South Texas Medicare Providers Are Under the ZPIC Audit Microscope

(July 16, 2010):  The number of ZPIC audits being conducted in Texas appears to be increasing with each passing day.  Health Integrity LLC, the Zone auditor responsible for Zone 4, is proving to be an active auditor of physician practices, physical therapy services, home health care, and other types of Medicare covered treatment in the region.

Even in a nationwide environment of intensifying oversight, Medicare providers in South Texas are under particularly close scrutiny.  According to a study by the Dartmouth Institute for Health Policy & Clinical Practice, updated as recently as May 12, 2010, “even after price adjustment, Miami and McAllen Texas are the highest cost regions in the country.” (Emphasis added).  And don’t forget that ZPIC auditors are essentially being “graded” based on the amount of overpayments recovered, along with the number of enforcement actions handled and referred to law enforcement.

As many Medicare providers in South Texas can attest, the folks at Health Integrity are becoming a familiar sight in their offices and clinics — reportedly conducting extensive on-site ZPIC audits with little if any notice.  To their credit, most health care providers have reported that Health Integrity’s representatives have been reasonable in their requests when conducting an on-site review, typically taking a sample of certain records and asking that the remaining records be sent within a reasonable amount of time after the visit.  Nevertheless, health care providers should take care when responding to the ZPIC’s requests for information.  While a provider may have an obligation to cooperate with the ZPIC, you should contact your counsel to ensure that your rights are protected while still fully meeting your obligations as a Medicare participant.

Notably, ZPIC audits are not limited to post-payment assessments.  ZPIC audits are now occurring as “prepayment reviews”.   A prepayment audit can effectively delay a provider’s cash flow up to six months (and in some cases even longer).  Given the GAO’s recommendation last month that CMS put more emphasis on automated prepayment review, we expect to see this audit tool continuing its precipitous rise for the near future.

Home health providers and other South Texas health care providers in McAllen, Harlingen, Brownsville, Laredo and Corpus Christi, should not wait until their home health claims are under the microscope.  If you have not already done so, we strongly recommend that you implement an effective Compliance Plan covering the services you provide and the claims that you bill to Medicare.

Robert W. Liles serves as Managing Partner at the Firm.  Robert and other Liles Parker attorneys represent health care providers around the country.  ns regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert or one of our other attorneys at 1 (800) 475-1906.

Texas Psychiatrist Indicted and Arrested

(July 9, 2010):  On June 14, 2010 the U.S. Attorney’s Office for the Western District of Texas announced that a Federal Grand Jury had returned a 99-count indictment against a pain management physician who operated clinics in San Antonio and El Paso.  The physician was charged with 21 counts of health care fraud, 20 counts of false statements relating to health care fraud matters, 21 counts of mail fraud, 16 counts of wire fraud, 4 counts of unlawful distribution of a controlled substances and 16 counts of money laundering.  The indictment alleges that the physician “caused to be submitted claims for reimbursement of peripheral nerve injections, facet injection procedures and Level Four office visits–typically involving 25 minutes of face-to-face time between patient and physician–which never were performed.”  Instead, the U.S. Attorney’s Office alleges that the physician performed “prolotherapy” on his patients — a procedure that Federal health care benefit programs do not reimburse.

Notably, an indictment is merely a charge and is not considered to be evidence of guilt. In issuing this indictment, the Texas HEAT task force, comprised of Federal prosecutors and investigative agencies,  have continued to ramp up efforts to investigate and prosecute allegations of health care fraud.  Notably, the use of “prolotherapy,” a relatively new therapeutic approach, has been supported by some of the best known clinics and physicians in the country.

While this case has yet to fully develop, it again points out that health care providers must take care when utilizing new approaches, despite the fact the therapeutic technique may be considered to be state-of-the-art.  Unfortunately, Medicare may take years to recognize and cover some techniques.  In the mean time, it is essential that providers take care when coding and billing for procedures that may not clearly qualify for coverage under applicable Medicare and / or contractor guidance.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Identity Theft “Red Flags” Rule Treating Doctors Like Banks Is Delayed Once Again

(July 5, 2010): The Federal Trade Commission (FTC) has agreed to once again delay enforcement of its illogical and onerous “Red Flags” rule with respect to physicians. 

The “Red Flags” rule arises under the Fair and Accurate Credit Transactions Act of 2003 and requires “financial institutions” and “other creditors” to develop written plans to detect identify theft in their day-to-day operations.  Under the FTC’s interpretation of the rule, physicians who permit patients to pay after they have rendered medical service are transformed into “creditors.”

Extension of the rule to physicians has been delayed several times as the extent of the burden on health care providers has become clear.  As recently as May 28, the FTC made note of the concerns:

 “At the request of several Members of Congress, the [FTC] is further delaying enforcement of the ‘Red Flags’ Rule through December 21, 2010, while Congress considers legislation that would affect the scope of entities covered by the Rule….The Commission urges Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the Rule and obviate the need for further enforcement delays.”

The June 25^th agreement arises in connection with a suit filed against the FTC last month by the American Medical Association (AMA) and others seeking to prevent enforcement of the “Red Flags” rule and alleging that the FTC overreached its bounds in seeking to enforce the rule against physicians.   A similar complaint by the American Bar Association (ABA) is currently making its way through the appeals process after the U.S. District Court for the District of Columbia enjoined enforcement of the rule against lawyers.  Until a ruling is issued in the ABA case, the AMA case will be held in abeyance and physicians will be safe from the “Red Flags” rule.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Counsel for HHS-OIG Discusses the Impact of Health Care Reform on Enforcement with Congress

(June 22, 2010):  In his testimony last week before the Health and Oversight Subcommittees of the House Committee on Ways and Means, Lewis Morris, Chief Counsel to the Inspector General (OIG) of Health and Human Services (HHS), emphasized the increasing speed and intensity of HHS-OIG’s multi-pronged health care fraud enforcement efforts.  Morris’ testimony reinforces the need for Medicare providers and suppliers to aggressively prepare for a knock on the door from HHS-OIG or one of its many enforcement partners.

Morris highlighted numerous new enforcement tools available under the Patient Protection and Affordable Care Act (PPACA), paying particular attention to innovations in data access and use.  These measures include consolidating and sharing data across agencies, as well as deploying new technology that allows “investigators to complete in a matter of days analysis that used to take months with traditional investigative tools.” 

He further praised the enhanced accountability measures contained in PPACA, such as HHS-OIG’s ability to impose civil monetary penalties for “failing to grant [upon reasonable request] timely access to HHS-OIG for investigations, audits, or evaluations.”  Notably, PPACA Section 6408 provides for a penalty of $15,000 for each day for failure to grant access.

Morris’ testimony also reminded the health care community that:

• PPACA allows the HHS Secretary to suspend payments to providers or suppliers based on credible evidence of fraud.  At the same time, it expands the types of conduct constituting Federal health care fraud offenses under Title 18.
• HHS-OIG has improved access to information from entities directly or indirectly involved in providing medical items or services payable by any Federal program.

Perhaps most significantly:

• Medicare and Medicaid program integrity contractors (i.e., ZPICs and PSCs) are required to provide performance statistics, “including the number and amount of overpayments recovered, number of fraud referrals, and the return on investment of such activities.” (emphasis added).

 While not surprising, it is nonetheless disconcerting that ZPICs and PSCs are essentially being “graded” based on the “amount of overpayments recovered,” along with the number of enforcement actions handled and referred to law enforcement.  Based on these performance measures, is there any real difference between ZPICs and RACs?  While RACs may be compensated directly based on the amount of overpayments collected (and ZPICs are not), it is crystal clear that the government’s expectations of ZPICs are quite similar.  Now, more than ever before, it is essential that providers implement effective compliance measures to cover their practices and clinics.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Responding to a Search Warrant of Your Practice or Clinic.

(June 1, 2010):  I.  Introduction:

Like most honest health care providers, you may believe that “search warrants” are only executed by the government in connection with the investigation of nefarious characters and criminals.  Unfortunately, that just isn’t the case.  The Federal government has increasingly utilized search warrants as a first-strike investigative tool.  In fact, the execution of a search warrant may very well be the first notice a health care provider has that their practice or clinic is under investigation.

Allegations of wrongdoing may arise from a wide variety of sources.  Health care providers may have been reported by disgruntled current or former employees, dissatisfied patients, or others familiar with the practice’s operations.  Notably, recent criticism aimed at RACs for their failure to identify and refer possible criminal wrongdoing to the government for further investigation may have generated a new period of significant enforcement.  It appears that Zone Protection Integrity Contractors (ZPICs) around the country have recently intensified their activities, going well beyond the typical overpayment audits normally seen.  We have seen a marked increase in the number of unannounced site visits, Medicare suspension actions and Medicare number revocation cases.  We fully anticipate the number of criminal referrals to DOJ to increase as well.

In assessing this issue, it is important to remember that prior to obtaining a search warrant, an Assistant U.S. Attorney has gone before a Federal Magistrate and has shown “probable cause” that a crime has been committed or is being committed.  Once issued, the search warrant may greatly help DOJ build its case.  Search warrants are preferable to subpoenas and other investigative tools because:

The health care provider will likely be caught completely off-guard, thereby reducing the possibility that documents may be lost, destroyed or otherwise be missing before it can be secured as part of the investigation.  In executing a search warrant, the government can preserve the documentation and electronic evidence to the greatest extent possible.

The government may use the execution of a search warrant as an opportunity to segregate possible witnesses and see if they can interview the employees and obtain statements before the practice and its employees have an opportunity to obtain counsel.

The combination of force and surprise will have an enormous psychological effect on your employees.  There will be absolutely no question about the seriousness and gravity of the government’s investigation.  This is often very intimidating, often resulting in significant damage to the practice, ranging from employee resignations to adverse publicity and media attention.

Finally, the scope of the search warrant will likely be sufficiently broad that the practice or clinic will have a difficult time determining the focus of the government’s investigation.

Once a search warrant is executed, the issue becomes how to best respond.  The purpose of this advisory is to provide an overview of the Federal search warrant process so that your interests can be protected.

II.  Responding to a Federal Search Warrant:

  A.  Before the search.

If the government were to execute a search warrant on your practice today, would you be ready?  Have your employees been briefed on how to respond if Federal agents show up at your practice or clinic?  If your answer to either of these questions is “no,” you should take immediate steps to better ensure that you are ready if this event were to occur.  Understandably, no health care provider likes to think that they would learn of an investigation in such a fashion.  Nevertheless, it occurs practically every day.  You should work with your attorney to draft procedures for responding to a search warrant that are tailored for your practice or clinic. 

B.  At the time of a search.

Please remember that these steps are not all inclusive.  Upon the execution of a Federal search warrant, you should immediately contact your attorney so that the specific facts and circumstances of your situation can be fully assessed and taken into consideration.  In responding to a search warrant, you should:

At the outset, it is important that you avoid taking any actions that could be misconstrued by the government as an obstruction to their search.  That does not mean that you cannot ask questions – merely that you should not obstruct their search.

 Try and ensure that patient care activities are not jeopardized. Typically, law enforcement will be sensitive to these issues and will try to avoid direct patient care areas.  Nevertheless, you may need to bring this issue to their attention.  You may find that legal counsel can often work with law enforcement to resolve an unreasonable intrusion in this regard.

 Ask for a copy of the search warrant and give it to your lawyer.  Your lawyer will try and prevent them from seizing any documents or items that appear to be outside of the scope of their warrant.  Importantly, search warrants are supposed to provide a specific description of the information or items to be search.  If a search warrant is ambiguous overly broad, your counsel may choose to seek to quash to the search.

 Regarding the search warrant itself, your lawyer will try and note the issuance date of the warrant and the date it was executed. Additionally, counsel will ask to check the identification of the leading agent handling the search, along with the identification of any other participating agencies (e.g. IRS, HHS-OIG).

 While your lawyer may request to see the affidavit upon which the search warrant is based, you should not be surprised if it was sealed by the Court and cannot be obtained. If counsel has not yet arrived, call your lawyer to discuss whether there may be any grounds to object to the search.  Should you object, inform the lead agent of your objection. Should the search continue, record the date and time of their arrival and departure.

 If they will allow it, try and accompany agents on the search.  Try to note which areas were searched and which documents or items were seized.  

 You may have documents that qualify as attorney-client privileged materials.  Should agents try to take documents that may be considered privileged, you should immediately object and notify the agents that the documents they are seizing are privileged. 

 Try and obtain a receipt from the agents for any items or documents that are seized. When possible, get copies of original documents before they are removed.

  C.  Handling employee issues.

The execution of a search warrant is an extremely stressful situation and can create confusion and stress on a practice’s employees. You should quickly move to restore order and re-assure employees that the situation is under control.

While a search warrant can be used to seize documents or other items, it cannot be used to force employees to participate in an interrogation.  Due to the many sensitivities in this area, it is strongly recommended that you have counsel advise employees of the situation.  While the government cannot force employees to answer questions, you must take care when you are briefing employees on the situation. While you must not tell employees that they are not allowed to talk with an agent, it is appropriate to tell employees that they have no obligation to answer any questions.  While individuals have a Fifth Amendment privilege against self-incrimination, your practice or clinic does not enjoy such a privilege.

When possible, send employees home for the day or have them work in another part of the facility.  Finally, you should notify employees that any questions regarding the location of certain records should be directed to a specific management official so that any inquiries can be properly and consistently handled.

  D.  After the search.

Document retention issues should be carefully handled. It is our view that all document destruction should immediately stop, even if the activity would be consistent with pre-search document retention policies used by the practice or clinic.  Once an investigation is initiated, you should diligently work to avoid even an appearance that obstruction of justice may be occurring. 

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

The Next “Patient” You See May be an Undercover Physician Auditing Your Practice.

(April 11, 2010): As the American Medical Association (AMA) recently reported on March 22^nd, health care providers may find themselves subjected to “Secret Shopper” audits by fellow providers hired by the government conduct reviews and investigations.

In a speech he made March 10^th, President Obama expressed interest in a proposal by Senator Tom Coburn, M.D. (R-OK) to have physicians and other health professionals go undercover and pose as patients to root out fraud. Apparently, President Obama included it among with several other Republican proposals which were considered when the recently passed Health Care Reform Bill was enacted.  Dr. Coburn tried to amend the Senate health reform bill with a provision that would direct the Department of Health and Human Services to establish a demonstration project for undercover investigations.  While a number of demonstration projects were ultimately included in the legislation, it isn’t clear if this is one of them.

Not surprisingly, the AMA has dismissed the idea of paying physicians to pretend to be patients in an effort to smoke out criminal activity.  As the AMA responded:

“The AMA has zero tolerance for health fraud, but there’s no evidence that the undercover-patient tactic would be effective or efficient in finding fraud. . . We are partnering with HHS and the Justice Dept. to address fraud, and we strongly recommend the government target areas where fraud occurs most, instead of wasting physician time that could be better spent caring for real patients.” (AMA President J. James Rohack, M.D.)

Notably, “Secret Shopper” audits and investigations are nothing new.  Both HHS and DOJ have used individuals posing as patients or employees in investigations for as long as health care fraud has been prosecuted by the government.

From a compliance standpoint, this could present a number of additional risks, not normally encountered in a standard billing and coding audit.  This could implicate a variety of E/M related issues.  Moreover, this may raise quality of care issues not otherwise covered in a routine audit.

The unknown issue at this point is whether HHS-OIG and / or  CMS may try and expand the use of “Secret Shoppers” beyond the traditional boundaries of law enforcement.  Currently, although ZPICs, PSCs and MICs may show up at a provider’s door seeking copies of documentation and answers to questions, they readily identify themselves when they arrive.  Our client’s have expressed concern about ZPICs and RACs using a variation of the “Secret Shopper” scenario in yet another attempt to identify possible subjects for audit.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

You’ve Got to be Kidding. . . the Government Wants More “Bounty Hunters” Conducting Medicare Audits?

(March 12, 2010): Yesterday, the White House announced that President Obama  intends to back additional bipartisan plans to stamp out waste in government-run medical programs for the elderly and needy.  The White House said this new effort to root out improper payments in the Medicare and Medicaid programs could double taxpayer savings over the next three years to at least $2 billion.

“We cannot afford nor should we tolerate this waste of taxpayer dollars,” the White House said.   The government believes that approximately $54 billion was lost through improper Medicare and Medicaid payments in 2009. Medicare is the government-run program covering elderly Americans and Medicaid is for the country’s poorest.

President Obama is seeking to crack down on waste and fraud as his administration strives to secure an overhaul of the $2.5 trillion healthcare system to contain costs and expand coverage to tens of millions of more Americans.  The action endorses Republican-backed proposals on alleged health care wrongdoers.

Similar to the current RAC reimbursement scheme, the proposed new plan will offer private auditors a share of the money that they recoup in order to encourage them to work harder to uncover improper payments under Medicare and Medicaid.   President Obama is also expected to back bipartisan legislation to expand the ability of government agencies to undertake these so-called payment recapture audits by providing more funds.  No additional information on how this will impact CMS was given.

As many health care providers will readily attest, over the past year, it appears that there has been a marked increase in PSC and ZPIC audits, almost all of which are accompanied by demands for extrapolated damages.  Once again, this points to the importance of self-assessment and an effective compliance strategy.  Asked to comment on this new “risk” to health care providers, Robert W. Liles, Managing Partner at Liles Parker, Attorneys and Counselors at Law, responded:

”Our firm has represented a number of health care providers around the country.  We have aggressively fought to have improper claims denial overturned.  This new risk will increase the likelihood that providers who have not been subjected to RAC audits in the past may now find themselves being examined by RAC-like auditors in the future.  Coupled with existing PSC and ZPIC audits, sole practitioners, small practice groups and clinics will find their coding and billing practice under the spotlight.  Unfortunately, based on recent cases we have handled, it appears that PSCs and ZPICs are increasingly imposing their own views regarding what is required, well beyond the four corners of CMS-authorized provisions set out under LCDs and LMRPs covering the services at issue.  Fortunately, when faced with the facts, ALJs have applied a reasonable approach and most of the claims at issue have been found to be payable.  We recommend that health care providers carefully review their documentation practices to lessen the likelihood that ZPICs, PSCs, RACs and these new third-party reviewers can successfully argue that the claims don’t qualify for coverage.”

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.