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Zone Program Integrity Contractors (ZPICs)1 are turning up the heat on noncompliant providers via their investigations of potential healthcare fraud.

Whenever there is a credible allegation of fraud, ZPICs can suspend all Medicare payments to a healthcare provider while they investigate. The imposition of payment suspensions has been made easier in recent years due to changes in regulations, increasing the financial risk to healthcare providers. Therefore, it is important for providers to understand how payment suspensions may be imposed and to take steps to avoid being the target of such actions.

In 2011, the Centers for Medicare & Medicaid Services (CMS)2 enhanced the ability of Medicare contractors such as the ZPICs to suspend payments to Medicare, Medicaid and CHIP providers and suppliers in cases of suspected fraud. This expansion marked a shift toward a less stringent burden for the government.

Specifically, the U.S. Department of Health and Human Services (HHS), in consultation with the HHS Office of Inspector General (OIG), was permitted to suspend Medicare payments “pending an investigation of a credible allegation of fraud” unless the department secretary determines that there is good cause not to suspend payments.3 The suspension of payment is not limited to the funds at issue or based on any particular allegation, but rather extends to all payments owed to a provider by the government.

Previous regulations allowed CMS to suspend payments based on having “reliable information” that there has been an overpayment, fraud, or willful misrepresentation (or reliable information that payments may not be correct). The current regulations relaxed the standard by requiring only a “credible allegation of fraud.” 4

While current regulations state that allegations are considered credible when they have “indicia of reliability,” that term is not defined. Rather, the reliability of an allegation is, according to CMS, something that will be determined on a case-by-case basis and in consultation with the OIG. CMS specifies, however, that a credible allegation of fraud can come from almost any source, as long as it has a degree of reliability. These sources include fraud hotline complaints, claims data mining, patterns identified through provider audits, civil false claims cases, and law-enforcement investigations.

Payment suspension can remain in place for many months, but must be reevaluated every 180 days to confirm that the suspension continues to be appropriate. Providers have an opportunity to submit a rebuttal statement in opposition to the imposition of a payment suspension, but there is no appeals process available.

If the payment suspension is lifted, the provider will receive the payments withheld during the suspension. However, this delayed payment would be little comfort to a healthcare provider dealing with a current suspension.

What Can Providers Do?

While CMS contends that the changes to the regulations did not change the impact or burden on the provider community, the agency admits that the standards for payment suspension have been reduced. This reduced standard potentially subjects more providers to significant financial risks during a payment suspension, even if they ultimately prevail on the claims at issue.

In light of the significant potential negative impacts of a payment suspension, providers should redouble their efforts to ensure that they have effective compliance programs in place. Providers should respond immediately to any reports of potential noncompliance by investigating and taking corrective actions as necessary. Providers also proactively should assess their current practices and confirm that they are following all Medicare policies and procedures, including any applicable coverage decisions, when billing Medicare claims. If the provider believes that an overpayment situation has arisen, it should repay the funds at issue promptly.

About the Author

Anna M. Grizzle is a partner in Bass, Berry & Sims specializing in healthcare compliance, investigations, and litigation matters.

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1ZPICs are charged with investigating fraud and abuse for all Medicare-related claims under Parts A and B (hospital, skilled nursing, home health, provider, and durable medical equipment claims), Part C (Medicare Advantage health plans), and Part D (prescription drug plans), as well as the coordination of Medicare-Medicaid (Medi-Medi).

2In 2011, CMS issued a final rule implementing certain provisions of the Patient Protection and Affordable Care Act (PPACA), which required CMS and state Medicaid agencies to combat fraud and more closely monitor enrollment in the Medicare, Medicaid and CHIP programs. See “Medicare, Medicaid, and Children’s Health Insurance Programs; Additional Screening Requirements, Application Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for Providers and Suppliers,” 76 Fed. Reg. 5862 (Feb. 2, 2011).

342 C.F.R. § 405.371.

442 C.F.R. § 405.372.

Missed Opportunity for Part B Payment by Many Hospitals


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