Medicare Audits: Who Bears the Burden in Your State?

Original story posted on: August 7, 2019

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Where the burden lies could make a difference when it comes to the RACs.

In a legal lawsuit, one party is initially presumed to be correct and gets the benefit of the doubt, while the other side bears the burden of proof. When a party bearing the burden of proof meets its burden, it switches to the other side.

Does it matter which state you live, reside, or do business in when it comes to extrapolated overpayments by Recovery Audit Contractors (RACs)? The answer is yes.

Why do I think this is an important topic? Two cases, one in Kentucky and one in Mississippi, were initiated recently, and each applied the burden exactly opposite from the other. If you reside in Kentucky and you are hit with an extrapolated Medicare or Medicaid overpayment, the burden is on Kentucky’s single state agency (or the contracted company hired to perform audits) to show that the extrapolation is valid. However, in Mississippi, the burden is on the healthcare provider.

Where does the burden lie in your state? It’s important to know because the outcome of these cases shifts to whoever bears the burden. In Kentucky, where the burden rested on the state, the provider won. But in Mississippi, where the burden laid on the provider, the provider lost.

The Kentucky case, from November 2018, found that the state acted arbitrarily and outside the scope of its authority by using uncodified methods of extrapolation when addressing alleged overpayments, applied the incorrect rule of law when determining the proper role of SCR §3.130(3.4), and rendered a decision in a final order that was not supported by substantial evidence in the record. The provider successfully got the court to throw out the extrapolation.

The court held that extrapolation methods, approved by statute for use to identify unacceptable medical billing practices and to refer appropriate cases to the Medicaid Fraud and Abuse Control Unit or the United States Attorney’s Office, were not appropriate for use in audits conducted by third-party contractors hired by the state to determine exact amounts deemed to be overpaid to medical providers.

Then we have Genesis Hospice Care, LLC v. Miss. Division of Medicaid, decided April 18, 2019.

The Medicaid provider appealed an alleged overpayment of $1,941,285 for hospice care allegedly provided to terminally ill patients that were not medically necessary.

The court held that the state agency could use statistical sampling as part of an audit to determine how much the Division overpaid the Medicaid provider for unsubstantiated hospice claims; the 75-claim audit still required countless man-hours to copy records, conduct an initial review, hire a consultant for a second review, send the records to the peer-review panel for a third review, and then make a demand for repayment and allow for an administrative appeal – and in the hearing officer's view, to individually audit all 808 claims would have been impossible.

The difference between Kentucky and Mississippi – the burden. When the burden lay on the provider, the state won. When the burden lay on the state, the provider won.

Programming Note:

Listen to Knicole Emanuel every Monday on Monitor Monday, 10-10:30 a.m. EST.

Knicole C. Emanuel Esq.

For more than 20 years, Knicole has maintained a health care litigation practice, concentrating on Medicare and Medicaid litigation, health care regulatory compliance, administrative law and regulatory law. Knicole has tried over 2,000 administrative cases in over 30 states and has appeared before multiple states’ medical boards.  She has successfully obtained federal injunctions in numerous states, which allowed health care providers to remain in business despite the state or federal laws allegations of health care fraud, abhorrent billings, and data mining.  Across the country, Knicole frequently lectures on health care law, the impact of the Affordable Care Act and regulatory compliance for providers, including physicians, home health and hospice, dentists, chiropractors, hospitals and durable medical equipment providers. Knicole is partner at Practus, LLP and a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

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