Statistical Audits

Statistical audits of claims and invoices are performed when the number of such is large and the dollar amounts of each are relatively small. A random sample of claims is drawn, a thorough audit is performed on the sample and the results are extrapolated to the population of claims or invoices. Standards for conducting a statistical audit have been developed by statisticians and accountants and are described in several textbooks and journal articles.

Mt. Carmel Medical Center v Kansas SRS

• Spectrum critiqued an audit conducted by Kansas on a random sample of Medicaid claims submitted by the Center. Among the problems we found were 1) using an attribute sample design instead of a variables estimation sampling design, 2) failing to compute confidence limits so that the estimated number of invalid invoices could be tested for statistical significance, 3) using too small of a sample size to achieve the required degree of precision, 4) failing to test for and failing to correct for a skewed distribution of invoices, 5) failing to check the sample of invoices for both over and under charges.

Oak Hill Hospital v Kansas SRS

• Spectrum found similar problems with an audit that had been conducted for claims submitted by Oak Hill Hospital.