The Change to the Time in Which CMS Can Collect an Overpayment.

In May 2012, the HHS-OIG released a report entitled “Obstacles to Collection of Millions in Medicare Overpayments” detailing its findings on how well CMS and its contractors were doing in collecting previously identified overpayments. In response to the OIG’s contention that CMS was not doing a good enough job collecting identified overpayments, CMS claimed that part of the problem was that its collection activities were hampered by the limitation in 42 U.S.C. § 1395gg which restricted recoveries of overpayments from providers to those overpayments made within the last 3 years, even though 42 C.F.R. § 405.980(b) permits a CMS contractor to reopen a paid claim for any reason within 1 year of the date of the initial determination and within four (4) years of the date of the initial determination if there is good cause. The OIG report recommended that CMS ask Congress to change the recovery period in § 1395gg to a period greater than the reopening period set forth in § 405.980. In § 638 of the recently enacted American Taxpayer Relief Act of 2012, the law passed to avoid the “fiscal cliff,” Congress responded to the OIG recommendation by changing the recovery period in § 1395gg from 3 to 5 years, 1 year longer than the reopening period in § 405.980.

The current Scope of Work (SOW) for the Recovery Audit Contractors provides that:

The Recovery Auditor shall not attempt to identify any overpayment or underpayment more than 3 years past the date of the initial determination made on the claim.

When CMS issued the final SOW in 2011, it presumably limited the RAC lookback to 3 years because of the 3 year limitation in § 1395gg. With that limitation now changed to 5 years, the question arises as to whether CMS will amend the SOW to permit the RACs to identify and reopen claims where the initial determination was made up to 4 years earlier. There is little reason to believe that CMS will pass up the opportunity to expand the universe of claims subject to RAC review.

Since the contingent fee structure of the RAC program makes it self-funding, expanding the universe of claims subject to RAC review will not result in any significant additional costs to CMS. Further, expanding the claim universe does not force the RACs to incur additional expense, but gives them the opportunity to substantially increase their profit. I believe that the recent amendment of § 1395gg creates a classic win-win situation for CMS and the RACs, but foretells a significantly less positive and more expensive future for providers.

Please contact us if we can be of any assistance with the activities of the Medicare Recovery Audit Contractors or in helping to resolve an issue with any of the legion of other auditors working for CMS.

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OMHA was established by § 931of the Medicare Drug, Improvement and Modernization Act of 2003. In § 931(b)(2), Congress provided that:

The Secretary shall assure the independence of administrative law judges performing the administrative law judge functions … from the Centers for Medicare & Medicaid Services and its contractors. In order to assure such independence, the Secretary shall place such judges in an administrative office that is organizationally and functionally separate from such Centers.

There are currently 65 OMHA ALJs in 4 regional field offices. The ALJs are organized into teams and supported by OMHA attorneys, paralegals and legal assistants. While OMHA ALJs hear appeals involving, among other things, an individual’s eligibility for Medicare and coverage determinations under Parts C and D, the largest part of the ALJs workload comes from Part A and B provider appeals of pre and/or post payment denials by one of Medicare’s audit contractors.

The Effect of RAC Audits on the ALJ’s Caseload.

According to the latest appeal statistics from CMS, RACs issued payment denials for 903,372 claims in fiscal year 2011 and providers filed 56,620 appeals in fiscal year 2011. According to statistics maintained by OMHA, it received 132,446 appeals in fiscal year 2012. Out of the 132,446 appeals filed, 40,386 or 30.5% were filed from RAC denials by Part A hospitals. By comparison, Part A hospitals filed just 1,545 appeals in FY 2011.

The increase in ALJ appeals is certainly not unexpected as a result of the nationwide expansion of the RAC program in 2010. The increased caseload has already impacted the ALJ’s ability to comply with the regulatory mandate set forth at 42 C.F.R. §405.1006 that appeals to the ALJ be decided within 90 days. There is little doubt that as more and more appeals reach the ALJs, providers will experience ever increasing delays in decisions by the ALJs. While some delay may be acceptable, a restrictive CMS policy regarding the payment of reasonable and necessary Part B services provided by a hospital to a beneficiary may cause such an increase in the level of ALJ appeals as to make timely decisions by an ALJ impossible and deprive a provider of the legally required prompt resolution of its appeal.

Appeals for Payment of Part B Outpatient Services Will Further Delay ALJ Decisions

CMS, relying on the language in Chapter 6 § 10 of the Medicare Benefits Policy Manual, claims that if a RAC determines that a Part A inpatient claim was improperly paid, the hospital may only be paid under Part B for the limited ancillary services listed in §10. In a number of rulings, the Medicare Appeals Council and various ALJs, relying on various sections of the Medicare Financial Management Manual and the Medicare Claims Processing Manual, have held that once the RAC has reopened a claim, the RAC and the MAC are obligated to adjust the claim and pay the hospital for all reasonable and necessary Part B services provided to the beneficiary. Although CMS disagrees with the holdings of the Medicare Appeals Council and the ALJs, it has instructed the MACs to make any Part B payment ordered by an ALJ.

Now, in addition to hospitals appealing inpatient claims they believe to have been improperly denied by a RAC, it is extremely likely that they will, in addition, appeal denied inpatient claims not because they disagree with the RACs decision that the inpatient claim was improper, but to receive payment for services provided and properly payable under Part B.

The inescapable result of the tidal wave of appeals crashing over OMHA will be less careful consideration by the ALJs of the merits of a provider’s appeal and unreasonable delays in ALJ resolution of provider appeals, further straining a provider’s financial resources. One can only hope that the staggering number of appeals generated by the RAC program do not deprive all Medicare providers and beneficiaries of the accurate and timely resolution of their claims.

Please contact us if we can be of any assistance with issues relating to ALJ appeals or in helping to resolve any other issue with any of the legion of CMS auditors in the Medicare-Medicaid Audit World.

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The OIG’s report is based upon an analysis of appeals decided by ALJs between October 2009 and September 2010 (fiscal year 2010). The OIG found that providers filed 85% of the appeals decided, that the ALJs rendered fully favorable decisions in 56% of the appeals (62% of all Part A appeals but 72% of Part A appeals filed by hospitals). The OIG calculated that about two-thirds of the ALJs rendered fully favorable decisions in between 41 and 70 percent of the appeals they considered. The question raised by these statistics is why is there such a large discrepancy between the decisions reached by the QICs in their review of the claims and the ALJs, since presumably both groups had the same information and were interpreting the same regulations. The obvious answer is that either the QICs or the ALJs are not doing their job correctly.

One might suspect that the first step in finding out which group is incompetent would be to have an independent entity review a statistically valid sample of the appeal records and offer an opinion as to whether the decision of the QIC or the ALJ was correct. Surprisingly, the OIG did not do that. Instead, the OIG appears to have assumed that the decision of the QICs was correct and then makes suggestions as to how to “improve” the decision making of the ALJs so that it will be more in line with that of the QICs. The result of such improvements, of course, will be a savings to the Government and reduced payments to providers. In case it is ultimately determined that the ALJ’s decisions are in fact correct, another “improvement” suggested by the OIG is that CMS impose a fee only on providers who want to appeal to the ALJ with the hope that this will result in fewer providers filing fewer appeals.

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During the last few years, CMS’ Recovery Audit Contractors (RACs) have determined that millions of dollars paid to hospitals for inpatient treatment should be refunded to CMS because although the patient needed the medical services provided, the services should have been provided on an outpatient basis. Although most people might think that the result of the hospital’s mistaken classification would simply be for the hospital to repay Medicare the difference between the amount it was paid for inpatient services and the amount that it would have been paid for the services on an outpatient basis, CMS has a different view. According to CMS, because the hospital submitted a bill for what was later determined to be unnecessary inpatient services, the hospital is entitled to no payment for its services.

On November 1, 2012, the American Hospital Association and four individual hospitals filed a lawsuit in the United States District Court for the District of Columbia against Kathleen Sebelius, the Secretary of the Department of Health and Human Services, in an attempt to overturn this unreasonable policy and to force CMS to pay hospitals for the legitimate outpatient services provided. While the hospital’s position is undoubtedly fair and reasonable, their lawsuit may not succeed.

Will CMS’ Broad Power to Administer the Medicare Program Defeat the Hospitals?

There is no doubt that Congress has given CMS broad powers to enact rules and regulations governing the operation of the Medicare Program. CMS has used that authority to promulgate thousands of regulations and policies to govern, among other things, who is eligible to participate in the Medicare program, what benefits the program will provide, the amounts to be paid for services and what hospitals and other providers must do to be paid. According to 42 C.F.R. § 424.32(a)(1), in order for a hospital or provider to be paid:

A claim must be filed with the appropriate intermediary or carrier on a form prescribed by CMS in accordance with CMS instructions.

As anyone involved with billing Medicare can attest, CMS has issued specific and detailed instructions as to how an inpatient claim is to be billed, how an outpatient claim is to be billed and how a hospital may change the status of a patient initially admitted as an inpatient to that of an outpatient. One of the many instructions requires a hospital to identify the services being billed as being provided to either an inpatient or an outpatient. Once the claim has been submitted, CMS does not permit a change in the patient’s status or the type of bill to be changed from inpatient to outpatient

The current lawsuit, in essence, asks the Court to force CMS to change its billing policy by forcing CMS to treat a bill submitted for inpatient services as a bill for outpatient services if a RAC or other contractor determines that it was not medically necessary to provide the services in an inpatient setting or to permit the hospital to file a new claim for the medically necessary outpatient services provided because it would be unjust to not pay the hospital for the obviously necessary services provided to the Medicare beneficiary. For the hospitals to be successful, they will have to convince the Court that CMS’ policy is so far beyond the scope of its authority to regulate the operation of the Medicare program that it is, in legal terms, arbitrary and capricious. History teaches that this will be an uphill battle for the hospitals.

Please contact us if you would like further information about this lawsuit or for assistance in helping to resolve other issues with any of the legion of CMS auditors that inhabit the Medicare-Medicaid Audit World.

The post Does Medicare Always Have To Pay A Hospital For Services Provided? appeared first on Medicare-Medicaid Audit World.

With the exception of the data collected by the American Hospital Association (AHA) through its RAC Trac initiative, I am not aware of any other data tracking administrative costs incurred by providers in connection with Medicare program integrity activities. As far as I know there is no aggregate data of the costs incurred by any identified group of Medicare providers in connection with pre and post payment reviews conducted by the MACs or the costs incurred by Medicare providers in responding to document or other information requests by ZPICs or their PSC predecessors.

The RAC Trac Data

According to the American Hospital Directory, there are about 4,219 hospitals in the United States. About 2,200 of those hospitals provided data to the AHA during the first half of 2012 on the costs associated with RAC activities. About 75% of the hospitals reported that RAC activity had some impact on their operations, the single largest impact being increased administrative costs. Approximately 45% of the hospitals spent less than $3,300 per month because of RAC audits while about 8% of the hospitals spent over $33,300 per month on RAC activities. In terms of employee time, the hospitals reported that about 315 hours of employee time per month was devoted to RAC activities. In addition to internal costs, the hospitals reported that they spent about $33,000 per month on external resources required to address RAC issues. The AHA report on the RAC Trac survey data for the 1st quarter of 2012 is available here, and the 2nd quarter results are available here.

What the Future Holds

To date most RAC audits have been directed at hospital short stay billing because of the larger claim amounts involved. However, Connolly recently announced that it would begin reviewing billing for E & M services both in and out of the hospital. This expansion was inevitable and not surprising in light of the statistics reported by the Association of American Medical Colleges in its 2011 State Physician Workforce Data Book that there were 799,509 active physicians in the United States in 2010 and Figure 2.13 in The Kaiser Family Foundation Medicare Chartbook, Fourth Edition, 2010, which indicates that 96% of physicians and other practitioners participate in Medicare Part B.

The expansion of recovery audits to physicians and other practitioners who participate in Medicare Part B raise two questions, the answers to which may have a profound impact on the Medicare program. In Part II of this post, I will discuss whether:

1. Providers will decide that the amount they receive from Medicare justifies the costs necessary to manage RAC audits and appeals or whether some providers will eventually conclude that those additional costs make serving Medicare patients a losing proposition?
2. The contingent fee arrangement under which the RACs are paid will influence the number of alleged improper claims the RACs find. It is not hard to imagine that as the volume of smaller dollar value claims audited by the RACs goes up, a greater percentage of reviewed claims will be found to be improper, as the RACs seek to maintain their profit margins. If this occurs, will the costs incurred by providers from this increased RAC activity drive providers out of the Medicare program?

Please contact us if we can be of any assistance with RAC audits or appeals or in helping to resolve an issue with any of the legion of CMS auditors in Medicare-Medicaid Audit World.

The post Will Recovery Audits Drive Away Medicare Providers? – Part I appeared first on Medicare-Medicaid Audit World.

The OIG’s Concerns With the Performance of the MACs

In addition to being concerned about CMS’ ability to adequately monitor and assess the performance of the various MACs, the OIG is concerned with whether the MACs have consolidated all Part A and Part B edits within their jurisdiction, have developed and tested final edits, implemented and used initial, local system, and medical review edits and evaluated edit effectiveness. On a related subject, the OIG is also concerned about Part B claims that were suspended for manual prepayment review on the basis of system edits but on which the reviews were not conducted. According to the OIG, because manual review is more timely and costly to the contractor, some suspended claims might not be reviewed but paid inappropriately. In sum, the OIG believes that the MACs may be paying too many improper claims.

The OIG’s Concern With the Performance of the RACs

As opposed to its concern with the MACs’ performance in specific areas, the OIG Work Plan does not identify any specific concern with the performance of the RACs. Rather, the Work Plan states that the OIG intends to “review the extent that Recovery Audit Contractors (RAC) identified improper payments, identified vulnerabilities, and made potential fraud referrals in 2010 and 2011.” The OIG will also review CMS’ actions in resolving RAC-identified vulnerabilities, addressing potential fraud referrals, and in evaluating RAC performance in 2010 and 2011. Apparently the OIG does not believe that the problems with the RAC program identified by the American Hospital Association, the American Medical Association and other professional organizations as well as some members of Congress warrant investigation.

The Concerns of Others With the Performance of the RACs

Since its inception, the structure of the RAC program has been the subject of considerable unfavorable comment by Medicare providers. In an April 3, 2012 letter, the leaders of 35 professional organizations representing doctors expressed their opposition to CMS’ plan to have RACs conduct prepayment reviews because “[t]he program’s contingency fee structure inappropriately incentivizes the Recovery Auditors to conduct “fishing expeditions” that are exceedingly burdensome for physician practices” and because “[t]hey [Recovery Auditors] are incapable of efficiently or accurately conducting prepayment review.”

On June 26 2012, the American Hospital Association wrote the Senate Finance Committee a letter in which it pointed out that “[M]edicare RACs have a strong financial incentive to deny claims. Medicare RACs are paid ―on a contingent basis for collecting overpayments –currently, between 9 percent and 12.5 percent of the overpayment amount.” The AHA went on to point out that the results of its RACTrac survey “[s]uggests that these incentives encourage the improper denial of large numbers of claims. According to data collected by the AHA, an astonishing 74 percent of appealed RAC decisions are ultimately reversed.”

Most recently, on September 11, 2012, the American Medical Association wrote CMS urging that it stop the proposed review by the RACs of E&M claims. The AMA first noted that because “[t]he RACs are not required to have same-specialty physicians review RAC determinations, we have no confidence that the RACs will be up to the task of understanding these variables or their clinical relevance.” The AMA then pointed out that “[C]MS’ FY2010 Recovery Auditor Report to Congress reported that 46 percent of the Medicare RAC determinations appealed were decided in the provider’s favor.”

The significant evidence of RAC errors that have resulted in reversals of between 46 and 74 percent, an error rate that would certainly attract OIG attention if incurred by the MACs while processing payments to providers, raise two significant questions:

1. Is the OIG’s lack of interest in RAC accuracy directly related to the ever increasing amounts of money recovered by the RACs at no cost to CMS?
2. Will the traditional advocacy of the professional organizations representing Medicare providers be effective in curbing the ongoing abuses of the Recovery Audit Contractors?

My own answers are “Yes” and “No,” respectively.

Please contact us if you would like further information about the ongoing RAC program or for assistance in helping to resolve other issues with any of the legion of CMS auditors that inhabit the Medicare-Medicaid Audit World.

The post What Concerns the OIG About MACs and RACs appeared first on Medicare-Medicaid Audit World.

Reports on Evaluation and Management Billing

In May 2012, the HHS OIG released a report entitled “Coding Trends of Medicare Evaluation and Management Services” in which it analyzed Evaluation and Management coding for (1) established patient office visits, (2) subsequent inpatient hospital care, and (3) emergency department visits. It found that the use of codes 99214 and 99215 increased 17% between 2001 and 2010, the use of codes 99232 and 99233 increased 6 and 9 percent, respectively between 2001 and 2010, and the use of code 99285 rose 21 percent, increasing from 27 to 48 percent of billings during the same period.

On September 15, 2012, the Center for Public Integrity released a study entitled “How doctors and hospitals have collected billions in questionable Medicare fees.” This article purports to report on the Center’s analysis of data obtained from CMS on Evaluation and Management billing as well as how the widespread adoption of EHR may be contributing to fraudulent upcoding by hospitals and doctors.

On September 21, 2012, the New York Times published an article entitled “Medicare Bills Rise as Records Turn Electronic” referencing both the May OIG report and the Center for Public Integrity article. The Times’ article, which purported to analyze CMS data from the American Hospital Directory, pointed out the same trends as the earlier reports, but attributed the difference to hospitals converting from paper records to EHRs. The Times article apparently prompted a strong letter from the Secretary of Health and Human Services and the Attorney General to the CEO’s of five hospital trade associations. In their letter of September 24, 2012, the Secretary and Attorney General warned against the use EHR software to commit healthcare fraud and threatened prosecution for fraudulent billing. The American Hospital Association responded the same day as did the Association of Academic Health Centers.

The Coming Audits of Evaluation and Management Codes

More immediately relevant to providers, but lost in the controversy generated by the Public Integrity and NY Times articles, was the approval granted to Connolly by CMS on September 12, 2012 to conduct statistical sampling through complex reviews of Evaluation and Management claims in order to calculate and project incorrectly paid claims. I do not believe I would be going too far out on a limb to suggest that Connolly will conclude that there is significant evidence of improperly billed claims and that CMS will authorize full scale auditing of such claims in all 4 RAC regions. There is also reason to believe that at least some of the MACs will decide to impose pre-payment reviews for some providers with significant billing of the higher cost Evaluation and Management codes.

If you have not recently reviewed the criteria for each Evaluation and Management code and audited your billing to ensure your compliance with the regulations, you should take whatever steps are necessary to audit your processes and procedures to ensure that your Medicare billing for this very basic service is appropriate and accurate. If you discover overbilling, you should consult with your attorney or other professional about your repayment obligations under the Patient Protection Act.

Please contact us if you would like further information about potential audits of Evaluation and Management codes or for assistance in helping to resolve other issues with any of the legion of CMS auditors that inhabit the Medicare-Medicaid Audit World.

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The World of Medicare Contractors

As the number of stand-alone health care providers continues to decrease, the number of corporate relationships between companies hired by CMS to ensure the integrity of the Medicare program and Medicare providers continues to increase. The result of this consolidation is the growing possibility that these relationships will not be detected or adequately addressed by CMS, with the result that complaints of wrongdoing against some providers will not be investigated as vigorously as complaints against other providers.

Examples of these interrelationships are detailed in protests filed with the Government Accountability Office (GAO) by C2C Solutions, Inc. and Cahaba Safeguard Administrators, LLC over the initial award of the Zone 2 ZPIC contract to AdvanceMed Corp. The protests, which were sustained by the GAO on January 25, 2010, concerned the possibility that as the Zone 2 ZPIC, AdvanceMed might be called upon to investigate the work performed by its then parent, Computer Sciences Corporation (CSC), in connection with service contracts held by CSC with Universal American and HealthNet in connection with those companies operation of plans under Medicare Parts C and D. In sustaining the protests, the GAO concluded that CMS had not sufficiently analyzed AdvanceMed’s plan to avoid the potential conflict before accepting AdvanceMed’s plan and awarding it the Zone 2 contract.

Possibly as a result of the GAO’s actions, or possibly to satisfy CMS’ desire to retain AdvanceMed as the Zone 2 contractor, in February 2011, CSC announced the sale of AdvanceMed to NCI, Inc. NCI announced that the sale closed in April 2011 and that AdvanceMed remains the Zone 2 ZIPIC.

As highlighted in a recent report by the OIG, CMS does not have in place uniform and effective procedures to identify and resolve actual and potential conflicts of interest between companies seeking CMS auditing contracts and related corporate entities receiving significant payments from Medicare. Unless a better way is found to ensure that those charged with ensuring the integrity of the Medicare program investigate with equal vigor suspected wrongdoing by any corporate provider, American taxpayers will continue to lose millions of dollars to waste, fraud and abuse.

Please contact us if you would like further information about ZPICs or for assistance in helping to resolve other issues with any of the legion of CMS auditors that inhabit the Medicare-Medicaid Audit World.

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In a unanimous decision filed on September 11, 2012, the Ninth Circuit held that CMS correctly interpreted its regulations that preclude an appeal of a RAC’s decision to reopen a paid claim, that the regulations were reasonable and that because the decision to reopen cannot be appealed, federal courts do not have jurisdiction to review a RAC’s decision to reopen a paid claim. In sum, the Court rejected every argument advanced by Palomar.

In my July 24th post I discussed the decision in St. Francis Hospital v. Sebelius in which a District Court in the Eastern District of New York came to a contrary result. According to the Ninth Circuit, the different result in St. Francis Hospital is based on the Constitutional due process argument advanced by St. Francis but abandoned by Palomar at an earlier stage of the litigation.

Is the “GOOD CAUSE” Fight Over?

As I suggested in my earlier post, I think the argument that the regulations permit a provider to litigate the question of good cause is extremely weak and expect that other Courts that consider the issue will come to the same conclusion as the Ninth Circuit. At this point, I believe that any hope of raising this issue is dependent upon a finding that by denying a provider the right to litigate the good cause requirement, the regulations deny the provider due process, a question not considered or decided by the Ninth Circuit.

Please contact us if we can be of any assistance in explaining court decisions that affect the workings of the Medicare-Medicaid Audit World or in helping to resolve an issue with any of the legion of CMS auditors.

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In § 935 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Congress added a new subsection (f)(3) to 42 U.S.C/ § 1395ddd. This subsection states:

Limitation on use of extrapolation
A medicare contractor may not use extrapolation to determine overpayment amounts to be recovered by recoupment, offset, or otherwise unless the Secretary determines that–
(A) there is a sustained or high level of payment error; or (B) documented educational intervention has failed to correct the payment error.
There shall be no administrative or judicial review under section 1395ff of this title, section 1395oo of this title, or otherwise, of determinations by the Secretary of sustained or high levels of payment errors under this paragraph.

The meaning of this section became the central issue in the case of Gentiva Healthcare Corp. v. Sebelius.

GENTIVA HEALTHCARE CORP. v. SEBELIUS

Gentiva Healthcare provides home health services to Medicare beneficiaries. In 2007, Gentiva’s MAC, Cahaba Safeguard Administrators, LLC, determined that there was “[a] sustained or high level of payment error” in claims filed by Gentiva. Cahaba conducted a post payment review of 30 of 1,951 claims submitted by Gentiva, found that 26 of the 30 claims were overpaid, and after extrapolating this result to the entire universe of claims, demanded that Gentiva repay Medicare $4,242,452.10. Gentiva appealed and argued that the clear language of § 1395ddd(f)(3) required the Secretary and not the MAC to determine whether there was a sustained or high level of payment error in Gentiva’s claims. During the administrative appeal proceedings, Gentiva was successful in having Cahaba’s overpayment decision overturned in 20 of the 26 claims and its alleged overpayment was reduced to about $850,000, but it was unsuccessful in its claim that only the Secretary could authorize the use of extrapolation. Gentiva appealed that decision to the United States District Court in Washington, D.C.

The District Court, in an opinion issued on April 6, 2012, held that the Secretary could delegate her authority to determine if “[t]here is a sustained or high level of payment error to a MAC. The District Court held that because 42 U.S.C. §1395kk(a) permits the Secretary to delegate her duties to Medicare contractors, it was not clear that Congress intended in § 1395ddd(f)(3) to limit the extrapolation decision solely to the Secretary. The Court concluded that since the statute was ambiguous and the Secretary’s interpretation reasonable, the Supreme Court’s decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. required the Court to uphold the Secretary’s decision. Gentiva’s June 6, 2012 appeal of the District Court’s decision (No. 12-5179) is pending.

The Flaw in the District Court’s Decision

The District Court’s conclusion that a MAC has the authority to decide when “[t]here is a sustained or high level of payment error” is premised upon its finding that the apparently straightforward language used by Congress in § 1395ddd(f)(3), i.e., “[u]nless the Secretary determines” is ambiguous. The Court did this by pointing to the apparent conflict between the language in § 1395ddd(f)(3) and the delegation language in § 1395kk(a). What the Court ignored, however, was the regulatory landscape at the time § 1395ddd(f)(3) was enacted, a landscape in which Medicare contractors had the authority to determine on their own if there was a sustained or high level of payment error and to conduct statistical sampling. It seems to me that in light of the procedures in place in 2003, a more reasonable interpretation of § 1395ddd(f)(3) is that Congress intended to limit the discretion then being exercised by the MACs by requiring the Secretary to determine whether statistical sampling was justified and that there is no conflict between the language in § 1395ddd(f)(3) and § 1395kk(a). I believe that the District Court’s failure to address this issue makes the validity of its conclusion suspect, an omission that will hopefully be corrected by the Court of Appeals.

Please contact us if you would like further information about statistical sampling and extrapolation or for assistance in helping to resolve other issues with any of the legion of CMS auditors that inhabit the Medicare-Medicaid Audit World.

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