Introduction
A ZPIC inspection can be onerous for any health care provider. Center for Medicare and Medicaid Services (CMS) has delegated its responsibilities to administer the Medicare and Medicaid programs, in large part, to private contractors. The original intent underlying this delegation of authority to private entities was to minimize government intrusion in the administration of federal and state health care programs. Nonetheless, many of these contractors operate with substantial, seemingly unfettered discretion and, at times, inspections conducted by these contractors resemble raids or searches conducted by law enforcement agents with one critical distinction — law enforcement agents must execute a search warrant supported by a probable cause unless the search is conducted pursuant to an exception to the search warrant requirement.
Zone Program Integrity Contractor (ZPIC) onsite inspections illustrate this point. ZPICs performed 777 onsite inspections in 2012 and maintain broad authority to conduct these inspections, as part of provider-specific prepayment audits designed to ferret out and prevent fraud and abuse. A ZPIC inspection may be conducted without providing sufficient advanced notice to the provider based on information obtained through data mining or predictive models, or based on third party complaints, including complaints received from former employees or patients. ZPIC inspections are also particularly unnerving in comparison to audits conducted by Medicare Administrative Contractors (MACs) or Recovery Audit Contractors (RACs), since ZPICs work closely with the FBI and the Office of the Inspector General for the Department of Health and Human Services (OIG-HHS).
During the ZPIC inspection, ZPICs will frequently request and obtain, among other things, copies of claims for certain services and patient records from the provider. ZPICs may also photograph diplomas, office space, and equipment. Following the inspection, a ZPIC investigator and a resident nurse will likely conduct several patient interviews at the patient’s home. Equally as important, depending on the ZPIC’s findings after an inspection, the ZPIC may refer a provider to the Office of the Inspector General for the Department of Health and Human Services (OIG-HHS) for a potential civil or criminal prosecution or exclusion. If OIG declines the referral, then the ZPIC may still refer the case to the FBI or other state enforcement agencies. In addition to referring providers to OIG and law enforcement agencies, the ZPIC may place the provider on pre-payment review indefinitely due to a parallel criminal investigation, or the ZPIC may refer the matter to the MAC for recoupment of overpayments if the ZPIC concludes that the provider’s billing mistakes did not result from intentional fraudulent conduct. This Note will broadly address some of these concerns by recommending a series of steps providers might take prior to, during, and after a ZPIC inspection.
The Quiet before the Storm
If counsel is retained prior to an inspection, then the provider should be adequately prepared for a possible ZPIC inspection.
Review the OIG Work Plan. Review the OIG Work Plan, which identifies services covered by Medicare and Medicaid that OIG will more closely scrutinize as part of their ongoing efforts to prevent and deter fraud, to establish whether the provider may be susceptible to an audit or an inspection. By conferring with the Work Plan, the provider will be well-positioned to anticipate what segments of her practice may be of potential concern to OIG.
Conduct a Shadow Audit. Conduct a shadow audit to emulate the processes and procedures employed by ZPIC’s to detect possible fraudulent conduct. The purpose of the audit – much like the predictive models widely used by ZPICs – is to identify and remediate errors related to claims for payment and any documentation supporting those claims. As part of this process, providers should also reassess their coding, and coverage determinations, and should address any deficiencies related to supporting documentation, including signature requirements.
Determine Whether the Provider’s Claim Denial Rates Vary Significantly in Comparison to Other Similarly Situated Providers. As part of any audit, the provider should also undertake a review of the quality of the documentation verification policies and procedures to ensure that the provider’s claim denial rates do not vary significantly from the claim denial rates at other similarly situated providers in the same specialty and similar geographic region.
The Inspection
Review the Notice of Onsite Inspection. Once counsel learns about the ZPIC inspection, a copy of the Notice of inspection for facial sufficiency (time, date, location, correct address, organization name) should be obtained.
Obtain the Name of the Agency and the Names of the Investigators. On occasion, ZPICs will arrive for an inspection with OIG or other investigative agencies. Therefore, determining what agency is conducting the ZPIC inspection and how many investigators are on scene is critical. The names of each individual investigator should also be obtained.
Scope of the ZPIC Inspection. Determine the scope of the ZPIC inspection, the scope of any request for records, and whether the investigators intend on conducting employee interviews onsite.
Copies of Any Records the ZPIC Has Scanned or Copied Onsite. If the ZPIC has begun copying or scanning any records before counsel arrives on site, then a request that the ZPIC furnish the provider with a list (or copies) of those records should be made.
Establish Credibility and Cooperate with the ZPIC. The importance of establishing credibility and cooperating with the ZPIC cannot be overstated. Engaging in any conduct which may be viewed as obstructing, impeding, or impairing the inspection will not only undermine the provider’s credibility with the ZPIC, it may also subject the provider to criminal consequences, including obstruction of a federal audit.
Provide the Requested Claims and Documents. While, generally, the provider has 30 days to produce the requested records, if ZPIC determines that the books, documents, or records are “necessary for the reimbursement determination,” then the ZPIC may demand to inspect, examine, or copy those records. Under these circumstances, a failure to provide access to those records may result in adverse consequences to the provider, including revocation or obstruction charges. Accordingly, where feasible, bate-stamped copies of the claims and documents requested by the ZPIC should be provided to the ZPIC.
Manage Onsite Interviews of Employees. Although the ZPIC is statutorily authorized to inspect the provider’s business and to request medical records as a condition of participation in Medicare or Medicaid, there is no ancillary legal authority for conducting employee interviews on site to gather additional information related to the ZPIC inspection. So, even if ZPICs view employee interviews as an integral part of their quest to deter and prevent fraud, neither the provider nor her employees are required to consent to interviews.
Unsurprisingly, the employees may be inexperienced in managing or responding to a random ZPIC inspection. Likewise, employees may have a very limited understanding of what their options are in this scenario and may, believe that they are required to consent to interviews. At the same time, statements made by employees may be imputed to the provider for purposes of criminal or civil liability as non-hearsay statements. Therefore, to manage this process and to address these concerns, counsel or a representative of the provider should inform all employees that they are free to speak to the ZPIC investigators but they are not required to speak to them and that, should they decide to speak to the ZPIC investigators, they are entitled to have an attorney present during any interview.
Furthermore, to prevent unnecessary interviews on site, only essential employees – employees whose day by day responsibilities are relevant to the ZPIC inspection — should be made available for interviews and the provider may notify non-essential staff, e.g. administrative and secretarial staff, that, they are free to go home for the day. This is reasonable under the circumstances and should not be viewed as obstructive conduct.
Request an Extension. Where appropriate, a request for an extension to produce the necessary claims and supporting documentation should be made. An extension may be entirely reasonable when the inspection interferes with the provider’s ability to provide adequate care to her patients, or when the ZPIC requests a voluminous amount of documents, which are not readily accessible for production and copying on site. Indeed, often providers use third party vendors to submit claims and the provider may need additional time to coordinate the production and copying of the requested claims (and supporting documentation) with the third party vendor.
Obtain a Complete List and Copies of all Documents or Claims Obtained by the ZPIC. Before the ZPIC leaves, the provider should ensure that she has a complete list (and copies) of all the documents, claims, and records obtained by the ZPIC.
After the Inspection
Suspend Document Destruction Policies. A hold, or its functional equivalent depending on the size of the provider, should be placed on any applicable document destruction policies. Suspending these policies will accomplish two objectives: it will show that the provider is sincerely committed to retrieving and producing additional documentation upon request and will demonstrate that the provider is not seeking to impede, obstruct, or impair the audit by altering, deleting, or falsifying documents.
Anticipate Patient Interviews. The local ZPIC, along with a registered nurse, may interview patients. The purpose of patient interviews varies depending on the particular industry. For example, in the home health context, the purpose of a patient interview is to analyze medical necessity. By reviewing copies of the claims obtained by the ZPIC, the provider may determine which patients the ZPIC might interview. Claims and any supporting documentation obtained by the ZPIC during the inspection should be examined in order to identify and address any deficiencies.
Anticipate Employee Interviews at Home. Similarly, ZPIC investigators may show up at an employee’s home to request an interview. Employees should know in advance of that exchange that they may tell a ZPIC investigator that appears at their door that they would prefer that an attorney be present during any interview.
Conduct an Internal Investigation. After the inspection, the provider should conduct an internal investigation and engage in additional fact-finding. The objective of the investigation is to determine why the ZPIC conducted the inspection, why the ZPIC requested and obtained specific documents or claims, and ultimately, to educate the provider with respect to her options based on the investigative findings.
Employee Interviews. In performing the investigation, employee interviews should be conducted by in house counsel or outside counsel.
Claims Review and Gap Analysis. In addition, the provider should review any and all claims or documents obtained by the ZPIC during the inspection and evaluate the significance of those documents. The claims review should focus on, among other things, the accuracy of the claims and any supporting documentation, the legibility of all supporting documentation, and compliance with all signature requirements. An essential part of the claims review should also include a gap analysis to confirm whether the services in the sample set of claims obtained by the ZPIC during the inspection are covered by applicable Medicare regulations, national coverage determinations, and local coverage determinations. Further, the analysis should determine whether the provider (or the third party vendor) used incorrect codes or modifiers in the sample set of claims at issue.
Anticipate Additional Document Requests. Where applicable, bate-stamped documents and a cover letter listing all of the documents included in the submission should be provided to the ZPIC in response to any additional document requests (ADR’s) from the ZPIC. The organization of the documents will convey a specific theme to the ZPIC. Thus, the documents should be organized in a way that convincingly conveys a theme to the ZPIC. For example, if the theme is “sloppy record-keeping” or a failure to understand ambiguous or complex regulations, then it may be beneficial to supplement the record with documentation supporting that theme. Likewise, if the theme is that the ZPIC made a mistake, for example, through predictive modeling or data analyses, then the documents in the submission should be organized to best communicate that them and, where applicable, should include all necessary certificates, any applicable plans of care, and any other information to illustrate that claims are accurate, reasonable, and medically necessary.
Conclusion
ZPICs have broad authority to initiate proactive and reactive inspections as part of an audit, they view themselves as fraud fighters, and they work closely with the FBI. Therefore, even though these recommendations address general concerns that broadly apply to ZPIC audits and inspections, providers, and their counsel, should be well-equipped to manage and respond to a ZPIC onsite inspection.
