My DME Company Received a Letter From a UPIC. What Should I Do?

If you receive a letter from CMS, should you worry? Do you need to call your attorney? Learn about the general domino effect of a UPIC audit notification.

You have received a letter from the Centers for Medicare and Medicaid Services (CMS) and observed changes to your payments. Be on alert:  your company could be facing a comprehensive audit from the federal government. By moving quickly, treading carefully, and using expert guidance from legal professionals, you can protect your legal rights in the minefield of an investigation.  

The Vigorous Hunt for Medicare Fraud

As the owner of a company that supplies durable medical equipment (DME), you likely serve Medicare beneficiaries. If you do, then when and why Medicare payments start and stop should weigh heavily on your business decisions. 

CMS is the Federal agency within the U.S. Department of Health and Human Services that administers the Medicare Program. Because taxpayer money funds CMS, it aggressively works to prevent, detect, and investigate fraud in the Medicare program. For Fiscal 2021, CMS requested $27 million more to reduce Medicare fraud.

CMS investigations are sound government investments. For every $1 spent on healthcare-related fraud and abuse investigations, CMS recovers more than $4. The government has a strong financial incentive to stamp out waste, fraud, and abuse. Therefore, they pursue violations vigorously.

This article describes CMS’s calculated pursuit against DME companies that it believes charged more than what the law permits. We focus on the first step in this investigative process: a letter from a Unified Program Integrity Coordinator (UPIC), a key partner of CMS. 

Read on to learn what you should (and should not) do in response to a UPIC audit and familiarize yourself with the critical next steps.

Improper Payments and the Conditions of Reimbursement

Improper payments by the Medicare program take many forms.  Perhaps you mistyped the billing code for a compression garment when you submitted the claim.  Maybe you sent equipment to a beneficiary who never requested your product. In general, Medicare’s payment for these claims would qualify as improper and could result in a suspension of your payments. You should only receive payment for equipment that a Medicare beneficiary is entitled to under the law. You alone are responsible for complying with these conditions of reimbursements. If you do not, CMS will hold you accountable for repayment. 

As a DME supplier that bills CMS, you have agreed to submit charges for covered medical equipment. Therefore, you should be familiar with the conditions of reimbursement.  You will find the term “medical necessity” in most insurance plans, public and private. Thus, familiarity with its meaning matters as you operate your DME business.

While there is no “one size fits all” definition of medical necessity, a UPIC audit would likely examine all certificates of medical necessity, the physician’s performance of objective measurements of need for the equipment, and the ordering physician’s licensure, among other things. In their absence, a UPIC could determine that payments for the equipment were improper and demand repayment. 

The Roles of UPICs and Other CMS Contractors

CMS partners with numerous contractors and subcontractors to reduce fraud and abuse by companies who bill the Medicare program. Each contractor serves a unique purpose to advance this effort.

• Medicare Administrative Contractors (MACs) process claims and enroll providers and suppliers.
• Recovery Audit Contractors detect and collect overpayments and identify underpayments.
• Zone Program Integrity Contractors (ZPICs) investigate potential fraud, waste, and abuse for Medicare Parts A and B, Durable Medical ​Equipment Prosthetics, Orthotics, and Supplies, and Home Health and Hospice.
• Unified Program Integrity Contractors (UPICs) combine and integrate Medicare and Medicaid Program Integrity audit and investigation work functions into a single contract. (See Table 1 of the CMS guide, “Medicare Fraud & Abuse: Prevent, Detect, Report.”) 

A DME supplier who bills Medicare could receive communications from any one of the contractors named above. A UPIC leads the recovery effort for dollars paid to your DME company that CMS believes were made in error. Given this purpose, a letter from a UPIC represents a real threat to your company’s financial health. 

What should I do if I receive a letter from a UPIC?

Take any letter from a UPIC seriously, no matter the content. Do not ignore the letter. Doing so could waive important rights that your company has and trigger adverse effects later.

A letter from a UPIC could indicate that a hold has been placed on payments to your company for reasons justified by the Medicare program conditions. These holds are called “suspensions.” A letter from a UPIC signals that not only has your company’s history of claim submissions been scrutinized but that evidence points to the possibility of improper payments.

When you receive a letter from a UPIC, it crucial to recognize that an investigation into the actions by your DME company has already taken place and is likely ongoing. Moreover, your company’s subsequent action could be referred to other agencies both within the Department of Health and Human Services (e.g., the Office of the Inspector General) and outside of it (e.g., the Department of Justice). In short, a letter is the tip of the iceberg. 

You will need to ask yourself hard questions, such as “What is the long-term business strategy for my company?” and “How much am  I willing to invest to keep my company operational for the duration of an investigation?” An investigation could last at least six months— and likely longer. During the investigation,  you will not be eligible to receive payments by Medicare.

Addressing the Allegations in a UPIC Letter

If your DME company services solely Medicare beneficiaries, then you know the potential damage of this notice.  A UPIC may issue a suspension of payments for several reasons, including: 

• credible allegations of fraud
• reliable information that an overpayment exists
• reliable information that payments made may not be correct
• a provider who fails to provide requested records

The most serious letters will notify you that your payments by the Medicare program have been put on hold and state the rationale supporting this decision.  It is critical to understand the grounds for a payment suspension, which will then dictate your options. A legal professional can help you address this.

You will be expected to understand the deadlines for a response, the allegations, and the law governing the suspension. If you miss deadlines, then you may waive significant opportunities to dispute the allegations. Thus, seek out professional legal advice as early as you can. A professional can explain to you the nature and substance of the allegations in layman’s terms. 

A UPIC Letter is Only the First Domino

There’s another reason to seek professional guidance right away. An investigation by a UPIC may have downstream effects. A letter from the UPIC subjecting your DME company to an investigation is merely the tip of the iceberg. That is, the investigation and its fallout could grow substantially over time if you do not respond appropriately or fail to take remedial actions.

The severity could depend on the volume of claims under investigation and the sufficiency of your records. A positive outcome would be your company’s ability to repay an overpayment fully. However, this outcome does not preclude the possibility of your company facing civil monetary fines, exclusion from the Medicare program, and even criminal penalties.

Additionally, at any point during an investigation by a UPIC, your matter could be escalated to another agency. That is, actions that constitute an improper payment in violation of the conditions of the Medicare program could also violate other laws.  Relevant laws include:

• False Claims Act
• Anti-Kickback Statute
• Physician Self-Referral Law (also called the Stark Law)
• Exclusion Statute
• Civil Monetary Penalties Law
• U.S. Criminal Code  

Potentially, your DME company could face criminal, civil, and administrative penalties when it receives a letter from a UPIC suspending Medicare payments. In other words, what starts with an investigation could end with a trial.

The Role of Complaints

Despite your best efforts, your DME company could draw scrutiny as a result of whistleblower complaints. CMS and its Office of the Inspector General actively encourage Medicare beneficiaries to report Medicare fraud to its hotlines. Complaints submitted via phone, fax, online, and mail often suffice for a company to become a target.

To avoid such complaints, promptly resolve complaints from Medicare beneficiaries about your equipment.  Doing so could help your company avert a costly UPIC investigation.

Conclusion

When operating in line with the conditions of the Medicare program, your DME company can improve the quality of life for millions of people. Demand for your equipment will continue to grow. By 2030, the baby boomer generation, estimated at 73 million people, will be 65 and older and eligible for Medicare. 

If you serve or plan to expand your services to Medicare beneficiaries, you must understand the system. Knowing the conditions of the payments from Medicare Part B could be the difference between a burgeoning business and one contemplating bankruptcy.

When a UPIC audit letter arrives, you’ll need to act quickly. An experienced healthcare law firm such as Jackson LLP can help you respond to any allegations and form an action plan to resolve the issues. Reach out to us to schedule a consultation to learn more about how we can support you during an audit.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.