The U.S. Department of Health & Human Services Office of Inspector General (“OIG”) recently published a report entitled “Enhancements Needed in the Tracking and Collection of Medicare Overpayments Identified by ZPICs and PSCs.” Zone Program Integrity Contractors (“ZPICs”) and Program Safeguard Contractors (“PSCs”) are private companies with which the Center for Medicare & Medicaid Services (“CMS”) contracts to help combat fraud, waste, and abuse in the Medicare program. ZPICs and PSCs conduct audits and investigations of healthcare providers that submit claims to Medicare. When such an audit or investigation uncovers an overpayment, the ZPIC or PSC refers the matter to a Medicare Administrative Contractor (“MAC”) that then initiates attempts to recoup the identified overpayments. The OIG’s new report grew out of a study into whether overpayment referrals from ZPICs and PSCs resulted in significant recoveries to the Medicare program.

The OIG found that ZPICs and PSCs were responsible for identifying overpayments in the Medicare program totaling $559 million during FY 2014. However, the dollar amounts of identified overpayments varied widely among ZPICs and PSCs, and half of the overpayment dollars were identified by just two out of the ten contractors. Of the $559 million identified overpayments identified by ZPICs and PSCs in FY 2014, MACs attempted to collect $482 million but only succeeded in recovering only $96 million. This collection rate was only about 20%, which was a significant improvement from the 7% collection rate previously reported in a 2010 review of similar recovery actions. Although such recovery efforts have substantially increased, the OIG noted that the rate is still low and it intends to take further steps to increase recovery rates.

To enhance efforts to recover identified overpayments, the OIG’s report contained several recommendations for CMS regarding possible new strategies. The OIG recommends that CMS implement surety bond requirements for home health providers and possibly other providers depending on their level of risk of becoming insolvent. Also, the OIG recommends that CMS create a standard report format and unique identifier system to be used by all contractors to better track overpayments and collection efforts. CMS agreed with most of the OIG’s recommendations, but did not concur with the OIG’s recommendation on surety bonds for home health providers. CMS did not disagree with the surety bond recommendation, but reported it needed to further evaluate how to effectively implement such a requirement to avoid undue burden to providers.

The OIG’s report shows its consistent resolve to improve CMS’s ability to recover Medicare overpayments through the efforts of private contractors like ZPICs and MACs. The attorneys at Chilivis Grubman represent healthcare providers of all types and sizes in connection audits and audit appeals. For any questions, or if we can assist you in connection with any such matter, please contact us at (404) 262-6505 or