Medicaid Audits: Challenge the Findings, Not the Extrapolation Method!!
Recently I have had multiple health care provider clients coming to me complaining of the way another attorney was handling the cases (This blog is not a jab at any attorney. I am in no way trying to offend any attorney. I am merely trying to let providers understand the correct way to appeal to avoid undue attorneys’ fees and headache). Apparently, when the provider receives a Tentative Notice of Overpayment, other attorneys have appealed State’s extrapolation method, instead of appealing on the basis of an inaccurate audit.
Why is the basis for the appeal important?
Let me give you two reasons/examples:
1. Reason #1: Appealing the extrapolation is an ambiguous procedure with little structure.
Example #1: Health care provider X’s attorney, whom we will call Jimmy John, only because I am hungry and would like a Jimmy John sandwich, appealed X’s Tentative Notice of Overpayment based on the extrapolation over a year ago. Literally for the past year, Jimmy John and X have submitted documents to Program Integrity (PI), a division of the Division of Medical Assistance (DMA), which has sent the documents back stating the documents were not filled out correctly and informing X that the correct process is a self audit. Herein lies the problem, appealing the extrapolation is an informal process with little rules, little deadlines and little appeal process. There is no incentive for PI to make a decision quickly, and there does not seem to be a way to schedule an informal hearing. There is just a lot of headache and paperwork back and forth.
That said, I have now contacted PI and asked that PI deny us, so I can pursue the appeal at the Office of Administrative Hearings (OAH). I requested the denial months ago. PI is waiting for authorization from the Attorney General’s office to provide the denial.
Can you say beaurocracy?
2. Reason # Two: It is plain easier to prove that whichever contractor conducted the audit made errors.
Example #2 comes from a recent Medicare lawsuit that did not end well for the health care provider. Despite the fact the case is a Medicare case, it is analogous to this topic. In case you want to read the entire case, here is the cite: Miniet v. Sebelius, WL 2930746 (S.D. Fla. July 18, 2012).
In summary, the U.S. Department of Health and Human Services (DHHS) hired a contractor to conduct Medicare audits. The contractor determined that the Plaintiff in this case was overpaid over $2.3 million. The provider appealed based on the extrapolation method. However, sadly, the provider tried to use the Medicare Act, which disallows the use of an extrapolation method unless there is a sustained or high level of payment error. According to the Recoupment Audit Contractor (RAC) contracted by the federal government, the provider’s accuracy rate was 0%. Based on the RAC’s accuracy rate, the court found that a basis existed that allowed DHHS to use the extrapolation method to determine the $2.3 million overpayment.
The Florida state court stated that, “In her Motion for Summary Judgment, the Secretary maintains that administrative and judicial review are statutorily foreclosed with respect to whether the extrapolation should have been conducted because the Secretary, through the CMS contractor, found that the sample had a 100 percent payment error rate. The Secretary maintains that this constitutes an implicit determination that there was a sustained or high level of payment error and, as such, extrapolation was proper.” Miniet v. Sebelius, WL 2930746 (S.D. Fla. July 18, 2012).
Most likely (if the federal RACs have any of the same issues that the North Carolina RACs have), the alleged accuracy rate was erroneous. Therefore, most likely the court based its decision to uphold the recoupment based on an erroneous accuracy rate. Had the provider, instead, challenged the validity of the audit itself, I’m willing to bet the result would have been different.
So, health care providers fighting Tentative Notices of Overpayment, appeal the validity of the audit, not the extrapolation method.
Oh, and a reason #3: Who wants to argue over math and statistics? Most likely, you would have to hire a statistician expert witness, which only increases the litigation costs.
I’m sure there are more reasons, but those are the most obvious.
Posted on March 19, 2013, in DHHS, Division of Medical Assistance, Health Care Providers and Services, Legal Analysis, Medicaid, Medicaid Appeals, Medicaid Audits, North Carolina, OAH, Program Integrity, Reconsideration Reviews, Tentative Notices of Overpayment and tagged Health care provider, Jimmy John, Medicaid, Medicare, North Carolina, RAC, Recovery Audit Contractor, Tentative Notice of Overpayment. Bookmark the permalink. Leave a comment.