ZPIC Audits Newest ‘Business Buster,’ Stakeholders Say

ATLANTA — RAC, CERT, ZPIC, take your pick. HME providers are now finding themselves the targets of multiple Medicare audits that, at least in some cases, threaten to cripple their businesses.

“In my career, there has never been a time where the government has been more intent on reducing improper payments,” said Wayne van Halem, president of The van Halem Group, an Atlanta-based consulting firm specializing in compliance, audits and appeals. “That’s one of the ways the administration wants to pay for health care reform initiatives.”

Van Halem, who has worked for Palmetto GBA and TriCenturion, said states where PSCs (Program Safeguard Contractors) have transitioned to ZPICs (Zone Program Integrity Contractors) are particularly feeling the heat.

One of those states is Texas. Barry Johnson, president of Texas Medical in Duncanville, Texas, and president of the Texas Alliance for Home Care Services, said he has heard from numerous providers throughout the state that they are being inundated with requests for documentation from Health Integrity, the ZPIC for Zone 4, which covers Texas, Colorado, New Mexico and Oklahoma.

Unlike RACs, which focus on identifying overpayments, or CERT audits aimed at measuring improper payments, ZPICs target potential fraud in the Medicare program and can audit the integrity of all Medicare claims for a particular provider with both pre- and post-pay audits.

CMS set up seven ZPIC zones, but so far has awarded contracts in only three. In addition to Health Integrity in Zone 4, contracts have gone to:

• AdvanceMed in Zone 5: Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia; and
• SafeGuard Services in Zone 7: Florida, Puerto Rico, and Virgin Islands.

Johnson said the ZPIC audits in Texas cover claims for everything from walkers and canes to complex rehab. The Zone 4 contractor has said the audits are based on what it calls “atypical billing practices,” he said.

“One provider got notification from Health Integrity that it was looking at 577 claims,” reported Johnson. “They are asking for documentation for 577 claims. You figure five to seven pieces of paper per claim documentation and that’s a lot of reams of paper. The cost of that and the time it takes is outrageous.”

It is so burdensome, he said, that “one provider has told us, ‘I have ceased doing anything in my business except trying to fulfill the requests for documentation.’”

The process, said Johnson, is a “business-buster.”

Providers have 30 days from the date on the letter of notification to get the ZPIC the information it has requested. If documentation is insufficient or is not received, the affected claims are denied and the contractor demands return of the funds. Even if providers win on appeal, their cash flow has already been interrupted by as much as six months, he said.

Perhaps most troubling, Johnson continued, is that providers who have contacted the ZPIC to ask questions about their audits have been told they are on 100 percent prepayment audit, which further interrupts cash flow and can impugn their integrity, even if there has been no evidence of fraud.

“We don’t object so much to the audits; it’s the intensity of the audits and the mechanism they are using,” Johnson said. “This is policy by interpretation. We believe their interpretation is quite zealous and it is certainly punitive, because they move right to the punitive action.

“If you bill enough claims,” he added, “there is going to be an error sooner or later. Those errors are not intentional, particularly if they change a rule in billing that sometimes people don’t completely understand.”

Growing Audit Alphabet

Auditing of HME claims is definitely on the upswing, confirmed consultant Andrea Stark of MiraVista LLC, Columbia, S.C.

“It seems like all of the new contracts CMS is awarding have to do with benefit integrity,” she said. “You’ve got your ZPICs, CERTs, RACs, jurisdiction medical review departments and the OIG.”

All of them — the ZPIC, the Comprehensive Error Rate Testing contractor, the Recovery Audit Contractors, the medical review departments of the DME MACs and the Office of Inspector General — have authority to conduct audits of HME providers.

“CMS has been under pressure to be held accountable [for the integrity of the Medicare trust fund],” said Stark. “And when the rocks start rolling down the hill, they start taking out a lot of things. So they certainly have increased the number of contractors. There are more avenues for detection of fraud in the program.”

The RAC and the CERT only look at claims that have been paid, and the CERT is seeking to catch contractor errors, Stark noted. While the RAC has been doing only automated reviews, she said the types of audits it will be doing “are going to get increasingly complex.”

The ZPICs and the medical review departments audit live claims in an effort to ferret out fraud, Stark said, and they do both post- and pre-pay reviews. They also handle external fraud referrals. “They are doing data analysis of claims and trying to anticipate trends and spikes and billing aberrations,” she explained.

Putting providers on prepayment review, as has been done in Texas, is within the ZPIC’s authority, she said. “Usually, there are extenuating circumstances, but they do have flexibility in their contract.”

That said, Stark agrees that audit contractors are not always in the right. In one example, she said, “there has been an issue with oxygen claims.

“CERT contractors have taken some liberties with interpreting Medicare guidelines regarding medical necessity,” she said. “They not only want to see the documentation normally in the patient’s file but also documentation of a current visit within the last six months. Patients, under the [local coverage determination], are not required to go back to their physician. CERT has been denying payment if that visit is not done. That’s not anywhere in the policy, and it is a source of contention. Many of these claims do end up being reversed.”

Not Documented = Not Done

To deal with the audits, Stark said, “providers need to anticipate and they need to prepare. These should not be massive surprises to providers. It is usually public knowledge [that an audit is being conducted on a particular product] … We are talking power mobility, diabetic supplies, CPAP supplies — a lot of them have been on the list for quite a while now.”

To get a sense of what is on the horizon, she suggested that providers take a look at the OIG work plan for 2010. The “hot audit” items, she said, include use of the KX modifier, billing after the date of death, power mobility, hospital beds, oxygen, enteral nutrition, diabetic supplies, repairs and service. (For more, see DME Makes OIG Work Plan Once Again, Oct. 5, 2009.)

The RACs are keying in on such things as wheelchair bundling, accessories and drugs for denied infusion pumps, prosthetic bundling, multiple DME rentals in a month and DMEPOS provided while a patient is in a covered Part A inpatient hospital stay.

“The biggest thing providers have to do to be prepared is to get their documentation in order,” said van Halem. “That is why they’re all getting in trouble. The documentation is really bad.”

Peggy Walker, RN, billing and reimbursement adviser for U.S. Rehab/VGM Group in Waterloo, Iowa, emphasized that providers should have as much documentation in their files as possible.

“If it is not documented, it is not done,” Walker stated. “[Providers] have got to make sure they have their documentation on file. Make sure the patient’s paperwork is correct. When they get RAC and CERT audits, they need to make sure who they are getting them from and give them what they ask for, and they need to do it in a very controlled type of package.”

Providers responding to audits, she said, should make copies of everything that is in the documentation package, which should include a cover sheet, the letter they received, numbered pages with the patient’s name, Medicare number and date of service and whatever is requested.

“Then send everything return-receipt-requested,” Walker said.

If a contractor is asking for documentation for a burdensome number of claims, such as in the Texas case, Walker advised contacting the contractor. “When they get that many requests, they can contact the ZPIC and say, ‘577 is far too many. Can I send in [documentation for] 30 and if you need more, I will send it in?’” Often, she said, the contractor will agree.

Walker also encouraged providers affected by a CERT oxygen audit to appeal their cases. There’s a good chance the CERT decisions will be reversed, she said.

“If you have a COPD emphysema client, they don’t get off oxygen,” Walker said. “There is no way anyone is going to reduce that oxygen. They are going to be on it until they die.” Thus, she said, there is no rationale for seeing their doctor every six months to determine if oxygen is still a necessity.

Walker said providers under prepayment review would be released once CMS contractors see improvement. “They are going to require [that providers] have a corrective action plan,” she counseled. “That’s a good thing.”

But Johnson wonders how good a thing it is if the prepayment review goes on indefinitely. “How long can you stand to be on prepayment audit?” he asked.

He said TACHS is working with legal counsel to see how best to help the Texas providers caught in the audit dilemma. He plans to meet with affected providers this week to find out how much time and money they are spending to comply with the requests for documentation, and he hopes to meet with the ZPIC soon.

“I understand the Health Integrity people are under a contract,” he said. “I think they are a little excessive in what they are doing, and they are impacting cash flow, which puts people out of business.”