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New Program Cracks Down on Medicare Fraud, Abuse

MacKenzie Kimball, May 1, 2009

Medicare fraud and abuse prevention and detection efforts are about the get tougher because of the new Zone Program Integrity Contractors (ZPIC), who began work in some regions on February 1.

CMS developed ZPICs to fix flaws in the current Medicare program integrity system, which protects the Medicare program by preventing and detecting fraud and abuse. Under the existing system, Medicare Drug Integrity Contractors (MEDIC) fight fraud and abuse in Medicare Part D, while Program Safeguard Contractors (PSC) are responsible for such efforts in either Medicare Parts A and B, durable medical equipment (DME), or home health and hospice, depending on the geographic region.

"The existing program integrity system is extremely fragmented, with multiple contractors investigating different types of Medicare fraud in a given state," says William Mahon, consultant at Mahon Consulting Group in Great Falls, VA, and past president and CEO of the National Healthcare Anti-Fraud Association. "Ultimately, the efficiency of the existing system is limited by is fragmented and complex nature."

CMS hopes to unify the system with ZPICs, who will eventually take on the work of PSCs and MEDICs.

The new program divides the country into seven jurisdictions, and in each jurisdiction one ZPIC will be responsible for program integrity oversight and functions for all Medicare-related claims. Because ZPICs will investigate cases of Medicare fraud involving all healthcare providers in a geographic region, they will have the ability to detect cross-billing and relationships among healthcare providers, which will lead to increased scrutiny of providers working across lines of business.

ZPICs will also compare data from Medicare and Medicaid claims to identify fraudulent activities between the programs, a process known as Medi-Medi data matching.

"For example, ZPICs will compare Medicare and Medicaid claims filed for dually-eligible beneficiaries to ensure the two programs are not paying for the same services," Mahon says. "The contractors will also look at the amount of services providers bill to Medicare and Medicaid to identify so-called 'time bandits,' whose services billed to both programs add up to seemingly impossible volumes of work."

ZPICS will perform the same types of investigations as PSCs, known as benefit integrity (BI) reviews, based on billing abnormalities identified by data analysis or allegations of fraud and abuse. ZPICs will conduct data analysis to determine normal practice patterns and then look for abnormalities, such as spikes in billing.

All BI reviews may not uncover fraudulent activities but can still result in significant overpayments because the documentation was missing or inappropriate. Some spikes in billing are completely legitimate, but, without appropriate documentation, a facility may be forced to return payments to Medicare.

"You never know when you will be audited, so facilities must be prepared to support the services they provide at all times," says Wayne van Halem, AHFI, CFE, president and CEO of The vanHalem Group, LLC, in Atlanta.

SNFs should be happy to know that ZPICs should simplify fraud and abuse investigations, especially for providers with multiple facilities.

"Previously, a benefit integrity review done on one facility could be completely different than one performed on another facility not far away," van Halem says.

Because ZPIC jurisdictions are large and the contractors are responsible for Medicare program integrity across all lines of business, there will be more consistency in the investigation process.

ZPICs are scheduled to transition in three cycles. The first cycle was scheduled to transition ZPICs for zones four, five, and seven, on February 1. Although the ZPICs for zones four and seven began work on this date, the transition for the zone five ZPIC was delayed because an unsuccessful bidder protested the award. CMS is months behind schedule in awarding contracts for the remaining zones and has yet to release transition dates for the second and third cycles.

Despite delayed implementation efforts, SNFs should understand how these new contractors expand the scope of fraud prevention and detection efforts and prepare for increased scrutiny of relationships between Medicare providers.


MacKenzie Kimball is an associate editor in the long-term care market at HCPro. She writes PPS Alert for Long-term Care and manages MDSCentral.

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