EDITOR’S NOTE: The following is the second article in a five-piece series titled “Dirty Tricks,” covering abuse in audits and statistical extrapolation in the healthcare industry.

I’ve been helping providers fight against statistical extrapolations since 2001. It has not been a pleasant experience. In almost all cases, the auditor, a Zone Program Integrity Contractor (ZPIC), failed to meet the disclosure requirements of the Program Integrity Manual.  

Anyone who has been audited is familiar with statistical extrapolation. The auditor takes a sample of a few patients, or claims, usually 30 or so, and then reviews them to see if they are valid. If 75 percent of the claims in a sample are rejected, the auditor will ask that the provider return 75 percent of the money collected over a number of years. That’s the extrapolation. 

Providers have the right to examine the statistical work and verify that it was done fairly and accurately. But to do this, the provider needs two things: first, it needs to have a complete record of the statistical work, and second, it needs to employ a credible scientific expert who really understands statistics and who can see through the often amateurish and deceptive work of the contractor. 

This series examines the numerous dirty tricks contractors use to stop providers from exercising their rights. Last time we covered how the contractors issue demand letters containing almost no information at all about the statistical extrapolation. That’s the “don’t explain anything at all” trick. We also covered the “make it impossible to analyze the information provided” trick. So let’s continue.

Dirty Trick No. 3: Send faulty CDs. In this trick, the contractor claims to send a CD that has all of the statistical information, but it makes it unreadable. After much back and forth, the contractor will wait until the last minute, then you will receive it. When you put the CD in your machine, it will be unreadable. You’ll try several computers but get the same result. Then the only alternative is to go back to the contractor and request that they send the CD again. Another 10 days is lost. Then, if you are lucky, you will receive a second CD and be able to read it. Problem solved? No. 

When you copy the file to your computer, you will find that it is encrypted and compressed. So you have to wait to get a separate letter from the contractor with a password to open the file, causing more delays. But that is still not enough. You will also need to download special software to decrypt and decompress the file. And after all of that, in many cases the password still will not work. So you’ll need to start the process all over again. More time is lost. This may sound trivial, but in my experience, it happens more than half the time. Oh, and one more thing: if your statistician is using iOS or Linux, it still won’t work.

This dirty trick may sound innocuous, but it is not. It drains time from your efforts and introduces much unnecessary cost and wasted resources (among attorneys, statisticians, and staff) in defending the provider.

Dirty Trick No. 4: Leave out critical files.

After all of the information at last is decrypted from the contractor’s CD, you sometimes will find that critical files are missing. The contractor will have included a short file that is a list of the sampled claims. But that is not enough – far from it. 

The most commonly missing file is the “universe” file, a complete record of all of the claims that have been processed during the period under review. In my 15 years of working on these cases, not once have I seen a contractor hand over the universe file in the first round, even if it is requested. But that file is a vital piece of information, needed if any competent statistician is to analyze what was done by the contractor so as to verify the accuracy and validity of their work. Without the universe file, you will find it impossible to run a number of tests to see if the contractor has made mistakes, or worse. More on this will be coming up later.

Sometimes, the contractor will send the “frame” file, not the universe file. This is a type of “bait-and-switch” move. The frame file is an excerpt from the master universe file. And the frame file is the source from which the sample is drawn. Again, it is insufficient. Why? Because the step in which the frame is extracted from the universe is a critical step, and one that can introduce bias into the extrapolation. So don’t settle for the frame file. You need also the full universe file, and of course, the sample file. 

Finally, there should be a separate file or spreadsheet that details the extrapolation. That also is frequently missing. Again, you and your statistical expert need to see all of the contractor’s work, not only what they reluctantly hand over.

Dirty Trick No. 5: Hide or block important information. 

Even after you supposedly have received all of the required files (and this is rare), you often find that important information is obscured from view. In spreadsheets, we often find that important columns of data are “hidden” and not visible. For example, important information regarding the identification of the doctor involved may be hidden – or important details regarding the patient. But what is even more galling is when all of the calculations are hidden. Formulas will be missing! In other words, you will be given the results, but you will not be able to see how the results were obtained. The contractor is seriously expecting that you can verify their statistical work when they show none of the formulas used. Unbelievable – and another PIM violation.

This is more important that it may seem. Your statistician needs to verify exactly what formulas were used, and also needs to verify the validity and source of all information put into the formulas. And you would be surprised at how many times the contractor either uses the wrong formulas, or places the wrong information into the right formulas. Or sometimes the contractor places the wrong information in the wrong formulas. You get the picture. You simply must be able to inspect every aspect of what was done. Your business is at stake.

Finally, the spreadsheets you receive often violate the best evidence rule (See Part I of this series). You are being shown leftovers from the dinner table in this scenario. The spreadsheets you receive are not the real spreadsheets used, but instead made-up excerpts from the real stuff, carefully edited to make a good impression. Don’t be fooled.

These behaviors on the part of contractors fit the standard profile: delay, obscure, and reluctantly provide information that turns out to be incomplete. Don’t make the mistake of thinking these actions are not being undertaken on purpose. They are, and they work. The number of providers who simply give up their appeals is increasing. They get worn down by these tactics. 

There are many more dirty tricks. This is only the beginning. In Part III we will go into more detail about how sneaky the contractors can be. Not only do they hide data, but many times they simply manufacture data out of thin air. It is a sad story, but one that needs to be told.

See you next time.

About the Author

Edward M. Roche is the founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations.

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