Small Texas Victory in Big ZPIC Audit Fight

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.