A few weeks ago, Dr. Stoller sent me this (and I have just been too swamped to keep up):
“OXFORD: ALERT! Recoupment Requests Based on Extrapolation
Some members have received letters from Oxford requesting that they pay large alleged overpayments based on extrapolation. Members are urged to alert their office staff to be aware of the process. A letter from Oxford notifies the physician of an audit that will cover medical billing and coding for e&m claims. The letter may seek information from physicians who are no longer Oxford providers. It will include a list of patients whose records have been selected for review. The
letter may include instructions from CODeXACT, Powered by PARSES (PARSES), which sets forth instructions on how to provide the requested documents. After the physician provides documents Oxford may send a letter from a Provider Compl iance Analyst seeking a repayment for alleged overpayments based on the “random sample.” This letter indicates that the overpayment is based on a “statistical methodology” and extrapolates to assert an alleged overpayment amount.
MSNJ believes that Oxford’s use of extrapolation to derive an overpayment amount is in violation of state laws and regulations. We have forwarded examples of this business practice to the New Jersey Department of Banking & Insurance (DOBI’s). We want to ensure that all such overpayment requests have been discovered. Members are urged not to pay the alleged overpayment amount. Given that the PARSES analysis will be used to extrapolate an alleged overpayment amount physicians may want to consider objecting to the request rather than providing the requested documentation.
Please respond to this article by writing to firstname.lastname@example.org if you have received one of the notice letters or one of the overpayment request letters. Please indicate whether you have paid any such overpayment request.
We will keep members apprised of developments concerning DOBI’s investigation of this business practice.”
At about the same time, some of our clients in TN were being harassed by a “recovery contractor” in an effort to recover money supposedly overpaid by TN BCBS (read about the TN Medical Society’s response).
Now, a few weeks later, Dr. Stoller has updated me:
OXFORD: Cease & Desist Order Issued on Recoupment
The New Jersey Department of Banking & Insurance (DOBI) issued a
cease and desist order against Oxford Health Insurance, Inc. on June
23, 2009, asserting that it has violated New Jersey law by seeking
overpayments from physicians based on extrapolation. DOBI asserts that
the Health Claims Authorization, Processing & Payment Act (HCAPPA)
restricts the situations in which a carrier may seek reimbursement for
overpayments based upon extrapolation. In particular, DOBI was
concerned about the use of extrapolation based on fraud.
The papers filed by DOBI indicate that Oxford justified its recoupment
attempts based on fraud. However, the statute only allows extrapolation
where there is “clear evidence of fraud” and the payer has both
investigated in accordance with its fraud prevention plan and has
referred the claim to the Office of the Insurance Fraud Prosecutor
(OIFP). According to DOBI, Oxford did not make such a referral. In
fact, DOBI’s papers cite numerous circumstances that suggest that
Oxford did not consider the physicians’ conduct to be fraudulent,
including the fact that Oxford allowed the targeted practices to remain
in its network. Moreover, the papers indicate that Oxford’s referral to
the OIFP was only made after DOBI’s inquiry into Oxford’s recoupment
practice, suggesting back-tracking on the part of the company.
The cease and desist order requires that Oxford: discontinue its
recoupment activity based on extrapolation; reimburse physicians for
overpayment recovery that violated the HCAPPA, together with 12%
interest; and file a report with DOBI detailing its efforts in this
DOBI’s action may take away some of the anxiety physicians feel when
insurers intimate that they have acted fraudulently when, in fact, they
are billing services and collecting payments in good faith.
Susanne Madden predicted this very behavior a few months ago, but I don’t think she was going out on a limb there, either. It’s going to get worse before it gets better, I think. And – brief applause for the NJ and TN Medical Societies.