Medicaid (SoonerCare) Overpayment Determinations Voided

The Oklahoma Health Care Authority ("OHCA") is the state agency that is responsible for administering Oklahoma's Medicaid program, also known as SoonerCare.¹ As part of OHCA's mandate, the state agency is charged with reducing waste and deterring abuse.² Overpayments may be recouped, and healthcare providers have the right to an appeal. Recently, the Oklahoma legislature took an active role in preventing OHCA from using certain methods to determine overpayment amounts. One such method is extrapolation, which the legislature defines as "the methodology of estimating an unknown value by projecting, with a calculated precision, i.e., margin of error, the results of a probability sample to the universe from which the sample was drawn."³ In other words, extrapolation is a method of predicting patterns in a large set of a data but by reviewing only a small portion of the data that is intended to be provably representative.

Extrapolation is not a new concept for investigating fraud of government-paid programs. Federal law has similar provisions that allow for audits of Medicare payees to ensure program integrity. Extrapolation was first documented in 1986 in a ruling issued by the Health Care Financing Administration, the predecessor of the Centers for Medicare and Medicaid Services ("CMS").⁴ Later, when the federal government created the Medicare Integrity Program, extrapolation was authorized by Congress but limited its use to two situations: (1) where there are sustained or high levels of payment error or (2) documented interventions have failed to correct the errors.⁵ More than one court has upheld the limited use of extrapolation methodology for recouping Medicare payments.⁶

In 2025, the Oklahoma legislature enacted a new law that directly prohibits the use of certain auditing procedures by OHCA during a defined period. The new section targets the former practice of OHCA of extrapolation, the method that estimates results for determining overpayment amounts.⁷ This practice has the possibility of requiring providers to repay amounts in excess of the audited claims. The new law even nullifies any overpayment determinations based on the former audit process. The new section includes the following language:

The use by the Oklahoma Health Care Authority of any methodology as described in subsection A of this section prior to the effective date of this act, and which was performed pursuant to the provisions of Oklahoma Administrative Code 317:30-3-2.1 with respect to an audit period beginning on or after January 27, 2020, through November 1, 2025, shall be deemed as invalid and any demand for payment made to a provider on the basis of such methodology shall be null and void. The Oklahoma Health Care Authority shall not have authority to make any demand for repayment from a provider with respect to an audit the effect of which has been nullified pursuant to the provisions of this subsection or to impose a financial penalty upon such provider with respect to any such audit.⁸

The new law went into effect on May 29, 2025. The Oklahoma Health Care Authority has since canceled demands for payment and payment plans for providers that were making payments based on the previous methodology. Efforts to recoup payments previously made are underway.

Footnotes

1 63 O.S. § 5003.

2 See generally 56 O.S. § 1011.9.

3 56 O.S. § 1011.9A(A)(2).

4 Stephen Daniel Bittinger et al, Statistical Sampling and Extrapolation: Due Process Challenges in the False Claims Act Litigation and Medicare Appeals Arenas, 35 The Health Law. 2, 50 (Dec. 2022).

5 42 U.S.C. § 1395ddd(f)(3)(A)

6 See Palm Valley Health Care, Inc. v. Azar, 947 F.3d 321, 330 (5th Cir. 2020); Gentiva Healthcare Corp. v. Sebelius, 723 F.3d 292, 297 (D.C. Cir. 2013).

7 56 O.S. § 1011.9A(B).

8 56 O.S. § 1011.9A(C).

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