“The worst form of inequality is to try to make unequal things equal.” -Aristotle
There are two major forms of statistics: descriptive statistics, which describe the current state of an event, condition, or data set, and inferential statistics, which use data in order to predict or infer some future state of an event, condition, or data set.
Descriptive statistics might, for example, give us the average charge for a procedure or the percentage of claims that are suspected to have been coded in error. In contrast, inferential statistics might predict the range of charges for a population or extrapolate the claims error in a sample to a universe of claims.
In many audits, the auditor uses descriptive statistics to summarize the data. Perhaps it is the actual error rate measured as the dollars in overpayment divided by the total dollars in the sample being audited. Or maybe it simply totals the overpayment amounts by claim and assesses that as the overpayment demand.