Facing a Zone Program Integrity Contractor (ZPIC) audit can have serious consequences for hospice facilities and their owners and administrators. When faced with a ZPIC audit, taking a proactive approach is critical, and hospices should be prepared to dispute their ZPIC’s findings on appeal.
Hospices have long been a primary target of the Centers for Medicare and Medicaid Services (CMS) with regard to Medicare fraud investigations, and hospices around the country are increasingly finding themselves at the center of government inquiries. In many cases, these inquiries involve audits by Zone Program Integrity Contractors (ZPICs) private contractors hired by CMS to uncover and help it take retributive action against overpayments to hospices and hospice Medicare fraud.
My Hospice is Being Audited by a ZPIC. What Now?
When a ZPIC conducts an audit, a few things can happen. One potential result (though one that is unlikely, particularly without legal representation) is that the ZPIC can conclude its audit without accusing the hospice of collecting overpayments or using fraudulent billing practices. Another option is that a Medicare Administrative Contractor (MAC) issues a demand for repayment based upon the ZPIC’s findings, and potentially imposes other penalties (such as suspending future payments), as well.
A third option is that the ZPIC or MAC refers the case to federal law enforcement authorities, such as the Department of Justice (DOJ) or the Office of Inspector General (OIG). When this happens, hospices and their owners and employees can face significant financial liability, exclusion from future participation in Medicare, and even federal criminal charges.
Why is My Hospice Being Targeted?
As we mentioned above, hospices have recently been high on the list of CMS’s and other federal agency’s Medicare enforcement priorities. This is due to perceived high levels of fraud in the hospice care sector.
Unfortunately, this perception is largely due to a limited number of high-profile Medicare fraud cases against individual hospices and their owners. In other words, as tends to be the case, a few bad actors have given the entire industry a bad name at least in the eyes of CMS. Another factor contributing to the high number of hospices facing ZPIC audits is the government’s increasing reliance on data analytics which focus on trends rather than the unique circumstances of individual hospices.
For example, due to the inherent nature of hospice care, some patient’s stays are longer than others. In addition, in certain geographic and demographic areas, there may be a greater or lesser need for long-term hospice care.
But, when the government’s software sees that one hospice is consistently billing for longer stays than others, it sees one thing: An outlier. The software does not factor in the unique circumstances that may fully justify the hospice’s Medicare billings, and it does not ask questions. Instead, what it often does is trigger an investigation or ZPIC audit? forcing a law-abiding hospice to take time and resources away from patient care and redistribute them to responding to the ZPIC or CMS.
Does Facing a ZPIC Audit Mean My Hospice is Being Accused of Fraud?
No, and that’s important. A ZPIC audit can lead to a federal Medicare fraud investigation, but the audit itself does not necessarily suggest an accusation of fraud. In order to avoid facing fraud charges, you should take appropriate steps to prevent an unfavorable outcome from your ZPIC audit including hiring experienced legal representation.
What Are the Potential Consequences of a ZPIC Audit?
If a ZPIC determines that your hospice has received unsupported payments from Medicare, the ZPIC and the MAC assigned to your region have authority from CMS to take a number of retributive actions. Depending upon the extent of the alleged improper receipts and why the ZPIC’s and MAC’s personnel believe that your hospice received overpayments, they have the authority to:
- Deny payment on future billings
- Institute a pre-payment review process for up to 100 percent of your hospice’s Medicare billings going forward
- Monitor your hospice for purposes of conducting future ZPIC audits
- Require repayment or recoupment of overpaid amounts
- Revoke assignment privileges
More importantly, however, if a ZPIC suspects that a hospice is defrauding Medicare, it has the ability to refer the case to the DOJ, OIG, and CMS. This can lead to a federal investigation and the potential for civil or criminal charges. In a civil case, hospice facilities, their owners, and certain employees can face liability for three times the government’s losses, fines of up to $11,000 per false claim, and other financial penalties. In a criminal Medicare fraud case, owners and key employees can face years and in severe cases decades behind bars.
What Are Some Common Issues in ZPIC Audits of Hospice Facilities?
Zone Program Integrity Contractor’s determinations of liability in hospice facility audits will frequently be misguided. For example, some of the issues that hospices will frequently encounter in ZPIC audits include:
- Improperly Denying Payment Due to Alleged Technical Deficiencies One common practice among ZPICs seeking to secure recoupments is to dispute Medicare billings, not on the basis of a lack of medical necessity but rather based upon alleged technical deficiencies with the billings themselves. Missing signatures, and even missing dates, have been cited on more than one occasion as grounds for payment denials. Yet, the law makes clear that, except in limited circumstances, such denials are beyond the scope of ZPIC’s authority.
- Improperly Questioning Hospices Patent Assessments After the Fact ZPIC audits assess hospice facilities and administrator’s decisions in hindsight, and this can lead to faulty conclusions. Take the common scenario of a hospice patient receiving care for more than six months which tends to be a trigger for ZPIC inquiry. While a ZPIC can come in and easily see that the six-month care period was exceeded, what it cannot see (without necessary input from the hospice) is that the hospice made a careful and medically sound assessment which placed the patient’s life expectancy at less than six months.
- Improperly Questioning Hospice Medical Directors and Physicians Judgment Similarly, ZPIC auditors will frequently attempt to second-guess hospice medical directors and attending physician’s judgment and then substitute their own judgment as a basis for denying Medicare reimbursement eligibility. However, medical directors and physicians must be afforded adequate discretion in light of the peculiarities of assessing patients and providing treatment in the hospice setting.
- Improperly Citing a “Failure to Decline” In some cases, ZPICs have attempted to wrongfully deny payment to hospices on the basis that a patient’s medical condition has “failed to decline.” However, this is not a recognized condition for reimbursement from Medicare, and any purported (violation) relating to the treatment of a patient whose conditions remain stable is an improper basis for denial.
- Improperly Citing “Violations” That Were Actually Compliant at the Time of Billing The Medicare billing regulations are amended regularly, and federal healthcare laws change all the time. As a result, a past billing that is non-compliant with current requirements could have been 100 percent legal at the time it was submitted to Medicare. However, it is not unusual for a ZPIC recoupment request to be based on a current regulation that was not in place at the time that the payment for which recoupment is sought was made.
- Improperly Denying Payment Based on Non-Binding Provisions The Medicare Benefit Policy Manual is a 16-chapter document that includes non-binding standards regarding billing procedures and medical services eligibility for Medicare reimbursement. Despite the non-binding nature of the Medicare Benefit Policy Manual, ZPICs will often attempt to deny payment or seek recoupment based upon a hospice’s failure to comply with the manual’s standards.
What if I Disagree with the ZPIC’s Determinations?
If you have recently gone through the ZPIC audit process, you are almost certainly dissatisfied with the result. For the reasons discussed above (among others), ZPIC audits regularly result in improper determinations, leaving hospices to dispute demands for recoupment and defend themselves in invasive federal investigations.
Fortunately, there is an appeals process for disputing ZPIC audit determinations. This process starts with submitting a request for “redetermination” to the MAC assigned to your region. If the MAC confirms the ZPIC’s findings (as is often the case), you can then appeal that decision by filing a request for “reconsideration” with the appropriate Qualified Independent Contractor (QIC).
Following reconsideration, there are actually three more levels of appeal for ZPIC audits. You can read more about the ZPIC appeals process in Seven Key Facts for Healthcare Providers About the ZPIC Appeals Process.
What Should I Do if My Hospice is Being Audited or Has Received an Unfavorable ZPIC Audit Determination?
Whether your hospice is currently being audited or you have already received a MAC demand letter as a result of a ZPIC audit, it is important that you speak with an experienced healthcare fraud defense attorney as soon as possible. If your ZPIC audit is ongoing, your attorney will be able to communicate with the auditors on your behalf and help you take appropriate steps to protect your rights and fight to avoid a determination of liability. If you have received an unfavorable determination, you need to assess your options for filing an appeal, and you may need to file for an appeal quickly in order to avoid intermediate recoupment liability.
Speak with an Attorney About Your Hospice Facility’s ZPIC Audit
To learn more about defending against a ZPIC audit or filing a ZPIC appeal, you can contact the attorneys at The Criminal Defense Firm For a free and confidential consultation, call 866-603-4540 or submit our online request form today.
Dr. Nick Oberheiden is a national litigation and trial criminal defense attorney who practices exclusively in the area of federal law.