Hospices Under the Microscope: Are You Prepared for ZPICs?

Hospices Under the Microscope:

Are You Prepared for ZPICs?

Paula G. Sanders, Esquire Principal & Chair Health Care Practice

Post & Schell, PC Chubb Health Care Webinar April 2, 2013

Objectives

• Understand how ZPICs differ from other audits

• Discuss how a ZPIC audit unfolds

• Evaluate your risks and potential exposures

Medicare Integrity Programs

• Regional Home Health Intermediary (RHHI)

• Medicare Administrative Contractors (MACs) (Replacing fiscal intermediaries and carriers)

Medicare Integrity Programs

• Recovery Audit Contractors (RACs)

• Program Safeguard Contractors (PSCs)

• Zone Program Integrity Contractors (ZPICs)

• Medicare Prescription Drug Integrity Contractors (MEDICs)

• Quality Improvement Organizations (QIOs)

Fraud or Abuse?

• Fraud: intentional deception or

misrepresentation of facts for purpose of gaining an otherwise unauthorized benefit

• Abuse: actions that are inconsistent with accepted, sound medical or business

practices

 Directly or indirectly results in unnecessary costs

Zone Program Integrity Contractors

(ZPICs)

• Consolidation of PSCs and MEDICs

• Coordination of claims processing and benefit integrity activities

• Ensure integrity of ALL Medicare-related claims

 Parts A, B, C, D, Home Health, DME, Hospice and coordination of Medi-Medi data matches

ZPIC Function: Identify FRAUD

• Primary goal: investigate instances of suspected fraud, waste and abuse

 NOT RANDOM

• Identify need for CMS administrative actions

 Payment suspensions, prepayment edits or auto-denial edits

ZPIC Responsibilities

• Regional Medicare data analysis

• Fraud case development

• Fraud complaint processing & resolution

• Provider education related to fraud investigations

• Ability to initiate payment suspensions and provider exclusions

Possible Sources of ZPIC Cases

• Referrals from MACs

 Suspected fraudulent or abusive

situations or patterns (data analysis)

• Complaints from beneficiaries, other providers or whistleblowers

• Office of Inspector General (OIG) Hotline

ZPIC Investigative Authority

• Not required to give notice

• Request medical records & documentation

 No limit to record requests

 No defined look-back period

• Conduct on-site visits and interviews of employees & beneficiaries

• Use probe sampling, statistical sampling & extrapolation

Use of Statistical Sampling for

Overpayment Estimation

• A Medicare contractor may not use

extrapolation to determine overpayment amounts . . . . unless . . .

 There is a “sustained or high level of payment error;” or

 Documented educational intervention has failed to correct the payment error

Extrapolation

• No CMS guidance regarding “high error rate”

• ZPIC must give notice of extrapolation

unless part of law enforcement investigation

• Extrapolate findings of sample to universe of claims for specified period

• Result: substantial overpayment determinations

ZPIC Sanction Authority

• Suspend or withhold payments

• Determine & collect overpayments

• Refer for exclusion from Medicare

• Refer cases to law enforcement

• Grounds for possible revocation

 Violation of provider agreement

Challenging ZPIC Findings

• No appeal of payment suspensions

• Appeal overpayment demands through Medicare Administrative Appeal process

• Five levels of appeal

• Lengthy process

 May only halt recoupment through second level

ZPIC Appeal Levels

1. Redetermination: MAC

2. Reconsideration: Qualified Independent Contractor (QIC)

3. Request for Hearing: Administrative Law Judge (ALJ)

4. Review of ALJ Decision: Medicare Appeals Council (MAC)

Target Areas for Hospice Claims

• Election statements

• Certifications of terminal illness

 Patients ineligible for hospice care

• Eligibility and long lengths of stay

• Residence of patients: nursing homes (SNFs), assisted living facilities (ALFs), boarding homes

• Terminal diagnosis

Target Areas for Hospice Claims

• Poor documentation

• Inappropriate general inpatient care claims

• Inappropriate continuous care claims

• Duplicate drug claims

• Overlapping Part A claims (hospital, SNF)

Target Areas: Hospice Utilization in

SNFs (OIG Work Plan 2011)

• Data mining: Hospice Medicare A claims and MDS

• Characteristics of nursing facilities with high hospice utilization

 Prior report: 82% of SNF/hospice claims did not meet coverage requirements

• Incentives to admit patients likely to have long stays

ZPIC Letters

• Identifies ZPIC authority to “conduct reviews of activities of providers…including medical utilization review and fraud review”

• “Please return the requested information …within (15)(30) days. Failure to comply …may result in exclusion … and/or

suspension of payment [without notice], payment denial or declaration of

ZPIC Letters--Extrapolation

• “Please note failure to furnish this

information shall result in the cancellation of all relevant claims. . . . Any

overpayment determined by us may be projected by extrapolating from the actual overpayment to the entire universe.”

ZPIC Letters: Notice of On-Site

Visit

• Hand-delivered at time of visit

• “On [Date] an on-site inspection and

interviews of facility staff will be conducted by six (6) representatives from this office. At that time you will be asked to produce approximately thirty-six (36) patients’

records (Attachment A) and financial records (Attachment B).”

Types of Information Requested

• All contracts and agreements with

physicians, pharmacies, SNFs, ALFs, boarding homes

• List of all current and former employees

 Name, job title, date of birth, address,

phone number, date of hire/termination or resignation

Types of Information Requested

• 1099 or W2 statements for owners,

managers, directors and medical directors

• Payrolls: independent contractors and

regular employees with title and contact info

• 1099 statements for vendors

• Policies and procedures

Types of Information Requested

• Check registers, wire transfer registers, financial ledgers

• Name and number of Compliance Officer

• Contracts for accounting, management, financial consulting, bookkeeping

• “On the cover letter, please list the name and contact information for the person

Types of Patient Information

Requested

• Medical records for beneficiaries and dates of service as shown on attached spreadsheet

• Unduplicated list of beneficiaries

 Place of service address, phone number, dates of admission & death, discharge or revocation, primary nurse

Time Frames for Submitting

Documents

• Prepayment review: 30 calendar days of request, no extensions

 Claims denied if documents not received by day 45

• Post payment review: 30 calendar days of request, extensions discretionary

Hypothetical Case Study: Hospice

for the Debilitated

• Primary diagnosis for 69% of patients is debility, highest in the region

• ZPIC identifies this as an “outlier”

• ZPIC requests 30 medical records

• Files sent do not contain signed notice of election forms (100% error rate)

Hypothetical Case Study: Hospice

for the Debilitated

• 100% error rate for sample claims reviewed: $51,679.19

• “High error rate” allows ZPIC to extrapolate to all claims that had been paid during

period under review

$51,679.19 becomes

Hypothetical Case Study: Hospice for

the Debilitated--#1 (no regulatory

counsel)

• Hospice discovers that medical records clerk did not copy the notices of election

• Records were sent but not copied

• Hospice signed certification statement attesting to completeness of document production

• Called regulatory counsel upon notice of overpayment

Hypothetical Case Study: Hospice

for the Debilitated--#2 (with

regulatory counsel)

• Hospice bate-stamped all documents and did not sign certification statement

• Upon review of ZPIC findings, hospice re-reviews documents sent and locates 15 of the “missing” elections, as well as 10 more that were not sent (will be addressed on

appeal)

Possible Appeal Issues

• Clinical findings: medical necessity

determinations; inconsistency with LCDs or NCDs (support with experts)

• Discrepancies in denial codes

• Procedural attacks

• Documents were provided but ignored

Possible Appeal Issues

• Accuracy of sample selection,

methodology and error rate (was sample representative of claims)

• Validity of universe (e.g., did ZPIC draw claims based only on length of stay >180 days but extrapolate against all claims

San Diego Hospice & Palliative Care:

ZPIC Audit

• February 2011 – Notice of PSC/ZPIC audit

• Shortly after notification, 8 investigators arrive and investigate for five days

• Take sampling of patient documents

• Require Hospice to submit documentation for every patient admitted

San Diego Hospice & Palliative

Care: ZPIC Audit

• Placed on prepayment review

• Audit continues after prepayment suspension is lifted

• Feb 4, 2013: files for bankruptcy

anticipating multi-million dollar payback

• Feb. 12, 2013: announces closure

• Feb. 20, 2013: whistleblower lawsuit unsealed

San Diego Hospice & Palliative Care

(per False Claims Act Complaint)

• Employee expresses concerns about

admission and retention of non-terminally ill patients in 2009 and 2010

• Jan. 10, 2011 - employee terminated for

“disagreement with philosophy of admission criteria”

• Feb. 2011– employee contacts state Dept. of Human Services and is encouraged to

San Diego Hospice & Palliative Care

(per False Claims Act Complaint)

• March 24, 2011 -- ex-employee submits letter

• Jan. 2012 -- ex-employee interviewed by FBI

• Dec. 3, 2012 -- ex-employee files whistleblower suit

• Feb. 20, 2013 -- whistleblower suit unsealed

San Diego Hospice: Whistleblower

Allegations

• “Open Access Policy” - Falsification of records to allow patients to qualify for hospice care

 Admission of patients wishing to prolong life

 Pressure to retain patients whose conditions had improved

 “Creative” manipulation of patient files to meet federal and state regulations

San Diego Hospice and Palliative

Care

• During audit, Hospice begins closer scrutiny of patient eligibility

• Large number discharged from service

• Staff reduced

Compliance Suggestions

• Know your operations, your risks & fraud and abuse insurance coverage terms

Be Prepared: It is When, Not If…

• Expect to receive governmental contact

• Designate a point person to coordinate response

 Who will receive letters/calls?

 Who will send it up?

 Who will be responsible for ensuring timely response?

Be Prepared: It is When, Not If…

response team – how will you communicate internally and with whom?

• Post a sample copy of request letters with instructions about where each type of letter should go

• Alert front desk/staff responsible for answering phone

Be Prepared: It is When, Not If…

• Train, train, train . . . . .

• Will staff know what to do if an

investigator wants to interview them?

If You Receive A

Notification Letter . . .

• Notify your attorney/compliance team

• Review what has been requested

• Gather documents, review and ask for extension if needed

• Scan and number everything produced

• Include cover letter itemizing contents

• Send certified mail

ZPICs and Websites

ZPIC Website ZONE STATES IN ZONE

Safeguard Services http://www.safeguard-servicesllc.com/default.asp

1 California, Hawaii, Nevada, American Samoa, Guam, and the Mariana Islands

AdvanceMed http://www.nciinc.com/about-us/advancemed/

2 Washington, Oregon, Idaho, Utah, Arizona, Wyoming, Montana, North Dakota, South Dakota, Nebraska, Kansas, Iowa, Missouri, Alaska

Cahaba http://cahabasafeguard.com/ 3 Minnesota, Wisconsin, Illinois, Indiana, Michigan, Ohio, Kentucky

Health Integrity http://www.healthintegrity.org/ 4 Colorado, New Mexico, Texas, and Oklahoma AdvanceMed

http://www.nciinc.com/about-us/advancemed/

5 Arkansas, Louisiana, Mississippi, Tennessee, Alabama, Georgia, North Carolina, South Carolina, Virginia, West Virginia

Under Protest 6 Pennsylvania, New York, Delaware, Maryland, D.C., New Jersey, Massachusetts, New Hampshire,

Vermont, Maine, Rhode Island, Connecticut

QUESTIONS????

Paula G. Sanders, Esquire [email protected]

(717) 612-6027 Post & Schell, P.C.

17 North Second Street, 12th Floor Harrisburg, PA 17101