: 1 (800) 475-1906.
I. SNF Medicare Denial Letters Background
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:
- Ascertain the extent to which billing practices by SNFs changed between 2006 and 2008;
- Determine the extent to which billing varied by type of SNF ownership in 2008; and
- 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.
Liles 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.
(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.
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 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.
Number of False Claims Act Investigations Being Pursued is Currently at an All Time High . . . and is Likely to Go Even Higher Due to Changes to the False Claims Act Under Health Care Reform
(November 26, 2010): As set out in a U.S. Department of Justice (DOJ) Press Release issued earlier this week, during Fiscal Year 2010 (ending September 30, 2010), DOJ secured $3 billion in civil settlements and judgments in connection with cases involving fraud against the government. Notably, $2.5 billion (approximately 83%) of the recoveries were related to health care fraud cases. According to DOJ, since January 2009, $5.4 billion has been collected under the False Claims Act and returned to Federal programs (such as the Medicare Trust Fund) and / or the Treasury. As Assistant Attorney General of the Civil Division Tony West reported:
“Under Attorney General Eric Holder’s leadership, our aggressive pursuit of fraud under the False Claims Act has resulted in the largest two-year recovery of taxpayer dollars in the history of the Justice Department. . . Nowhere is this more apparent than in our success in fighting health care fraud. Since January 2009, the Civil Division, together with the U.S. Attorneys’ offices, commenced more health care fraud investigations, secured larger fines and judgments, and recovered more taxpayer dollars lost to health care fraud than in any other two-year period.” (emphasis added).
While the number of False Claim Act cases commenced during the last two years is at an all time high, this number is likely to further grown due to recent changes to the False Claims Act under Health Care Reform.
Pursuant to Section 6402 of the Patient Protection and Affordable Care Act (generally referred to as the “Health Care Reform Act”), Medicare participating providers, including Physicians, Group Practices, Chiropractors, Home Health Agencies, Hospices, Community Mental Health Clinics, and others who bill the identify an “overpayment” must report and return the overpayment, explaining (in writing) how the overpayment occurred within 60 days. As the statute provides:
‘The PPACA states that “[a]ny overpayment retained by a person after the deadline for reporting and returning the overpayment. . . is an obligation [as defined in the False Claims Act.”
Failure to meet this obligation may subject a provider to to monetary penalties of up to $11,000 per claim (in the case, in the form of an “overpayment,” plus treble damages.
As many providers can readily confirm, confirming that an overpayment exists isn’t also that easy, especially in complex cases where a patient has secondary insurance and / or the number of claims processed (as charges, credits and corrections) may be quite large. Additionally, due to the complexity of Medicare coverage and payment rules, two reasonable individuals may disagree as to whether an overpayment is present. In any event, the number of potential whistleblowers (individuals with knowledge of arguable overpayments under Section 6402), will undoubtedly increase.
Health care providers should review their current Compliance Plan to better ensure that internal audit and review mechanisms are in place so that any overpayments can be readily identified and repaid to the government within the 60-day deadline. The decision of where to disclose and return an overpayment, whether to a Medicare Administrative Contractor (MAC), the Department of Health and Human Services – Office of inspector General (HHS-OIG), or to DOJ, may differ depending on the facts. Depending on the size or complexity of an overpayment, a provider may need to contact legal counsel for advise on how to best handle the alleged overpayment. Due to the 60-day deadline, if legal counsel is to be involved, they must should be contacted as soon as possible.
An effective Compliance Plan case assist in the identification and proper handling of overpayments. If your practice has not already implemented an effective Compliance Plan, it should do so immediately.
Robert W. Liles has worked with a wide variety of heath care providers around the country in connection with False Claims Act and / or False Claims Case. Should your practice need assistance with compliance or overpayment issues. For a complimentary consultation, please call: 1 (800) 475-1906.
(August 31, 2010):
I. Introduction — Regional Health Care Fraud Summits:
Last week, department heads of the U.S. Department of Justice (DOJ) and the Department of Health and Human Services (HHS), met in Los Angeles, CA and conducted the second of a planned series of “Regional Health Care Fraud Prevention Summits.” Following-up on a similar conference held in Miami, DOJ Attorney General Eric Holder HHS Secretary Kathleen Sebelius discussed a number of ongoing concerns and remedial steps that are being taken to identify, investigate and prosecute instances of Medicare fraud. In addition to these agency heads, participants learned of current and additional planned fraud enforcement initiatives from Federal and State law enforcement officials.
II. Health Care Fraud Issues Discussed at the Summit:
As Attorney General Holder discussed, the administration’s current enforcement actions were having a significant impact on health care fraud. In fact, additional funding has been allocated to expand the HEAT program to additional cities:
“. . . Last year brought an historic step forward in this fight. In May 2009, the Departments of Justice and Health and Human Services launched the Health Care Fraud Prevention and Enforcement Action Team, or “HEAT.” Through HEAT, we’ve fostered unprecedented collaboration between our agencies and our law enforcement partners. We’ve ensured that the fight against criminal and civil health care fraud is a Cabinet-level priority. And we’ve strengthened our capacity to fight health care fraud through the enhanced use of our joint Medicare Strike Forces.”
This approach is working.
In fact, HEAT’s impact has been recognized by President Obama, whose FY2011 budget request includes an additional $60 million to expand our network of Strike Forces to additional cities. With these new resources, and our continued commitment to collaboration, I have no doubt we’ll be able to extend HEAT’s record of achievement. And this record is extraordinary.
In just the last fiscal year, we’ve won or negotiated more than $1.6 billion in judgments and settlements, returned more than $2.5 billion to the Medicare Trust Fund, opened thousands of new criminal and civil health care fraud investigations, reached an all-time high in the number of health care fraud defendants charged, and stopped numerous large-scale fraud schemes in their tracks.
We can all be encouraged, in particular, by what’s been accomplished in L.A. Criminals we’ve brought to justice here – in the last year alone – include the owners of the City of Angels Hospital, who pleaded guilty to paying illegal kickbacks to homeless shelters as part of a scheme to defraud Medicare and Medi-Cal; a physician in Torrance who defrauded insurance companies by misrepresenting cosmetic procedures as “medically necessary”; an Orange County oncologist who pleaded guilty to fraudulently billing Medicare and other health insurance companies up to $1 million for cancer medications that weren’t provided; a Santa Ana doctor who pleaded guilty to health care fraud for giving AIDS and HIV patients diluted medications; and a ring of criminals who defrauded Medi-Cal out of more than $4.5 million by using unlicensed individuals to provide in-home care to scores of disabled patients, many of them children.“ (emphasis added).
As HHS Secretary Sebelius further noted:
“In March, we gave him some help when Congress passed and the president signed the Affordable Care Act — one of the strongest health care anti-fraud bills in American history. Under the new law we’ve begun to strengthen the screenings for health care providers who want to participate in Medicaid or Medicare. And I am proud to announce that CMS is issuing a final rule strengthening enrollment standards for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).
This rule and others coming soon mean that only appropriately qualified suppliers will be enrolled in the program. The days when you could just hang a shingle over a desk and start submitting claims are over. No more power-driven wheelchairs for marathon runners. Under the new law, we’re also making it easier for law enforcement officials to see health care claims data from around the country in one place, combining all Medicare-paid claims into a single, searchable database. And we’re getting smarter about analyzing those claims in real time to flag potential scams. It is what credit card companies have been doing for decades: If 10 flat screen TV’s are suddenly charged to my card in one day, they know something’s not quite right. So they put a hold on payment and call me right away.
We should be able to take the same approach when one provider submits ten times as many claims for oxygen equipment as a similar operation just down the road. It’s about spotting fraud early before it escalates and the cost grows. As we step up our efforts to stamp out fraud, we’re holding ourselves accountable. The President has made a commitment to cut improper Medicare payments in half by 2012.”
While DOJ Attorney General Holder’s and HHS Secretary Sebelius’ presentations provided an overview of law enforcement’s current and future efforts, the comments of DOJ Assistant Attorney General for the Criminal Division, Lanny A. Breuer, were especially enlightening in terms of how providers are being identified and targeted for investigation. As Mr. Breuer discussed:
“In 2007, the Criminal Division of the Justice Department refocused our approach to investigating and prosecuting health care fraud cases. Our investigative approach is now data driven: put simply, our analysts and agents review Medicare billing data from across the country; identify patterns of unusual billing conduct; and then deploy our “Strike Force” teams of investigators and prosecutors to those hotspots to investigate, make arrests, and prosecute. And as criminals become more creative and sophisticated, we intend to use our most aggressive investigative techniques to be right at their heels. Whenever possible, we actively use undercover operations, court-authorized wiretaps and room bugs, and confidential informants to stop these schemes in their tracks.” (emphasis added).
As Mr. Breuer’s comments further confirm, health care providers are being identified based on their billing patterns. Through the use of data-mining, providers who coding and billing practices identify them as “outliers,” are finding themselves subjected to administrative, civil and even criminal investigation.
As counsel for a wide variety of health care providers around the country, we are especially concerned that honest, hard-working health care providers are finding themselves and their practices / clinics under investigation merely because: (1) their productivity is higher than that of their peers, or (2) their focus is specialized and often treats a higher percentage of seriously sick patients which ultimately requires a more detailed or comprehensive examination than one might normally find. Ultimately, through our representation of health care providers who have been targeted through data-mining, we believe that it is fundamentally unfair to investigate a provider merely on the basis of statistical data which can be manipulated in a thousand different ways in order to justify going after a specific provider or a type of practice.
On the administrative side, when data-mining is used as a targeting tool, providers are being audited and pursued by ZPICs, PSCs and RACs – each of is incentivized (either because they receive a percentage of any overpayment OR they are under contract with CMS to find overpayments and wrongful billings) to find fault with the provider.
IV. Continuing Health Care Fraud Concerns:
Under the current system, providers targeted through data-mining are likely to be saddled with extrapolated damages which can easily run into the millions of dollars, regardless of the fact that a large percentage of these providers are eventually exonerated (either fully or partially) when the case is heard by an Administrative Law Judge.
Health care providers subjected to an administrative audit (by a ZPIC, PSC or RAC), civil investigation (such as a review by the DOJ for possible False Claims Act liability), or criminal investigation (by DOJ or a State Medicaid Fraud Control Unit) should immediately contact your counsel. Extreme care should be taken when making statements to Federal or State investigators. Should the provider make a statement that is false or misleading, such comments could be used as the basis for bringing a separate cause of action. Your legal counsel may choose to handle all contacts with the government.
Robert W. Liles serves as Managing Partner at Liles Parker. Should you need assistance in connection with Medicare matters and cases. Should you have questions regarding these issues, give us a call for a free consultation. Call us at: 1 (800) 475-1906.
(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.
(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.
Providers Should Exercise Caution When Handling Overpayments, More Than Likely You Can’t Keep It, Even if the Payor Doesn’t Want it Back!
(July 15, 2010): Since the May 2009 passage of the Fraud Enforcement and Recovery Act (FERA) and subsequent enactment of the PPACA, we’ve heard a lot about how the government looks at Medicare overpayments and how providers should handle them. Two major misconceptions seem to underlie the public response to provisions clarifying that failure to timely refund Medicare overpayments can result in False Claims Act (FCA) liability.
I. Historical Overview of the “Overpayment” Issue
Prior to the clarification and statutory reinforcement of the “overpayment” issue provided by PPACA, a number of providers have mistakenly believed that in the absence of a direct demand for repayment, an identified overpayment would belong to the provider. Notably, this issue is not new. In fact, the recent enacted provisions have merely reinforced the government’s long-standing position that a provider has a responsibility to voluntarily refund Medicare overpayments without an overpayment determination being made by the government.
As you will recall, the agreement to return any overpayments is fundamental to a provider’s eligibility to participate in the Medicare program. Section 1866(a)(1)(C) of the Social Security Act (42 U.S.C. § 1395cc) requires participating providers to furnish information about payments made to them and to refund any monies incorrectly paid. Implemented in 2006, the Medicare Credit Balance Report (CMS-838) is designed to ensure timely compliance with this obligation.
Secondly, PPACA Section 6402 echoes the requirements of CMS’ 2002 proposed rule that providers “must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.” (67 Fed. Reg. 3662 (January 25, 2002)). A conservative reading of that proposed rule arguably suggested that HHS-OIG’s voluntary disclosure protocol may not be “voluntary” after all but a mandatory repayment may be required. Thus, the government has long sought to clarify when, not if, overpayment refunds would be required.
Despite the publicity resulting from PPACA and its FCA implications, it is important to remember that this issue was addressed over a decade ago. As set out in the 1998 holding in United States v. Yale University School of Medicine, Civil Action No. 3:97CV02023 (D.Conn.), the government intervened in a qui tam and obtained $1.2 million settlement based on alleged FCA violations for failing to return credit balances. In summary, providers who fail to promptly (within 60 days of identification) return an overpayment to the government do so at their own peril.
II. Handling Non-Federal Overpayments
As an aside, even if the overpayment at issue is not owed to a Federal payor (such as Medicare or Medicaid), it is imperative to remember that virtually no overpayments belong to a provider. In the case of non-Federal payors (such as a private insurance company), we are aware of numerous instances where the non-Federal payor has notified the provider that due to the administrative burden of applying an overpayment to a beneficiary’s account (typically due to the complexity of the payment history), the non-Federal payor has chosen to either “waive” collection of an overpayment or not to cash a check sent by the provider. This also regularly occurs when the identified overpayment is under a certain amount (such as $25.00). When faced with such a situation, a provider must review applicable State law to ascertain how an overpayment must be handled. For instance, in Texas, Title 6 of the Property Code requires businesses and other entities holding unclaimed property to turn the property over to the Texas Comptroller’s Office after the appropriate abandonment period has expired. As in most States, violation of these escheat laws can subject a provider to various penalties.
The lesson to be learned here is quite clear – regardless of who the payor is, an overpayment can rarely, if ever, properly be retained by a provider, regardless of the amount in controversy. A provider must carefully examine both Federal and State statutes when faced with this issue. The best practice is to return an overpayment to the payor (Federal, State, or private patient), regardless of the amount, upon identification. Should a provider be unable to identify who is owed an overpayment or cannot locate a valid address to return the overpayment (due to a variety of factors), your State’s escheat law must be considered.
This can be a complicated issue, especially when a large overpayment has been identified and it is owed to a Federal payor. While time is of the essence, it is strongly recommended that you contact your legal counsel as soon as it appears that a potential large or complicated Federal overpayment has been found. Your attorney can help guide you through this complex process.
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.
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): 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 126.96.36.199 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.