Monthly Newsletter

About Overpayment Extrapolations

Reduce Liability by Appealing the Extrapolation

CMS states that all extrapolated appeals are reviewed by a statistician to assure the methodology was implemented properly and the calculations are correct.

A provider/supplier who doesn't agree with the extrapolation may submit a Redetermination request. A Redetermination is the first level of an appeal. It is a request for independent re-examination of a claim when there is a dissatisfaction with the original determination.  The CMS contractor will typically follow these guidelines:

• All such claims must be included in a single request.
• It is not acceptable to submit a separate request for each claim as the full sample is required to extrapolate the final amount. Each claim is reviewed and a determination is made.
• The outcome for all appealed sample claims may positively or negatively impact the provider's/supplier's dollars.

If a statistical estimate of an overpayment (an extrapolated overpayment) is overturned during the administrative appeals process, then the provider is liable for the overpayment identified in the sample but not the extrapolated amount.

Given the large difference between overpayment amounts in the sample and extrapolated amounts, it is critical that the process for reviewing extrapolations during an appeal is fair and reasonably consistent. In the first and second levels of the appeals process, such extrapolated overpayments are reviewed by Medicare administrative contractors (MACs) and qualified independent contractors (QICs), respectively.

Here are some guidelines for appealing an extrapolation with the Centers for Medicare & Medicaid Services (CMS):

• File a redetermination request
  • A provider or supplier can file a redetermination request within 120 days of receiving the initial determination. The request must include all denied or partially denied claims in the sample.
• Follow the instructions
  • File the request in writing using the Medicare Redetermination Request (CMS-20027) or a written document that includes the required appeal elements. The request can be sent to the address on the electronic remittance advice (ERA) or standard paper remittance (SPR) advice, or electronically through the MAC's website.
• Assert your disagreement
  • At each level of the appeal, you must state why you disagree with the extrapolation or statistical sampling.
• Expect a review by a statistician
  • A statistician will review all extrapolated appeals to ensure the methodology was implemented correctly and the calculations are accurate.
• Understand the outcome
  • The outcome of the appeal can positively or negatively impact the provider's or supplier's dollars.

Another Reason to Appeal

Your practice should have expertise in the appropriate coding, documentation and billing for your specialty.  There are times when the Medicare contractor didn’t get it “right”.  If you can prove through the appeals process that most of the overpayment determination were made in error, it is possible to argue that no extrapolation should be applied.  You then are responsible to repay the remaining claims, without extrapolation.

The list of extrapolation terms and definitions below demonstrates the need to understand sampling and extrapolation methods.

Extrapolation Terms and Definitions

OIG Finds Medicare Contractors Were Not Consistent in How They Reviewed Extrapolated Overpayments in the Provider Appeals Process

The Office of Inspector General (OIG) objective was to determine whether the Centers for Medicare & Medicaid Services (CMS) ensured that MACs and QICs reviewed appealed extrapolated overpayments consistently and in a manner that conforms with existing CMS requirements. The OIG surveyed contractors, interviewed statistical groups of three contractors and audited three separate nonstatistical samples of appeal cases.  The OIG found the following:

• Although Medicare administrative contractors (MACs) and qualified independent contractors (QICs) generally reviewed appealed extrapolated overpayments in a manner that conforms with existing CMS requirements, CMS did not always provide sufficient guidance and oversight to ensure that these reviews were performed in a consistent manner.
• The OIG found that the most significant inconsistency involved the use of a type of simulation testing that was performed only by a subset of contractors.
  • The test was associated with at least $42 million in extrapolated overpayments that were overturned in fiscal years 2017 and 2018.
• If CMS did not intend that the contractors use this procedure, these extrapolations should not have been overturned. Conversely, if CMS intended that contractors use this procedure, it is possible that other extrapolations should have been overturned but were not.
• 39 of the appeals cases the OIG reviewed that were listed in the Medicare Appeals System (MAS) as involving extrapolation, 19 cases did not actually involve statistical sampling. Improving the accuracy of the information in the MAS would potentially assist CMS with ensuring that extrapolated overpayments are reviewed by the MACs and QICs in a consistent manner. 

To read the full OIG report – click here.

Don’t Fail to Return an Overpayment to CMS

When an overpayment determination is made and your appeal attempts have failed, if the overpayment isn’t fully repaid within 30 days, interest will accrue. Your MAC initiates the overpayment recovery process by sending a demand letter requiring repayment.  When responding to an initial demand letter, you can:

• Make an immediate payment
• Request immediate recoupment
• Submit a rebuttal
• Appeal the overpayment by requesting a redetermination
• Request an ERS (extended repayment schedule)

Fail to respond to the demand letter?  The MAC then sends an intent to refer (ITR) letter for eligible delinquent debts 61–90 days after the initial demand letter. The ITR letter advises you to refund the overpayment or establish an extended repayment schedule (ERS). If you don’t, the MAC refers the debt for collection.

CMS refers the overpayment debt to the Treasury or to a Treasury-designated debt collection center. Both work with the Treasury Offset Program to collect the overpayment. The Treasury may collect the debt using the following methods:

• Demand letters
• Phone calls
• Skip tracing
• Administrative offset referrals
• Private collection agency referrals, which may collect the debt with skip tracing, credit report search, demand letters, and phone calls
• Federal salary offset administrative wage garnishment
• Referral to the U.S. Department of Justice for litigation

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) prohibits recouping overpayments until a decision is made on a provider's appeal.

Going through the entire Medicare Appeals Process can take a prolonged period of time.  During that time the Treasury Department is likely to contact your organization.  Make sure to use the 2003 MMA citation and that your claims are still in the Medicare appeals process. Provide detailed information regarding which level and the amounts. If the Treasury continues to pursue, contact legal counsel for assistance with this matter.

Additional Resources Related to Overpayments & Appeals

Medicare Claims Processing Manual Chapter 29 - Appeals of Claims Decisions

Medicare Overpayments Fact Sheet MLN006379

Medicare Program Integrity Manual Chapter 8 – Administrative Actions and Sanctions and

Statistical Sampling for Overpayment Estimation

Training by the American Institute of Healthcare Compliance, a licensing/certification partner with CMS offers an outpatient clinical appeals specialist online training.  After successfully completing the program, there is an option to certify and earn the Certified Outpatient Clinical Appeals Specialist (COCAS^SM) credential.