Presenting a live 90-minute webinar with interactive Q&A Medicaid Audit Overpayments: Challenging Statistical Sampling and Extrapolation WEDNESDAY, MARCH 15, 2017 2pm Eastern | 1pm Central | 12pm Mountain | 11am Pacific Today’s faculty features: David R. Ross, Shareholder, O’Connell and Aronowitz , Albany, N.Y . Dr. Patricia L. Maykuth, Ph.D, President, Research Design Associates , Decatur, Ga. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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MEDICAID OVERPAYMENTS: Challenging State Audit Allegations of Overpayment and the Use of Statistical Sampling and Extrapolation Presented by : Pat Maykuth, Ph .D., President, Research De sign A s sociates, I n c. David R. Ross, Es q., Sh areholder, O’Connell & A ronowitz , P.C. March 15, 2017 2: 00 p . m. to 3: 30 p . m.
Introduction and A Primer on the Legal Issues In Statistical Sampling and Extrapolation PART 1 OF THE PRESENTATION 6
What is Sampling? Sampling is taking a subset of the claims in a Medicaid provider’s universe of claims for the purpose of auditing them. How is the sample of claims chosen? Usually via computer software. The sample must be randomly selected to be valid. 7
What is Extrapolation? Extrapolation takes the results of an audited sample of claims and projects the dollar amount of the overpayment from the sample over the universe of paid claims. The audited sample has a known amount of dollars in error so that amount is projected to the universe for a global repayment amount. 8
Legal Basis for Statistical Sampling for Overpayment Estimation US HHS “may introduce the results of a statistical sampling study as evidence of the number of violations . . . or the factors considered in determining the amount of [a] civil money penalty. Such statistical sampling study, if based upon an appropriate sampling and computed by valid statistical methods , constitutes prima facie evidence. [T]he burden . . . shifts to the [Provider] to produce evidence reasonably calculated to rebut the findings of the statistical sampling study.” Excerpt from 45 C.F.R. § 160.536(a)-(b) (emphasis added). State Medicaid programs generally use a similar approach. 9
Individual States and Statistical Sampling Unlike Medicare, Medicaid has no universal guidance outlining the rules of the process to be used. Your state may have simple or detailed rules, or no rules at all. ◦ Texas follows the MPIM and uses RAT-STATS. ◦ California and Florida use “generally accepted statistical standards.” ◦ New York has no rules at all. The burden of proof is on the Provider to challenge the statistical sampling and extrapolation. ◦ The State’s methodology is presumed valid unless and until the Provider proves otherwise. 10
What Are the Legal and Scientific Issues Pertaining to Sampling and Extrapolation? Understanding what those complex issues are is not easy Do I need an expert? (Hint: you absolutely do) ◦ Lawyers are not enough (and that’s coming from a lawyer) 11
The Role of the Expert: Why You Should Always Have One A statistical consultant is essential to understanding how the audit was conducted and whether the results are statistically valid. ◦ Laypersons generally cannot understand these concepts absent training. The expert will review both the process actually used and the results in your case. An expert is the only person who will be able to properly answer important questions pertaining to the audit. 12
The Role of the Expert: Asking the Important Questions Is the process used by the auditors properly designed? Is this process suitable for use in this audit of my client? Is the process, as applied to my client in this audit, proper? Is it different from the norm? If so, how and why? How was the sample size chosen? Was that selection proper? Is it adequate (large enough) for the confidence interval? Did the auditors properly document the audit? 13
The Role of the Expert: Asking More of the Important Questions Is the software program used for random number generation certified or widely accepted for this purpose? Was adequate documentation for replication provided? Was the software program used working as it was designed? ◦ When in doubt have an expert look at the source code ◦ Can’t get the source code? Argue violation of due process 14
The Role of the Expert: Asking Even More of the Important Questions How were the random numbers selected? Were they generated by a valid method? ◦ Did the auditors perform appropriate tests for randomness on these numbers? Can the results be replicated by the provider? ◦ If not, there is a serious problem. ◦ Retaining the seed is a very important factor. ◦ Is the frame sorted as it was at the time the random numbers were used to pick the sample? What about the extrapolation calculations themselves? 15
Right Idea, Wrong Answer 16
Dewey Wins the Election!! Pollsters surveyed via telephone 17
There Are Three Kinds of Lies: Lies, Damned Lies, and Statistics So which is it? The outcome of any statistical study is determined by that characteristic that is sampled Why were so many polls in the past presidential election saying contradictory things? ◦ bias ◦ corrupted frame ◦ probability of selection unknown ◦ polling done for advocacy not to answer the question ◦ sampling error ◦ response bias 18
Ultimately, It Comes Down to Two Basic Questions 1. What is the ‘it’ that is being measured by the study? 2. Is the ‘it’ being measured correctly? 19
Human Baby Due Date Average human gestation period is 280 days (9.33 months or 40 weeks) A 90% confidence level predicts the due date will be between 273 days and 280 days. o Assumptions : sample size 20, average 280 days, lower confidence level 273 days, upper confidence level 287 days o No calculable confidence level for 1 person Complication error: ◦ Only 40% of women give birth on this due day ◦ Accuracy error of 60% ◦ Do not know the distribution ◦ not normal ◦ Do not know the conception date ◦ Measurement error How believable is it to use this estimate for the birth date of one person? How useful is it to a person who wants to know what day the baby is going to be born? 20
Right Idea, Wrong Answer Dewey wins election (not!) – they surveyed only people with telephones Human baby due date example In 1939, the US government predicted we would be out of domestic oil in 13 years It was also predicted that the US space program would have 9-10% catastrophic failure rate Why do these statistical studies fail us? ANSWER: they are not correctly designed for the question being asked Your client’s Medicaid audit may also be incorrectly designed 21
A Primer on Sampling and Extrapolation PART 2 OF THE PRESENTATION 22
What is Statistics? Statistics is a branch of mathematics dealing with: ◦ the collection, ◦ analysis, ◦ interpretation, and ◦ presentation of masses of quantitative data. 23
Terms Universe – dollar amount of claims paid to a Provider in a specific timeframe Sampling Frame – subset of the universe defined as variables of interest from which the sample will be randomly selected and over which the sample will be extrapolated Sample – a randomly selected subset of a sampling frame to be audited for overpayments Unit of Analysis (Sampling Unit) – what is measured in the audit: claim line, claim, beneficiary, provider (must be invariant throughout the audit) (Please see the List of Terms provided with presentation) 24
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