SGS is a subsidiary of Hewlett-Packard Enterprise Services and performs data analysis, investigations and medical reviews to detect, prevent, deter and reduce fraud, waste and abuse.
The contract enlists the company as a zone program integrity contractor. Those contracts were established under the Medicare Modernization Act of 2003 requiring the CMS to implement measures for program integrity.
The CMS designated seven zones throughout the country, each with their own ZPIC contractor. As part of this new contract, SGS will oversees region 6, which includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Washington, D.C., according to the award notice.
The CMS first attempted to award SGS zone 6 in 2012, but other contractors interested in the territory protested, and claimed the CMS awarded the contract to SGS unfairly, with conflicts of interests involved. The GAO was asked to investigate the matter, but it found no evidence of wrongdoing. The area lacked a formal ZPIC for years, with SGS serving in an informal capacity until the contract could be formally awarded.
In addition to zone 6, SGS also oversees zone 1, which includes California and Hawaii as well as the Mariana Islands and other American territories, and zone 7, which includes Florida, Puerto Rico and the Virgin Islands.
A ZPIC audit is different from other Medicare fraud protectors in that they look to identify fraud, while Recovery Audit Contractors and Medicare Administrative Contractors focus solely on determining whether payments were appropriately dispersed.
For example, a ZPIC may look into the acceptance or offering of kickbacks, the falsification of certificates of medical necessity, inappropriate billing for services not rendered, misrepresenting the diagnosis to justify payment, and beneficiaries fraudulently sharing Medicare cards.
An SGS spokesperson declined to comment on the contract. The contract lasts one year and has four option years.