RA & ZPIC Audits: Know the Playbook and Prepare your Team

Football season may be over with now, but there are other teams you should continue to follow this year. The Centers for Medicare and Medicaid have teamed up with Recovery Auditors (RAs) and Zone Program Integrity Contractors (ZPICs) to identify fraud, waste, and abuse by identifying and correcting improper Medicare payments. ZPICs in particular raise considerable concern among providers because they can also conduct fraud investigations, respond to requests for information from law enforcement, and refer suspected cases of fraud to law enforcement for prosecution.

The playbook

In 2012, RAs returned almost $2 billion dollars to Medicare, and ZPICs reported more than $250 million dollars in savings to Medicare. Their playbook consists of detailed statistical analysis to determine audit targets, usually as a result of sophisticated data mining. These auditors look for unusual patterns in claims utilizing specific CPT codes, excessive claim submission for certain patients or residents, excessive claims from certain providers or suppliers, or high or sustained error rates as sources of data.

Take control of the game

Both auditors can conduct pre-payment and post-payment reviews. It is important to realize that even if Medicare has paid your claims, these auditors can enter your turf and demand money back. However, if you get a demand letter from a RA or ZPIC, you can always appeal. There are five levels of appeals for RA audits and four levels of appeals for ZPIC audits. A provider has 120 days after receiving an official determination from the auditor. This is a critical time frame for two reasons. First, if an appeal is not filed within this time, the right to appeal is lost. Second, the first two levels of appeal delay recoupment, but it begins if a third level appeal is made. Bankruptcy is not a choice. Medicare debts are not subject to automatic stays in a bankruptcy filing, and furthermore Medicare has the authority to collect pre-petition Medicare overpayments by withholding post-petition reimbursements owed to a provider or supplier, in addition to moving to the head of the creditor line if the entity subject to the audit is no longer operational. (Fischbach v. Centers for Medicare and Medicaid Services, 2013 U.S. Dist. LEXIS 39855 (March 22, 2013)). (See also 31 C.F.R. § 901.2(h)).

The best defense is a good offense

Obviously, the ideal situation is to stay out of the purview of the RAs and ZPICs in the first place. Stay out of trouble by implementing offensive compliance measures. Here are some tips for setting up a good defense:

• Ensure that payments comply with all national coverage determinations as well as local coverage determinations. If a service is not covered, any payment rendered is considered an overpayment. Periodically check national and local coverage determinations to review any new policies.
• Create checklists and templates to meet documentation requirements. For example, the Medicare Program Integrity Manual lays out the documentation requirements for Durable Medical Equipment, Prosthetic, and Orthotic Supplies. Chapter Five of the manual gives providers guidelines for each item that must be in a patient’s medical records to substantiate a claim for these supplies.
• Create a compliance plan and review it on a regular basis. Identify areas where your documentation in the medical records or otherwise needs improvement because it is worth the effort to comply now instead of paying later.
• Seek help. If you are ever contacted by a Medicare auditor, notify your legal counsel immediately. You may have meritorious defenses against a demand, and the sooner you can identify potential issues and defenses the better for purposes of responding to the audit and/or appealing.