STATISTICAL ANALYSIS & RECOVERY AUDIT DEFENSE/PROSECUTION

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
• 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