Texas Medicaid Dental Claims Are Under Audit Scrutiny

Texas Medicaid Dental Claims Audit(April 23, 2012): Texas dentists, orthodontists and oral surgeons are under considerable scrutiny by the government, and most practices don’t even realize it. This article examines several one of the current tools being used by the government to calculate the alleged amount of "damages" (improper claims) paid to dental providers by the State under Medicaid.

I. Texas is Auditing Medicaid Dental Claims:

Many dental and orthodontic practice who treat children covered by Medicaid have found themselves part of an ongoing, Texas Medicaid dental audit. Essentially, the Texas Medicaid dental audit project is targeting providers who have been providing orthodontic services to the state’s most needy citizens, children covered by Medicaid. Dental professionals currently facing Texas Medicaid dental claims audit have been hit hard by HHCS-OIG. In addition to denying orthodontic claims that had been pre-approved by a third-party contractor working for the State, many practices are now learning that the State has "extrapolated" the amount of alleged damages involved. While extrapolated damages are quite common in Medicare cases, it is fairly unusual to see its widespread use in Texas Medicaid dental cases.

II. What Does it Mean to "Extrapolate" Damages?

"Extrapolation" is the process of using statistical sampling in a review to calculate and project the amount of alleged overpayments made in connection with claims for care and treatment submitted by a health care provider to a payor for reimbursement. Basically, a Federal or State agency (or in some cases, its contractor) will start by requesting the supporting documentation associated with a specific sample of claims. It is not until much later that a health care provider learns that the "sample" of claims requested was allegedly a statistically relevant sample" of the health care provider’s claims (the claims at issue can be Medicare claims, Medicaid claims, or even claims paid by a private payor). After examining the sample of claims requested, the government agency (or its contractor) then calculates and applies the "error rate" found to the entire universe of claims covering a given period of time. This long-standing practice thereby allows them to grossly inflate the monetary demands on their audit targets while avoiding the need to actually review each individual claim in the universe for which they are seeking recoupment or offset.

III. How Did this Practice Get Started?

Although the practice of using a statistically relevant sample to estimate the number of times something may be present in the universe of items has been around since the advent of higher mathematics, the application of this methodology to estimate the number of improper claims paid over a specific period of time is relatively new. The application of statistical sampling to health care claims for this purpose dates back about twenty years to a decision by the U.S. Secretary of Health and Human Services (HHS) to authorize the use of statistical sampling in lieu of engaging in onerous claim-by-claim reviews. In Chaves County Home Health Services v. Sullivan, 931 F.2d 914 (D.C. Cir. 1991), the Federal District Court upheld extrapolation as being within the Secretary’s discretion. The use of statistical sampling has spread over the years. Federal agencies (such as HHS-OIG, CMS-contracted auditors, etc.), State agencies (such as HHSC-OIG) and even private insurance payors now capitalize on the use of this damages-estimating tool, usually to the detriment of the targeted health care provider. To be clear, everyone recognizes that an "extrapolation" is merely a substitute for conducting a claim-by-claim review of every claim submitted by thee provider and paid by a payor during the period in question. Nevertheless, the methodology is here to stay, regardless of the adverse impact it can have on a provider’s ability to remain in business.

IV. How Can a Dental Practice or Orthodontist Practice Respond?

Unfortunately, the practice of seeking extrapolated damages can be a surefire way of destroying a dental provider’s practice. We’ve seen the use of statistical sampling, especially of Texas Medicaid dental claims, grow considerably in recent years. In fact, the Federal and State government’s passion for statistical sampling only seems to be growing. This makes it essential for dentists, orthodontists and other dental professionals to involve experienced legal counsel as soon as possible after you have received notice of an audit. Over the last decade, Liles Parker attorneys have noted a marked increase in the prevalence of extrapolated damages in Medicare audits, Medicaid audits and in audits by private payor Special Investigative Units (SIUs). Rather than assume that the government’s (or their contractor’s) calculations are correct, we have carefully analyzed the statistical methodology utilized when the auditors have extrapolated damages. To be fair, sometimes their auditors have conducted the extrapolations properly. Nevertheless, in many cases, the government auditors failed to properly handle this complex mathematical process, thereby rendering their extrapolation void.

Over the years, Liles Parker has worked with a number of the best statisticians in the country, challenging the extrapolation of damages and having it invalidated at various levels of the administrative appeals process. If your dental practice’s Medicaid claims are audited, we strongly recommend that you engage experienced legal counsel to represent your interests during this challenging process.

V. Is There Anything I Can Do to Lessen the Likelihood of a Texas Medicaid Dental Claims Overpayment?

To be clear, there is no proverbial "silver bullet" that can be used by a dental practice that treats Medicaid patients to avoid the scrutiny of HHSC-OIG and / or other law enforcement agencies. Every dental and orthodontic practice in Texas (and in other States, for that matter) should expect to be audited at some point if you accept Medicaid or another Federal / State insurance plan. Rather than wait for such an eventuality, dentists and orthodontists should affirmatively review their operations, coding and billing practices to ensure that their practices fall squarely within the rules. An experienced law firm knowledgeable in dental compliance issues can assist you with these efforts.

Healthcare Lawyer

Liles Parker is a full-service health law firm focusing on regulatory compliance and provider representation. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental and orthodontic practices, as well as for other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid.

For more information on how we can assist you in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is Managing Partner at the Firm and can be reached at 1-800-475-1906. Call him today for a free consultation.