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Audits: Extrapolation as Valid Methodology

Question:

Jennifer,
I received a record request for approximately 15 medical records.  A few months later I got a letter saying that I owe a lot of money back because the findings in those 15 charts are indicative of how I treat my whole practice.  How is this allowed?
Dr. B

Answer:

This question ties in nicely with Tuesday’s email discussing Prompt Pay Discounts, because Prompt Pay Discounts are a method utilized by third party payors to pay doctors less and Extrapolation is a method utilized by third party payors to recoup monies already paid. The answer is that Extrapolation is an accepted practice:

Extrapolation to a conclusion concerning a larger universe from a validly constructed  sample has long been an accepted statistical technique.  The sample size utilized should be sufficiently large so that there is a reasonable probability that is a representative of the entire universe.  In addition, the sample should be selected in a random fashion, to avoid the possibility of skewing the results toward a desired conclusion.

The process is usually as follows: (1) third party payor will request a sampling of records; (2) the records will be reviewed to determine the number of instances of improper billing per code in the sampling of records; (3) the percentage of instances of improper billing per code will be multiplied by the entire universe of patients, resulting in an amount the third party payor determines was overpaid.  Thereafter, the overpayment amount will demanded by way of refund demand.
 
Please be aware that just because you receive a refund demand does not necessarily mean you owe money to the third party payor.  When a doctor contacts us for assistance at this stage in the process, our next step is to mitigate damages, which we do by: (1) disputing extrapolation as an effective process, possibly because the sample utilized was not “sufficiently large” or wasn’t “selected in a random fashion”; (2) presenting additional documentation; and (3) retaining an independent coding expert to review the third party payors findings.

Tip:  the best way to effectively manage an audit is to contact us before you send any records for review so that we may control the flow of information.  And, the best way to prevent an audit is to adopt our Compliance Plan to ensure your practice is complying with all billing and coding procedures and requirements.

For additional information on this topic, contact Jennifer Kirschenbaum at (516)-747-6700 ext. 302 or at Jennifer@Kirschenbaumesq.com.

 

Copyright © 2011 by Kirschenbaum & Kirschenbaum, P.C.
All Rights Reserved. This email is provided for news and information purposes only and does not constitute legal advice or an invitation to an attorney-client relationship. While every effort has been made to ensure the accuracy of the information contained herein, Kirschenbaum & Kirschenbaum PC does not guarantee such accuracy and cannot be held liable for any errors in, any reliance upon this, or losses caused by the information. Under New York’s Code of Professional Responsibility, this material may constitute attorney advertising. Prior results do not guarantee a similar outcome.


    





 


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