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OIG’s Audit found Medicare Contractors Were Not Consistent in How They Reviewed Extrapolated Overpayments in the Provider Appeals Process

oig auditBy: Karina P. Gonzalez

When an overpayment is identified in Medicare Part A or B claims, providers can contest the overpayment amount by using the Medicare administrative appeals process.  Because of the large difference between overpayment amount in a sample from an extrapolated amount, the OIG states that it is critical for the review process during an appeal to be fair and consistent. In the first and second levels of Medicare appeals (redetermination and reconsideration) extrapolated overpayments are reviewed by MAC (Medicare Administrative Contractors) and by QICs (Qualified Independent Contractors).

The OIG audit was to make sure that the MACs and the QICs reviewed the appealed extrapolated overpayments consistently and in compliance with CMS requirements.

What OIG found was that CMS did not always provide sufficient guidance and oversight to ensure that these reviews were performed in a consistent manner.  The most significant inconsistency identified was the use of a type of simulation testing that was performed only by a subset of contractors.  The test was associated with at least $42 million in extrapolated overpayments that were overturned in fiscal years 2017 and 2018.

In addition, CMS’s ability to provide oversight over the extrapolation review process was limited because of data unreliability issues in the Medicare Appeals System (MAS).  Of the 39 appeals cases reviewed by the OIG listed in the MAS as involving extrapolation, 19 cases did not actually involve statistical sampling.  Improving the accuracy of the information in the MAS was identified as being crucial to ensure that extrapolated overpayments are reviewed by the MACs and QICs in a fair and consistent manner.

What OIG recommends is that CMS:

(1) provide additional guidance to contractors to ensure reasonable consistency in procedures used to review extrapolated overpayments during the first two levels of the Medicare Parts A and B appeals process;

(2) take steps to identify and resolve discrepancies in the procedures contractors are using  to review extrapolations during the appeals process;

(3) provide guidance regarding the organization of extrapolation related files that must be submitted in response to a provider appeal;

(4) improve system controls to reduce the risk of contractors incorrectly marking the extrapolation flag field in the MAS; and

(5) update the information in the MAS to accurately reflect extrapolation amounts challenged as part of an appeal,

So many providers have had to pay substantial extrapolated overpayments and may not have retained a statistical expert to review the sampling and extrapolated procedures which as you can see may have been to their detriment.  Many providers have gone out-of-business because of the large extrapolated overpayments and the difficulty of getting an accurate, fair and meaningful review on challenges to  statistical sampling and extrapolated overpayments in the first two levels of Medicare’s appeal process.