Challenging CMS sampling procedures

Until recently, few attorneys had litigated cases that challenged the sampling procedures used by the Centers for Medicare & Medicaid Services (CMS), says Lester Perling, a health care attorney with Broad & Cassel in Tampa, FL. "That has changed now," he says. "It has received a lot of attention inside the government, and a lot more attorneys have raised these issues in overpayment and False Claims cases where it is appropriate."

According to Perling, the courts repeatedly have ruled that sampling itself is not a due-process violation. "The issue is whether it is done correctly or incorrectly." He says the legal argument associated with sampling is very straightforward: If the sampling is not done in accordance with government policy or generally accepted statistical processes, it is a due-process violation.

However, even as overpayment assessments continue to surge, many providers have yet to learn how to respond effectively to CMS’ aggressive audit and post-payment reviews of provider claims.

Perling says this issue first will arise when the government audit is initiated and the government asks for a sample of a certain number of claims. "That, theoretically, is your first opportunity to intervene in the sampling process before you even get to an appeal," he says.

If the government does not do that job correctly, Perling says there are several opportunities to challenge what it has done. The first is informally negotiating with the carrier, intermediary, or Department of Justice regarding the sampling procedures when the overpayment is received. While Perling says he does this routinely, he adds that most carriers and CMS itself often do not want to hear these arguments.

The first formal opportunity to challenge the sample procedure is at the fair-hearing level if it deals with Part B claims, and the reconsideration level if it deals with Part A claims. However, Perling says his experience is that providers rarely win these arguments at this juncture. The hearing officers are employees or independent contractors of the carriers, he notes. They often say they do not have jurisdiction to hear the case, and if they do hear the case, he says, they typically will rely on what their own in-house statistician tells them.

"That is going to be even more of a waste of time than at the fair-hearing level, because the reconsideration process typically looks at it on a claim-by-claim basis as opposed to an aggregate basis," he explains.

According to Perling, the fair-hearing level can be a steppingstone to a challenge at the administrative law judge (ALJ) level. However, most providers choose to make a summary challenge at the fair-hearing level rather than a full challenge because the chances of success are not that great.

"Where the rubber hits the road in this process is at the ALJ level," Perling asserts. At that stage, providers must determine their strategy on how to proceed, including whether to use an outside expert. "As a practical matter, that is not always necessary," he argues. "We have actually won quite a few cases at the ALJ level submitting only a legal brief on the issue."

Perling says he did that by arguing that the sampling guideline appendix or the program integrity manual required that the fiscal intermediary or carrier did not take all the required steps or cannot document that those steps were taken.

In larger cases, it usually makes sense to hire an expert, says Perling. In those cases, it is more likely that the ALJ will call its own expert. However, he says it is his experience that if providers do no hire an expert, the other side will not call one either. "From a strategy perspective, that is something to think about," he says.

As part of the ALJ process, Perling requests all of the documents the carrier or intermediary should have related to these cases. In several recent cases, the carrier has responded that a critical document could not be provided. Afterward, the extrapolation was withdrawn, and the overpayment demand was reduced.

The ALJ often has had to issue a subpoena to bring that about, he adds. "That certainly advises that in these cases, you always request a subpoena for documentation when you don’t get it voluntarily from the carrier," he says.

The next level of appeal after the ALJ is the Medicare Appeals Counsel, which Perling says has been fairly sensitive to the sampling issue. "They will reverse ALJs if they get it wrong," he says. This process, however, take years to complete.