Medicaid Audits

Medicare and Medicaid fraud costs U.S. taxpayers hundreds of billions of dollars each year. This puts tremendous strain on an already overburdened healthcare system, driving costs ever higher and threatening the ability of America’s health providers to deliver quality care.

A Large Portion of Medicaid-Participating Providers Are At High Risk of Being Audited

Due to the implications and scale of healthcare fraud, the government has begun to aggressively pursue any healthcare providers who don’t assiduously follow all relevant statutes and administrative procedures.

This means that if you are a healthcare provider who participates in the Medicaid system, then you and your practice are at a higher risk of a Medicaid audit. While instituting a comprehensive compliance program is the single most important step towards ensuring that you pass a Medicaid audit, doing so is no guarantee that the Center for Medicare and Medicaid Services or its contractors will not audit you.

For healthcare professionals and businesses, the stakes associated with the Medicaid audit process couldn’t be higher. Among the 140 million taxpayers in the US, we successfully convict only 600 people for tax fraud annually.

Among these taxpayers, there are only about 1,100,000 doctors in the US, many of whom work for hospitals that may easily have 10 or more Medicaid providers working for the same facility. Additionally, a significant portion of those professionals and the businesses they work for don’t accept Medicaid at all.

In 2017, however, the government successfully convicted more than 1,500 individuals of Medicaid fraud, most of whom owners of healthcare businesses. This means that a doctor’s chance of being convicted of Medicaid fraud is much higher than an average taxpayer’s chance of being convicted of tax fraud. This statistic is especially surprising given the fact that most medical professionals take extraordinary measures to ensure that they remain compliant with Medicaid-related statutes and administrative procedures.

When it Comes to Medicaid Audits, Offense is the Best Defense

The Healthcare Fraud Group has been helping clients navigate the Medicaid audit process for decades.

One of the most important things that we do is help our clients take a proactive approach to avoiding the worst outcomes of an audit. This is accomplished by creating a comprehensive and rigorous compliance defense that minimizes the ability of an audit team to impute fraudulent intent. Compliance programs also tend to be good for business as they can eliminate billing errors that work against the business as well as in its favor.

The Healthcare Fraud Group also help its clients establish ironclad document-management systems that ensure critical information is not lost. One of the worst things that you can say to an auditor is that you cannot provide a certain document because you can’t find it. This will automatically suggest criminal intent and is likely to result in an escalation of the audit, referring the case to a federal agency for prosecution, litigation, or further criminal investigation.

We can also help clients establish self-auditing processes. This can be one of the most important defenses against an eventual audit from a CMS contractor or a Medicaid Fraud Control Unit. Self-auditing not only fixes actual errors and creates a strong record of exactly how a business’ internal processes operate, but it also demonstrates to investigators that the business in question takes compliance seriously. Medical practices that are meticulous about compliance make themselves very hard targets for zealous auditors, investigators, and prosecutors who strive for personal gain or career advancement, leaving them to move on to more fertile hunting grounds.

Understanding ZPIC Audits

Medicaid may intervene in a service provider’s business for a number of reasons and using a variety of mechanisms. The most serious of these is a ZPIC audit. This stands for Zone Program Integrity Contractor, a name given to one of seven private companies that handle audits on behalf of the Medicaid program.

Unlike some other forms of Medicaid audits, ZPICs are typically not random. They usually start when a data analysis indicates that a healthcare provider’s billing pattern is in some way anomalous. If your practice is located in a city that the Centers for Medicare and Medicaid Services deems to be high risk, such as Houston, Miami, or Detroit, then your chance of eventually being subjected to a ZPIC audit is extremely high.

Once a practice has been selected to undergo a ZPIC audit, the situation becomes more serious. Far more than a mere exercise in accounting, ZPIC audits are often preludes to serious civil and criminal proceedings. ZPIC auditors have enormous power and are authorized to carry out actions that would normally require a subpoena, with very few limitations on their ability to conduct investigation-related activities.

For example, ZPIC auditors can freely interview any employee or patient of your practice. They can compel your office to produce virtually any document that is related to their investigation. They can even force unwilling parties to answer detailed questions in person or in writing.

Most importantly, ZPIC Medicaid audits can result in enormous administrative, civil, and criminal penalties. One of the primary purposes of ZPIC audits is to claw back any erroneous payments that Medicaid has issued. Even if billing errors were clearly the result of innocent mistakes, a practice can still easily find itself on the hook for hundreds of thousands of dollars if a ZPIC audit uncovers systematic errors that were taking place.

An even greater threat comes from civil judgments, serious administrative penalties, and, in the worst cases, criminal indictments and convictions. In cases of reckless or wanton billing mistakes, serious administrative actions such as the suspension or even revocation of medical licenses, or the temporary or permanent banning of an entire practice from the Medicaid system may be imposed. In other cases, individual practitioners may be banned from seeing Medicaid patients, either temporarily or permanently.

ZPIC auditors can also recommend civil action against the practice. This can include up to $11,000 in fines for each instance of improper billing. Because a single case may involve thousands of errors, these fines can quickly add up to liabilities that can threaten virtually any practice with insolvency. Additionally, blanket fines of up to $250,000 for individuals and $500,000 for corporations may be imposed.

The outcome that should be avoided at all costs is a referral of the case by the ZPIC auditor to the Department of Justice for a recommended criminal investigation. By the time ZPIC refers a case to the DOJ, there is likely to be compelling evidence of egregious misconduct. By this stage, it is often not possible to avoid serious fines and jail time. While the maximum sentence that is usually imposed for first-time offenders is nominally five years, defendants will often face enormous pressure to plead guilty in exchange for a lesser sentence. Repeat offenders, however, can face up to life in prison in the worst cases of abuse.

As shown earlier, any doctor who accepts Medicaid patients is already at a substantial risk of being targeted with a criminal investigation at some point in their career. A healthcare provider who comes under scrutiny from a ZPIC audit and who has not retained skilled legal counsel to help them resolve the situation is all but guaranteed to be hit with serious civil or criminal penalties.

This is not the time to waiver. If you are the target of a ZPIC audit, you need to get experienced and skilled legal counsel like the Healthcare Fraud Group working to fight on your side.

ZPIC auditors are incentivized to recoup the maximum possible amount

In deciding to aggressively go after fraud, the Centers for Medicare and Medicaid Services pays its private sector auditors in a way that encourages the recoupment of as much money as possible from each audit. This has created incentives that could reasonably be described as perverse.

Simply put, ZPIC auditors are gunning for providers’ bank accounts. And this means that the auditors themselves often play fast and loose with the rules, frequently overstepping the bounds of their mandates and violating procedural guidelines that govern what they can and cannot do. Medicaid auditors also frequently reach false conclusions that are not supported by the available evidence. They may assert that some treatments were medically unnecessary despite evidence that there was clearly a need for the treatment in question.

Because Medicaid audits can involve many expert-level judgement calls, such as whether or not a patient required physical therapy, or whether an echocardiogram was needed to determine a patient’s cardiac ejection fraction, there is a great deal of nuance in the determinations of the auditors.

At the Healthcare Fraud Group, our deep knowledge of clinical procedures, billing codes, and the medical field in general helps us to quickly spot and challenge the mistakes of auditors. Claiming that a given procedure, test, drug or device was not medically necessary is one of the primary gambits that ZPIC auditors use to initiate recoupments. However, such cases are rarely black and white. In many cases, the ZPIC auditor simply doesn’t have sufficient understanding of the specialty in question in order to make an accurate call as to the validity of the expense. This allows competent legal counsel to successfully challenge ZPIC allegations.

Preventing escalation to a criminal case

Due to the potential seriousness of ZPIC Medicaid audits, the first priority should always be preventing the audit from escalating into a criminal investigation. The best way to accomplish this is to involve an experienced law firm like the Healthcare Fraud Group as early in the process as possible.

The last thing that you want to do in a ZPIC audit is to disclose information that could be used against you or that could trigger a civil or criminal investigation. The Healthcare Fraud Group can assist throughout the audit process by taking control of information disclosure and act as the sole intermediary between the practice and the auditors.

This can make it difficult for auditors to exceed their authority while also preventing missteps when disclosing information. It’s important to understand that once mistakes have been made in disclosing documentation these errors cannot be undone. It is imperative to get disclosure right the first time.

The Healthcare Fraud Group is also adept at using deadline extensions to our clients’ benefit. Rushing to comply with auditor requests is a surefire way to commit serious errors. With strategically used deadline extensions, rushing will never be a problem.

We will also work to prevent future audits by signaling to the auditors and investigators that our client’s practice is taking future compliance with the utmost seriousness. We will comprehensively review all of our client’s compliance protocols, as well as whether the practice’s corporate structure provides adequate protections to its principals against personal liability that may arise from future investigations. In short, we make our clients the hardest possible targets for government regulators.

The Healthcare Fraud Group will also open lines of communication with auditors and investigators. If the case does get referred to the U.S. Attorney’s office or the Office of the Inspector General, we can strategically guide the process in order to prevent it from becoming a criminal matter.

If a ZPIC audit ends with heavy penalties or other unfavorable outcomes, we can work to appeal the determination. There are many possible errors that auditors can commit. If auditors violated established protocols for requesting and reviewing documentation, that may be grounds for reducing penalties or annulling findings.

Likewise, many cases may involve areas where expert professional knowledge is required in order to accurately assess the underlying issues. If auditors have attempted to pursue a case without sufficient expertise or bringing in a subject-matter expert, then the findings may also be invalidated. The rate of errors committed as a whole by an auditing contractor may also be grounds for challenging an audit’s findings.

The Healthcare Fraud Group will work to mitigate any adverse findings

In our experience, the most serious consequences of Medicaid audits tend to flow from a limited number of alleged violations. In many cases, there is clearly no criminal intent on the part of the client. However, that is no guarantee against heavy penalties and recoupments being imposed as well as the potential for a case to be bumped up to the U.S. Attorney’s office for a criminal investigation.

By getting involved early in the audit process, the Healthcare Fraud Group will help protect against the consequences of the following common accusations:

  • Coding errors, either intentional or not. Controlling the flow of information is critical in an audit so that the ability of the auditor to uncover new mistakes is minimized. At the same time, we ensure that our clients don’t fall into the temptation of retroactively adding or falsifying billing records, which is a major reason that audits turn into criminal investigations.
  • Allegations of giving or accepting kickbacks. Auditors have been known to construe legal transactions as somehow constituting kickbacks. Having an experienced legal team on your side will discourage this.
  • Allegations that the clinic engaged in medically unnecessary procedures, prescriptions, or provision of devices. This is where bad faith on the part of profit-chasing auditors can easily cause an audit to go off the rails. Auditors must have at their disposal the relevant expertise to make a judgement as to whether or not a given action was medically necessary. If they do not possess such expertise themselves, then they must hire an expert to make the call. Even then, experts may disagree on the particular aspects of any given treatment regimen. The Healthcare Fraud Group has a solid track record of combating shaky allegations of unnecessary medical treatments.
  • Allegations of negligent or fraudulent prescription of drugs. This is another area where the deep expertise of the Healthcare Fraud Group can be brought to bear in raising doubt. Whether or not a given prescription or an ongoing drug regimen was properly executed is almost never a black-and-white issue. As there was not grossly fraudulent behavior taking place, we will be able to raise serious doubts as to whether the action in question was in error.

We will act as your guard dog throughout the process, maintaining high vigilance against auditor malfeasance, misinterpretation, or other errors. The fact is that auditors are not always top-tier professionals. Many audits that we have dealt with have been sloppily executed, with lazy mistakes, administrative overreach, and auditors who are clearly more interested in scoring a big payday than maintaining the integrity of America’s medical system.

When this is the case, we will use our knowledge and hard-won expertise to keep auditors in check when they exceed the purview of their office. We will call them out when they use bad methodologies and will correct them if they try to use outdated regulations as an excuse to impose penalties.

We will also carefully check every word of the auditing firm’s work, catching any errors that may have been committed in the interpretation of our client’s records or in the auditors’ understanding of regulations. Auditors who attempt to justify penalties or recoupments with flawed logic or who have intentionally donned evidentiary blinders, focusing only on evidence that may support blame or guilt while ignoring anything that may be exculpatory, will be exposed and their actions effectively countered.

Contact us today

Hiring the Healthcare Fraud Group to help you through a healthcare audit is one of the best moves you can make. For a free initial consultation, contact us today.