D.C. lawmakers limit extrapolation

Sunday, August 31, 2003

WASHINGTON - While the HME industry braces for a Congressional decision on competitive bidding, the House and Senate have agreed to move forward with a measure that would prohibit the DMERCs from extrapolating overpayments from a small number of claims to a large number of claims.

The measure is part of a package of Medicare regulatory and contracting reform agreed to by the House and Senate conference committee that is trying to reconcile each chamber’s Medicare reform legislation.

Conference committee members have also agreed to prohibit recovery of overpayments during an appeal until after an evaluation by an independent party.

At the Administrative Law Judge (ALJ) level, some estimates hold that about 80% of all recoupment decisions are overturned. Today, the Medicare ALJ resides with the Social Security Administration. The new contracting reform would shunt the ALJ over to the Department of Health and Human Services.

While the conferees have included language that would ensure the independence of the ALJ within HHS and CMS, the defeat of a previous proposal to make this transition was hailed by the HME industry which would prefer the ALJ to remain where it is.

“The whole issue with moving them from SS to HHS is that they [ALJ] would lose their ability to basically be rationale,” said Cara Bachenheimer, a partner at Epstein Becker & Green in Washington. “They weren’t bound by Medicare policy, so if you have an [irrational] Medicare documentation rule and somebody clearly did what they said they did, the ALJs will rule in their favor.”

Bachenheimer fears that the language that would ensure independence could just be a matter of public relations.

For the HME industry, the use of extrapolation has been the bane of providers who’ve watched errors on a relative handful of claims turn into potential liabilities that skyrocketed into millions and even billions of dollars.

In Aug. 2001, the use of sampling and extrapolation from 300 claims led one U.S. attorney to assert that Apria could owe the government between $4.8 billion and $9 billion.

Larger company’s can fight such charges and often settle for much less, but for some smaller providers the use of extrapolation can be a fateful proposition.

“We have seen companies with extrapolated overpayments that are greater than the amount of business they did in a year,” said Steve Azia, counsel to the Power Mobility Coalition, which has testified before Congress twice on this issue in recent years. “It literally can put you out of business overnight.” HME