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ZPIC Audits: How Can Your Organization Prepare?

May 29, 2014

Jonathan H. Fink, CPA
Partner

In its continual mission to uncover improper claims, Medicare has increased the presence of its Zone Program Integrity Contractors (ZPICs).  This ZPIC emergence is being driven largely by the transition in the national RAC (Recovery Audit Contractor) contract and the required suspension of document requests to providers until the new contract is awarded.  ZPIC auditors have many similarities with RAC auditors.  Consistent with RAC auditors, ZPICs are charged with trying to identify overbillings, up-coded bills and abuse of the system (whether intentional or unintentional).  And, just like RACs, ZPICs make onerous document requests and do not allow long periods of time in order to complete those requests.  However, there are a few key differences.

ZPIC vs. RAC: What is the Difference?

RAC auditors are paid a contingency amount based on the number of dollars they recover through their audits.  If a RAC identifies a potential billing error, they challenge the bill and, if the finding is upheld, the provider is required to pay back the corresponding amounts it has received from Medicare.  ZPIC auditors, however, are paid on a contractual basis so one could argue they are less focused on high dollar bills and more focused on identifying potential fraud.  ZPIC auditors also have the ability to extrapolate errors found in their testing.  This means that a small dollar error noted on one claim could turn out to have a significant impact once extrapolated.  In addition, while RAC audit visits are always preceded by a demand letter identifying specific concerns, ZPIC auditors can show up unannounced to a facility and immediately request medical records, interviews with staff members, etc.  For an unprepared facility, what started as a disruption to the business could lead to a full-blown business crisis if billings are interpreted as fraudulent, extrapolated errors become material and the facility’s participation in the Medicare program is threatened.

Faced with the ZPIC threat, what can long term care providers do to help manage their risk?

  1. Ensure your compliance program is current and adheres to the current Medicare guidelines (see related article).  An updated compliance program that is properly communicated to all affected employees and staff is an important indication to outside auditors of how ownership/management views fraud.
     
  2. Implement and maintain an active audit program.  For nursing homes, Medicare has indicated they believe there is an issue within the industry related to therapy overbillings.  In response, facilities should ensure therapy services are a focus point of management’s compliance monitoring.  Such audits can be performed in-house or by an outside expert but the key consideration is they need to be ongoing.  A provider cannot perform a detailed billing review and then suspend the process until a potential issue (or auditor) arrives.
     
  3. Obtain and monitor PEPPER reports.  These reports were first provided by CMS in hard copy in late 2013 and updated reports were recently provided electronically to each provider.  The PEPPER reports provide claims metrics for your facility and other facilities within your state and around the country.  It is important to understand how your facility compares to the larger averages and whether that may be an indication of potential billing errors.
     
  4. Discuss with your staff the potential impact of a ZPIC audit.  Each facility should organize a response team and develop a plan that can be followed in the event that an audit is initiated. 

As budget concerns continue at both the national and state levels, it does not appear that the role of oversight auditors such as Zone Program Integrity Contractors will be going away any time soon.  Long term care providers should assume that, if they have not been audited already, that an audit could happen at any time.  As such, it is important to ensure your staff is aware of the issues and ready to respond to the auditors when they arrive.

For more information, please contact Jonathan Fink at jfink@blumshapiro.com or 860.561.6849.

 

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