Title 2. Maryland Department of Health — Subtitle 7. Use of Extrapolation in Recovery of Health Claim Overpayments
Statutes in effect as of October 1, 2026.
Md. Code Ann., Health-Gen. § 2-701 (2026)
Title 2. Maryland Department of Health
Subtitle 7. Use of Extrapolation in Recovery of Health Claim Overpayments
§ 2–701LinkCopy Citation
(a)
In this subtitle the following words have the meanings indicated.
(b)
“Claim” has the meaning stated in § 2–501 of this title.
(c)
“Extrapolation” means the process of estimating an unknown value by projecting, with a calculated precision or margin of error, the results of the review of a sample to the universe from which the sample was drawn using a statistically valid sampling methodology.
(d)
“Federal government” means an agency of the United States government or a contractor retained by the agency of the United States government.
(e)
“Overpayment” means a payment that:
(1)
Is made by the Department to a provider for services or goods for which the provider submitted a claim to the Department;
(2)
Is found to be incorrect; and
(3)
Results in a payment greater than that to which the provider is entitled.
(f)
“Program” has the meaning stated in § 2–501 of this title.
(g)
“Provider” has the meaning stated in § 2–501 of this title.
(h)
“Statistically valid sampling methodology” means a methodology used for extrapolation that has a confidence level of 90% or greater and is validated by a statistician who possesses at least a master’s degree in statistics.
(i)
“Universe” means a defined population of claims submitted by a provider to the Department and paid to the provider by the Department during a specified time period.
Md. Code Ann., Health-Gen. § 2-702 (2026)
Title 2. Maryland Department of Health
Subtitle 7. Use of Extrapolation in Recovery of Health Claim Overpayments
§ 2–702LinkCopy Citation
(a)
Subject to the requirements of this subtitle, the Inspector General, or a contractor or an agent acting on behalf of the Inspector General, may use extrapolation during an audit to recover an overpayment from a provider if:
(1)
The federal government has also conducted an audit of the program for overpayment; and
(2)
The monetary recovery amount determined to be due by the program to the federal government is based on the federal government’s use of extrapolation.
(b)
An audit conducted by the Inspector General or a contractor or agent acting on behalf of the Inspector General under subsection (a) of this section shall be limited to the scope of the federal audit, including claims for the same audit time period and the same type of claims.
Md. Code Ann., Health-Gen. § 2-703 (2026)
Title 2. Maryland Department of Health
Subtitle 7. Use of Extrapolation in Recovery of Health Claim Overpayments
§ 2–703LinkCopy Citation
(a)
On a finding of an overpayment to a provider, the Inspector General may not use extrapolation unless there is a determination of a sustained or high level of payment error, as defined by regulation.
(b)
When using extrapolation to determine an overpayment, the sample to be used may not include claims:
(1)
In which the alleged overpayment would have no fiscal impact on the entire sample;
(2)
That were submitted in accordance with the Department’s, Inspector General’s, or program’s directives, policies, guidelines, or regulations; or
(3)
That are the result of an unintentional overlap in services among unrelated providers caused by circumstances beyond the control of the provider that is subject to the audit, in which case the Inspector General may recover the original overpayment.
Md. Code Ann., Health-Gen. § 2-704 (2026)
Title 2. Maryland Department of Health
Subtitle 7. Use of Extrapolation in Recovery of Health Claim Overpayments
§ 2–704LinkCopy Citation
(a)
The Inspector General or a contractor or an agent of the Inspector General that conducts an audit under this subtitle in which extrapolation may be used shall:
(1)
Perform the audit in accordance with a methodology used by the federal government or conducted in accordance with Generally Accepted Auditing Standards (GAAS) and the Statement on Accounting Standards (SAS);
(2)
Use a statistically valid sampling methodology; and
(3)
Meet the following qualifications:
(i)
Have at least 3 years of auditing experience;
(ii)
Have experience in the procedural coding program used for the claim;
(iii)
Be familiar, either independently or through training by the provider, with the format and content of paper and electronic medical records and claim forms used by the provider; and
(iv)
Have general knowledge of the particular health care item or service that is the subject of the audit and the program rules that govern the health care item or service at the time the item or service was provided.
(b)
(1)
If the medical necessity of the claim is the subject of the audit, the entity that conducts the audit shall include as part of the audit team an individual licensed in the same health occupation as the provider.
(2)
The individual included in the audit team under paragraph (1) of this subsection shall have significant knowledge of the audited procedure but is not required to be in the same specialty or practice area as the audited provider.
Md. Code Ann., Health-Gen. § 2-705 (2026)
Title 2. Maryland Department of Health
Subtitle 7. Use of Extrapolation in Recovery of Health Claim Overpayments
§ 2–705LinkCopy Citation
(a)
Not less than 15 calendar days before commencement of an audit by the Inspector General under this subtitle, the Inspector General shall give to the provider written notice of the audit, including:
(1)
The statistically valid sampling methodology to be used;
(2)
The name, contact information, and credentials of each individual conducting the audit, including the individual validating the methodology;
(3)
The audit location, including whether the audit will be conducted on–site at the location of the provider or through record submission; and
(4)
The manner in which the information requested must be submitted.
(b)
(1)
Except in cases where the Inspector General refers the audit findings and conclusions to the Office of the Attorney General Medicaid Fraud Control Unit or other applicable law enforcement agency, the Inspector General shall, on completion of the audit, conduct an exit conference with the provider that is the subject of the audit.
(2)
During the exit conference, the Inspector General shall:
(i)
Present the provider with the audit draft written findings and conclusions and the estimated amount of recovery due as a result of overpayment to the provider; and
(ii)
Give the provider the following information in writing:
(1)
A clear description of the universe from which the sample was drawn;
(2)
The sample size and the method used to select the sample;
(3)
The formulas and calculation procedures used to determine the amount to be recovered;
(4)
The list of claims that were reviewed;
(5)
A description of each claim, noting the errors that resulted in an overpayment; and
(6)
A specific list of the regulations, statutes, and transmittals on which the Inspector General relied in determining that the claim was improper.
(3)
(i)
A provider may challenge the draft findings and conclusions within 30 days after the exit conference unless, because of the size and scope of the audit, the provider:
(1)
Has negotiated a longer period with the Inspector General through a mutual good faith process; and
(2)
Has submitted additional information regarding the claims to the Inspector General.
(ii)
The additional information submitted under subparagraph (i) of this paragraph may include evidence showing that:
(1)
The claims used in the sample were either paid properly or paid in accordance with § 2–703 of this subtitle; or
(2)
The audit does not meet applicable requirements or reach valid findings and conclusions.
(4)
Failure to challenge the draft findings and conclusions contained in the preliminary report does not preclude a provider from appealing the final report and recovery letter under subsection (d) of this section.
(c)
(1)
The Inspector General shall review any additional documentation submitted by the provider under subsection (b) of this section or presented at any time during the audit.
(2)
After review of any additional documentation submitted by the provider, the Inspector General shall, when appropriate, recalculate the error rate used in extrapolation and issue its final report and recovery letter.
(3)
The final report and recovery letter shall state that the provider has 30 days after the date of the recovery letter to appeal the findings in the report in accordance with § 2–207 of this title, Title 10, Subtitle 2 of the State Government Article, and COMAR 10.01.03 and 28.02.01.
(d)
(1)
On appeal, the provider may present evidence of a second audit using the same sampling methodology but based on a different sample of claims identified and produced by the Inspector General.
(2)
On request of the provider, the Inspector General shall provide a new sample of claims to the provider within 30 days after receipt of the request.
(3)
The provider shall have 60 days after receipt of the new sample to conduct the audit and provide the results to the Inspector General, unless the provider has negotiated a longer period with the Inspector General.
(4)
The Inspector General may review the provider’s audit for compliance with the requirements of this subtitle.
(e)
The recovery shall be stayed until completion of the administrative appeal process.
(f)
This subtitle does not limit a provider from challenging the accuracy of the Inspector General’s audit, including:
(1)
The statistical and extrapolation methodology used in the audit;
(2)
The credentials of any individual who performed or reviewed the audit; or
(3)
Any other reasonable basis.
(g)
(1)
The Department may adopt the findings of the federal government, including the error rate, if the federal government conducts an audit that:
(i)
Concludes that a provider received an overpayment;
(ii)
Uses an error rate that is specific to a single provider;
(iii)
Derives the overpayment from a statistically valid sample; and
(iv)
Provides all supporting documentation of the audit.
(2)
If the Department adopts the findings of the federal government, the Department shall provide to the provider a copy of the federal government’s audit report and supporting documentation with the preliminary recovery letter stating the amount due to the State and the provider’s appeal rights.
(3)
(i)
Within 30 days after receipt of the preliminary recovery letter, the provider may challenge the draft findings and conclusions unless, due to the size and scope of the audit, the provider:
(1)
Has negotiated a longer period with the Inspector General through a mutual good faith process; and
(2)
Has submitted additional information to the Inspector General.
(ii)
The additional information submitted under subparagraph (i) of this paragraph may include evidence showing that:
(1)
The claims used in the sample were either paid properly or paid in accordance with § 2–703 of this subtitle; or
(2)
The audit did not meet applicable requirements or reach valid findings and conclusions.
(4)
Failure to challenge the draft findings and conclusions contained in the preliminary recovery letter does not preclude a provider from appealing the final report and recovery letter under subsection (d) of this section.
(h)
This subtitle does not apply to audits conducted in response to federal audits initiated before October 1, 2016.