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Providers, and now HMO's, are required to design and implement Compliance Programs to detect and prevent Medicare/Medicaid Fraud and Abuse. CMS and the United States Attorney General exert significant pressure, including the combined threats of extremely large fines, loss of Medicare/Medicaid provider status, and criminal prosecutions.

Conducting a statistically valid sample of Medicare/Medicaid billings is generally an integral part of these compliance programs. Ross Health Actuarial has significant experience in designing statistical sampling procedures for the detection and quantification of billing issues. We use our knowledge of health care claims and variability to develop efficient sampling procedures. In addition, we work with you to identify your objectives in conducting the sampling, and then develop a study design to efficiently meet your specific needs.

Compliance Officers/Internal Counsel. Whether your sampling study is a self-motivated portion of your Compliance Program, or is the result of a consent decree or settlement with CMS, we can help you develop an efficient sampling program.

Outside Counsel/Response to Investigations. In the unfortunate but possibly inevitable event that your organization is targeted for investigation, we can work with your outside counsel to develop targeted sampling studies. This may take the form of preparing an independent study, or reviewing and/or challenging estimates of overpayments prepared by CMS.

We Provide the Statistical Services. We provide the more arcane statistical services in developing your statistical sampling study, without packaging the more readily available claim review services. Thus, you retain greater control over the selection of the Record Review Team and the process of reviewing the sampled billing records. The Record Review Team can consist of your internal audit staff, an external team of billing reviewers, or a combination of internal and external staff. If you need assistance, we can help you identify an outside vendor to perform the review of the selected items.


Our approach to statistical sampling studies is to work with the client and the clients internal and/or external counsel to identify the objectives for the sampling study, and then to use our knowledge of health care claim costs and distributions to design a study that will efficiently and effectively meet your needs. We then work with your team to identify records to be sampled, and then quantify or extrapolate the results of that study.

Our approach is summarized in more detail:

Determine Study Objectives. We will meet with the client Compliance Officer or counsel to determine study objectives. These objectives will be discussed in light of the degree of precision required under the circumstances, any budgetary considerations that would affect sample size, and the timing of the study. In addition, the need to identify targeted sub-sets of information (e.g. providing an estimate for a particular billing unit of the provider organization) will affect the sample design and sample size. The study objectives will generally be stated in terms of developing an estimate with a predetermined dollar or percentage precision level, within a confidence interval of 90% or 95%.

Develop a Statistical Sampling Design to Meet the Study Objectives. We then work with client staff to identify available billing data to determine the size of the universe of billings under consideration, and then request available data from the billing system. Following discussions with internal audit or counsel regarding the likely range of occurrence rates for the issues under consideration (e.g. billing errors), and in consideration of the sampling costs, we develop a stratified sampling design to meet the study objectives. Due to our experience with health care claims costs, Ross Health Actuarial can generally develop a study design that will achieve greater precision, or require a smaller sample size, or both, compared to other sampling approaches.

Identify a Random Sample of Records for Review. We then use a random number generator to randomly identify records to be selected for sampling and review. These records are carefully allocated among pre-determined groupings, or strata, which provide the precision and efficiency of the sampling design. The listing of randomly identified records is then passed on to the client and the Record Review Team (internal or external) for record review and quantification of key variables for the study.

Quantify and Extrapolate the Results from the Sample. The client then relays the findings of the Record Review Team, which will include one or more financial variables for each record reviewed. The values from the sampled items are then quantified and extrapolated to the total population of claims, in a manner consistent with the sample design. In addition to developing a point estimate, a range of results reflecting the statistical confidence interval will also be calculated.

Communicate Our Findings. We will communicate our findings several ways. First, we will communicate our findings to client management in a clear and practical manner, to assist the client in understanding the implications of our analysis. Second, we will provide a full report detailing the statistical sampling design, the quantification methodology and the results. This report will provide the technical detail to support the findings Third, we are available to discuss our methodology and findings with external parties (as directed by client/counsel.) Finally, we are available to provide expert testimony with respect to our report.

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