Arnstein & Lehr Partner Charles MacKelvie Overturns ZPIC Extrapolation Resulting in $5.36 Million Victory
Arnstein & Lehr Chicago partner Charles F. MacKelvie recently received a favorable Reconsideration Decision from a Medicare Administrative Contractor (MAC) for a large home health agency ("Provider"), reversing a post audit extrapolation of disallowed claims; the extrapolation extended the post payment audit to its entire universe based upon a "statistically random sample" of 1.4% of the universe of claims. Initially, the Medicare subcontractor, which is a Zone Program Integrity Contractor (ZPIC), disallowed 30 Medicare claims post payment, a denial rate of more than 90%, and extrapolated those results to the Provider's entire universe of paid claims, resulting in a $5.36 million overpayment. In the first phase of a Claims Appeal, the Redetermination Phase, the MAC, accepting the Provider's challenge to the contractor's statistical methodology, overturned the ZPIC's finding, deeming the extrapolation's sampling methodology "statistically defective," substantially below the required statistical confidence level of 90%, and not in accordance with the Medicare Program Integrity Manual. Since the Medicare contractor did not begin to recoup the overpayment because the Reconsideration Appeal was filed timely, the Provider was spared the agony and expense of a prolonged Medicare claims appeal.