Tag Archives: MPIM

Appeal on Statistical Sampling for Medicare Audits – “Measuring the Variables of Interest” and “Proper Procedures”

It has been our experience at Barraclough that contractors almost always skip the step of taking a probe sample when calculating the required sample size.   Even though they do this, they frequently rely on RAT-STATS to make the sample size calculations. The inputs into RAT-STATS requires the variation in the variable being estimated, that is, RAT-STATS requires as one of its crucial inputs the variation (e.g., the mean and standard deviation) of the overpayments (which is the variable being estimated). Since the contractors skip taking a probe sample, they plug the wrong data into the RAT-STATS program, and then make their calculation of sample size by using the variation of the payments instead of the underpayments.   This almost always results in RAT-STATS claiming that a smaller sample size is adequate. In the MPIM, Chapter 3, Section 3.10.2, we see a sketch of what a “properly executed” sample design is.   In includes:

(1) defining the universe, (2) [defining] the frame, (3) [specifying] the sampling units, (4) using proper randomization, (5) accurately measuring the variables of interest, and (5) using the correct formulas for estimation

It can be argued that taking a probe sample so as to be able to plug the correct (and required) data into the RAT-STATS program falls under the fifth category “accurately measuring the variables of interest”. It follows that if the probe sample is not taken, then according to the MPIM, proper procedures have not been used. Note:  RAT-STATS is a free statistical software package that providers can download to assist in a claims review. The package, created by OIG in the late 1970s, is also the primary statistical tool for OIG‘s Office of Audit Services.


Barraclough has been working in the area of statistical sampling for more than ten years.   Over time, it has seen a deterioration in the standards for statistical sampling.   In essence, the current rules indicate that the contractor is not required to follow any specific statistical methodology or even follow many of the guidelines in the Medicare Program Integrity Manual  (MPIM).   In the MPIM, Chapter 3, Section it states that:

“Failure by the [contractor]  to follow one or more of the requirements contained herein does not necessarily affect the validity of the statistical sampling that was conducted or the projection of the overpayment.

An appeal challenging the validity of the sampling methodology must be predicated on the actual statistical validity of the sample as drawn and conducted.

Failure by the [contractor] to follow one or more requirements . . .  should not be construed as
necessarily affecting the validity of the statistical
sampling and/or the projection of the overpayment.”

The language quoted from the MPIM seems to indicate that no appeal may be based on the sampling methodology.

No matter how the contractor arrives at their sample, it does not seem to be reviewable.

Note:  This was quoted In the Case of Maxxim Care, EMS (February 25, 2010)