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Potential Class Action Targeting ZPIC Dismissed: What This Means

by admin on April 30, 2018 1 comment

medicare payment suspensionBy: Matt Fischer

A recent lawsuit seeking class action status that targeted Zone Program Integrity Contractor (ZPIC), AdvanceMed along with the U.S. Department of Health and Human Services (HHS) has been dismissed.  The plaintiff, an Illinois home health agency (HHA), filed suit in federal court requesting a writ of mandamus (i.e. an order directing a party to perform a specific act) and damages based on claims of fraud and non-compliance with Medicare’s regulations.  With many wanting an overhaul with regards to ZPIC authority, this case has been watched closely.  What does this decision mean going forward?  Consequently, this decision solidifies the formidable hurdle and requirement to exhaust all administrative remedies before challenging a ZPIC in court.

What occurred in this case is not uncommon.  AdvanceMed conducted a review of a number of patient charts which led to a suspension of Medicare payment “based on reliable information that an overpayment exists or that the payments to be made may not be correct.”  In response to the suspension notice, the HHA submitted a rebuttal statement with additional supporting documentation.  The ZPIC later informed the HHA that the documentation had been reviewed and the Centers for Medicare & Medicaid Services (CMS) decided to continue the suspension.  In subsequent discussions between the parties, an AdvanceMed representative surprising stated that it was not their policy to review rebuttals nor was it obligated to review the additional documentation.  The representative further indicated that CMS concurred with their position.  As a result, the HHA filed a lawsuit.     

As a ZPIC, AdvanceMed is tasked with identifying potential cases of Medicare fraud and otherwise preventing overpayments.  With this responsibility, ZPICs in conjunction with CMS have the authority to temporarily suspend payment.  If it occurs, the provider or supplier then has the opportunity to submit a rebuttal.  Important to note, the decision to suspend is not entitled to further review in the Medicare appeals process; only the overpayment determination is eligible.

In its complaint, the HHA argued the ZPIC’s refusal to review its rebuttal violated Medicare’s regulations and deprived the HHA of its right to administrative review.  In response, AdvanceMed filed a motion to dismiss on the ground that the HHA failed to exhaust its administrative remedies.  The court ultimately agreed and granted the motion holding that a provider or supplier must exhaust all administrative remedies before seeking relief in court.  Additionally, front and center, was the issue of the backlogged Medicare appeals process.  When addressing the delay caused by the backlog, the court noted that the delayed process was “unfortunate.”

This decision highlights the obstacle that Medicare businesses face.  Although a payment suspension can cripple a business, the imminent harm caused does not excuse a provider or supplier from letting the administrative process play out.  The bottom line: it is critical for providers and suppliers to remain proactive and be prepared for an audit.

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