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OIG to Focus Its Attention on How CMS Applies Statistical Sampling

March 05, 2018
Reimbursement By Rodney Farley, Director

Last month, the Office of Inspector General (OIG) announced it would begin focusing its attention on how the Centers for Medicare and Medicaid Services (CMS) applies statistical sampling.


Statistical sampling is the process of systematically selecting a limited number of records or data from a selected population to yield generalizations about that population. Medicare Administrative  Contractors (MACs) use the process of statistical sampling to determine if a provider has been overpaid. If a provider disagrees with the calculation, as determined by the MAC, a provider has the right to appeal using the five step Medicare Administrative Appeals process.

Steps in the Medicare Administrative Appeals process include:

  • Step 1: Redetermination
  • Step 2: Reconsideration
  • Step 3: Administrative Law Judge (ALJ)
  • Step 4: Departmental Appeals Board (DAB) Review
  • Step 5: Federal Court (Judicial) Review

If overturned, the provider is accountable for the overpayment—as determined in the sample—but not the full extrapolated amount. Step 1 and Step 2 of the Medicare Administrative Appeals process are critical to determining if a sample will be upheld.

Last month, the OIG announced its plan to closely monitor how MACs and Qualified Independent Contractors (QICs) apply extrapolation. In 2017, CMS paid $36.2 billion in improper payments. This year, the OIG has added to its workplan a Review of Statistical Methods Within the Medicare Fee-For-Service Administrative Appeal Process. This is good news for providers. With more focused efforts, the OIG may in fact uncover errors in how the MACs approach the appeals process. However, it's also important for providers to remain diligent in their own internal audit practices to catch inconsistencies before the MACs. Additionally, should you as a provider disagree with an extrapolation calculation, you can file a request for redetermination. By securing your revenue cycle, you may just protect your pockets in the long run.

Looking for more information on claims auditing? Download our ebook, A Healthcare Facility's Guide to Extrapolation.

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