What is a ZPIC Investigation?

Healthcare Fraud Defense Attorneys Explain ZPIC Investigations

If your medical practice, hospice, nursing home, home health agency, or other Medicare-reimbursed health care practice is being investigated by a Zone Program Integrity Contractor (ZPIC), it is critical that you gain a clear understanding of what is at stake. Here, the health care fraud defense attorneys of The Criminal Defense Firm explain what you need to know when facing a ZPIC investigation.

Zone Program Integrity Contractors (ZPICs) are private contractors who get paid by the federal government to uncover abuses of the Medicare system and recover payments made to health care providers in non-conformance with Medicare’s complex billing regulations. While the direct results of a ZPIC audit or ZPIC investigation including recoupments and denial of future payments can be substantial, the indirect consequences can be far more severe. Department of Justice (DOJ) or Office of Inspector General (OIG) investigations, civil or criminal prosecution, fines and treble damages, exclusion from Medicare are just some of the consequences that can flow from a ZPIC investigation.

Now that you know some of what is at stake (see below for a comprehensive overview of the potential consequences of a ZPIC investigation), you know why defending your health care practice during the investigation needs to be your top priority. Health care providers who take a proactive approach to their ZPIC investigations are frequently those who have the best results. To prevent your practice from being put at risk by a ZPIC investigation, here are some of the key facts that you need to know:

All About Medicare’s Zone Program Integrity Contractors (ZPICs)

ZPICs: Who (and What) They Are

Zone Program Integrity Contractors exist under the Medicare Integrity Program. The Medicare Integrity Program was established by the Health Insurance Portability and Accountability Act (HIPAA) of 1996 in order to, “strengthen the Centers for Medicare and Medicaid Services” (CMS) ability to detect and deter potential fraud, waste, and abuse in the Medicare program.

Following HIPAA’s enactment, Congress enacted the Medicare Modernization Act (MMA) in 2003. The MMA implemented what is known as “Fee-For-Service” contracting reform an effort to combat Medicare overspending by using private contractors to investigate health care providers suspected of receiving overpayments, whether through fraud or unintentional misbilling.

Enter the Zone Program Integrity Contractors. These private companies are assigned to seven “zones” throughout the United States, as follows (subject to change):

• Zones 1, 6 and 7: Safeguard Services California, Connecticut, Delaware, Florida, Hawaii, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Nevada, Pennsylvania, Rhode Island, Vermont, and Washington D.C.
• Zones 2 and 5: AdvanceMed (an NCI Company) Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Tennessee, Utah, Virginia, Washington, West Virginia, and Wyoming
• Zone 3: Cahaba Indiana, Illinois, Kentucky, Michigan, Minnesota, and Ohio
• Zone 4: Health Integrity Colorado, New Mexico, Oklahoma, and Texas

As “Fee-For-Service” government contractors, these ZPICs get paid based upon the recoveries they secure on behalf of CMS. As a result, they have a direct financial incentive to identify as many overpayments and overbillings as possible. If you go through a ZPIC investigation without legal representation, you can almost certainly expect to be found liable and face the potential for a subsequent federal investigation.

ZPICs: Their Role in the Medicare “Fee-For-Service” Recovery Program

Under the MMA, Medicare Administrative Contractors (MACs) are at the center of CMS’s “Fee-For-Service” recovery program. These are the primary investigative contractors authorized under HIPAA and the MMA. Underneath these MACs, various other contractors have responsibility for investigations in specific areas of health care and Medicare enforcement. For example, ZPICs are tasked with performing “integrity” enforcement functions with respect to Medicare Parts A and B; Durable Medical Equipment Prosthetics, Orthotics, and Supplies; Home Health and Hospice Services; and Medicare-Medicaid data matching.

Along with ZPICs, the contractors authorized under HIPAA and the MMA include:

• Medicare Administrative Contractors (MACs)
• Program Safeguard Contractors (PSCs)
• Supplemental Medical Review Contractors (SMRCs)
• Quality Improvement Organizations (QIOs)
• Qualified Independent Contractors (QICs)
• Recovery Audit Contractors (RACs)
• Unified Program Integrity Contractors (UPICs)

In select circumstances, a single contractor can serve multiple functions. For example, AdvanceMed and Safeguard Services are both ZPICs and UPICs. Providers will often face investigations by multiple administrative contractors; and, if you need to appeal the outcome of your ZPIC audit, the first stage will be seeking redetermination by a MAC.

ZPICs: What Are They Looking For?

So, your health care practice or organization is being investigated by a ZPIC, what exactly does that mean? In other words, what is the ZPIC looking for?

As we indicated above, ZPICs are looking for improper billings under the federal Medicare system. This includes fraudulent billings (i.e., intentional requests for overpayment in violation of the Medicare billing regulations and federal health care law), but it also includes unintentional and inadvertent submissions of inaccurate requests for reimbursement. If the Medicare system has paid more than it was supposed to (or if a request for overpayment has been submitted), the ZPIC wants to uncover it so that it can bill CMS for services rendered.

Some of the types of issues that ZPICs may attempt to identify in order to pursue a financial recovery include:

• Billing for non-qualifying services and equipment, including those which are not medically necessary
• Falsifying or failing to keep appropriate patient records
• Missing or fraudulent physician certifications
• Phantom billing, double billing, upcoding, unbundling of services, and other similar types of billing violations
• Technical violations of the Medicare billing regulations

Unfortunately, in their efforts to collect for (and from) Medicare, ZPICs and other administrative contractors will overreach beyond their scope of authority. In many cases, they will flat-out make mistakes as well. From seeking to recover funds for reasons that exceed their statutory authorization (e.g., due to missing dates or signatures) to attempting to apply incorrect Medicare regulations (i.e., applying current regulations to past billings that complied with the then-current regulations), ZPIC’s practices need to be carefully scrutinized to ensure that health care providers are not being forced to repay, or denied Medicare reimbursements inappropriately.

Why is My Home Health Care or Hospice Organization Being Investigated by a ZPIC?

While many ZPIC investigations target health care providers and scam artists that have received improper payments from Medicare, it is not unusual for completely innocent providers to face inquiries from ZPICs in all seven zones around the country. There are a few reasons why:

• Data-Driven Investigative Focus The federal government and its administrative contractors are increasingly relying on data analytics to identify potential targets for health care fraud investigations. If your practice or organization looks “unusual” when compared to industry-wide or sector-wide data, it is likely to become the target of an investigation. Of course, being unique does not at all signify reliance on improper billing practices, and this will be a vital component of many health care provider’s ZPIC investigation defense strategies.
• Sectors in the Government’s Crosshairs Certain sectors of the health care industry have garnered special attention from the DOJ, OIG, and other federal law enforcement agencies in recent years. Several of these sectors, including hospice and home health care, are also within the ZPIC’s jurisdiction. Due to several recent high-profile Medicare fraud cases, hospices and home health agencies are currently prime targets for ZPIC and federal law enforcement investigations.
• The “Fee-For-Service” Recovery Program Finally, remember that ZPICs operate under the “Fee-For-Service” model. The more they recover, the more they get paid. If your practice or organization is being targeted by a ZPIC despite strict adherence to the Medicare billing regulations, it could simply be a matter of the ZPIC attempting to profit from launching another investigation.

What Are My Rights During the ZPIC’s Investigation?

Since ZPICs are not government agencies, health care providers and organizations have broad rights during the investigative process. Once again, ZPICs will often attempt to overreach; in some cases, they may attempt to improperly deny provider’s rights or obscure the truth about the provider’s options during their ZPIC investigations. As a health care provider facing a ZPIC audit, your rights include (but are not limited to):

• The right to legal representation at all stages of the audit process
• The right not to disclose information without legal obligation
• The right to designate certain employees (or your counsel) as sole points of contact for ZPIC investigators
• The right to question ZPIC’s methods, including by hiring independent experts in the field of Medicare compliance
• The right to the substantiation of any adverse findings flowing from a ZPIC investigation

What Are the Potential Consequences of a ZPIC Investigation?

As we mentioned above, the direct and indirect consequences of a ZPIC investigation have the potential to be substantial. In the most severe cases, they can put health care providers and organization’s entire businesses at risk. An unfavorable ZPIC investigation can ultimately lead to:

• Recoupment and denial of payment for improper Medicare billings
• Pre-payment review of future Medicare billings
• Revocation of assignment privileges
• Ongoing scrutiny leading to an increased risk of future audits by ZPICs, RACs, MACs, and other administrative contractors
• Disqualification from Medicare, Tricare, and other federal benefit programs
• Civil or criminal investigation by the federal government
• Civil penalties including recoupments, fines, treble damages, and other financial obligations that can easily reach into the millions of dollars
• Criminal penalties including substantial financial liability and federal imprisonment of key personnel

Get the Help You Need for Your ZPIC Investigation

Is your health care practice or organization facing a ZPIC investigation? If so, the federal health care defense attorneys at the The Criminal Defense Firm can help. To get started with a complimentary case assessment, call the firm nationwide at (888) 452-2503 or request a confidential appointment online now.

Brian J. Kuester

Brian Kuester offers his extensive experience to counsel companies and individuals under civil or criminal government investigation. When resolution requires litigation, clients choose Mr. Kuester’s proven court and litigation experience.