Moving the HME Industry Forward

General Healthcare

ZPIC Education Letter – How to Respond

January 9, 2017

AMARILLO, TEXAS – When a DME supplier receives any type of communication from a ZPIC, the supplier must take it seriously and make it a top priority to submit a response that is satisfactory to the ZPIC. This is because unlike a DME MAC, RAC or CERT, the ZPIC comes into the picture when it receives information that the supplier might be engaging in fraud.

If a ZPIC investigates a DME supplier and concludes that fraud is occurring, the ZPIC can turn its file over to the Office of Inspector General (“OIG”). In addition, the ZPIC can instruct the DME MACs to suspend all payments for at least six months while a thorough audit of the supplier’s claims is conducted. If a large portion of the supplier’s income comes from Medicare, then this six month payment suspension will likely put the supplier out of business.

When a ZPIC receives information that a supplier might be engaging in fraudulent acts, then the ZPIC might send an “education” letter to the supplier. The “re” portion of the letter will say “Provider Education pursuant to Medicare Program Integrity Manual 4.19.” Here are excerpts from a standard education letter:

[Name of ZPIC] understands that most providers strive to work ethically, render high-quality care and submit proper claims for Medicare payment, and the Federal Government places enormous trust in providers to do so. We received information that suggests that you and your staff may require additional education regarding Medicare beneficiary solicitation, Certificates of Medical Necessity (CMN) and Misrepresentation of Services or Items.

Statutory Basis for [Name of ZPIC’s] Actions. In accordance with section 1893 of the Social Security Act [Section 42 of the United States Code (U.S.C.) 1395ddd] and Title II § 202 of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, the Centers for Medicare & Medicaid Services (CMS) is authorized to contract with entities to fulfill program integrity functions for the Medicare program. These entities are called Zone Program Integrity Contractors (ZPICs). As a ZPIC, [name of ZPIC] performs program integrity activities designed to reduce fraud, waste, and abuse in the Medicare program.

Action Needed. You and your staff should carefully read the entire publication at the following link; but some key points we would like to bring to your attention are: [the Medicare anti-kickback statute is quoted].

Medicare Claims Processing Manual – Chapter 20 – Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) … Certifications and recertifications may not be altered by “whiting out” or “pasting over” and entering new data.

Fraud & Abuse. Fraud is an intentional representation that an individual knows to be false or does not believe to be true and makes, knowing that the representation could result in some unauthorized benefit to himself/herself or some other person. The most frequent kind of fraud arises from a false statement or representation that is material to entitlement or payment under the Medicare program. The violator may be a practitioner, physician, supplier, contractor employee or beneficiary. Examples of fraud include, but are not limited to the following:

• Billing for services or supplies that weren’t provided.
• Altering claims to obtain higher payments.
• Soliciting, offering or receiving a kickback, bribe or rebate, i.e., paying for referral of patients.
• Provider completing Certificates of Medical Necessity (CMN) for patients not known to the provider.
• Supplier’s completing CMNs for the physician.
• Using another person’s Medicare card to obtain medical care.

Please review the information provided in this letter to ensure you and your staff understand Medicare coverage and payment requirements. Use this information to determine whether corrections to your billing and claim submission procedures are required to prevent future errors.

… [W]e note that per 42 CFR § 424.535(a)(8)(ii), CMS has the authority to revoke a currently enrolled provider’s or supplier’s Medicare billing privileges if CMS determines that the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.

Self-Audit and Voluntary Refunds. [Name of ZPIC] recommends that you conduct a self-audit to identify any overpayments your practice or facility has received related to the information provided in this letter. If you determine that you have been overpaid by Medicare, you are obligated to refund these overpayments to the Medicare Administrative Contractor (MAC) that process your claims … If you identify evidence of potential fraud, you may choose to voluntarily disclose this to the Office of Inspector General (OIG) under the Provider Self-Disclosure Protocol (SDP).

Our goal is to ensure that you are fully aware of the law, regulations, and Medicare instructions which apply to you and other providers who furnish services or items to Medicare beneficiaries … If you have questions about this letter, you may reach me at ___-___-____.

In reviewing the education letter described above, you will note that the DME supplier is not required to file a Corrective Action Plan (“CAP”) nor to otherwise respond to the ZPIC. Having said this, the supplier would be foolish not to take the following steps:

• The supplier should call the Program Integrity Analyst (“Analyst”) who signed the letter.
• In calling the Analyst, the supplier should not be combative or defensive. To the contrary, the supplier should be conciliatory and cooperative.
• The supplier should gather as much information as possible from the Analyst. In requesting information, the supplier needs to understand that the Analyst is limited as to how much information the Analyst can give to the supplier.
• Questions that the supplier should ask the Analyst include: (1) Can you tell me what precipitated this education letter? (2) Did the education letter arise out of documents we provided pursuant to an audit request? (3) Did the education letter arise out of a review of our billing patterns? (4) Did the education letter arise out of a complaint by a patient? Physician? Competitor? (5) Can you give me some examples of how we may be have paid or received kickbacks? (6) Can you give me some examples of how we may have improperly induced patients? (7) Can you give me some examples of how we may have improperly contacted patients? (8) Can you give me some examples how we may have billed for services or supplies that we did not provide? (9) Can you give me some examples of how we may have altered claims and/or altered documents? (10) What corrective steps would you like for us to take?
• At the end of the phone call, the supplier should tell the analyst that the supplier will conduct an audit that addresses the issues raised in the education letter……and that the supplier will then submit a response letter to the Analyst within 30 days from the date of the education letter.
• After obtaining as much information as possible from the Analyst, the DME supplier should conduct an audit that addresses the issues raised in the education letter. Within 30 days following the date of the education letter, the DME supplier should submit a written response to the Analyst. It is important that the supplier’s health care attorney review the response before it is submitted.

By taking these steps, the supplier will let the ZPIC know that it is taking the education letter seriously. The odds are that taking these proactive steps will decrease the risk of the ZPIC bringing a further action against the supplier.

Denise Leard will be presenting the following webinar:
Audits: Steps to Avoid…and Steps to Respond
Presented by: Denise M. Leard, Esq., Brown & Fortunato, P.C.
Tuesday, January 17, 2017
2:30-4:00 p.m. EASTERN TIME
Medicare has a huge arsenal of weapons it can use in order to find and request overpayments.  Knowing the various types of audits and how to respond effectively can limit recovery by Medicare.  Being successful with the additional documentation request will allow a supplier to avoid the overburdened and delay-plagued appeals process.  This is key to surviving in today’s audits environment.  This program focuses on audits aimed at HME suppliers and prepares the supplier to appropriately respond to requests for documentation.

Learning Objectives:
1) The supplier will be able to distinguish the various entities auditing HME claims for Medicare and understand the implications of the audits.
2) The supplier will learn ways to be proactive on protecting itself from Medicare audits.
3) The supplier will be able to prepare documentation responsive to a prepayment or post-payment additional documentation request.

Register for Audits: Steps to Avoid…and Steps to Respond on Tuesday, January 17, 2017, 2:30-4:00 pm ET, with Denise M. Leard, Esq., of  Brown & Fortunato, PC.

Please contact Ika Sukh at if you experience any difficulties registering.

FEES: Member:  $99.00    
Non-Member:  $129.00

Jeff Baird will be presenting the following webinar:
Webinar sponsored by Mediware Information Systems, Inc.
Telehealth Arrangements: What is Proper and What is a Sham?

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Thursday, January 19, 2017
1:00-2:00 p.m. CENTRAL TIME
Telehealth is a good thing. Having a telehealth encounter with a physician saves time, saves money, and is often just as effective as an in-person physician/patient encounter. It is fair to say that telehealth is the “wave of the future.” Having said this, when the DME supplier receives a physician order arising out of a telehealth encounter, the supplier needs to be aware of when the telehealth encounter is legitimate … and when it is a “sham.” While a legitimate telehealth encounter results in a legitimate physician order that should result in payment to the DME supplier, a sham telehealth encounter will result in denial of the supplier’s claim….and may result in a government investigation of the supplier if it participated in the sham. This webinar will discuss a number of issues pertaining to telehealth encounters, including the following: (i) telehealth requirements vary from state to state; for example, some states allow “audio only” encounters while other states require “visual and audio” encounters; (ii) if the encounter does not meet Medicare requirements for reimbursement to the physician, then Medicare will not pay the supplier for the underlying product … notwithstanding that state law is met; and (iii) if the DME supplier is directly or indirectly paying the physician for the telehealth encounter, then the Medicare anti-kickback statute is likely violated.

now for “Telehealth Arrangements: What is Proper and What is a Sham?” on Thursday, January 19, 2017, 1:00-2:00 pm CT, with Jeffrey S. Baird, Esq., of  Brown & Fortunato, PC.

Contact Kolby Wegener at if you experience any difficulties registering.
This webinar is free for attendees.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or