Food for Thought

On July 28th, a report (see REPORT ) was sent to the Centers for Medicare & Medicaid Services (CMS) from the Inspector General’s office that will have widespread attention in the near future.  And it’s without question a physician issue, not a hospital one.   If you’re a doctor it will affect your wallet or purse, so you might want to know this.

The report resulted from a study of coding errors causing overpayments to physicians.  Medicare payments were made for patient encounters at non-facility locations that actually took place at hospital outpatient departments or ambulatory surgical centers (ASCs).   As everyone knows, non-facility encounters reimburse at a higher rate than if the encounter was at a facility such as a hospital in order to help cover the overhead expenses of the physician.

Straight Quotes from the Report

“Physicians are required to identify the place of service on the health insurance claim forms that they submit to Medicare contractors. The correct place-of-service code ensures that Medicare does not incorrectly reimburse the physician for the overhead portion of the payment if the service was performed in a facility setting.”

The report continues.    “Our audit covered 484,218 nonfacility-coded physician services valued at $42,385,710 that were provided in calendar year 2007 and that matched hospital outpatient or ASC claims for the same type of service provided to the same beneficiary on the same day.”

In this study, “Physicians correctly coded the claims for 10 of the 100 services that we sampled. However, physicians incorrectly coded the claims for 90 sampled services by using nonfacility place-of-service codes for services that were actually performed in hospital outpatient departments or ASCs. The incorrect coding resulted in overpayments totaling $4,710.”

“Based on these sample results, we estimated that Medicare contractors nationwide overpaid physicians $13.8 million for incorrectly coded services provided during calendar year 2007. We attribute the overpayments to internal control weaknesses at the physician billing level…”, etc.

But That Was from the Year 2007

Yes it was.  But think about it.   In their random sampling, 90% of the time the place-of-service codes were wrong!   The first thing I’d want to know if I were a physician is whether the coding in my office is being done correctly in 2010.    Am I sure my in-house biller or billing company is doing it right?     If not, could I be setting myself up for a RAC Audit?    Could they discover a “pattern of abuse” that then triggers a ZPIC investigation?

Your RAC Is On Its Way

Trust me when I say this – even if your RAC hasn’t yet audited you or a doctor near you, it’s coming.    Just in the past 30 days, physician audits have increased in pockets all over the country.   In fact, we’ve learned of more physician audits in the past month than the previous six months combined.

If you sense that maybe it would be wise to check into your office’s compliance with Medicare guidelines, you’re probably right.   Help is as close as an email away.

Winston Creath is an independent healthcare consultant working in the compliance and revenue cycle management arenas on behalf of physicians and clinics.  He serves as President of National Business Solutions of GA, LLC.  He can be reached at for questions or comments.

A Report from the Trenches

The annual conference of the American Association of Medical Society Executives (AAMSE) was held this year in Seattle, Washington July 21-24th.   The nearly 300 attending executives represented medical societies with memberships of a few hundred to several thousand physicians each.   Needless to say, these were some very sharp professional people with their fingers on the pulse of physician concerns.

Their Concerns

While there were many interests represented, as my colleagues and I interacted with them during breaks, exhibits and over lunch, several topics seemed to grab the most attention.  When asked “what do you do”, we would mention various services we offer, and more often than not the most interest seemed to center on document management, our web-based EMR, and the RAC Review (baseline audits).

Closely connected with RAC audits of course is the ZPIC threat.  I found that the executives want to educate their physicians regarding the need for strict compliance with Medicare guidelines, thus conserving income and preventing “pattern of abuse” investigations by ZPIC.

Their Sense of Urgency

Regarding RAC Audits, the consensus seemed to be that the time is rapidly approaching when RACs will target physicians, and it may get ugly.   This has been our prediction all along, as regular readers will recognize.   Really in-the-know physicians are taking the necessary steps – RAC baseline independent audits, remote coding services, office staff and physician coding training, etc.

The government’s July 2010 announcement of arrests and prosecution of physicians in Florida and elsewhere – with more to follow – has everyone’s attention.   Several executives I spoke with mentioned that they were not concerned with protecting those involved in deliberate criminal activity.   Their concern is that some physicians, whether through carelessness or otherwise, may be setting themselves up for charges of fraud through a “pattern of abuse”.

No Idle Threat

Their concern was that the “highly sophisticated data mining technology” mentioned by President Obama earlier this year was no idle threat.   The belief was that probably most physicians either don’t know about it or underestimate just how effective it is.   Hospitals are finding out.   Physicians are about to.

We had a number of executives express the desire to have someone come and speak to their membership.   Medical societies are beginning to take the RAC threat seriously, and are concerned that their physician members do likewise.

We do these audits nationwide.  The average practice scores run about 60% compliant.  The lowest score nationwide has been 32%, and the highest so far has been 78%.

If you are reading this article and either know or are a physician who has not had an independent third-party RAC compliance analysis, drop me an e-mail at and let’s talk.

Winston Creath is an independent healthcare consultant working in the compliance and revenue cycle management arenas on behalf of physicians and clinics.  He serves as President of National Business Solutions of GA, LLC.  He can be reached at for questions or comments.

ZPIC? What’s a ZPIC?

Just when you think you’ve got a handle on this RAC thing, here comes another alphabet soup acronym – ZPIC.   You gotta to hand it to CMS – they really know how to cook ’em up!

ZPIC stands for Zone Program Integrity Contractor.  Here’s a brief sketch of their history, what they do and the dangers they pose.

Where They Came From

The Medicare Prescription Drug Improvement and Modernization Act of 2003 called for CMS to phase out fiscal intermediaries and carriers and establish MACs (Medicare Administrative Contractors) to handle the processing of Medicare claims.  Whereas fiscal intermediaries and carriers were previously responsible for detecting and reporting fraud and abuse cases, by 1999 a new enforcement arm called Program Safeguard Contractors (PSCs) had been created.  Now the PSCs are being renamed ZPICs.   ZPIC jurisdictions align with the MACs.

There are seven ZPIC zones:

Zone 1 – California, Nevada, American Samoa, Guam, Hawaii, and the Mariana Islands.
Zone 2 – Alaska, Washington, Oregon, Montana, Idaho, Wyoming, Utah, Arizona, North Dakota, South Dakota, Nebraska, Kansas, Iowa and Missouri.
Zone 3 – Minnesota, Wisconsin, Illinois, Indiana, Michigan, Ohio, and Kentucky.
Zone 4 – Colorado, New Mexico, Oklahoma, and Texas.  (Contract awarded to Health Integrity, LLC)
Zone 5 – Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia. (Contract awarded to AdvanceMed Corporation, but under dispute.)
Zone 6 – Pennsylvania, New York, Maryland, Washington D.C., Delaware, Maine, Massachusetts, New Jersey, Connecticut, Rhode Island, New Hampshire, and Vermont.
Zone 7 – Florida, Puerto Rico and Virgin Islands. (Contract awarded to SafeGuard Services, LLC)

CMS wants to have all Zone contracts awarded ASAP.  As of the date of this writing, zone 4 and zone 7 contracts have been in operation since February 1, 2010.  A dispute is delaying zone 5.

Their Assigned Duties

ZPICs are a recent part of the “integrity” focus of CMS.  They detect, investigate and gather evidence of suspected fraud and abuse to be turned over to the Office of Inspector General (OIG) for criminal or civil prosecution.  These cases may result in prison sentences, monetary penalties, or certain forms of administrative sanction.   ZPICs are not to be taken lightly.

Potential Dangers Posed by ZPICs

ZPICs have access to CMS National Claims History data, which can be used to look at the entire history of a patient’s treatment no matter where claims were processed.  Being able to look at the overall picture will enable them to more readily spot over billing and fraudulent claims.

Among other things, ZPICs will look for billing trends or patterns that make a particular provider stand out from the other providers in that community.

While they’re not bounty hunters working on commission, they will nevertheless have to be very aggressive to justify their lucrative contracts.  For example, the zone 5 contract now under dispute pays AdvanceMed Corporation $107,957,737.00 for a 5- year period.   You can bet CMS will expect them to earn that kind of money!

ZPICs can examine medical charts to see whether a particular service actually occurred, and whether it was a medically necessary and reasonable treatment.

Here’s a comforting thought  –  ZPICs are not required to have Physician review of denials.   It is presumed that nurses will conduct the reviews.

And now,  here’s a sobering thought – just because a provider has had a RAC denial and recoupment does not prevent the ZPIC and OIG from prosecuting for fraud or abuse connected with that overpayment.

Since ZPIC actions can potentially lead even to imprisonment, extreme attention should be focused on any contact from a ZPIC.    Click HERE for assistance if you are contacted by a ZPIC.

Winston Creath is an independent executive healthcare consultant working in the compliance and revenue cycle management arenas on behalf of physicians and clinics.  He serves as President of National Business Solutions of GA, LLC.  He can be reached at for questions or comments.