Category Archives: Government Denials

Zone (Program Integrity Contractor) Defense: Successfully Navigating ZPIC Audits

Sarah Mendiola, Esq., Linda Fotheringill, Esq., Fotheringill & Wade, LLC

While the provider community has been focusing on combating denials from the RACs and MACs, audits by the Zone Program Integrity Contractors (ZPICs) have been quietly recovering hundreds of millions of dollars in identified overpayments. If you talk to a provider who has been involved in a ZPIC audit, you will quickly realize that this type of audit can be devastating in its impact.  This paper explains why the ZPIC is not your typical Medicare auditor and what a provider can do to potentially minimize the impact of a ZPIC audit on their organization.

Issue: ZPICs are looking for “fraud & abuse”, and their audits have the potential to significantly impact the revenue of a hospital through statistical sampling, extrapolation and False Claim Act penalties. Yet, from our work with various hospital providers around the country, we have found that many are not familiar with ZPIC audits and how they differ from audits by the RACs and MACs. A ZPIC medical record request is often handled just like any other auditor request for records.

Takeaway: Do not respond to a ZPIC audit request in a business as usual fashion. Involve your Compliance Officer and executive team at the time records are requested.   Strongly consider enlisting the help of legal counsel experienced with ZPIC audits and the Medicare appeal process. A ZPIC audit can potentially open your organization up to civil and criminal penalties if the ZPIC identifies fraudulent activity.

Check out our white paper for a fuller exploration of this topic.


Does 11 Really Mean 12? Breaking Down the Limitations on Mammogram Screening.

by Catherine Caldwell, Fotheringill & Wade, LLC

Continuing our series to honor Breast Cancer Awareness Month, in this post we will discuss ongoing denial issues relating to mammogram coverage under Medicare. While each claim is unique, similarities between claims and their denials can provide insight which can be used to prevent future denials. Below we will break down the CMS regulation which provides the parameters for coverage of mammography services for women (42 CFR 410.34(d)) and will present case studies which illustrate interpretation of the policy.

Breaking Down the Policy:

Mammograms are very important in the early detection and treatment of breast cancer. However, CMS policy places limitations on the circumstance under which Medicare will provide coverage for mammography screening. 42 CFR 410.34(d) states the following:

  •  “The service must be, at a minimum a two-view exposure (that is, a cranio-caudal and a medial lateral oblique view) of each breast.
  •  Payment may not be made for screening mammography performed on a woman under age 35.
  • Payment may be made for only 1 screening mammography performed on a woman over age 34, but under age 40.
  • For an asymptomatic woman over 39 years of age, payment may be made for a screening mammography performed after at least 11 months have passed following the month in which the last screening mammography was performed.”[1]

(DISCLAIMER: the regulations do allow for diagnostic mammograms. If a patient presents with symptoms that would warrant the need for a mammogram, the provider is allowed to perform a mammogram outside of the above mentioned situations. The regulations relating to be requirement for diagnostic mammograms can be found in 42 CFR 410.34 (b). Additionally, diagnostic mammograms are available for men who are covered by Medicare.)[2]

 The Limitations

 Subsection 2

This subsection states a concrete rule. NO PAYMENT will be made for mammograms if the patient is under 35 years old. This should be an automatic red flag for all providers. Unless the patient has additional coverage through another insurer (Medicaid or Commercial), there will be no payment made by an insurer.

Subsection 3

This subsection indicates that payment MAY be issued for a mammogram performed on a patient who is over the age of 34 but younger than 40. Please note, this does not allow for an annual mammogram for patients in this age range. The regulation states that only ONE mammogram may be covered for women in this age bracket. As such, if you have a patient that falls within this qualification, it is extremely important to ask the patient if she has ever had another mammogram. Not asking this question runs a risk of an automatic denial.

Subsection 4

This subsection appears to cause the most issues for providers. At the first reading the subsection does not seem very complex. So then why do we see so many denials under this subsection? The issue becomes clearer if you look closely to the wording. What exactly does 11 months after the month from the last mammography mean? How does the claims processor count the months? A few case studies shed some light on how exactly the subsection is used to deny cases.


Case Studies

Study #1:

Denial Reason: Patient’s mammogram benefits for the year had been exhausted.

Case Facts: 79 years old woman covered by Medicare was seen for a mammogram on 6/30/14. The patient’s last mammogram screening was performed on 7/1/13.

Discussion: For those of you counting at home, 11 months from July 1 is typically June 1 of the next year. So, why was this claim denied? The denial comes down to the exact wording of the regulation. The regulation specifically states that coverage may be given for a mammogram performed after at least 11 months have passed following the month in which the last screening mammography was performed. The regulation is being interpreted as to require that the patient wait 11 months after the month in which they had their previous mammogram. In this case, the provider would have needed to count from 8/1/13 (the first of the month after the month in which the patient had her previous mammogram) making the patient’s mammogram due 7/1/4, just one day after the patient had her mammogram.

 Study #2:

Denial Reason: Patient’s mammogram benefits for the year had been exhausted.

Case Facts: 59 years old woman came to her provider for her annual mammogram on 07/01/14. The patient’s last mammogram screening was performed on 8/15/13.

Discussion: This case is a little easier to determine why the claim was denied. From date to date, there is only a 10 month gap between the mammograms. However, using the terminology of the regulation, the provider would have needed to count 11 months from 9/1/13. The mammogram was provided prior to expiration of the timeframe under the regulation.



Though the provider is still fighting the denials on both of the above claims, these denials show that the timing for mammograms is key to safeguard the likelihood of payment. Providers should check their records to confirm when a patient had her last mammogram. If this is the patient’s first mammography visit to your office/hospital, it is imperative that the provider question the patient as to when her last mammogram was performed. Providers are also better served to err on the side of caution and calculate the 11 months starting the first day of the month after the previous mammogram. Although there is no guarantee of payment, taking steps to ensure that the claim is compliant with all of the applicable regulations can assist in faster payment.


[1] 42 CFR § 410.34(d) (1998).

[2] Id. Sub. Section (b).

Is the threat of Breast Cancer a “Separate Medical Condition” under Tricare’s Breast Implant Removal Policy?

by Elizabeth Emery, Fotheringill & Wade, LLC

In honor of Breast Cancer Awareness Month, we would like to start the month off with a brief case study surrounding the diagnosis of breast cancer. The case involved a medical policy that initially denied a claim as a “non-covered” benefit but was approved after an appeal. Although each patient is unique, there are similarities in the patients’ hospital course that help set up a foundation for disputing denials and getting claims paid. This case study focuses on both the uniqueness of the patient as well as the key tools needed to fight any denial.

  Case Study

Payer:     TriCare
Denial Reason:    Claim denied as a non-covered benefit
Question:    Can the services be covered under the medical policy?

Case facts:    48-year old woman with a family history of breast cancer presented to her primary care physician with complaints of lumps in her left breast. After x-rays and other diagnostic exams, her primary care physician concluded that a biopsy was required. The patient had breast implants and the lumps seemed to be growing next to the silicone implant. Tests indicated that some of the lumps were behind the implant. The physician determined that the biopsy could not be completed without removing the left silicone implant and that the implant could not be put back in after the biopsy was complete. Since the removal of one implant would disfigure the patient, the physician ordered both implants be removed.


At first glance, a clinical policy might seem stringent and inflexible. Upon closer examination, we often find that the terminology in the policy can work in the provider’s interest to get a claim covered. For the denied claim in our case study we used a thorough review of the policy to successfully fight the “non-covered” denial.

Tricare Policy states that removal of silicone or saline breast implants will only be covered if:

the initial… implantation was or would have been a covered benefit; or if the initial implant was not covered, the removal may be covered only if it is necessary treatment of a complication which represents a separate medical condition.  (Emphasis added)

In this case, the initial implantation was not covered, nor would it have been. The patient had the implants for purely cosmetic purposes and it was not a covered service. However, the medical records clearly set out information as to why the removal was necessary and through appeal, we demonstrated that the biopsy constituted a separate medical condition for which the removal should be covered.

Breaking Down the Policy:


The term “may” indicates that the insurer has agreed to review the documentation you submit in support of the care you have given or plan to provide. This is a powerful tool when your documentation and medical records clearly set out the reasons for the service.

“Necessary Treatment”

The term necessary is subjective and ambiguous. Even if we could push an insurer to give a definition that is more precise, it all comes down to reviewing the medical records and determining whether the service was required. We view this as a good thing. It allows the skilled appeal writer to dig into the details of the case and pull out the facts that demonstrate the necessity of a service. Highlighting the details for the insurance reviewer ensures that the services are viewed in the best possible light.

In our case study, it was necessary to remove the implant for several reasons, including the fact that the implant can interfere with the diagnosis of breast cancer. Further, if a puncture were to occur during the biopsy, it may not be identified immediately and the patient would have to be readmitted at a later date for removal/repair.

“Complication which represents a separate medical condition”

The Tricare policy points out that complications do not include damage to the implant: “hardening, leakage… are considered unfortunate sequelae from the initial non-covered surgery” . But the policy is silent as to what may be constitute a separate medical condition. This definition is, therefore, extremely broad. It gives the provider an opportunity to explain the individual’s clinical condition and to argue that the services should be considered a separate medical condition.

In our case study, potentially malignant tumors located around the breast implant constitute a separate medical condition. The tumors are not a result of the patient’s decision to have breast implants in the first place and, as explained above, it was necessary to remove them in order to properly diagnose the patient.


Whether your appeal team is in-house or an outside firm, the medical records and documentation can prove that a service falls under the policy even when the claim denied as non-covered. Don’t accept the denial without pushing back. Close examination of the clinical policy can prove that the services rendered are covered and should be paid.


[1] Tricare Policy Manual 6010.57-M, Ch 4, Sec. 5.5 Sub. Sec. 3.1, 3.3

[2] Id. at Sub. Sec. 4.2

Is Chairman Brady’s Call for CMS to Retract the Settlement Process Likely to Derail the Settlement?

On the Friday before Labor Day, CMS offered a proposal to settle all hospital claims denied for lack of necessity for inpatient admissions (and still in the appeal process). For eligible claims the proposal offers to pay hospitals 68 % of the net allowable amount. In a recently issued letter to Human Services (HHS) Secretary Sylvia Burwell, Kevin Brady (R-TX), Chairman of the Ways and Means Subcommittee on Health, has questioned whether HHS has the statutory authority for the proposed settlement offer and calls on CMS to retract the offer.

In addition to the question of authority, Chairman Brady also raises a number of concerns with regard to the process that CMS has developed for the settlement of hospital claims. We will look at each of the concerns expressed in the letter, but we will offer our opinion first: Chairman Brady’s letter is unlikely to do anything but possibly slightly delay the settlement process. While the Chairman’s letter does call on CMS to retract the settlement proposal, we believe that this is an action CMS will only take if forced to do so.

In the letter Chairman Brady indicates that the Committee was “shocked to learn about the disclosure of the settlement policy in the press.” Apparently, the offer was not only news to the hospital community, but also to one of the most powerful committees in Congress. Given this fact, it is not difficult to read Chairman Brady’s letter as an expression of frustration that CMS did not consult the Committee before issuing the settlement offer. Chairs of oversight committees (rightly) expect that agencies in their jurisdiction will inform them about major policy shifts before they hit the papers. While certainly questionable form on CMS’ part, it seems insufficient to cause CMS to withdraw the offer. We anticipate that Secretary Burwell will draft a thoughtful response to the Chairman and for the settlement process to move forward as planned.

Addressing each of the concerns expressed by Chairman Brady in his letter, here is how we see the issues:

  1. In the letter Chairman Brady questions whether HHS has the statutory authority for this settlement process.
    • Our interpretation is that CMS has the authority. Buried in the Code of Federal Regulations (Title 42, Part 405, Section 376) is language, based on provisions of the Social Security Act, that allows CMS to “compromise” on any overpayment determination regarding a claim. Nothing says CMS can do this en masse, but nothing says they can’t, so there’s every reason to believe a court would see this regulation as permitting the present offer.
  2. Chairman Brady question the wisdom of the “‘all or nothing’ settlement approach,” rightfully noting that each discharge is unique and the circumstances that apply pertaining to medical necessity in one case do not necessarily transfer to all cases.
    • The very nature of an aggregated settlement is that each party concedes claims it could probably prevail on for the sake of efficiency. Regarding the Chairman’s concern that the process threatens the “due process rights of Medicare providers,” as there is nothing compulsory about the settlement, providers are not obligated to accept the offer.   A provider can choose to stay in the appeals process, likely with its wait time shortened by the providers who do settle being removed from the queue.
  3. Chairman Brady asks CMS to show its math regarding the 68% offer. He points to the payment ratio of outpatient versus inpatient treatment in five categories, and asks why the settlement does not reflect that number (an average of 36%).
    • Based on statistics from the American Hospital Association’s RacTrac study, if all the eligible claims went through the entire appeal process, 66% of them would yield decisions favorable to the hospitals. The proposed settlement achieves what is likely to be close to the ultimate result, but speeds up the process.
  4. Chairman Brady asks about the beneficiaries’ frustration regarding the skyrocketing Part B liability that has followed the increase in inpatient denials.
    • If anything, the settlement profits beneficiaries, who could be liable for Part B coinsurance if hospitals lost their appeals and rebilled the claims. Under the express terms of the agreement, hospitals forego any right to collect anything from beneficiaries that hasn’t already been either paid or promised under a payment plan.

The ultimate takeaway from all of this might be that if you’re running a federal agency and plan to launch a program that could cost billions – and the Congressional committee overseeing your agency has held hearings on the topic – you would be wise to pick up the phone and give the committee a heads up. In this case it appears that CMS forgot that. In light of CMS’ recent policy fits and starts – the about-face on rebilling, the repeated delays of implementation of the two-midnight rule, the vacillation on automatically denying related claims – CMS’ apparent failure to consult with Congress prior to issuing the proposed settlement is not much of a surprise. But, while the result could be a hurdle for the proposed 68% settlement offer for inpatient status appeals, it’s not likely to be a derailment.

Dust Settling on Medicare Settlement

Tuesday afternoon, CMS held what it described as its “first” provider conference call regarding its offer to settle inpatient status claims for 68% of the allowable payment. As frequently happens with these calls, there were only a few new concrete details or clarifications that came out, but they are worth noting:

  1. Per CMS, a claim will be eligible if it was denied “at any point in the appeal process” based on the allegation that an outpatient setting would have been appropriate. The specifically cited example was a case in which the initial denial was for the inpatient admission, but a subsequent contractor conceded the service was inpatient-only but alleged the procedure was not necessary at all. Not only did CMS confirm that this claim would be considered eligible based on the initial denial, but CMS also made clear that the inverse is true, as well. So, according to CMS, a claim initially underpaid based on a DRG downcode, for example, that was then denied in full after an inpatient status review, is also eligible.
  2. CMS repeated its “all-or-nothing” statement – a hospital must choose to settle all or no eligible claims, not settle some and continue appealing others. CMS added the proviso that it will be adding eligible claims the provider doesn’t report. While this failsafe is reassuring in theory, the practical reality is that CMS and its contractors will likely see an overwhelming number of claims on spreadsheets, so it will be in the provider’s interest to make sure every claim that might be eligible is on the list.
  3. Perhaps most importantly since one of the virtues of settlement is a quicker resolution, CMS indicated that it expects that MACs will be able to review a provider’s eligible claim spreadsheet and provide a response within 30 days of the spreadsheet’s submission, and the provider then has 14 days to accept or respond to CMS’ eligibility determination. At that point, payment for the confirmed eligible claims is due within 60 days.

Theoretically, then, a provider could have money in the bank within 90 days of sending its list. It is worth remembering, however, that this entire settlement issue arose because CMS and its related entities were so woefully underprepared for the deluge of appeals in the RAC era. An ALJ decision required by law to be issued within 90 days now takes years. All appeals for claims submitted for settlement are stayed throughout the determination process. So, if CMS again has underestimated the response, providers could again be left waiting while the paperwork shuffles through. The silver lining to that cloud is that a stay is exactly what it sounds like: If the hospital later withdraws outstanding claims from the settlement process, they resume their appeals where they left off on the day the spreadsheet hit CMS’ inbox.

Again, as always, a lot of unanswered questions remain, thanks to more than a few “We’ll get back to you” pledges from CMS. We’ll certainly keep you posted.