Department of Health and Human Services 

OFFICE OF

INSPECTOR GENERAL

 

 

ZONE PROGRAM INTEGRITY 

CONTRACTORS’ DATA ISSUES 

HINDER EFFECTIVE OVERSIGHT 

Daniel R. Levinson 

Inspector General 

November 2011 

OEI-03-09-00520 
 

 

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 EXECUTIVE SUMMARY

OBJECTIVES

1. To perform an early assessment of the Centers for Medicare & 

Medicaid Services’ (CMS) oversight of the Zone Program Integrity

Contractors (ZPIC). 

2. To describe the extent to which ZPICs performed program 

integrity activities, including investigations, case referrals, 

responses to requests for information, and administrative actions.

3. To determine the extent to which CMS used program integrity 

workload statistics in ZPIC performance evaluations. 

4. To describe any barriers encountered by ZPICs in performing their 

Medicare program integrity activities.

BACKGROUND

This study is part of the Office of Inspector General’s (OIG) body of work 

examining the identification and investigation of fraud, waste, and 

abuse by Medicare program integrity contractors. OIG has identified 

oversight of CMS program and benefit integrity contractors as a top 

management challenge for the Department of Health and Human 

Services. Previous OIG studies found vulnerabilities in these 

contractors’ efforts to combat fraud and abuse. This is the first study 

examining ZPICs’ program integrity activities. 

CMS is replacing Program Safeguard Contractors (PSC) with ZPICs, 

which will perform Parts A and B program integrity work in seven 

newly established geographical zones. CMS awarded the first two ZPIC 

contracts for Zones 4 and 7 on September 30, 2008, and both ZPICs 

were operational as of February 1, 2009. As of September 2011, CMS

had awarded the remaining five ZPIC contracts and five of the seven 

ZPICs were operational. 

ZPICs are required to report monthly workload statistics related to 

their program integrity activities, including investigations, case 

referrals, requests for information, and administrative actions. CMS 

tracks and analyzes these statistics using an online system called the 

CMS Analysis, Reporting, and Tracking System (CMS ARTS). 

Our study was limited to the ZPICs in Zones 4 and 7 because they were 

the only ZPICs that had completed a full contract year at the time of our 

review. Our study reviewed ZPICs’ activities for the period 

February 1 through October 31, 2009. We collected and reviewed 
 

 

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EXECUTIVE SUMMARY

ZPICs’ workload data in CMS ARTS and contacted CMS staff to help 

resolve discrepancies in the workload data. Additionally, we reviewed 

ZPICs’ performance evaluations and surveyed the ZPICs to identify any 

barriers they encountered in performing their program integrity 

activities. 

FINDINGS 

Workload data used by CMS to oversee ZPICs were not accurate or 

uniform. There were inaccuracies and a lack of uniformity in ZPIC data 

as a result of system issues in CMS ARTS, ZPIC reporting errors, 

ZPICs’ interpretations of workload definitions, and inconsistencies in 

requests for information reports. 

A visual review of ZPICs’ workload data revealed a CMS ARTS system 

error that resulted in incorrect data relating to ZPICs’ investigations 

and cases. Additionally, we found that ZPICs’ interpretations of 

workload definitions led to a lack of uniformity in workload data. 

Specifically, the ZPICs counted and reported their new investigations 

differently in their workload statistics in CMS ARTS. This lack of 

uniformity could be the reason that one ZPIC reported seven times more 

investigations originating from external sources (e.g., complaints) than 

the other. In addition, there were differences in the ways ZPICs were 

reporting on ZPIC-initiated work, and one ZPIC found the definitions 

regarding overpayments unclear. 

The inaccuracy and nonuniformity of ZPICs’ data prevented a 

conclusive assessment of ZPICs’ program integrity activities. One 

of our objectives was to describe the extent of ZPICs’ program integrity

activities during their first year of operation. However, the inaccuracies 

and lack of uniformity in the ZPICs’ data prevented us from making a 

conclusive assessment of their activities. 

The lack of uniformity in ZPICs’ reporting of data is similar to issues we 

identified more than 10 years ago in a review of Medicare Part A fraud 

units. That review found that definitions of key terms varied in 

meaning among CMS and its contractors, which hindered CMS’s ability 

to interpret data and measure fraud unit performance. In addition, 

despite CMS’s statement that its new contracting strategy of realigning

contractor jurisdictions to include both Medicare Parts A and B would 

make it easier for CMS to compare contractors, the lack of uniformity 

identified in ZPICs’ reporting could prevent CMS from both accurately 
 

 

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EXECUTIVE SUMMARY

measuring an individual ZPIC’s performance and comparing workload 

statistics across ZPICs. 

CMS’s performance evaluations of ZPICs contained few workload 

statistics. Neither ZPIC evaluation contained the amount of 

overpayments referred or the number of investigations or cases initiated

as a result of proactive methods. The performance evaluations provided 

limited information on requests for information. Also, while one ZPIC’s 

evaluation included the number of investigations the ZPIC initiated, the 

other did not. This lack of quantitative workload data is similar to the 

results of our past work on PSC performance evaluations, which found 

that the evaluation reports provided limited quantitative data about 

PSCs’ achievements. 

Although the ZPIC Statement of Work does not specify that workload 

statistics should be included in CMS’s performance evaluations of the 

ZPICs, it does state that CMS uses CMS ARTS data to track and 

analyze ZPIC workload, performance, and production. Therefore, 

including workload statistics in ZPICs’ performance evaluations would 

help ensure that CMS performs a thorough assessment of ZPICs’ 

performance. 

Data access issues affected ZPICs’ ability to perform program 

integrity activities. ZPICs reported that data access issues affected their

ability to identify potential fraud and abuse, respond to requests for 

information, and track overpayment collections. At the start of their 

contracts, ZPICs had difficulties obtaining data. One ZPIC described

difficulties obtaining claims data from a previous PSC and, therefore, 

decided to purchase the claims data on its own from another CMS 

contractor. The other ZPIC stated that the data necessary to fulfill 

requests for information were not available or had to be generated from 

multiple sources. 

Both ZPICs reported that improved data access would assist them in 

identifying potential fraud and abuse. ZPICs reported that having access 

to daily downloads of claims data would enable them to perform 

near-real-time analysis of a provider’s or a supplier’s billing activity. 

Both ZPICs identified issues with tracking overpayment collections 

relating to home health and durable medical equipment. They explained 

that the format of overpayment reports received from Medicare 

administrative contractors (MAC) makes it difficult to identify the 

overpayments related to their jurisdictions. 
 

 

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EXECUTIVE SUMMARY

RECOMMENDATIONS 

OIG has a long history of reviewing Medicare’s program integrity 

contractors and their ability to detect and deter fraud, waste, and abuse. 

This review covered the first two ZPICs’ first year of operation. 

Conducting an initial assessment of the two ZPICs’ activities provides 

CMS with important information that would be helpful in its oversight 

of all ZPICs’ performance. The inaccuracies and lack of uniformity we 

identified in ZPICs’ data prevented us from making a conclusive 

assessment of their program integrity activities; however, the issues we 

identified present a serious obstacle to CMS in effectively overseeing 

ZPIC operations. It is important that these issues be corrected so that 

CMS can analyze ZPICs’ effectiveness in detecting and deterring fraud, 

waste, and abuse. It is also important that these issues be corrected so 

that CMS can determine how well ZPICs are performing compared to 

other ZPICs and PSCs. Therefore, we recommend that CMS: 

Clarify the workload definitions in CMS ARTS to ensure that ZPICs’ 

workload statistics are accurate and that ZPICs report their data 

uniformly. CMS should clarify the definitions of the workload statistic 

fields in CMS ARTS and discuss the definitions with the ZPICs to ensure 

uniformity of reporting across ZPICs. 

Improve oversight of ZPICs by performing a timely review of data in 

CMS ARTS for each ZPIC and across ZPICs to detect any anomalies 

in workload reporting. This would enable CMS to identify any issues 

that need to be further addressed and identify ZPICs that may need

further oversight. 

Utilize and report ZPIC workload statistics in ZPIC evaluations. CMS 

requires ZPICs to report workload statistics in CMS ARTS that could be 

valuable to CMS in its oversight and evaluation of ZPICs. Once CMS has 

ensured that ZPICs’ workload statistics are being accurately and 

uniformly reported, CMS should utilize and report these statistics in 

ZPICs’ performance evaluations. 

Ensure that ZPICs have access to all data necessary to effectively 

carry out their program integrity activities. CMS should ensure that 

ZPICs have all data necessary to improve their identification of potential 

fraud and abuse, respond to requests for information, and track 

overpayment collections. For example, CMS should ensure that ZPICs 

have access to the necessary claims data at the start of their contracts, 

have access to near-real-time data, and receive MAC overpayment 

reports that are separated by ZPIC jurisdiction. 
 

 

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EXECUTIVE SUMMARY

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL

RESPONSE 

CMS believes it has already complied with our first recommendation. 

CMS stated that there were some early misunderstandings, which have 

since been clarified, and believes the workload definitions are now 

written clearly. 

CMS concurred with the first part of our second recommendation, to 

perform a timely review of data in CMS ARTS for each ZPIC. It did not 

concur with the second part, to perform a timely review of data across 

ZPICs. CMS stated that anomalies cannot be detected across ZPICs 

because of the differences in fraud landscapes between the ZPICs. We 

disagree and note that we detected anomalies in reporting across ZPICs, 

including differences in the way the ZPICs were reporting their 

numbers of new investigations. 

CMS partially concurred with our third recommendation and stated it 

will consider including workload statistics for future evaluations, if 

appropriate. CMS stated it would welcome the opportunity to meet 

with OIG to discuss any workload statistics OIG believes would relate 

directly to ZPICs’ performance. 

CMS concurred with our fourth recommendation and stated that the 

currently awarded ZPIC Statements of Work require ZPICs to have 

access to daily downloads of shared system claims data. Additionally, 

CMS stated that it believes an effective workaround was developed for 

every data access problem identified in our study. 
 TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................ ..... i

INTRODUCTION ............................................ 1 

FINDINGS ................................................. 11

Workload data used by CMS to oversee ZPICs were not accurate 

or uniform............................................. 11

The inaccuracy and nonuniformity of ZPICs’ data prevented a 

conclusive assessment of ZPICs’ program integrity activities.... 14

CMS’s performance evaluations of ZPICs contained few 

workload statistics ...................................... 15

Data access issues affected ZPICs’ ability to perform program 

integrity activities ...................................... 16

RECOMMENDATIONS ..................................... 18 

Agency Comments and Office of Inspector General Response.... 19 

APPENDIXES ............................................. 21 

A: Definitions for Selected Workload Data Fields in the Centers 

for Medicare & Medicaid Services’ Analysis, Reporting, and

Tracking System..................................... 21 

B: Zone Program Integrity Contractors’ Program Integrity 

Activities and Workload Data .......................... 24 

C: Agency Comments ................................... 32

ACKNOWLEDGMENTS ..................................... 36
 

 

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 INTRODUCTION

OBJECTIVES 

1. To perform an early assessment of the Centers for Medicare & 

Medicaid Services’ (CMS) oversight of the Zone Program Integrity 

Contractors (ZPIC). 

2. To describe the extent to which ZPICs performed program 

integrity activities, including investigations, case referrals, 

responses to requests for information, and administrative actions.

3. To determine the extent to which CMS used program integrity 

workload statistics in ZPIC performance evaluations. 

4. To describe any barriers encountered by ZPICs in performing their 

Medicare program integrity activities. 

BACKGROUND

This study is part of the Office of Inspector General’s (OIG) body of work 

examining the identification and investigation of fraud, waste, and 

abuse by Medicare program integrity contractors. OIG has identified 

oversight of CMS program and benefit integrity contractors as a top 

management challenge for the Department of Health and Human 

Services. Previous OIG studies found vulnerabilities in these 

contractors’ efforts to combat fraud and abuse. This is the first study 

examining ZPICs’ program integrity activities; it focuses on the two 

ZPICs that completed a full contract year in 2009. 

Recently, there has been congressional interest in the work of the 

ZPICs. The Senate Committee on Finance sent a letter to CMS on 

October 15, 2010, regarding the performance both of the Program 

Safeguard Contactors (PSC) and ZPICs.1 The letter raised concerns 

about the effectiveness of PSC and ZPIC efforts to combat fraud and 

abuse in the Medicare program. 

Transition From PSCs to ZPICs

The Medicare Prescription Drug, Improvement and Modernization Act 

of 2003 required CMS to implement Medicare contracting reform. As a 

result of contracting reform, CMS is replacing PSCs with ZPICs, which 

will perform program integrity work for Medicare Parts A and B in 

seven newly established geographical zones: 

1 Accessed at http://grassley.senate.gov/about/upload/2010-10-15-Letter-to-CMS.pdf 

on October 21, 2010. 
 

 

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INTRODUCTION

• Zone 1: American Samoa, California, Guam, Hawaii, the 

Mariana Islands, and Nevada. 

• Zone 2: Alaska, Arizona, Idaho, Iowa, Kansas, Missouri, 

Montana, Nebraska, North Dakota, Oregon, South Dakota, 

Utah, Washington, and Wyoming. 

• Zone 3: Illinois, Indiana, Kentucky, Michigan, Minnesota, 

Ohio, and Wisconsin. 

• Zone 4: Colorado, New Mexico, Oklahoma, and Texas. 

• Zone 5: Alabama, Arkansas, Georgia, Louisiana, 

Mississippi, North Carolina, South Carolina, Tennessee, 

Virginia, and West Virginia.

• Zone 6: Connecticut, Delaware, Maine, Maryland, 

Massachusetts, New Hampshire, New Jersey, New York, 

Pennsylvania, Rhode Island, Vermont, and 

Washington, D.C.

• Zone 7: Florida, Puerto Rico, and the Virgin Islands. 

CMS awarded the first two ZPIC contracts, for Zones 4 and 7, on 

September 30, 2008, and both ZPICs were fully operational as of 

February 1, 2009. Health Integrity, LLC, was awarded the Zone 4 

contract and SafeGuard Services, LLC, was awarded the Zone 7 

contract. 

As of September 2011, CMS had awarded the remaining five ZPIC 

contracts. Zone 1 was awarded in September 2010 and was fully 

operational in December 2010. Zone 2 was awarded in September 2009, 

but the award was protested. The protest was resolved in October 2010, 

and Zone 2 was fully operational in February 2011. Zone 3 was 

awarded in April 2011; however, a postaward protest has delayed the 

transition. Zone 5 was awarded in February 2009, but the award was 

protested and a stay of performance was required. CMS provided 

justification to override the stay, and the ZPIC was fully operational in 

December 2009. The last ZPIC contract for Zone 6 was awarded on 

September 30, 2011. 

Program Integrity Activities of the ZPICs

According to the ZPIC Statement of Work, ZPICs’ activities to identify, 

prevent, or correct potential fraud, waste, and abuse may include, but 

are not limited to, the following: 
 

 

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INTRODUCTION

• proactively pursuing different sources and techniques for 

analyzing data, 

• performing investigations, 

• referring cases to law enforcement, 

• initiating appropriate administrative actions, and 

• responding to requests for information from law 

enforcement. 

The ZPIC Statement of Work establishes the fundamental activities 

that may be performed by ZPICs and awarded through individual task 

orders. CMS has awarded several task orders to ZPICs. Each task 

order specifies the requirements to be performed. One type of task 

order is the fee-for-service task order; hereinafter, we refer to this as the 

benefit integrity task order.2 This task order involves performing 

program integrity work for Medicare Part A, Part B, durable medical 

equipment (DME), and home health and hospice (HH&H).3

As shown in Table 1 below, the Zone 4 ZPIC received $11.4 million and 

the Zone 7 ZPIC received $10.8 million to conduct activities under their 

benefit integrity task orders for the first contract year 

(September 30, 2008, through October 31, 2009). In 2009, Zone 4’s 

jurisdiction included 9 million beneficiaries and 107 million paid claims 

totaling $33 billion. Zone 7’s jurisdiction included 7 million 

beneficiaries and 96 million paid claims totaling $26 billion. 

 

Table 1: ZPIC Funding for First Contract Year and Oversight 

Responsibility for Benefit Integrity Task Order for 2009

ZPIC Funding 

9/30/08–10/31/09

Number of 

Beneficiaries 

Number of 

Paid Claims 

Dollar Amount 

of Paid Claims

Zone 4 $11.4 million 9 million 107 million $33 billion

Zone 7 $10.8 million 7 million 96 million $26 billion

Source: ZPIC task orders and OIG analysis of data received from CMS, December 2010. 

2 Other types of task orders that CMS has awarded include, for example, one that 

addresses the Medicare-Medicaid data match program and one that addresses home health 

fraud specifically in the Miami-Dade, Florida, area. 

3 Although DME services are included in Part B and HH&H services are included in 

Part A, the benefit integrity task order separates these types of services in its reporting. 
 

 

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INTRODUCTION

CMS Oversight of ZPICs’ Program Integrity Activities

Workload activity statistics. ZPICs are required to report monthly 

workload statistics related to their benefit integrity task orders to CMS. 

These statistics are reported in an online system called the CMS 

Analysis, Reporting, and Tracking System (CMS ARTS). According to 

the ZPIC Statement of Work, CMS uses CMS ARTS to track and 

analyze ZPICs’ workload statistics and performance. 

Within CMS ARTS, the workload statistics are tracked in specific 

templates, which are described below. 

Benefit Integrity template. Statistics in this template include, but are not 

limited to:

• number of new investigations and new cases resulting 

from proactive methods (e.g., data analysis), 

• number of new investigations and new cases originating 

from external sources (e.g., complaints), 

• amount of overpayments referred to and recovered by the 

affiliated contractor/Medicare administrative contractor 

(AC/MAC),4 and 

• administrative actions initiated (e.g., number of payment 

suspensions, exclusions, civil monetary penalties, and 

autodeny edits).

Workload statistics in this template are reported separately for Part A, 

Part B, DME, and HH&H. 

Requests for Information template. Statistics in this template include, but 

are not limited to:

• number of information/data analysis requests received 

from OIG and the Department of Justice (DOJ) for 

ZPIC-initiated and non-ZPIC-initiated cases; 

• number of information/data analysis requests completed 

for OIG and DOJ; and

• number of information/data analysis requests received 

from, and completed for, entities other than OIG and DOJ.

4 AC/MACs are the contractors that process Medicare Parts A and B claims and recoup

overpayments referred by ZPICs. 
 

 

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INTRODUCTION

CMS provides definitions for ZPICs to use when reporting workload 

data. Appendix A contains definitions for selected workload statistics. 

In addition, ZPICs include narrative information in the Benefit 

Integrity and Requests for Information templates to provide details on 

any significant workload activity. 

Quality Assurance and Improvement template. One section of this 

template requests monthly ZPIC workload statistics regarding 

timeliness of responses to requests for information. ZPICs are required 

to report these statistics separately for requests from OIG and DOJ. 

The statistics are also tracked separately for Priority I and Priority II 

requests. Priority I requests are top priority and are required to be 

fulfilled within 30 days. Priority II requests are less critical and are 

required to be fulfilled within 45 days. Specifically, ZPICs report the 

number of Priority I and Priority II requests completed year-to-date and 

the number of these that were fulfilled within the required timeframes. 

Quarterly Requests for Information reports. At the time of our review, 

ZPICs were required to submit quarterly reports on law enforcement 

requests. These reports provide more detailed information than the 

monthly statistics. The quarterly reports contain information such as 

the source of the request, whether it was Priority I or Priority II, 

whether it was open or closed, the date it was received, the date it was

closed, and a description. As of October 2010, ZPICs were no longer 

required to submit these quarterly reports, but instead are required to 

enter their requests for information into the Fraud Investigation 

Database.5

ZPIC Performance Evaluations

 

According to the ZPIC Statement of Work, ZPICs’ performance for each 

task order will be evaluated annually by CMS, with the first evaluation 

review occurring approximately 6 months after the task order is 

awarded. The Performance Evaluation Team (PET) may evaluate any 

requirement in the Statement of Work that is related to the task order 

awarded. The objectives of the performance evaluation include:

• measuring and evaluating ZPICs’ performance, 

• identifying opportunities to improve performance, 

5 The Fraud Investigation Database is a CMS system that contains data on Medicare and 

Medicaid investigations, cases, requests for information, and payment suspensions. 
 

 

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INTRODUCTION

• providing a fair and accurate system of review for CMS to 

ensure effective and efficient Medicare and Medicaid 

program administration, and

• assessing the degree to which ZPICs’ direct and indirect 

customers are satisfied with ZPIC services.

Some examples of potential data sources described in the ZPIC 

Statement of Work that may be used to evaluate performance include:

• ZPIC-supplied data—Each ZPIC is required to prepare a 

self-evaluation of its performance. This will be considered 

as part of the annual performance evaluation.

• Internal controls—CMS may conduct internal control 

reviews of ZPICs and include the results in their

performance evaluations.

• PET investigations—PET may investigate any aspect of 

ZPIC activities and include findings as part of the 

performance evaluations.

Related Studies by OIG 

Previous OIG studies have found vulnerabilities in Medicare program 

integrity contractors’ efforts to identify and investigate potential fraud 

and abuse as well as limitations in CMS’s oversight of these contractors. 

In November 1998, OIG issued a report entitled Fiscal Intermediary 

Fraud Units (OEI-03-97-00350). OIG found that key words, including 

“complaint” and “case,” varied in meaning among CMS and its 

contractors, which hindered CMS’s ability to interpret fraud unit data 

and measure fraud unit performance. OIG recommended that CMS 

establish clear definitions of key words, establish a standard set of data 

that can be used to measure fraud units’ performance, and include this 

standard set of data in all contractor performance evaluation reports.

In March 2006, OIG issued a report entitled Medicare’s Program 

Safeguard Contractors: Performance Evaluation Reports 

(OEI-03-04-00050). OIG found that PSC performance evaluation 

reports provided limited quantitative data about PSCs’ achievements 

related to detecting and deterring fraud and abuse. 

In July 2007, OIG issued a report entitled Medicare’s Program 

Safeguard Contractors: Activities To Detect and Deter Fraud and 

Abuse (OEI-03-06-00010). OIG found that PSCs differed substantially 

in their number of new investigations and case referrals and 
 

 

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INTRODUCTION

recommended that CMS review PSCs with low activity. In response to 

this report, CMS stated that its new PSC (and now ZPIC) contracting 

strategy, which realigns contractor jurisdictions to include both 

Medicare Parts A and B, would make it easier to compare contractors. 

CMS also stated that improvements within CMS ARTS would prevent 

inconsistent reporting across contractors. 

In May 2010, OIG issued a report entitled Collection Status of Medicare 

Overpayments Identified by Program Safeguard Contractors

(OEI-03-08-00030). OIG found that overpayments that PSCs referred 

for collection did not result in significant recoveries to Medicare. 

Specifically, claims processors collected 7 percent, or $55 million, of the 

$835 million in overpayments that PSCs referred in 2007. In response 

to this report, CMS stated that it was adding reporting requirements 

that would improve overpayment tracking among the MACs and 

PSCs/ZPICs. 

METHODOLOGY

Scope 

Our study was limited to ZPICs in Zones 4 and 7 because they were the 

only ZPICs that had completed a full contract year at the time of our 

review. We focused on investigation and fraud case workloads as well 

as requests for information and administrative actions related to ZPICs’ 

benefit integrity task orders during their first year of operation 

(February 1 through October 31, 2009).6 In addition, we gathered 

information from the ZPICs regarding any barriers they encountered 

while performing their contractual duties during their first full contract 

year (September 30, 2008, through October 31, 2009).

Data Collection 

We collected data from CMS and ZPICs in Zones 4 and 7. We collected 

data from February through December 2010 and performed followup 

from January through March 2011. 

Data from CMS. From CMS, we collected ZPICs’ workload statistics 

from the CMS ARTS Benefit Integrity, Requests for Information, and 

6 The first contract year for the ZPICs in Zones 4 and 7 was September 30, 2008, through 

October 31, 2009. However, because the ZPICs were in transition and were not fully 

operational until February 1, 2009, we reviewed only workload statistics for the period 

when they were fully operational. We refer to this period as their first year of operation for 

simplicity. 
 

 

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INTRODUCTION

Quality Assurance and Improvement templates. We collected workload 

data for each month during the ZPICs’ first year of operation, beginning 

with February 2009 and ending with October 2009. We also collected 

summary workload data for the 9-month timeframe. In addition, we

collected the narratives included in the Benefit Integrity and Requests 

for Information templates. We also collected the quarterly law 

enforcement Requests for Information reports for the ZPICs’ first year of 

operation. 

Additionally, we reviewed the CMS ARTS workload definitions and 

contacted CMS staff to obtain clarification on the definitions and to help 

resolve discrepancies in the workload data. 

We also requested performance evaluations for the ZPICs’ first contract 

year. For each ZPIC, we received a performance evaluation report that 

covered the period September 30, 2008, through April 30, 2009. As of 

March 2011, evaluation reports covering the period May 1 through 

October 31, 2009, had not been completed. 

Data from ZPICs. We sent each ZPIC its Benefit Integrity and Requests 

for Information workload data, which we had received from CMS. We 

asked ZPICs to review the information to ensure its accuracy and either 

confirm that it was correct or provide corrected information. We did not 

ask ZPICs to review their data in the Quality Assurance and 

Improvement template. 

To obtain additional information, we sent a data collection instrument 

to the ZPICs. The information collected included the types of potential 

fraud and abuse investigated and referred to OIG, the types of proactive 

data analysis conducted, and the number of overpayment recoupment 

actions related to cases. We also requested information about any 

barriers encountered relating to data access, fraud and abuse 

investigation, referrals for administrative actions, and responding to 

requests for information. 

Data Analysis 

We reviewed the workload data in the Benefit Integrity template to 

identify any inconsistencies. We analyzed data on ZPICs’ 

investigations, case referrals, and administrative actions by type of 

service. We calculated the total number of investigations and cases 

handled by the ZPICs and aggregated the dollars associated with 

administrative actions (e.g., overpayments). We also calculated the 

percentage of investigations and cases that originated from external 

sources and proactive methods. We determined the percentage of 
 

 

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INTRODUCTION

investigations, cases, and referred overpayment dollars associated with 

each type of service (i.e., Part A, Part B, DME, and HH&H). 

From the Requests for Information workload data, we determined the 

number of requests that ZPICs received from OIG, DOJ, and other 

entities during their first year of operation. We compared the Requests 

for Information workload data to the data provided in the Requests for 

Information quarterly reports. 

We reviewed the requests for information data from the Quality 

Assurance and Improvement template to determine whether they

corresponded to the data in the quarterly Requests for Information 

reports and to identify any inconsistencies in the template itself. 

We also used the quarterly Requests for Information reports and 

information in the Requests for Information workload narratives to 

determine the timeliness of ZPICs’ response to OIG and DOJ requests 

for information. Appendix B provides a detailed explanation of our 

methodology for determining timeliness of requests for information. 

We reviewed the ZPICs’ performance evaluation reports to determine 

the extent to which they incorporated program integrity workload 

statistics. In addition, we compared the data on the timeliness of 

requests for information in the performance evaluations with the 

timeliness data in the quarterly Requests for Information reports and 

the Quality Assurance and Improvement template.

From the ZPIC survey, we aggregated the types of potential fraud and 

abuse that were investigated and referred to law enforcement, as well 

as the number of overpayment recoupment actions associated with 

cases. We also identified the types of proactive data analysis conducted. 

Additionally, we compiled any barriers reported by the ZPICs regarding 

data access, performance of administrative actions, and response to 

requests for information. 

For ease of reporting, we differentiate between the ZPICs, when 

necessary, by referring to them as either ZPIC A or ZPIC B in our

report. 

Limitations

The program integrity workload data and survey information included 

in the report are self-reported by the ZPICs. Although we asked ZPICs 

to verify the accuracy of their workload data, we did not independently 

validate the information. 
 

 

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INTRODUCTION

Standards

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors 

General on Integrity and Efficiency. 
 

 

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Workload data used by CMS to oversee ZPICs

were not accurate or uniform 

 FINDINGS

There were inaccuracies and a 

lack of uniformity in ZPICs’ data 

during their first year of 

operation (February through October 2009). The inaccuracies and lack 

of uniformity resulted from system issues in CMS ARTS, ZPIC 

reporting errors, ZPICs’ interpretations of workload definitions, and

inconsistencies in requests for information reports. 

System issues in CMS ARTS led to inaccurate ZPIC data 

In reviewing the original CMS ARTS data we received from CMS, we 

identified a system issue that led to inaccurate ZPIC workload data. 

Specifically, we identified two fields in the Benefit Integrity template 

that were not being calculated correctly in CMS ARTS. The fields were 

“Number of new investigations originating from reactive sources” and 

“Number of new cases referred originating from reactive sources.” The 

correct values for these fields should have been calculated by summing 

several data fields; however, CMS ARTS was not summing the fields 

correctly, resulting in incorrect totals. A visual review of the workload 

data revealed the system error. CMS worked with its CMS ARTS 

contractor to correct the system errors and, at our request, resubmitted 

the corrected data reports to us. Appendix A contains the definitions of 

selected CMS ARTS workload statistics. 

ZPIC reporting errors led to inaccurate data in CMS ARTS

Based on our initial review of ZPICs’ workload data, we found 

discrepancies that prompted us to request the ZPICs to review their 

data. For example, we identified discrepancies between one ZPIC’s 

Request for Information workload data and the requests for information 

data in its quarterly reports. Additionally, we identified discrepancies 

between the fields in CMS ARTS that capture the number of fraud cases 

open at the beginning of the month and the number open at the end of 

the month. It did not appear that CMS had identified these 

discrepancies or had asked the ZPICs to review or revise their data.

ZPICs reviewed their data and reported that some of the workload data 

they originally submitted to CMS were incorrect. ZPIC A provided us 

with revised workload data that increased its number of requests for 

information received from 480 to 516. ZPIC B provided us with revised 

workload data that increased the amount of its overpayment dollars 

recovered in 1 month from $0 to $155,174; ZPIC B also increased its 

total number of case referrals from seven to nine. 
 

 

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FINDINGS

Moreover, according to the workload definitions, the number of cases

that were open and active at the beginning of the month should equal 

the number of cases open and active at the end of the previous month. 

However, even after ZPICs submitted their revised data to us, we 

identified instances in which these numbers did not match. 

ZPICs’ interpretation of workload definitions led to a lack of uniformity in 

workload data 

New investigations. Based on ZPICs’ workload data, ZPIC A opened 

404 new investigations and ZPIC B opened 2,409 new investigations. 

As shown in Table 2, ZPIC B’s number of investigations originating 

from external sources (e.g., complaints) was seven times higher than 

ZPIC A’s (2,305 versus 312). 

Table 2: New ZPIC Investigations by Source 

External Source Proactive Method Total

ZPIC A 312 92 404

ZPIC B 2,305 104 2,409

 Both ZPICs 2,617 196 2,813

Source: OIG analysis of ZPICs’ Benefit Integrity Workload data, February 1 through October 31, 2009.

In reviewing ZPIC workload data and following up with ZPIC staff, we 

determined that the two ZPICs counted and reported their new 

investigations differently in their CMS ARTS workload statistics. 

Specifically, ZPIC B explained that it included all fraud complaints in 

its number of new investigations in CMS ARTS, regardless of whether 

those complaints were merged into one investigation of a particular 

provider. However, ZPIC A explained that if it received one complaint 

on a particular provider and started an investigation and then received 

another complaint on the same provider, this would not be counted as a 

new investigation in the workload statistics. This lack of uniformity in 

ZPICs’ reporting could account for the disparity between the ZPICs’ 

numbers of new investigations opened during our timeframe and could 

also affect CMS’s ability to accurately assess ZPICs’ performance. 

ZPIC-initiated work. In the workload statistics, ZPICs report whether 

requests for information submitted by OIG and DOJ were based on 

ZPIC-initiated cases or non-ZPIC-initiated cases. The workload 

statistics showed that one ZPIC had no requests as a result of 
 

 

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FINDINGS

ZPIC-initiated cases, whereas the other ZPIC reported that nearly all of 

its OIG/DOJ requests were results of ZPIC-initiated cases. Because of 

this disparity, we followed up with the latter ZPIC and learned that it

included its prior work as a PSC when reporting the number of requests 

it received as a result of ZPIC-initiated cases. The ZPICs’ different 

interpretations of definitions involving ZPIC-initiated work could lead 

them to provide CMS with inaccurate data for reviewing performance in 

this area. 

Overpayments. Several fields in the workload statistics capture 

information on overpayments; however, the definitions of these fields 

were problematic for at least one ZPIC. As shown in Appendix A, three 

overpayment fields are located in the investigation workload section 

(fields A9, A10, and A14) and two overpayment fields are located in the 

fraud case workload section (fields B7 and B13). 

In reviewing one ZPIC’s survey and workload data, we identified an 

inconsistency and followed up with that ZPIC. We learned that 

although the fields for “Dollar amount referred to the AC/MAC for 

overpayment collection” and “Number of overpayment recoupment 

actions referred to the AC/MAC” are located under the investigation 

workload section, the definitions do not indicate whether CMS is 

referring to overpayment referrals based on a case or an investigation. 

Therefore, this ZPIC included data relating to investigations and cases 

in both of these fields instead of just information related to 

investigations.7 This could prevent CMS from accurately identifying 

overpayments associated with investigations versus those associated 

with cases. 

Reports regarding requests for information were inconsistent

The ZPICs’ quarterly Requests for Information reports and their 

Quality Assurance and Improvement reports each contain information 

regarding the number of OIG and DOJ requests for information 

completed and the ZPICs’ timeliness in completing these requests. 

However, we found inconsistencies regarding the ZPICs’ reporting of 

requests for information between the two reports. For example, our 

analysis of one ZPIC’s quarterly report data from February through 

7 There is a field relating to the number of overpayment recoupment actions referred to 

the AC/MAC in the investigations workload area but not in the case workload area. CMS 

staff reported that they were planning to add this field when they make system 

enhancements to CMS ARTS.
 

 

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FINDINGS

October 2009 showed that the ZPIC completed 31 Priority I requests for 

OIG, with 19 percent not completed within 30 days. However, this 

ZPIC’s Quality Assurance and Improvement data for the same period

indicated that the ZPIC completed just eight Priority I requests for OIG, 

with 25 percent not completed within 30 days. 

In addition, we found inconsistencies within the Quality Assurance and 

Improvement report from month to month. For example, although 

ZPICs are instructed to report the number of requests completed 

year-to-date, we found instances in which the number of completed 

requests decreased from one month to the next. Moreover, although 

ZPICs are instructed to report the number of Priority I requests for 

information completed year-to-date and the number of these requests 

fulfilled within 30 days, we observed instances in which the number of 

requests completed within the 30-day required timeframe was greater 

than the total number of requests completed. 

One of our objectives was to The inaccuracy and nonuniformity of ZPICs’ describe the extent of ZPICs’ 

data prevented a conclusive assessment of program integrity activities 

ZPICs’ program integrity activities during their first year of operation 

(February through October 2009). However, the inaccuracies and lack 

of uniformity in the ZPICs’ data prevented us from making a conclusive 

assessment of their activities. 

We have provided ZPICs’ workload data and data obtained through our 

survey in Appendix B to give a general sense of the ZPICs’ self-reported 

program integrity activities. Appendix B provides information on 

ZPICs’ investigation and case referral activity, utilization of external 

and proactive methods, activities related to requests for information, 

and activities related to overpayments and other administrative actions. 

The inconsistencies we identified in ZPICs’ reporting are similar to the 

issues we identified more than 10 years ago in our review of Medicare 

fraud units.8 In that report, we found that definitions of key terms, 

including “complaint” and “case,” varied in meaning among CMS and its 

contractors, which hindered CMS’s ability to interpret data and 

measure fraud unit performance. Similarly, the inconsistencies and 

lack of uniformity we identified in ZPICs’ reporting could prevent CMS 

from performing effective oversight of the ZPICs. 

8 OIG, Fiscal Intermediary Fraud Units, OEI-03-97-00350, November 1998. 
 

 

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FINDINGS

In response to our previous work on PSCs’ identification of potential 

fraud and abuse, CMS stated that its new contracting strategy of 

realigning contractor jurisdictions to include both Medicare Parts A 

and B would make it easier to compare contractors.9 CMS also stated 

that improvements within CMS ARTS would prevent inconsistent 

reporting across contractors. However, our current review has 

identified incorrect and nonuniform reporting in CMS ARTS that could 

prevent CMS from both accurately measuring an individual ZPIC’s 

performance and comparing workload statistics across ZPICs. 

CMS did not include the results of 

CMS’s performance evaluations of ZPICs many workload statistics in ZPICs’ 

contained few workload statistics performance evaluation reports. 

Neither ZPIC evaluation included 

the number or percentage of investigations or cases initiated as a result 

of proactive methods. Additionally, neither evaluation reported on the 

number of overpayment actions initiated or the overpayment dollars 

referred. While one ZPIC’s evaluation included the number of 

investigations initiated, the other did not. This lack of quantitative 

workload data is similar to the results of our past work on PSC 

performance evaluations, which found that PSC evaluation reports 

provided limited quantitative data about PSCs’ achievements related to 

detecting and deterring fraud and abuse. 10 

Both ZPICs’ evaluations did provide some information on the timeliness 

of requests for information. However, one ZPIC’s evaluation report 

provided the average response time for completing Priority I and 

Priority II requests but did not provide information on the number of 

requests completed or the number that exceeded the required 

timeframes. The other ZPIC’s evaluation report provided the number of 

Priority I requests that were completed and the number that exceeded 

the timeframe; however, these data did not coincide with the data 

provided in the ZPIC’s Requests for Information quarterly reports or in 

the Quality Assurance and Improvement template. 

Although the ZPIC Statement of Work does not specify that workload 

statistics should be included in CMS’s performance evaluations of the 

9 OIG, Medicare’s Program Safeguard Contractors: Activities To Detect and Deter Fraud 

and Abuse, OEI-03-06-00010, July 2007. 

10 OIG, Medicare’s Program Safeguard Contractors: Performance Evaluation Reports 

(OEI-03-04-00050), March 2006. 
 

 

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FINDINGS

ZPICs, it does state that CMS uses CMS ARTS data to track and 

analyze ZPIC workload, performance, and production. Including 

workload statistics in ZPICs’ performance evaluations would help 

ensure that CMS performs a thorough assessment of ZPICs’ 

performance. 

Data access issues affected ZPICs’ ability to ZPICs reported that data access 

perform program integrity activities issues affected their ability to 

identify potential fraud and abuse, 

respond to requests for information, and track overpayment collections. 

At the start of their contracts, ZPICs had difficulties obtaining data. As 

outlined in the Statement of Work, ZPICs were required to obtain 

3 years’ worth of Medicare claims data. According to CMS staff, the 

outgoing PSCs were to provide these data to the ZPICs. However, 

ZPIC A described difficulties obtaining claims data from a previous PSC 

and, therefore, decided to purchase the claims data on its own from 

another CMS contractor. This caused a 30-day delay in data 

availability during the first month of operations. ZPIC B stated that at 

the beginning of its contract, the data necessary to fulfill the requests 

for information were not available or had to be generated from multiple 

sources. For a short time, this ZPIC contracted with a prior PSC to 

fulfill DME requests for information because the data being requested 

were not available to the ZPIC. 

Both ZPICs reported that improved data access would assist them in 

identifying potential fraud and abuse. The ZPICs explained that it 

would be beneficial to have access to daily downloads of Part A, Part B, 

DME, and HH&H claims data. This would enable the ZPICs to perform 

near-real-time analysis of a provider’s or supplier’s billing activity. The 

ZPICs explained that they are working with CMS to receive access to 

these data. Additionally, one ZPIC reported that having access to 

Medicare Part C and Part D data would enable the ZPIC to have a full 

picture of a provider’s billing pattern. 

In response to our previous work on the collection status of PSCs’ 

overpayments, CMS stated that it had issued new requirements for 

ZPICs and MACs to assist with overpayment reporting.11 However, 

ZPICs identified barriers to tracking overpayment collections relating to 

11 OIG, Collection Status of Medicare Overpayments Identified by Program Safeguard 

Contractors (OEI-03-08-00030), May 2010. 
 

 

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FINDINGS

home health and DME. The ZPICs reported that the format of the 

overpayment reports received from Medicare claims processors makes it 

difficult to identify the overpayments related to their jurisdictions. 

ZPIC A stated that it has worked with the MACs and now can properly 

identify the majority of the money collected. ZPIC B reported that its

issues relating to home health had been resolved but that it was still 

having issues with the overpayments relating to DME. The ZPIC 

explained that the overpayment recoupment report provided by the 

MAC does not enable the ZPIC to track the money collected on its

overpayment referrals. 
 

 

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 RECOMMENDATIONS

OIG has a long history of reviewing Medicare’s program integrity 

contractors and their ability to detect and deter fraud, waste, and abuse. 

This review covered the first two ZPICs’ first year of operation. 

Conducting an initial assessment of the two ZPICs’ activities provides

CMS with important information that would be helpful in its oversight 

of all ZPICs’ performance. 

Although one of our objectives was to describe the extent of ZPICs’ 

program integrity activities, the inaccuracies and lack of uniformity we 

identified in ZPICs’ data prevented us from making a conclusive 

assessment of their activities. Additionally, we found that data access 

issues affected ZPICs’ ability to perform program integrity activities. 

Moreover, some of the issues we identified are similar to past OIG 

report findings. Specifically, the lack of uniformity in ZPICs’ reporting 

is similar to what we found regarding Medicare Part A fraud units more 

than a decade ago. Furthermore, the lack of quantitative workload data 

in ZPICs’ performance evaluations is similar to the results we identified 

more than 5 years ago in our work on PSC performance evaluations. 

Additionally, although CMS has stated that its new contracting 

strategy, which realigns contractor jurisdictions to include both 

Medicare Parts A and B, would make it easier to compare contractors, 

the issues we identified could prevent CMS from accurately comparing 

workload data across ZPICs. 

The issues we identified have been problematic for some time and 

present a serious obstacle to CMS in effectively overseeing ZPIC 

operations. These issues need to be corrected so that CMS can analyze 

ZPICs’ effectiveness in detecting and deterring fraud, waste, and abuse. 

Correcting these issues also will enable CMS to determine how well 

ZPICs are performing compared to other ZPICs and PSCs. Therefore, 

we recommend that CMS: 

Clarify the workload definitions in CMS ARTS to ensure that ZPICs’ workload 

statistics are accurate and that ZPICs report their data uniformly

CMS should clarify the definitions of the workload statistic fields in 

CMS ARTS and discuss the definitions with the ZPICs to ensure

uniformity of reporting across ZPICs. 
 

 

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RECOMMENDATIONS

Improve oversight of ZPICs by performing a timely review of the data in CMS 

ARTS for each ZPIC and across ZPICs to detect any anomalies in workload 

reporting 

This would enable CMS to identify any issues that need to be further 

addressed and identify ZPICs that may need further oversight. 

Utilize and report ZPIC workload statistics in ZPIC evaluations

CMS requires ZPICs to report workload statistics in CMS ARTS that 

could be valuable to CMS in its oversight and evaluation of ZPICs. 

Once CMS has ensured that ZPICs’ workload statistics are being 

accurately and uniformly reported, CMS should utilize and report these

statistics in ZPICs’ performance evaluations. 

Ensure that ZPICs have access to all data necessary to effectively carry out 

their program integrity activities

CMS should ensure that ZPICs have all data necessary to improve their 

identification of potential fraud and abuse, respond to requests for 

information, and track overpayment collections. For example, CMS 

should ensure that ZPICs have access to the necessary claims data at 

the start of their contracts, have access to near-real-time data, and 

receive MAC overpayment reports that are separated by ZPIC 

jurisdiction to enable ZPICs to determine which recovered 

overpayments are associated with their overpayment referrals. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL

RESPONSE 

CMS believes it has already complied with our first recommendation. 

CMS stated that there were some early misunderstandings, which have 

since been clarified, and believes the workload definitions are now 

written clearly. We ask that CMS, in its final management decision, 

provide OIG with documentation of the revised definitions. 

CMS concurred with the first part of our second recommendation, to 

perform a timely review of data in CMS ARTS for each ZPIC. CMS 

stated that it has developed a monthly dashboard of key statistical

indicators in CMS ARTS. However, CMS did not state how often it was 

reviewing these indicators along with ZPICs’ other monthly workload 

statistics to detect any anomalies in ZPIC reporting. CMS did not 

concur with the second part of our recommendation, to perform a timely 

review of data across ZPICs. In response to our previous work on PSCs’ 

identification of potential fraud and abuse, CMS stated that its new 

strategy of realigning contractor jurisdictions to include both Medicare 
 

 

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RECOMMENDATIONS

Parts A and B would make it easier to compare contractors. However, 

in its current comments, CMS stated that this new strategy does not 

make it possible to compare the zones and that anomalies cannot be 

detected across ZPICs because of the differences in fraud landscapes 

between the ZPICs. We disagree and note that we detected anomalies 

in reporting across ZPICs, including differences in the way the ZPICs 

were reporting their numbers of new investigations. We maintain that 

reviewing data across ZPICs will enable CMS to detect anomalies in 

workload reporting and identify ZPICs that may need additional 

oversight. 

CMS partially concurred with our third recommendation and stated it 

will consider including workload statistics for future evaluations, if 

appropriate. CMS stated that it cannot evaluate a ZPIC based on the 

number or percentage of investigations or cases initiated as a result of 

proactive methods, the number of overpayment actions initiated, or the 

associated overpayment dollars referred. CMS stated that these data 

can vary widely from month to month and are not a good indicator of 

performance because they are not within the control of the ZPIC. OIG

maintains that quantitative measures, such as the number of 

investigations and cases initiated as a result of proactive methods, are 

within the control of the ZPIC. While these measures should not be the 

sole indicator of ZPIC performance, they can provide valuable 

information on the level of ZPIC activity and the quality of ZPIC 

performance. OIG continues to support the need for both quantitative 

and qualitative measures in ZPICs’ performance evaluations. CMS 

stated its willingness to work with OIG to identify workload statistics 

that would relate directly to ZPICs’ performance. 

CMS concurred with our fourth recommendation and stated that the 

currently awarded ZPIC Statements of Work require ZPICs to have 

access to daily downloads of shared system claims data. Additionally, 

CMS stated that it believes an effective workaround was developed for 

every data access problem identified in our study. The full text of 

CMS’s comments is provided in Appendix C. 
 

 

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 APPENDIX~A

Table A-1: Definitions for Selected Workload Data Fields in the Centers for Medicare 

& Medicaid Services’ Analysis, Reporting, and Tracking System

Field Definition

A. Investigation Workload

A3. Number of new investigations originating from reactive 

sources 

This number reflects all new investigations originating from 

specific complaints and/or information. This is a count of 

investigations, not individual target providers within an 

investigation. The amount reported in this field should total the 

workload entered in A3a–A3e.

A3a. Medical Review

This reflects the number of new investigations referred to the 

Zone Program Integrity Contractor (ZPIC) Benefit Integrity Unit 

(BIU) from the Affiliated Contractor /Medicare Administrative 

Contractor (AC/MAC) Medical Review unit (since the beginning 

of the month).

A3b.AC/MAC Complaint Unit 

This reflects the number of new investigations referred to the 

ZPIC BIU from the AC/MAC’s Complaint Unit (since the 

beginning of the month).

A3c. Other

This reflects the number of new investigations referred to the 

ZPIC BIU from sources other than those specified above (since 

the beginning of the month).

A3d. CMS Field Offices This reflects the number of new investigations originating from 

a CMS Field Office (since the beginning of the month).

A3e. Other ZPIC Task Orders

This reflects the number of new investigations referred to the 

ZPIC BIU from other ZPIC Task Orders (since the beginning of 

the month).

A4. Number of new investigations resulting from proactive 

leads

This number reflects all new investigations originating from 

self-initiated means. 

A7. Number of investigations open and active at the end of the 

month

This reflects the number of investigations that are open and 

active in the ZPIC BIU at the end of the month. The amount 

reported here reflects the amounts reported in

A1+A3+A4-A5-A6+any investigations reprioritized into an 

active status from A8.

A9. Dollar amount referred to the AC/MAC for overpayment 

collection

This reflects the dollar amount that the ZPIC BIU referred to 

the AC/MAC for collection.

A10. Number of overpayment recoupment actions referred to 

the AC/MAC

This reflects the number of recoupment actions referred for 

overpayment that the ZPIC BIU submitted to the AC/MAC this 

month.

A14. Dollar amount recovered on overpayments related to 

investigations, determined by the ZPIC and referred to the 

AC/MAC for collection

This reflects the actual dollar amount recovered as a result of 

ZPIC BIU recoupment actions referred to the AC/MAC.

B. Fraud Case Workload

B1. Number of fraud cases open and active at the beginning 

of the month

This reflects the number of fraud cases that are open and 

active at the beginning of the month. This number should 

equal B5 from the prior month. 

B2. Number of new cases referred originating from reactive 

sources

This number reflects all cases originating from the sources 

specified below and should total the workload entered in

B2a–B2e.

B2a. Medical Review

This reflects the number of new cases referred by the ZPIC 

BIU that originated from the AC/MAC Medical Review unit 

(since the beginning of the month).

B2b. AC/MAC Complaint Unit 

This reflects the number of new cases referred by the ZPIC 

BIU that originated from the AC/MAC’s Complaint Unit (since 

the beginning of the month).

continued on next page
 

 

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APPENDIX~A

Table A-1: Definitions for Selected Workload Data Fields in the Centers for Medicare 

& Medicaid Services' Analysis, Reporting, and Tracking System (Continued)

Field Definition

B2c. Other

This reflects the number of new cases referred by the ZPIC 

BIU that originated from sources other than those specified 

above (since the beginning of the month).

B2d.CMS Field Offices This reflects the number of new cases originating from CMS 

Field Offices during the month being reported on.

B2e. Other ZPIC Task Orders This reflects the number of cases originating from other ZPIC 

Task Orders during the month being reported.

B3. Number of new cases referred resulting from proactive 

leads 

This number reflects all new cases originating from 

self- initiated means. 

B5. Number of cases open and active at the end of the month This reflects the number of cases that are open and active in 

the ZPIC BIU at the end of the month.

B7. Total dollars as a result of administrative action on cases This reflects the dollar amount that the ZPIC BIU referred to 

the AC/MAC for collection on cases this month only.

B13. Dollar amount recovered on overpayments related to 

cases, determined by the ZPIC and referred to the AC/MAC for 

collection

This reflects the actual dollar amount recovered as a result of 

ZPIC BIU recoupment actions referred to the AC/MAC.

C. Medical Review in Support of Benefit Integrity

C1g. Total number of prepay claims denied

This reflects the total number of prepay claims denied, in part 

or in full. Claims with a single line item denial shall be 

considered a full prepay claim denial. Claims that are denied 

based on lack of medical records following an Additional 

Documentation Request (ADR) shall also be included.

C1g1. The dollar amount of prepay claims denied

This reflects the dollar amount of prepay claims denied 

represented in C1e. Where line item or partial denials were 

made, only include the actual amount denied as opposed to 

the total amount of the claim. This shall include claim denials 

for lack of medical records following a nonresponse to an ADR.

D. Administrative Activities

D1a. Number of new payment suspension requests submitted 

to CMS during the month

This reflects the number of official petitions submitted to CMS 

to suspend providers during the month. Providers with multiple 

Provider Identification Numbers (PINs) assigned will be 

considered as a single provider, even when multiple PINs are 

suspended. Providers assigned to Group Practices where the 

group is suspended as well, shall be considered as separate 

suspensions.

D1b. Number of payment suspension requests denied by 

CMS during the month

This reflects the number of official petitions submitted that were 

denied by CMS during the month. 

D2a. Number of providers newly referred for exclusion

This reflects the number of providers referred to the Office of 

the Inspector General (OIG) for exclusion during the month. 

D3a. Number of Civil Monetary Penalties (CMP) referred to 

OIG or CMS for consideration

This reflects the number of CMPs referred by the ZPIC to 

either CMS or OIG for consideration during the month. 

D5a. The number of new auto-deny edits recommended for 

implementation

This reflects the number of new benefit integrity auto-deny 

edits, created by the ZPIC either solely or jointly with the 

AC/MAC, that the ZPIC recommends for payment system 

implementation this month.

D5b. The total number of ZPIC-recommended auto-deny edits 

that were in effect during the month

This reflects the total number of ZPIC-recommended

auto-deny edits that were in place during any part of the 

month.

continued on next page
 

 

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APPENDIX~A

Table A-1: Definitions for Selected Workload Data Fields in the Centers for Medicare 

& Medicaid Services' Analysis, Reporting, and Tracking System (Continued)

Field Definition

E. Information/Data Requests

E1a. Number of information/data analysis requests received 

from the OIG/ Department of Justice (DOJ) for ZPIC initiated 

cases

This reflects the number of information/data analysis requests 

(including requests for Medical Review) received from the 

OIG/DOJ for ZPIC initiated cases this month.

E1b. Number of information/data analysis requests received 

from the OIG/DOJ for non-ZPIC initiated cases

This reflects the number of information/data analysis requests 

(including requests for Medical Review) received from the 

OIG/DOJ for non-ZPIC initiated cases.

E1c. Number of information/data analysis requests completed 

for the OIG/DOJ

This reflects the number of information/data analysis requests 

completed for the OIG/DOJ during the month. This number 

represents both ZPIC initiated and non-ZPIC initiated 

completions.

E2a. Number of formal information/data analysis requests 

received from "Other" Entities

This reflects the number of information/data analysis requests 

received from "Other." "Other" includes, but is not limited to,

CMS, Internal Revenue Service (IRS), Medicaid Fraud Control 

Units (MFCU), State Investigative Departments, or State 

Attorney General Offices.

E2b. Number of formal information/data analysis requests 

completed for "Other" Entities

This reflects the number of information/data analysis requests 

completed for "Other" during the month. This number 

represents both ZPIC initiated and non-ZPIC initiated 

completions. "Other" includes, but is not limited to, CMS, IRS, 

MFCUs, State Investigative Departments, or State Attorney 

General Offices. 

Source: CMS ARTS definitions document received from CMS, July 2010. 
 

 

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APPENDIX B APPENDIX~B

Zone Program Integrity Contractors’ Program Integrity Activities and Workload Data

One of our objectives was to describe the extent of Zone Program Integrity Contractors’ (ZPIC) 

program integrity activities during their first year of operation (February through October 

2009). In this appendix, we provide ZPICs’ workload data, as well as data obtained through 

our survey, to give a general sense of the program integrity activities as reported by the 

ZPICs. However, inaccuracies and a lack of uniformity in the ZPICs’ data prevented us from 

making a conclusive assessment of their activities. 

ZPICs’ Investigation and Case Referral Activity

ZPICs investigate potential fraud and abuse on the part of providers and suppliers that

receive reimbursement under Medicare Parts A and B. When ZPICs receive an allegation of 

fraud or identify a potentially fraudulent situation, they investigate to determine the facts 

and magnitude of the alleged fraud. For example, ZPICs may review a sample of claims, 

interview a sample of beneficiaries, or perform data analysis to substantiate the allegation. 

ZPICs consult with the Office of Inspector General (OIG) on the facts of the investigation and 

obtain OIG’s recommendation on whether the investigation should be further developed as a 

case referral. 

Table B-1 shows the number and percentage of new investigations opened by ZPICs by the 

types of services involved. Table B-2 shows the number and percentage of cases referred to 

law enforcement by the types of services involved. Table B-3 provides the types and 

percentages of potential fraud and abuse involved with ZPICs’ new investigations and case 

referrals. 

Table B-1: New ZPIC Investigations by Type of Service

Part A Part B DME2 HH&H2

Number Percentage Number Percentage Number Percentage Number Percentage Total

ZPIC A1 69 17% 165 41% 83 21% 87 22% 404

ZPIC B1 1,295 54% 231 10% 818 34% 65 3% 2,409

 Both 

 ZPICs 1,364 48% 396 14% 901 32% 152 5% 2,813

Source: OIG analysis of ZPICs’ Benefit Integrity Workload data, February 1 through October 31, 2009. 1 Percentages across the row do not total 100 percent because of rounding. 2

 “DME” refers to durable medical equipment and “HH&H” refers to home health and hospice. 
 

 

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APPENDIX~B

Table B-2: New ZPIC Case Referrals by Type of Service

Part A Part B DME HH&H

Number Percentage Number Percentage Number Percentage Number Percentage Total

ZPIC A 0 0% 28 67% 11 26% 3 7% 42

ZPIC B1 2 22% 4 44% 3 33% 0 0% 9 

 Both 

 ZPICs 2 4% 32 63% 14 27% 3 6% 51

Source: OIG analysis of ZPICs’ Benefit Integrity workload data, February 1 through October 31, 2009. 1 Percentages across the row do not total 100 percent because of rounding.

Table B-3: Types and Percentages of Potential Fraud and Abuse Involved With 

ZPICs’ New Investigations and New Case Referrals

Types of Potential Fraud and Abuse Percentage of Total New 

Investigations

Percentage of Total New Case 

Referrals

Billing for services not furnished or 

supplies not provided 32% 26%

Aberrant billing patterns—e.g., pattern of 

overutilization of services or outlier 

payments 

18% 8%

Vacant supplier location or shell provider 12% 18%

Billing for medically unnecessary 

services or supplies 11% 19%

Utilizing compromised or stolen 

beneficiary health insurance claim 

numbers or provider identification 

numbers

10% 18%

Schemes of collusion—e.g., soliciting, 

offering, or receiving a kickback, bribe, 

or rebate 

6% 1%

Misrepresenting the beneficiary's 

condition or billing for services for 

beneficiaries who do not meet Medicare 

coverage guidelines 

4% 9%

Misclassifications of Diagnosis-Related 

Groups 3% 0%

Altering medical documentation or claim 

forms 1% 3%

Other 4% 0%

 Total 100%1 100%1

Source: OIG analysis of ZPICs’ survey response for first year of operation. 

1 Percentages do not total 100 percent because of rounding.
 

 

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APPENDIX~B

ZPICs’ Utilization of External and Proactive Methods

ZPICs are required to pursue leads from both proactive methods and external sources to 

address potential fraud and abuse. Proactive methods include, but are not limited to, data 

analysis and reviewing the Fraud Investigation Database, the Internet, and news media. 

Fraud leads from external sources include, but are not limited to, law enforcement referrals; 

Centers for Medicare & Medicaid Services (CMS) referrals; and beneficiary complaints, 

including those received from the affiliated contractor/Medicare administrative contractor 

(AC/MAC) complaint unit. According to CMS’s Medicare Program Integrity Manual (PIM), 

ZPICs’ ability to make use of available data and apply innovative analytical methodologies is 

critical to their success as benefit integrity contractors. 

Table B-4 shows the extent to which ZPICs used external sources and proactive methods to 

generate investigations during their first year of operation. Table B-5 shows the extent to 

which ZPICs used external sources and proactive methods to generate cases during their first 

year of operation. Table B-6 provides examples of proactive data analysis and other proactive 

methods used by ZPICs during their first year of operation.

Table B-4: New ZPIC Investigations by Source Used To Initiate the 

Investigation

External Source Proactive Method

Number Percentage Number Percentage Total 

ZPIC A 312 77% 92 23% 404

ZPIC B 2,305 96% 104 4% 2,409

 Both ZPICs 2,617 93% 196 7% 2,813

Source: OIG analysis of ZPICs’ Benefit Integrity Workload data, February 1 through October 31, 2009. 

Table B-5: New ZPIC Case Referrals by Source Used To Initiate the Case

External Source Proactive Method

Number Percentage Number Percentage Total 

ZPIC A 19 45% 23 55% 42

ZPIC B 4 44% 5 56% 9 

 Both ZPICs 23 45% 28 55% 51

Source: OIG analysis of ZPICs’ Benefit Integrity workload data, February 1 through October 31, 2009. 
 

 

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APPENDIX~B

Table B-6: Examples of Proactive Data Analysis and Other Proactive Methods Used 

by One or Both ZPICs 

Proactive Data Analysis

• Review of billing patterns to identify spikes in providers’ billing patterns or to determine the top billing providers for 

particular specialties

• Comparison of billings within a specialty or across the country related to particular procedure codes

• Review of data to identify hospices in which a large percentage of Medicare patients were in hospice care for an 

unusually long period 

• Identification of beneficiaries who received an excessive number of episodes of home health benefits

• Identification of Medicare beneficiaries who resided at an unusually long distance from the address of the DME 

supplier

• Cross-referencing of the top 10 billers in Part A, Part B, DME, and home health

• Verification that beneficiary had a diagnosis related to limb amputation for suppliers billing for prosthetic devices

• Identification of Medicare providers who were on State lists of physicians with suspended licenses

• Review of services for inpatient stays with the same admission and discharge dates 

• Identification of claims for ambulance services with no associated services

Other Proactive Methods

• Attendance at meetings with Program Safeguard Contractors, ZPICs, and MACs to discuss new trends and identify 

potentially fraudulent providers or suppliers

• Review of news articles to identify any arrested individuals, followed by a determination of whether the identified 

individuals were Medicare providers

• Visits with doctors who were beyond a certain age to verify that they were still practicing medicine 

Source: OIG analysis of ZPICs’ survey responses, 2010. 
 

 

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APPENDIX~B

ZPICs’ Activities Relating to Requests for Information

ZPICs may be asked to provide beneficiary records or provider data to OIG, the Department of 

Justice (DOJ), or other entities that identify and investigate fraud. ZPICs are responsible for 

responding to these requests for information and data analysis. Timeframes for responding to 

requests from OIG and DOJ generally fall into one of two categories: Priority I and 

Priority II. Priority I requests are top priority and are required to be fulfilled within 30 days. 

Priority II requests are less critical and are required to be fulfilled within 45 days. According 

to the PIM, if the requests require that ZPICs access claims history data using Data Extract 

Software (DESY), the Priority I 30-day and Priority II 45-day timeframes do not apply. 

Methodology for determining timeliness of ZPICs’ response to requests for information. We 

utilized information in the ZPICs’ quarterly Requests for Information reports and the 

workload narratives to determine the number of OIG and DOJ Priority I and Priority II 

requests received and completed. To determine timeliness, we calculated the percentage of 

completed requests that exceeded the 30- and 45-day timeframes. We excluded requests from 

our calculations if they indicated that they required DESY access, because the timeliness 

timeframes do not apply to these requests. The quarterly reports for ZPIC A included a 

separate category for requests that required DESY access; quarterly reports for ZPIC B did 

not. Therefore, we needed to rely solely on the comments in the workload narratives for ZPIC 

B to determine whether the requests required DESY access. However, because this ZPIC’s 

narratives may not have identified all DESY requests, our calculations may have included 

some requests that required DESY access. 

Table B-7 presents the total number of requests for information received by the ZPICs during 

their first year of operation by the source of the request. Table B-8 shows the results of our 

analysis of the timeliness of ZPICs’ response to OIG and DOJ requests. 

Table B-7: Requests for Information Received by ZPICs 

OIG/DOJ Other Entities Total

ZPIC A 441 75 516

ZPIC B 429 8 437

 Both ZPICs 870 83 953

Source: OIG analysis of ZPICs’ Requests for Information workload data, February 1 through October 31, 2009. 
 

 

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APPENDIX~B

Table B-8: Timeliness of ZPICs’ Completion of OIG and DOJ Requests

for Information

Percentage of Priority I Requests 

That Exceeded 30-Day Timeframe

Percentage of Priority II Requests 

That Exceeded 45-Day Timeframe

ZPIC A 10% 28%

ZPIC B 34% 19%

 Both ZPICs 23% 23%

Source: OIG Analysis of ZPICs’ Requests for Information quarterly reports and monthly Requests for Information 

narratives, February 1 through October 31, 2009. 

ZPICs’ Overpayments and Other Administrative Actions

ZPICs must take administrative action to prevent and recover inappropriate payments. 

Administrative actions include referrals to the AC/MAC for recovery of overpayments, referrals 

to CMS for recommended payment suspension, referrals to the AC/MAC for recommended 

autodenial or prepayment review edits, referrals to OIG for exclusions, and referrals to CMS or 

OIG for imposition of civil monetary penalties. 

According to the PIM, ZPICs should initially consider less severe administrative actions, such as 

recovery of overpayments and suspension of payments, before making referrals for exclusions or 

civil monetary penalties.

Table B-9 provides the number and percentage of ZPICs’ overpayment dollars associated with 

investigations and cases that were referred to the AC/MAC for different types of Medicare 

services. Table B-10 indicates the percentage of ZPICs’ overpayment dollars referred that were 

recovered by the AC/MACs. Table B-11 presents workload data regarding the extent to which 

ZPICs took other administrative actions and provides information regarding administrative 

actions described by ZPICs in response to our survey. 
 

 

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APPENDIX~B

Table B-9: Overpayments Associated With Investigations and Cases That Were Referred to 

AC/MACs for Different Service Types

 

Part A Part B DME HH&H

Dollars Percentage Dollars Percentage Dollars Percentage Dollars Percentage Total 

ZPIC A1 $0 0% $19,505,031 90% $1,488,324 7% $722,730 3% $21,716,085

ZPIC B2 $8,650,607 16% $6,404,642 12% $1,298,623 2% $36,201,484 69% $52,555,356

Bothiii 

ZPICs2 $8,650,607 12% $25,909,673 35% $2,786,947 4% $36,924,214 50% $74,271,441

Source: OIG analysis of CMS’s Benefit Integrity workload data, February 1 through October 31, 2009.

1 In response to our survey question that asked ZPICs to describe any issues with their referrals of overpayments to the AC/MACs, ZPIC A noted an issue with its Part A 

hospital overpayment referrals. The ZPIC stated that it suspended referrals for overpayment collection because the MAC would not process the overpayments that were 

extrapolated by calendar year. The MAC requested that the overpayments be extrapolated by cost report year, which, in turn, required the ZPIC to reduce the value of the 

overpayments to the actual amount identified. Given that the Part A dollars referred by ZPIC A is $0, it is possible that the ZPIC referred the reduced overpayment amounts to 

the MAC after our timeframe. 

2 Percentages across the row do not total 100 percent because of rounding.

Table B-10: Overpayments Associated With Investigations and Cases 

That Were Referred to and Recovered by AC/MACs

Number of 

Actions

Total Dollars 

Referred

Total Dollars 

Recovered

Percentage

Recovered 

ZPIC A 35 $21,716,085 $5,789,798 27%

ZPIC B 52 $52,555,356 $3,713,692 7%

 Both ZPICs 87 $74,271,441 $9,503,490 13%

Source: OIG analysis of ZPIC survey responses and CMS’s Benefit Integrity Workload data, February 1 through 

October 31, 2009.
 

 

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APPENDIX~B

Table B-11: Administrative Actions Initiated by ZPICs

ZPIC A ZPIC B Both ZPICs

Payment Suspensions Submitted to CMS1 13 13 26

Payment Suspensions Denied by CMS 0 1 1 

Providers Referred to OIG for Exclusion2 0 0 0 

Providers Referred to CMS or OIG for Civil 

Monetary Penalties2 0 0 0 

New Autodeny Edits Recommended3 0 3 3 

Prepay Claims Denied 40,601 42,012 82,613

Dollar Amount of Prepay Claims Denied $20 million $12 million $32 million

Source: OIG analysis of CMS’s Benefit Integrity workload data, February 1 through October 31, 2009.

1

ZPIC A noted that it required some training from CMS to ensure it provided the necessary information and handled the 

suspensions correctly. ZPIC B noted that it needed to receive authorization from CMS before the payment suspension 

could be implemented and that there have been instances in which authorization was not provided timely and the provider 

was issued the money. ZPIC B reported that it has worked with CMS to take steps to achieve a faster suspension approval 

time.

2

One ZPIC noted that very few of these actions have been referred for many years.

3

ZPIC A described a barrier to tracking the savings from autodeny edits. The ZPIC explained that no report is available from 

the MACs to enable the ZPIC to identify the savings resulting from autodeny edits. ZPIC B reported that its concern with 

autodeny edits is the ability of the MAC to implement the edits because of system limitations.
A P PEN D x c 

Agency Comments 

("'w.~ DEPARTMENT OF HEALTH & HUMAN SERVICES 

\,~ Administrator 

Washlnglon. DC 20201 

SEP 3 0 2011 DATE: 

TO: 	 Daniel R. Levinson 


Inspector Oeneral 


FROM: 	 Donald M. Berwick, M.D. 


Administrator 


SUBJECT: 	 Office ofInspector Oeneral (010) Draft Report: "Zone Program Integrity 

Contractors' Data Issues Hinder Effective Oversight" (OEI-03-09-00520) 

The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 

comment on the Office ofIn.'1pector General (010) draft report entitled, "Zone Program Integrity 

Contractors' Data Issues Hinder Effective Oversight." The purpose of this report was to assess 

CMS' oversight of the Zone Program Integrity Contractors (ZPIC), understand the extent to 

which ZPICs perfonned program integrity activities, detennine the extent to which CMS uses 

program integrity workload statistics in ZPIC performance evaluations, and to identify any 

barriers encountered by ZPICs in perfonning their Medicare program integrity activities. 

In 2008, CMS embarked on a neW program integrity strategy by replacing Program Safeguard 

Contractors (PSCs) with ZP[Cs, which will perform Parts A and B program integrity work in 

seven newly established geographical zones. This new strategy will result in new jurisdictions 

with responsibility for all four claim types: Part A, Part B, durable medical equipment (DME), 

and home health and hospice (HH&H). As of August 2011, CMS has awarded six of the seven 

ZPIC contracts. However, the most recent award is currently under protest; therefore, only five 

of the seven ZPTCs are fully operational at this time. 

The OIG's report was limited to the first two ZPIC awards, Zones 4 and 7, because (hey were the 

only ZPICs thai had completed a full contract year at the time of the OIG's report. CMS concurs 

with some of {he findings that OrG identified in this report and has taken measures to address 

these issues. These include having the CMS Analysis, Reporting, and Tracking System (CMS 

ARTS) contractor fix the errors in the formulas for the total number of new investigations 

originating from reactive sources and the total number of cases referred originating from reactive 

sources. 

The 010 also indicated that CMS' performance evaluations ofZPICs contained few workload 

statistics. CMS has determined that workload statistics are not the most accurate measure of 

performance evaluations, because the contractors do not have control over the workload assigned 

to them. Instead, CMS uses many other deliverables in the CMS ARTS, such as the monthly 

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APPENDIX~C
 

 

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APPENDIX~C
 

 

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APPENDIX~C
 

 

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APPENDIX~C A CKNOWLEDGMENT S

This report was prepared under the direction of Robert A. Vito, Regional 

Inspector General for Evaluation and Inspections in the Philadelphia 

regional office, and Linda M. Ragone, Deputy Regional Inspector 

General. 

Tara Bernabe served as the team leader for this study. Other principal 

Office of Evaluation and Inspections staff from the Philadelphia 

regional office who contributed to the report include Maria Johnson, 

Ashley Robin, and Sunil Patel; central office staff who contributed 

include Scott Manley. 
Office of Inspector General http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components:

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties.

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.