A recent federal court decision should serve as an important reminder to providers that the Centers for Medicare and Medicaid Services (“CMS”) and its contractors have substantial authority to audit provider Medicare claims and to broadly apply extrapolation to calculate overpayments. In Palm Valley Health Care, Inc. v. Azar, No. 18-41067, 2020 BL 14097 (5th Cir., Jan. 15, 2020), the United States Court of Appeals for the Fifth Circuit re-affirmed CMS’ application of extrapolation of errors identified in a sample of claims to over 10,000 claims. The resulting demand for the provider, Palm Valley Health Care, Inc. (“Palm Valley”), to refund claims was $12 million rather than the amounts paid on the sample set. Providers need to be aware that when CMS audits their claims, CMS is not required to use the most precise statistical methodology for selecting claims for audit.
