Update to the Random Number Extrapolation Rule Saga

By Ken Bence posted 01-07-2022 15:33

Some of you may remember this tale of DHS acting to change the rules around random number extrapolation in recovering overpayments to providers. Believe it or not, it began over a year ago and I previously wrote posts to this blog here, here and here. While it may not be a terribly exciting topic, it matters when a provider finds themself on the receiving end of a monetary recovery action.

The subject here is Minnesota Rule 9505.2220 on Monetary Recovery of overpayment through Random Sample Extrapolation. The rule has existed since 1981 and empowers the Surveillance and Integrity Review Section (SIRS) of DHS to recover overpaid funds due to fraud, abuse or error.  In recent years, there have been some notable cases of DHS attempting recovery of substantial sums of money from providers, some of which were greatly reduced through litigation when DHS failed to follow the rule on random sample extrapolation. In late 2019, DHS began a process of rule modification to make substantial changes to this rule which we believed would serve to benefit the State over the providers in monetary recovery actions.

ARRM and member providers outlined specific objections to the proposed rule changes through public comment and written and verbal testimony, and in April of 2021, an administrative law judge disallowed the changes that were proposed by DHS. We did not hear anything after that, so we assumed the proposed rule changes had been dropped by DHS. However, we learned in November of 2021 that DHS had submitted revised rule changes to the Chief Administrative Law Judge which were not subject to public notification or comment, and they were approved in August. On Monday, January 3, 2022, the newly adopted rule was published in the State Register.

In reviewing the changes, we are pleased that most of the objections we raised were taken into account so that the final rule changes are generally acceptable. What doesn’t change, however, is that DHS has the authority to pursue recovery of funds it can demonstrate were overpaid due to fraud, abuse or error, even if the error was not the fault of the provider. And random number extrapolation is still an acceptable statistical method to use when the number of suspected claims or recipients is large. Contact me with any questions.

-Ken Bence, Director of Research, Analysis and Policy