Look for ZPICs to be tougher on Medicare fraud and abuse

The Medicare program's program safeguard contractors (PSCs) haven't been doing their job properly identifying Part A and Part B fraud and abuse (and referring overpayments to claims processors for collection), but the Centers for Medicare and Medicaid Services expects the transition to zone program integrity contractors (ZPICs) to solve many of the problems identified in two new reports by the Office of Inspector General of the U.S. Department of Health and Human Services.

In 2007, PSCs referred overpayments totaling $835 million to claims processors. However, only two out of 18 PSCs in operation reaped 62 percent ($519 million) of that total, says the OIG. "PSCs differed substantially in the dollar amounts of overpayments they referred for collection in 2007," the OIG says. "PSCs referred from $3 million to $266 million in overpayments for collection, with a median of $15 million."

The dollar amount of PSC-referred overpayment didn't always correlate to the size of PSCs' oversight responsibility. "For example, the PSC with the most overpayment dollars referred for collection ($266 million) had the third smallest oversight responsibility ($5 billion) of all 18 PSCs," says the OIG. In addition, Part B payments represented only 29 percent of PSCs' oversight responsibility, but accounted for 89 percent ($747 million) of referred overpayments. Part A payments represented 71 percent of PSCs' oversight responsibility, but accounted for only 11 percent ($88 million) of referred overpayments.

"Overpayments that PSCs referred for collection did not result in significant recoveries to the Medicare program," notes the OIG. "PSCs referred 4,239 overpayments totaling $835 million to claims processors in 2007, but very little had been collected by claims processors as of June 2008. Claims processors collected 7 percent, or $55 million." Many overpayments were on hold for a variety of reasons. However, 8 percent ($64 million) couldn't be explained at all by claims processors.

Two ZPICs became fully operational in February 2009, and all PSC work will be transitioned to the remaining five by year-end. The goal is to consolidate all Part A, B, C and D fraud-fighting activity under the ZPICs. While CMS believes the rules that ZPICs must play by will address most of these problems, the OIG isn't so sure and recommends that CMS closely monitor overpayment and collection activities during the transition and beyond.

To learn more:
- read the OIG report, Medicare Overpayments Identified by Program Safeguard Contractor
- read the OIG report, Collection Status of Medicare Overpayments Identified by Program Safeguard Contractors

Suggested Articles

Humana filed suit Friday against more than a dozen generic drugmakers alleging the companies engaged in price fixing.

Medicare Advantage open enrollment kicked off last week, and insurers are taking new approaches to marketing a slate of supplemental benefit options. 

Health IT company Cerner announced a definitive agreement to acquire IT consulting and engineering firm AbleVets as a wholly owned subsidiary.