Second in a Series on the 2010 Compliance Update from the AMBA National Medical Billing Conference
Continuing the very interesting presentation by Robert Liles, Esq., of Liles & Parker at the AMBA National Conference a few weeks ago on compliance risks for medical billing services and physician providers in 2011, let’s next review the section of his presentation on ZPICs (Zone Program Integrity Contractors) and RACs (Recovery Audit Contractors).
ZPICs More of a Concern
While many of us have been hearing about RACs for a while, ZPICs have received less attention, which is surprising since they are currently a far greater threat to Physicians, Home Health Agencies, Hospices, DME Suppliers, Physical Therapy Clinics and Chiropractors. While RACs have taken a number of the preliminary steps to begin auditing these providers, few RACs have initiated such audits (with the exception of certain DME claims). ZPICs are hired by CMS and work closely with both other CMS affiliated contractors and with law enforcement. ZPICs perform a wide range of medical reviews, data analyses and medical necessity assessments of Medicare claims. Over the last year, ZPICs have been actively conducting site visits around the country. In a number of cases, these site vistis have led to Medicare suspension and revocation actions.
In his presentation at AMBA, Mr. Liles mentioned that ZPICs around the country are increasing their enforcement efforts:
- ZPICs perform extensive data mining and typically identified audit targets based on their findings.
- Conducting medical reviews in support of benefit integrity activities.
- Supporting law enforcement and answering complaints.
- Investigating fraud and abuse.
- Recommending recovery of Federal funds through administrative action.
- Referring cases to law enforcement.
Mr. Liles said that through these activities, ZPICs are hoping to:
- Develop innovative data analysis methodologies for detecting and preventing Medicare fraud and abuse.
- Develop high quality fraud case referrals for law enforcement.
- Identify appropriate corrective actions.
Mr. Liles went on to describe the types of actions currently being taken by ZPICs. “Over the last six months, we have seen a proliferation of aggressive ZPIC enforcement actions, all of which represent a greater threat to providers than a mere overpayment demand.”
He said these actions have included:
- Placement on Pre-Payment Review.
- Referral for criminal investigation and prosecution.
- Payment suspension actions. Based on the site visit, ZPICs have alleged that “fraud or willful misrepresentation” is present. The contractor has then contracted CMS for approval to place the provider on payment suspension. We have also seen heard of suspension cases where the ZPIC alleged that the provider had engaged in “cloning.” These allegations were likely the result of the provider’s use of Electronic Medical Records software which did not require that the provider enter sufficient individualized, detailed patient information.
- Medicare Number Revocation Actions. ZPICs are assessing whether a provider meets the basic requirements for participation. Additionally, the contractors are checking to see if the provider has properly notified CMS of changes in location, etc. If not, in some cases it is recommending that CMS revoke the provider’s Medicare number.
“ZPICs appear to view themselves differently than they used to as PSCs,” Mr. Liles said. “While their duties have not dramatically changed, suspension and revocation actions are more frequently being taken.”
Mr. Liles recommended that one important thing third party medical billers can do to protect themselves in the case of an HHS-OIG investigation is to switch to charging a flat fee. HHS-OIG has discouraged the use of percentage-based billing for many years. “This removes the appearance of an incentive to turn a blind eye to improper billing,” he said. “The flat fee may be the wave of the future.”
He also mentioned that one of the main concerns with ZPICs is that if they place a provider on pre-payment review, this will likely cause a physician’s practice to get behind 3-4 months before payments start rolling back in. This can put a stranglehold on the practice’s cash flow (and on their billing company’s cash flow if they are reimbursed based on a percentage of claims billed or recovered – yet another reason to move to flat-fee billing). The best way to deal with a pre-payment review situation is not to hold off submitting claims, but to continue submitting and getting the claims denied. Initiate the administrative appeals process (and hopefully win). You should also get a third party consultant to review your claims. Hopefully, taking these claims through the appeals process and winning, coupled with a favorable expert opinion about your claims, will be sufficient to get the ZPIC to take a practice off of pre-payment review. If not, contact CMS’ Regional Office and contact your Congressman if necessary. They need to understand that the ZPICs actions are going to put the practice out of business, thereby hurting the Medicare patients – the very folks that the system is supposed to help.
RACs “An Unrealized Threat”–Until Now
Ironically, despite the fact that HHS-OIG dislikes for third-party billing companies to be paid on a percentage basis, that is precisely how RACs are compensated; they receive a percentage of the overpayment recovery. Mr. Liles mentioned that the reason the RAC program was quickly expanded nationwide was because a pilot project (primarily examining hospital claims) was found to be quite successful. This is a concern for practitioners and medical billers, he said, because hospitals are much more likely to have an effective compliance plan in place than are private physician practices.
“It’s going to be a slaughter” when RACs go into private practices to look at records and start comparing them to the billing and coding practices of many physician practices, Liles said.
In regard to RACs, Mr. Liles said there are some key issues to keep in mind:
- RACs are expected to develop proprietary methods and data mining techniques to identify both healthcare providers and claims to be reviewed.
- Prior audits primarily focused on hospital-based claims. While hospital reviews will continue, current and future audits will also include a wide variety of other Medicare providers.
- Each RAC has already scheduled and conducted in-person and / or teleconference education and outreach sessions for each region. Now that these educational sessions have been conducted, CMS approval to audit a wide variety of claims can be sought and these audits and records reviews can be conducted as soon as CMS approval is received .
- RACs have obtained claims data and are identifying new targets. Moreover, CMS has already approved the review of “medical necessity” issues (related to specific claims) by some of the RACs.
- For years, RACs have been an unrealized threat. They are finally here. You should monitor the claims being examined by the RAC covering your region.
- They must employ qualified clinical and coding/billing personnel.
- RACs are paid on a contingency basis (Varies from 9.0% to 12.5%).
Medicaid RACs: Pursuant to the Health Care Reform Act, by the end of 2010, states are required to contract with firms to serve as a Medicaid RAC.
- Similar to the Medicare RAC program, the Medicaid RAC program will pay companies on a percentage basis.
- Providers should expect RAC referrals for fraud (as opposed to mere demands for overpayments) to increase. Both CMS and RACs were criticized by GAO in its February 2010 report on RACs. As the GAO found, during the 3-year demonstration project, RACs identified over massive amounts in improper payments, yet referred only two cases of potential fraud to CMS.
Mr. Liles pointed out that as set out in CMS’ “Medicare Program Integrity Manual,” when auditing claims, specific concerns to be examined included but are not limited to:
- The contractor should evaluate if there is evidence in the medical record that the service submitted was actually provided and if so, if the service was medically reasonable and necessary.
- The contractor will look for possible patterns and / or trends in the medical record that may indicate potential fraud, waste or abuse. Examples include:
– In reviews that cover a sequence of codes (e.g. E/M codes), there may be evidence of a trend to use the high ends codes more frequently than would be expected.
– The medical records tend to have obvious or nearly identical documentation.
– In a provider review, there may be a pattern of billing more hours of care than would normally be expected on a given workday.
– Is there evidence in the medical record of alterations? These might include obliterated sections, missing pages, inserted pages, white out, and excessive late entries.
Notably, Mr. Liles pointed out that it is extraordinarily difficult for providers to sue and prevail against Medicare integrity program contractors. As set out under 42CFR421.316(a) Limitation on Medicare integrity program contractor liability:
(a) A MIP contractor, a person or an entity employed by, or having a fiduciary relationship with, or who furnishes professional services to a MIP contractor is not in violation of any criminal law or civilly liable under any law of the United States or of any State (or political subdivision thereof) by reason of the performance of any duty, function, or activity required or authorized under this subpart or under a valid contract entered into under this subpart, provided due care was exercised in that performance and the contractor has a contract with CMS under the subpart terms of the contract.
In summary, Mr. Liles recommended that if you have documentation for a claim that’s being questioned, “Appeal, appeal, appeal.” Otherwise, he said, your denial rates go up, and to stay off the radar, you want to keep your error rates as low as possible. He also strongly recommended: “If you owe money, pay it back!”
This is the second in a series of blog posts on this very interesting presentation; future posts will cover the Top 10 compliance risks for 2011. Visit our blog weekly to read the additional posts.
Robert W. Liles, Esq. owns a private law firm, Liles & Parker, which focuses on fraud defense, internal audits, compliance, and regulatory matters. Robert serves as AMBA’s General Compliance Counsel.