Industry Insights

If your facility has been selected for a Zone Program Integrity Contractors (ZPIC) audit, you have been intentionally targeted. The ZPIC audit program is an aggressive initiative to reduce Medicare waste, fraud and abuse. Skilled nursing facilities (SNFs) should take immediate action to prepare their organizations for the possibility of a ZPIC audit. 

Process

ZPIC investigations are triggered by regional data analysis performed to spot trends that suggest fraudulent activity. Specific triggers include high claim rejection or recoupment rates, higher utilization than neighboring providers, high clinical case mix assignment and patients with lengths of stay outside industry norms. Once a ZPIC detects a potentially fraudulent trend in the data, it launches an investigation that requires providers to submit supporting medical records for selected claims. Areas of interest for ZPIC auditors include proper Resource Utilization Group (RUG) placement, necessity and reasonableness of therapy care and necessity and proper documentation of skilled care needs. Specifically, ZPIC auditors are interested in results considered “red flags,” including a high percentage of RUGs for ultra-high therapy, a high percentage of RUGs with low Activities of Daily Living scores and lengths of stay exceeding industry averages. Once a request is received from the ZPIC, the provider has 30 days from the date printed on the letter of notification to respond with the requested records. If the provider fails to meet the 30-day deadline, the claims requested will be denied, and the contractor will demand that the funds be returned. If documentation is insufficient or does not match submitted claims, the ZPIC refers the case to CMS. CMS then can choose to deny payment, suspend all future payments or even revoke the provider’s ability to bill CMS. If warranted, the ZPIC also may refer the case to the Office of the Inspector General for possible criminal prosecution.

Negative Effects

ZPIC audits have proven both costly and burdensome to providers. The most crippling effect of a ZPIC audit can be the long-term interruption in revenue and cash flow. At minimum, a ZPIC audit will last about three months, but it is not uncommon for the process to last up to two years. During this time, the provider may be under a prepayment review, meaning it is reimbursed only for ZPIC-approved items. The prepayment review can continue, until ZPIC auditors see a marked improvement in the provider’s claim denial rate. ZPICs also may place providers on a post-payment review, in which, for a designated time period, previous claims are reviewed and providers may be required to return the reimbursement amount if claims do not qualify.

It is common for ZPIC auditors to use a statistical sample of a provider’s claims to calculate the denial rate and then project the derived percentage error to the entire population of claims. Due to wide variability, error rates have been known to reach 100 percent in certain provider audits. Using statistical samples to project the total population error rate could result in significant repayment of funds by providers. In addition to reduced cash flow due to post- and prepayment reviews, providers may receive hundreds of requests for patient records that must be received within 30 days of the request. As each patient record consists of multiple pages, preparing and sending the requested materials is time-consuming and costly. Many providers subject to ZPIC audits have stated that complying with the 30-day time period halted daily tasks as employees focused on gathering the required materials. Referrals also began to decrease for these providers, as hospitals and doctor’s offices view the provider’s need for additional patient record copies as an unnecessary burden.

Preparation

Being proactive is the only way to ensure compliance with applicable documentation, coding and billing requirements. First, implement an effective compliance plan including the use of periodic self-audits to identify possible deficiencies. Once deficiencies are identified, take immediate action to correct and modify practices to ensure future compliance. Next, maintain detailed medical records reflecting the technical knowledge of SNF staff, changes in patient condition over time and the duration and level of patient therapy. Contractors may attempt to nullify claims by arguing that the care received was unnecessary or did not qualify as “skilled” care, so detailed records offer contractors little ammunition with which to make these claims. Also, ensure the minimum data set is consistent with the related clinical record. This makes it more difficult for a contractor to challenge RUG classifications. Finally, notify your staff of the severity of ZPIC audit consequences and appoint an individual who will be responsible for ZPIC audit requests and communications. Should you receive an audit notice, this will help to avoid confusion and ensure personnel are aware of their responsibilities in complying with the auditor’s requests.

If you receive a ZPIC audit notice, do not hesitate to begin the process of gathering requested materials. The audit notice is not always sent to an individual in an administrative position; in several instances, the notice has been sent to an individual in the medical records department who was unaware that failing to act could result in negative consequences. After receiving the notice, contact your advisor immediately to review the records and documentation requested by ZPIC auditors for completeness and accuracy prior to its release.

Proper documentation, staff education and self-evaluation can help providers comply with applicable laws and regulations and successfully navigate the ZPIC audit process. For more on ZPIC audits, contact your BKD advisor.