DALLAS — Attorneys working in Texas won a small victory July 9 in opposition to ZPIC (Zone Program Integrity Contractor) audits. 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.
According to the Texas Alliance for Home Care Services, such audits in the state have resulted in a substantial number of targeted companies being put on 100 percent prepayment review, which means all future claims are denied pending a lengthy five-step administrative review. The extreme sanction — in effect shutting down the company's revenue stream — even happens in cases when a provider is apparently in compliance and provides auditors with more than ample documentation.
At the request of TAHCS, attorneys for legal counsel Thompson, Coe, Cousins & Irons, LLP, have been asking for documented evidence of how Zone 4 (Texas, Colorado, New Mexico and Oklahoma) contractor Health Integrity performs its duties under the CMS contract for DME in providing ZPIC audits.
"The request for information was initiated months ago by TAHCS as a response to atypical and excessive audits exceeding more than 500 for some providers," said TAHCS president Barry Johnson.
As a result, two State District Court judges in Texas have ruled that two Texas Rule of Civil Procedure 202 petitions related to the ZPIC audits can proceed. A Rule 202 petition is an investigative tool (specific to Texas law) that can be used to request deposition testimony either in anticipation of a lawsuit or to investigate a potential claim. In this case, the intent is to determine if ZPIC audits have been performed in accordance with required policies and procedures.
"This is a landmark decision which gives the right to examine the ZPIC contract and all methodology associated with the audits plus any related information between CMS and HHS," Johnson said.
"This is the first time in Texas that someone has been able to get a Rule 202 petition against a CMS contractor, but the bigger question is whether we can obtain the depositions and continue with the investigation," said Thompson Coe attorney Edward Vishnevetsky. "The Rule 202 proceeding allows attorneys to obtain deposition testimony without there being an actual lawsuit. Now that the court has ordered the testimony, the next step is to seek to enforce the court order; they have a period of time to respond and may pursue other possible objections and defenses.
"We expect they will oppose us in a number of ways," added Vishnevetsky. "This is cautious optimism — a very small win on a big issue."
The Rule 202 petition is one of several routes Thompson Coe is pursuing against CMS and Health Integrity. The attorneys have also initiated administrative remedies, which are ongoing, but there has been no response. And they have filed a Freedom of Information Act request to obtain copies of policies and procedures and of the contract between Health Integrity and CMS.
"The documents were promised but have not been provided," said John Browning, another Thompson Coe attorney working on the issue.
"The important thing is that we are showing that, unlike previous times, the DME industry is not going to sit idly by, but instead we will try to obtain answers in new and creative ways that have not been tried before," said Vishnevetsky. The attorneys are also hoping to initiate a dialog with Health Integrity and the U.S. Department of Health and Human Services to find the answers to "timely and appropriate questions." They contend CMS and Health Integrity have failed to live up to their own internal policies and procedures.
The Rule 202 petition was filed on behalf of a single provider but others could become involved, the attorneys said. The use of the Texas-specific petition mechanism could make it less likely the case would be moved to federal court given the special treatment courts have historically accorded to Rule 202 procedures, said Browning.
"We don't have the other side's perspective, but it appears there are a substantial number of claims being denied despite the provider having all the needed medical documentation, and the reasons being given are on their face defective," Browning said.
For example, auditors have said that prescriptions are not current, yet claim documentation says the equipment was delivered on or near the date it was ordered. In another example, auditors say the equipment is not medically necessary, but there is a physician's prescription on file to confirm otherwise. In one instance, a piece of oxygen equipment was denied as being not medically necessary yet the patient had COPD and subsequently died of it.
Browning and Vishnevetsky also question the repeated use of the 100 percent pre-payment review, the most severe sanction, without applying any intermediate sanctions beforehand. "It's disturbing to us, and we can only speculate what the reason is," said Browning. "That's why we are seeking this information."
It's hard to say the exact number of companies being targeted in the state, but Vishnevetsky said he has seen evidence that there are many: "We were on the phone in January with dozens of providers in the process of having an audit performed, and the numbers have risen since that point." Added Browning, "We get calls on a daily basis."
Also troubling is that targeted companies receive no notification that they are on 100 percent prepayment review, but find out only when they call to ask, Vishnevetsky said. "They didn't get a letter, they didn't get a phone call," he said.
"It's like something from a Kafka novel," said Browning. "These are companies that have provided substantial documentation and have still found themselves in this position. Certainly companies are well advised to keep as detailed and complete documentation as possible. It can only help you, but it is not a guarantee against this kind of action being taken."
"The purpose of audits is to find areas of fraud and to educate providers," said Vishnevetsky. "We are finding that there is no education, no dialog — only sanctions, and putting someone on 100 percent prepayment review for months will suffocate their revenue stream and make them shut their doors. Audits are an essential tool in any industry, especially if the government is the payer, but we are finding that the procedures being followed are not in line with the purposes of the audits."
"Accountability is a two-way street," said Browning.
