JBC debates extrapolation audits to recover Medicaid payments, asks for guardrails

Staff presented a JBC draft (Lehi 26-0978) to allow the Department of Health Care Policy and Financing to use statistical extrapolation in audits beyond claim-by-claim reviews. Staff explained extrapolation uses a statistically significant sample and extrapolates to a larger universe, which can yield larger recoveries than claim-by-claim audits because it covers more claims cost-effectively.

Several committee members raised concerns rooted in previous experience with recovery-audit contractors (RAC): those audits and prior extrapolation approaches had produced litigation and problematic incentives. One member summarized the OIG recommendations and the estimated federal-share refunds cited in audit findings and said: "Auditing and doing an extrapolation audit of the providers isn't going to fix that" and urged fuller compliance and guidance by the Department. Committee members pressed staff to narrow the authority to specific programs (PBT and NEMT) and to add statutory guardrails such as prohibiting contingency-fee contracts, requiring a fixed-price contract, directing State Auditor oversight, and ensuring contractors present trend themes to the Department for immediate corrective action.

Staff said the bill's FY2627 projection included $6,900,000 in additional General Fund savings attributable to extrapolation recoveries; they also noted a typo in the tables and agreed to provide corrected tables. The committee did not dispose of the bill but asked staff to return with a revised draft that incorporates requested guardrails and clarifications; the committee kept the $6.9 million in its balancing assumptions while staff redrafts the bill.