Legal Insights and Perspectives for the Healthcare Industry

A longstanding source of frustration among providers facing overpayment determinations is the inconsistent application of statistical sampling and extrapolation by Medicare contractors. This, coupled with the contractor’s unfettered discretion to determine when extrapolation will be used and what constitutes a sustained or high level of payment error, can result in enormous negative financial consequences for providers. In a recent update to the Medicare Program Integrity Manual, the Centers for Medicare and Medicaid Services sets out clarifying guidance and accountability mechanisms for Medicare contractors to follow when performing statistical sampling, including when extrapolation of overpayment determinations is permitted. It also affords providers with greater opportunities for confirming the appropriateness of the extrapolation methodology including compliance by Medicare contractors with the updated guidance. An exception for CMS and the Medicare contractors—that failure to follow one or more requirements contained in the guidance may not necessarily be viewed as affecting the validity of the extrapolation—raises questions over how CMS will enforce the updated guidance and the potential for success when challenging poorly performed extrapolations.

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