Statistical Analysis and Recovery Audit Defense/Prosecution (RAC) – One growing need faced by healthcare and insurance entities is defense or prosecution of RAC audits. ValueScopes’ healthcare experts are experienced in RAC audit defense and prosecution to ensure that a healthcare provider is not paid more or receiving less than necessary. Our healthcare experts provide a variety of statistical services tailored specifically for healthcare providers.
Types of RAC Audits involving Extrapolated Recovery Amounts and Provider Factors
Extrapolation used if:
- Sustained or high level of payment error
- Documented education efforts failed to correct the error
Error rates are applied to the entire universe of claims.
Determination of sustained or high-level payment error is not subject to administrative or judicial review.
Areas of concern include:
- Medical necessity
- One-day stays
- Inappropriate setting, e.g., Inpatient Rehabilitation
- Coding errors
- Extensional Debridement
- Complex DRGs, e.g., Septicemia, Respiratory Disorders, OR procedures
Basics of Statistical Sampling and Extrapolation
When may contractors use statistical sampling?
- Threshold Determination: “High Level of Payment Error”
- Error rate determinations by Medical Review (MR) unite, Program Safeguard Contractor (PSC), ZPIC
- Probe samples
- Data analysis
- Provider/supplier history
- Information from law enforcement investigations
- Allegations of wrongdoing by provider/supplier employees
- OIG audits or evaluations
- Statistical Sampling vs. Claim-by-Claim Analysis
- Number of claims in universe and claims’ dollar amounts
- Resources available
- Sampling’s cost effectiveness
- Requirements for Contractors
- Consult with statistical expert
- Requirement unless sampling methodology routinely and repeatedly used
- Use of other statistically valid audit sapling methodologies used by law enforcement permissible
- Follow procedure resulting in probability sample
- Probability sample and results are always “valid”; some may have higher precision level
- Select provider or supplier
- Select period for review, e.g., the time period – number of days, weeks, months, or years
- Define universe – All relevant claims (e.g., all claims coded a specific MS-DRG)
- Define sampling unit – May be individual claim or individual line claim or clusters of claims for a beneficiary
- Define sampling frame – Listing of all possible sampling units covering completely the target universe
- Consult with statistical expert
- Sample Selection and Sampling Designs
- Simple Random Sampling – Uses “random selection method to draw a fixed number of sampling units from the frame without duplication” (example: using deck of cards and dealing certain number of cards)
- Systematic Sampling – Involves numbering sampling units, starting with a random unit and selecting units at a fixed interval (e.g., every 10th unit starting with “8”: 8, 18,28,38, etc. until the universe is exceeded)
- Stratified Sampling – Classifying sampling units in non-overlapping groups such as where overpayment amounts in each strata are a similar as possible
- Cluster Sampling – Involves random sample of clusters; all the claims for a beneficiary would be a “cluster” and, as a result, the precision of estimated overpayment may be reduced
- Design combinations – Two or more of above methods
- Random Number Selection – PSC, ZPIC, RAC contractor documents and you may use reputable software such as RAT-ST S TS
- Sample Size – Important, but not only determinant of overpayment estimate’s precision
- Documentation of Sampling Methodology – PSCs, ZPICs and other contractors must maintain documentation of the methodology used