It is becoming increasingly common for healthcare providers that participate in Medicare Part B to become the target of post-payment audits conducted by the contractors working for the Centers for Medicare and Medicaid Services (“CMS”). In many cases, such an audit is the result of data analysis conducted by a CMS contractor into the provider’s billing practices or the receipt of a complaint from a beneficiary. Typically, a CMS contractor may reopen a claim within one year from the date of payment, four years if there is “good cause” to do so, or at any time if there is fraud “or similar fault.” One type of CMS contractor that conducts such post-payment audits is a Zone Program Integrity Contractor, or “ZPIC.” The ZPIC for Zone 5, which includes Georgia, the Carolinas, and several other states, is AdvanceMed; other ZPICs include Safeguard Services, Cahaba, and Health Integrity.
The Dangers of a ZPIC Audit
Of all the categories of CMS contractors, ZPICs present particular danger to the unwary provider. ZPICs are specifically tasked with investigating instances of suspected fraud, waste, and abuse in the Medicare system. Unlike other types of CMS contractors that are typically limited to conducting “desk reviews” of claim submissions, ZPICs conduct “law enforcement-like” audits and investigations which, in addition to data analysis (often using the relatively new Fraud Prevention System) and desk reviews, often include onsite visits and beneficiary and/or provider interviews. Where the ZPIC finds billing errors or other irregularities, it has a number of available options including referring the matter to the Medicare Administrative Contractor (“MAC”) for an overpayment recoupment or implementation of a pre-payment review or, where the ZPIC’s investigation uncovers possible fraud, referring the matter to a law enforcement agency such as HHS’ Office of Inspector General (“OIG”) or the Department of Justice (“DOJ”).
Post-Payment Review Results and Provider Education Letters
The result of some ZPIC audits is a “Post-Payment Review Results and Provider Education” letter. These letters typically inform the recipient provider that its purpose is to provide “detailed information on the results of [the] review as well as supply [the provider] with additional education” regarding the ZPIC’s findings. After discussing any errors that the ZPIC found and listing an overpayment (typically a fairly low number due to the fact that such audits are typically not conducting using a statistically-valid random sample (“SVRS”) that can be extrapolated), the letter goes on cite the “60-day rule” (which has been discussed in previous client alerts and requires any Medicare provider to report and return any overpayments within 60 days of identification) and inform the provider that violations of the 60-day rule could result in liability of the federal False Claims Act.
Because these audits typically result in a relatively small overpayment determination for the reason stated above, they can easily become a trap for the unwary provider. For example, it is often the case that the ZPIC finds a very high error rate that could have resulted in a very high overpayment determination had an SVRS been utilized but, because a non-random sample was used, the overpayment figure remains very low. However, because the “education” letter puts the provider on express notice of potential billing errors and possible additional overpayments, and even cites the provider’s obligations to report and return any overpayment under the 60-day rule and the False Claims Act, a provider that ignores such a letter and does not conduct a further investigation into the ZPIC’s findings places itself at high risk for further audits/investigations and the potential for tremendous liability under the False Claims Act. Given the level of detail in these ZPIC letters, it would be exceedingly difficult for a provider to later claim that it had no reason to know of any potential billing errors and overpayments.
Conclusion
Because of the tremendous power of a ZPIC, it is crucial that a provider that receives a request for records from a ZPIC such as AdvanceMed seek legal counsel to assist the provider through the process. Further, regardless of the overpayment amount cited in such a ZPIC post-payment review letter, it is important for providers that receive such a letter to contact counsel immediately and begin an internal audit to determine whether there is any additional overpayment amount that must be reported and refunded to the government. Because CMS guidance states that such internal audits must be conducted “with all deliberate speed,” time is of the essence.
The attorneys at Chilivis Grubman work with healthcare providers of all types in connection with audits by government and commercial payors, as well as internal audits and investigations. For any questions, or if we can assist you in connection with a healthcare regulatory or compliance issue, please contact us at (404) 262-6505 or sgrubman@cglawfirm.com.