Provider survives cuts, recession only to fall victim to ZPIC audit

ABILENE, Texas - An audit by the Zoned Program Integrity Contractor (ZPIC) has become the "death blow" for Freedom2Go. In April, when the company was notified of the audit, it was in the middle of a reorganization that it hoped would help it recover from the reimbursement cuts and recession of 2009. "We were just beginning to make progress," said 62-year-old Richard Lamb, president and general manager, who has worked in the HME industry for most of his adult life. "We had been posting losses, but in April, we actually posted a gain." Fast forward a few months and Lamb has closed Freedom2Go, once an $8-million, four-location company with 2,500 patients. In late June, he was trying to tie up loose ends, including finding new providers to take his 800 oxygen patients. Here's what Lamb told HME News about his experience.

HME News: How'd it all start?

Richard Lamb: It all started on April 28, when we received additional documentation requests (ADRs) from the ZPIC. Of course, there was no notice this was coming, and no information about how the audit would proceed or how we were going to be measured.

HME: How many claims were audited?

Lamb: In all, at last count, 500, but I think it was more than that, probably 700 or 800. In dollars and cents, it was more than $200,000, which is a big chunk of change for us.

HME: How did the audit proceed?

Lamb: One of the problems we experienced was--the ADR states that we have 30 days to respond with documentation, and each ADR is dated, but it's not postmarked until five or eight days later, meaning it sat on somebody's desk or in a mailroom before it was sent out. It took up to 10 days for us to actually receive the ADRs, which was one-third of the time we had to respond.

HME: Did you have the additional documentation on file or did you have to chase doctors for it?

Lamb: Our policy was that we had orders from doctors, CMNs and some level of chart notes, and if we really needed something more, then we'd go back to doctors. Providers need to have a policy in place where they don't bill anything unless they have all the documentation and everyone understands that, including the doctors. If you don't have cooperation from a doctor, don't provide services to his patients.

HME: Why weren't you able to bounce back from the audit?

Lamb: We expected to make it through, but it didn't stop at 30 days. They kept sending us ADRs. I have copies of e-mails where they admit they dropped the ball in stopping our audit. They also admitted that for the claims that had been audited not to expect to get paid for those anytime soon, because they were so backlogged.

HME: At what point did you decide to close your doors?

Lamb: Our bank viewed this audit as something that we couldn't recover from. So we were unable to pay our people and that put us in a position where we didn't even have staff to transition all of our patients. I mean, these people are at risk; they depend on us. We have a skeleton crew still on board, but we're scrambling.

HME: What's next for you?

Lamb: I'm 62 and I have most of my personal dollars invested in the company. It was basically my retirement and I don't know what I'm going to do. I probably face some tough decisions about selling my house and everything in it and seeing what I'm left with and figuring out what the next stage of my life is going to be.

HME: Why not fight the audit?

Lamb: I'm not excited about getting involved in a lawsuit with Medicare, which would probably last for years. I've been aware of situations like this where owners have stood up to Medicare and mortgaged their homes and all kinds of things. I'm talking to my own attorneys right now about my options. It's difficult. I'm just trying to hold my head up and get through it all in the most intelligent way possible.