On March 5, 2024, a South Carolina District Court judge ordered CMS to produce the complete universe of claims, which included zero-paid claims data, in a provider’s due process challenge to an extrapolated overpayment.  In Goose Creek Physical Med., LLC v. Becerra, No. 22-cv-03932, 2024 WL 942918 (D.S.C. March 5, 2024), the provider sought judicial review of a final agency’s decision in a Medicare appeal. The provider argued that the administrative record was incomplete because CMS failed to provide certain information that it relied upon, directly or indirectly, related to the extrapolation despite multiple requests for it by the provider. Specifically, the provider argued that CMS failed to include the provider’s FOIA request for specific information related to the statistical methodology. CMS argued that the provider was attempting to seek an improper supplementation of the record. 

The Court distinguished between completing the administrative record versus supplementing the administrative record. Completing the administrative record means including existing evidence initially omitted from the administrative record to make it whole. Supplementing the administrative record means seeking to include new evidence to the administrative records which requires a heightened burden by the movant.

In addition, the judge outlined the burden a provider must meet to overcome the presumption that CMS properly designated the administrative record. In other words, a provider must identify materials allegedly omitted from the record with sufficient specificity. The Court also specified the difference between zero-paid claims (fully adjudicated claims that have been assigned zero payment) versus unpaid claims (claims submitted for payment but not yet processed or adjudicated). 

In this case, the provider specifically identified the missing FOIA request, the complete universe file, and the recalculation documentation. The Court ordered CMS (through its contractors) to produce the missing extrapolation documents/data to complete the administrative record.

What are the implications of this case?

As a matter of due process, CMS (through its contractors) are required by regulation and law to produce sufficient documentation to the provider should the methodology be challenged. The methodology must be reasonable and valid to use for extrapolation. Despite these requirements, CMS routinely fails to produce the ‘sufficient’ documentation which is a reasonable basis to invalidate an extrapolated overpayment or recalculation of a refund from an extrapolated overpayment. By acknowledging that the actual target universe includes zero-paid claims that must be produced to a provider in the administrative record of any appeal, the Court acknowledged that providers have a due process right to this information. This acknowledgement is significant to Medicare overpayment appeals because zero-paid claims are routinely excluded and dramatically increase the extrapolated overpayment by CMS. This ruling also acknowledges that CMS cannot unilaterally determine what constitutes the administrative record.

As a result of this ruling, providers will have a better opportunity to challenge the statistical validity of an extrapolated overpayment or extrapolated refund where a CMS contractor failed to produce the complete universe of claims. We can expect to see more challenges to an agency’s extrapolated overpayment and more federal litigation on this issue moving forward.