STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

INDIAN RIVER MEMORIAL )

HOSPITAL, INC., )

)

Petitioner, )

)

vs. ) Case Nos. 97-2469

) 97-2692

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case in Vero Beach, Florida, on August 11, 1998, before Patricia Hart Malono, a duly-designated administrative law judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: John D. Buchanan, Jr., Esquire

Henry, Buchanan, Hudson, Suber & Williams, P.A.

117 South Gadsden Street Tallahassee, Florida 32303

For Respondent: Thomas A. Falkinburg, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Building III Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

Whether, as set forth in the Respondent's letters dated April 28, 1997, and May 19, 1997, health care services provided by the Petitioner to specified Medicaid recipients, for which services the Petitioner was reimbursed under the Medicaid

Program, were not medically necessary and, therefore, resulted in overpayments to the Petitioner; and, if so, the amount which the Respondent is entitled to recoup from the Petitioner.

PRELIMINARY STATEMENT

In a letter dated April 28, 1997, the Agency for Health Care Administration ("Agency") notified Indian River Memorial Hospital ("Indian River Memorial") that it was requesting repayment of

$322,528.48 in alleged Medicaid overpayments for inpatient psychiatric health care services that Indian River Memorial provided to thirty-two Medicaid recipients. The Agency based its repayment request on the determinations by the Keystone Peer Review Organization ("KePRO") that, for the thirty-two patients, "either the inpatient admission or a portion of the length-of- stay was not medically necessary." Indian River Memorial timely filed a Petition for a Formal Hearing Pursuant to Section 120.57, F.S., and the Agency transmitted the petition to the Division of Administrative Hearings for assignment of an administrative law judge. The case was assigned DOAH Case No. 97-2469.

In a letter dated May 19, 1997, the Agency notified Indian River Memorial Hospital that it was requesting repayment of

$248,223.06 in alleged Medicaid overpayments for inpatient psychiatric health care services that Indian River Memorial provided to forty Medicaid recipients. The Agency based its repayment request on the determinations by KePRO that, for the forty patients, "either the inpatient admission or a portion of

the length-of-stay was not medically necessary." Indian River Memorial timely filed a Petition for a Formal Hearing Pursuant to Section 120.57, F.S., and the Agency transmitted the petition to the Division of Administrative Hearings for assignment of an administrative law judge. The case was assigned DOAH Case No.

97-2692.

In the Joint Response to the Initial Order filed by the parties on June 18, 1997, the parties requested that DOAH Case No. 97-2469 and DOAH Case No. 97-2692 be consolidated. The request was granted, and the cases were consolidated by order dated July 17, 1997. The cases were scheduled for final hearing in October 1997, but they were held in abeyance at the request of the parties, for good cause shown, until March 1998, at which time they were scheduled for final hearing on August 11 through 14, 1998.

On June 25, 1998, Indian River Memorial filed a Motion to Compel the Disclosure and the Opportunity to Depose Witnesses Who Have Given an Expert Opinion or in the Alternative, Exclude Such Evidence. Indian River Memorial requested that the Agency be required to disclose the names of the physicians employed by KePRO who reviewed its medical records and offered opinions regarding the medical necessity for the health care services Indian River Memorial provided to the specified Medicaid recipients. Indian River Memorial further requested that it be given the opportunity to depose these physicians or,

alternatively, that the denial letters prepared at the direction of these physicians be excluded from evidence. Indian River Memorial filed a memorandum of law in support of its motion, and the Agency filed a response in opposition to the motion. Oral argument was heard on the motion on July 8, 1998, with counsel for the parties attending by telephone. In an order dated

July 20, 1998, the motion was denied in its entirety for the reasons stated therein.

The final hearing was held on August 11, 1998. Indian River Memorial presented the testimony of Annette Barton-Riley, its Assistant Vice President for Quality Management; Petitioner's Exhibits 1 through 66 and 69 through 71 were offered and received into evidence.1 The Agency presented the testimony of Nedra Mansager, a Registered Nurse Consultant employed by the Agency; Respondent's Exhibits 1-A, 1-B, 2, 3A, and 3B, were offered and received into evidence. The Agency was given leave to file Respondent's Exhibit 4 as a late-filed exhibit. The exhibit was filed on August 14, 1998, and received into evidence; this exhibit was supplemented by stipulation of the parties on December 4, 1998.

The parties stipulated at the hearing that they would present the remainder of the testimonial evidence by deposition. As a result, the transcripts of the depositions of the following physicians were filed by the parties and accepted in lieu of live testimony: John Sullenberger, M.D., the Agency's Chief Medical

Advisor for the Medicaid Program; Bernard L. Frankel, M.D., Indian River Memorial's expert; Mercedes L. Borromeo, M.D., a psychiatrist who was the attending physician for some of the Medicaid patients whose inpatient care is at issue herein; Raymond N. Dean, M.D., a psychiatrist who was the attending physician for some of the Medicaid patients whose inpatient care is at issue herein; and Joseph J. Alteri, M.D., a psychiatrist who was the attending physician for some of the Medicaid patients whose inpatient care is at issue herein. The deposition transcripts were not assigned exhibit numbers.

At the final hearing, the parties stipulated with respect to DOAH Case No. 97-2469 that Medicaid reimbursements for services provided to six patients who were not included in the attachment to the April 28, 1997, letter were not at issue and that the issues regarding Medicaid reimbursements for services provided to patient S. L. and to patient M. S. had been resolved.2 Pursuant to the parties' stipulation, the amount in controversy in DOAH Case No. 97-2469 was revised downward to $312,862.74.

With respect to DOAH Case No. 97-2692, the parties stipulated that the Agency was not seeking recoupment of Medicaid reimbursements for services provided to patient J. W. and that the issues regarding Medicaid reimbursements for services provided to fifteen patients, J. A.; M. B.; A. B.; M. G.; P. H.; K. H.; D. K.; A. L.; R. M.; A. M.; E. M.; N. P.; M. P.; M. W.;

and W. G., had been resolved. Pursuant to the parties'

stipulation, the amount in controversy in DOAH Case No. 97-2692 was revised downward to $172,245.10.

Finally, the parties filed a Prehearing Stipulation in which they identified several issues of law on which there was disagreement. These issues were raised at the final hearing, and the parties were ordered to file post-hearing memoranda of law regarding the following four issues: the assignment of the burden of proof; the admissibility of KePRO's denial letters and the conclusiveness of these letters to establish lack of medical necessity; the amount of interest to which the Petitioner would be entitled under Section 409.913.24(a), Florida Statutes; and the applicability of the per diem rate of reimbursement which resulted from the decision in Tallahassee Memorial Regional Medical Center, Inc., et al. v. Cook, et al., 109 F.3d 693 (11th Cir. 1997). The parties reached an agreement as to Petitioner's entitlement to interest, and they addressed the remaining three issues in their post-hearing memoranda. These issues have, to the extent necessary, been addressed in the Conclusions of Law below.

The transcript of the final hearing was filed with the Division of Administrative Hearings on August 31, 1998. It was agreed at the final hearing that the parties would file proposed recommended orders within thirty days of the date on which the final deposition transcript was filed, which was December 11, 1998. The parties requested and were granted two extensions of

time within which to file their proposed recommended orders. On February 5, 1999, the parties filed their proposals, which have been duly considered in rendering this Recommended Order.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the final hearing and on the entire record of these proceedings, the following findings of fact are made:

1. The Respondent, the Agency for Health Care Administration, is the state agency responsible for administering Florida's Medicaid Program, which includes recovery of payments made for services which are retrospectively determined to be medically unnecessary. Section 409.913, Florida Statutes.

2. The Petitioner, Indian River Memorial Hospital, Inc., is an acute care facility that has contracted with the Agency to provide health care goods and services to Medicaid recipients. Indian River Memorial meets all statutory requirements for a Medicaid provider.

3. At the times material to these proceedings, the Keystone Peer Review Organization was under contract with the Agency to conduct retrospective reviews of the medical records and other information related to health care goods and services provided to Medicaid recipients and to determine whether the goods and services qualified for reimbursement under the Medicaid Program.

4. The amount of money the Agency seeks to recoup from Indian River Memorial is based on the results of KePRO's

   retrospective review of the medical necessity for acute inpatient care for Medicaid recipients admitted for psychiatric treatment to Indian River Memorial in 1992, 1993, and 1994.

5. The process used for retrospective reviews by KePRO consisted of four steps.3 The review process was initiated when the Agency submitted a list of Medicaid cases to KePRO for review. At the times material to these proceedings, the Agency submitted all of the Medicaid cases involving inpatient psychiatric services for peer review, and KePRO was the only peer-review organization authorized to review psychiatric services. The medical records were also sent to KePRO, which employed registered nurses to review the records to determine whether the admission and the number of days of hospitalization for each recipient were justified by the relevant criteria set

   forth in the Florida Medicaid Criteria Handbook. In the Medicaid cases at issue herein, the relevant criteria were those adult and pediatric psychiatric criteria for intensity of service, severity of illness, and discharge.

6. If the KePRO nurse found that the medical records established that the applicable criteria were met, KePRO approved the payment which had been made for the services. If the KePRO nurse found that the medical records did not support the applicable criteria, the nurse referred the case for further review to a physician licensed in Florida and acting in the capacity of an independent contractor to KePRO. The identities

   of these physicians were confidential and were not disclosed even to the Agency.

7. The physician who first reviewed a Medicaid case was not required to be a specialist in the type of medicine presented in the case even though the physician was expected to evaluate the medical necessity of the services in light of the requirements of the applicable Medicaid criteria, his or her own clinical judgment, and any other factors deemed relevant. The fact that one of the applicable Medicaid criteria was not satisfied was not dispositive of the question of medical necessity for the services provided.

8. If the physician questioned the medical necessity for some or all of the services provided to a Medicaid recipient, a letter was sent to the provider identifying the case as a pending denial and giving the provider twenty days in which to provide additional information to support the medical necessity for the services. If additional information was submitted, the case was sent to a second physician, who reviewed the additional information and determined whether the preliminary decision of the first physician should be upheld, modified, or reversed.

9. If the second physician upheld the decision, an initial denial letter was sent by KePRO to the provider advising that it was not entitled to reimbursement under the Medicaid Program for the specified services provided to the Medicaid recipient. The initial denial letters were form letters which were modified as

   needed and included, among other things, a brief description of the basis for the denial, the services for which reimbursement was denied, and notification of the provider's right to request that KePRO reconsider its decision.

10. If the provider requested reconsideration, KePRO scheduled a "reconsideration" and notified the provider that it could submit additional information in the form of testimony and/or documentation. The physician reviewing the case on reconsideration could not be one of the physicians who had previously reviewed the case and had to be board-certified in the relevant medical specialty. During reconsideration, the physician was expected to review the medical records and any additional information that had been submitted; he or she then determined whether the initial decision should be upheld, modified, or reversed.

11. KePRO prepared a letter that notified the provider of the decision on reconsideration and included a brief explanation of the basis for the decision. The reconsideration letter was a form letter that was modified to include information specific to the case under review. The explanation for the decision on reconsideration was prepared by a nurse, who interpreted and summarized the notes of the reconsideration review which had been prepared by the reviewing physician.

12. KePRO initial denial letters and reconsideration letters were signed by William L. Moore, M.D., KePRO's medical

    director from 1993 through 1996. Dr. Moore is board-certified in family practice and quality assurance and holds a Florida license to practice medicine. Dr. Moore was not involved in the preparation of the letters, and he did not read the medical records of any of the Medicaid recipients except when necessary for purposes of quality control.4

13. The initial and reconsideration letters were sent to the provider, and copies of the letters were also sent to the Agency. If the provider did not submit repayment to the Agency based on the KePRO letters, the Agency prepared and sent a letter advising the provider that it must repay the Agency for reimbursements it had received under the Medicaid Program for services which KePRO had denied. The letter also advised the provider of its right to request an administrative hearing to be conducted pursuant to Chapter 120, Florida Statutes.

14. Following a retrospective review, KePRO sent initial denial letters to Indian River Memorial and the attending physicians advising them that Indian River Memorial was not entitled to reimbursement for a specified number of days of inpatient care provided to the Medicaid recipients identified in the denial letters because KePRO had determined either that the admission was not medically necessary or that it was not medically necessary for the recipient to receive acute inpatient care for the number of days he or she remained hospitalized.5 After it received the initial denial letters, Indian River

    Memorial requested that KePRO reconsider a number of its decisions denying reimbursement. KePRO completed the reconsiderations, and sent letters to Indian River Memorial advising it of the decisions to uphold or modify the initial denials.

15. Based on the KePRO decisions on reconsideration, the Agency prepared and sent the April 28, 1997, and May 19, 1997, letters to Indian River Memorial seeking to recoup reimbursements for services provided to seventy-two patients admitted to Indian River Memorial and treated for psychiatric problems in 1992, 1993, and 1994; thirty-two patients were identified in the letter at issue in DOAH Case No. 97-2469, and forty patients were identified in the letter at issue in DOAH Case No. 97-2692. The Agency's decision to seek to recoup reimbursements made on behalf of most of these Medicaid recipients was based on KePRO’s determinations that there was no medical necessity for the hospital admission or that there was no medical necessity for a specified number of days of inpatient care.6

16. John Sullenberger, M.D., is Chief Medical Advisor for Florida's Medicaid Program, and he makes the final decision for the Agency regarding the medical necessity for health care goods and services provided to Medicaid recipients in Florida.

    Dr. Sullenberger is board-certified in surgery and in thoracic surgery, and he holds a license to practice medicine in Florida.

17. Dr. Sullenberger reviewed both the initial and the reconsideration letters sent to Indian River Memorial by KePRO for fifty-four of the seventy-two Medicaid recipients identified in the attachments to the April 28, 1997, and May 19, 1997, letters.7 Because Dr. Sullenberger is not a psychiatrist, he did not offer an expert opinion as to the medical necessity for the days of acute inpatient care provided to these Medicaid recipients. Instead, he agreed with the decisions of KePRO with respect to fifty-three of the recipients and believed that the explanations in each of the KePRO letters provided a reasonable basis on which to deny reimbursement under the statutory definition of medical necessity applicable in Florida Medicaid cases; Dr. Sullenberger did not approve of the KePRO decision to deny reimbursement with respect to one recipient.8

    Dr. Sullenberger did not review the medical records of any of the fifty-four Medicaid recipients, and he did not review the notes written by the physician advisors reviewing the cases for KePRO.9 Rather, Dr. Sullenberger based his agreement with the KePRO decisions exclusively on the cursory explanations contained in the initial and reconsideration letters.

18. Indian River Memorial presented the testimony of three attending physicians for the Medicaid recipients at issue. Each of these physicians commented on the information contained in the medical records for their patients, explained their reasons for admitting and retaining each patient in an acute care setting,

    and offered their opinions that acute inpatient care was medically necessary for each of their patients at admission and throughout their hospitalization at Indian River Memorial.

19. Indian River Memorial also presented the testimony of Bernard L. Frankel, M.D. Dr. Frankel is board-certified in psychiatry, is licensed to practice medicine in Florida and Georgia, and is currently a professor of psychiatry at Emory University in Atlanta, Georgia. Dr. Frankel reviewed the medical records for fifty-two of the fifty-three Medicaid recipients whose hospitalization in Indian River Memorial was ultimately placed at issue by Dr. Sullenberger's testimony, and Dr. Frankel offered his opinion as an expert in psychiatry as to the medical justification for the admission and length of stay for each of the fifty-two patients. Dr. Frankel expressed his opinion that, based on the information contained in the medical records and on his clinical judgment, the admission to and length of stay in an acute care facility such as Indian River Memorial was medically justified for each of the fifty-two patients. Dr. Frankel supported his opinions with a summary of the pertinent points documented in the medical records and with his assessment of the medical necessity of the hospitalization for each of the fifty- two patients.

20. Neither Mercedes S. Borromeo, M.D., the attending physician, nor Dr. Frankel testified regarding the medical necessity for the admission and thirty-two-day hospitalization of

    patient J. P. J. P. was admitted to Indian River Memorial on November 10, 1993, and, in the opinion of the KePRO physicians both initially and on reconsideration, he should have been discharged on December 3, 1993, because he was stable and no longer needed acute inpatient care. Dr. Sullenberger testified that he agreed with the opinion of KePRO that ten days of the thirty-two days of hospitalization were not medically necessary. The Medicaid reimbursement per diem rate of $452.53 was effective from July 1, 1993, through December 31, 1993.

21. The evidence presented by Indian River Memorial is sufficient to establish that, in DOAH Case No. 97-2469, the admission and length of stay was medically necessary for patients P. A.; T. A.; E. A.; D. A.; T. B.; B. B.; E. B.; M. B.; S. B.;

    J. C.; J. C., Jr.; B. C.; H. C.; B. D.; W. E.; J. F.; A. F.;

    
    

    E. J.; G. J.; M. L.; B. L.; S. L.; V. L.; C. L.; M. M.; R. M.;

    
    

    A. N.; Y. R.; J. S.; and K. B. (C.). The evidence presented by the Agency through Dr. Sullenberger's testimony and the KePRO letters is not sufficient to support the Agency's contention that the services provided these patients were not medically necessary.10

22. The evidence presented by Indian River Memorial is sufficient to establish that, in DOAH Case No. 97-2692, the admission and length of stay was medically necessary for patients J. B., Jr.; J. P. B.; K. C.; R. C.; M. D.; A. D.; R. D.; L. E.; C. F.; K. H.; M. H.; T. K.; J. L.; H. L.; J. M.; M. M.; R. P.;

    C. R. S.; J. S.; K. S.; M. S.; and R. W. The evidence presented by the Agency through Dr. Sullenberger's testimony and the KePRO letters is not sufficient to support the Agency's contention that the services provided these patients were not medically necessary.11

23. Indian River Memorial presented no evidence except the medical records to support the medical necessity for the acute inpatient care provided to patient J. P. from December 4, 1993, through December 13, 1993. In the absence of any expert testimony to establish the medical necessity for these ten days of hospitalization, Indian River Memorial must repay the Agency for the Medicaid reimbursement Indian River Memorial received for ten days of inpatient care for patient J. P., at the applicable per diem rate of $452.53.

24. Finally, the Agency's claim in its Proposed Recommended Order that the Agency is entitled to recoup from Indian River Memorial payments made for a patient identified as R. D. is rejected. The Agency asserts that Indian River Memorial is not entitled to reimbursement under the Medicaid Program for inpatient services provided to R. D. on the basis of a "technical denial," that is, Indian River Memorial's failure to provide medical records for this patient. This assertion is not supported by any evidence of record, either through a KePRO letter or testimony of Dr. Sullenberger.

    CONCLUSIONS OF LAW

    
    

25. The Division of Administrative Hearings has jurisdiction over the subject matter of these proceedings and of the parties pursuant to Sections 120.569 and .57(1), Florida Statutes (1997).

26. Section 409.913, Florida Statutes (1997), provides in pertinent part:

    1. For purposes of this section, the term:

       
       

       * * *

       
       

       (c) "Medical necessity" or "medically necessary" means any goods or services necessary to palliate the effects of a terminal condition, or to prevent, diagnose, correct, cure, alleviate, or preclude deterioration of a condition that threatens life, causes pain or suffering, or results in illness or infirmity, which goods or services are provided in accordance with generally accepted standards of medical practice. For purposes of determining Medicaid reimbursement, the agency is the final arbiter of medical necessity. Determinations of medical necessity must be made by a licensed physician employed by or under contract with the agency and must be based upon information available at the time the goods or services are provided.

       * * *

       
       

       (5) A Medicaid provider is subject to having goods and services that are paid for by the Medicaid program reviewed by an appropriate peer-review organization designated by the agency. The written findings of the applicable peer-review organization are admissible in any court or administrative proceedings as evidence of medical necessity or the lack thereof.

       * * *

       
       

       (7) When presenting a claim for payment under the Medicaid program, a provider has an affirmative duty to supervise the provision of, and be responsible for, goods and services claimed to have been provided, to supervise and be responsible for preparation and submission of the claim, and to present a claim that is true and accurate and that is for goods and services that:

       * * *

       
       

       (b) Are Medicaid-covered goods or services that are medically necessary.

       
       

       * * *

       
       

       (f) Are documented by records made at the time the goods or services were provided, demonstrating the medical necessity for the goods or services rendered. Medicaid goods or services are excessive or not medically necessary unless both the medical basis and the specific need for them are fully and properly documented in the recipient's medical record.

       
       

       * * *

       
       

       (10) The agency may require repayment for inappropriate, medically unnecessary, or excessive goods or services from the person furnishing them, the person under whose supervision they were furnished, or the person causing them to be furnished.

       
       

27. Rule 59G-1.010(166), Florida Administrative Code, amplifies the statutory definition and provides:

    "Medically necessary" or "medical necessity" means that the medical or allied care, goods, or services furnished or ordered must:

    1. Meet the following conditions:

       1. Be necessary to protect life, to prevent significant illness or significant disability, or to alleviate severe pain;

       2. Be individualized, specific, and consistent with symptoms or confirmed diagnosis of the illness or injury under treatment, and not in excess of the patient's needs;

       3. Be consistent with generally accepted professional medical standards as determined by the Medicaid program, and not experimental or investigational;

       4. Be reflective of the level of service that can be safely furnished, and for which no equally cost effective and more conservative or less costly treatment is available statewide;

       5. Be furnished in a manner not primarily intended for the convenience of the recipient, the recipient's caretaker, or the provider.

    2. "Medically necessary" or "medical necessity" for inpatient hospital services requires that those services furnished in a hospital on an inpatient basis could not, consistent with the provisions of appropriate medical care, be effectively furnished more economically on an outpatient basis or in an inpatient facility of a different type.

    3. The fact that a provider has prescribed, recommended, or approved medical or allied care, goods, or services does not, in itself, make such care, goods or services medically necessary or a medical necessity or a covered service.

28. As noted in the Preliminary Statement, the parties disagree about the rules of law which govern cases such as these in which the Agency seeks to recoup monies paid to a health care provider under the Medicaid Program when the Agency determines that the services were not medically necessary. It is not necessary to address these disputed issues of law because this case can be resolved on the basis of the conclusion of law set forth by the Agency in its final order in Indian River Memorial

    Hospital v. Agency for Health Care Administration, DOAH Case No. 97-4794, Audit No. HR96-039, Rend. No. AHCA-99-033-FOF-MDP

    (Feb. 3, 1999). This case involved a dispute in which the Agency sought to recoup reimbursements made to Indian River Memorial under the Medicaid Program for acute inpatient care it provided to Medicaid recipients who were admitted for psychiatric treatment, and lack of medical necessity for the admission or for the hospitalization was the basis for the recoupment action. The Agency concluded in its order:

    Section 409.913(1)(c) requires that the determination by AHCA (through its employee- or-contract physician) be "based upon information available at the time the goods or services are provided." The reference to "information available at the time the goods or services are provided" may be read in pari materia with Section 409.913(7)(f), concerning the submission of valid claims; when it is, the conclusion can be drawn that such "information" consists predominantly of the patient-beneficiary's medical record.

    The record below indicates . . . that AHCA's physician did not review the medical records in question here.

    
    

    Thus, under the narrower scope of review necessitated by Section 409.913(1)(c), the provider in this case has met its burden [of proving medical necessity]. Since the medical records were not reviewed as required by Section 409.913(1)(c), the record herein lacks the minimal evidence by which AHCA's determination might otherwise have been upheld.

    Final Order at 6.

    
    

29. On the basis of the facts found herein, Indian River Memorial failed to present sufficient evidence to contradict

    AHCA's determination that ten days of acute inpatient care provided to J. P. was not medically necessary. Accordingly, Indian River Memorial must repay the Agency for reimbursements it received under the Medicaid Program for services provided to

    J. P., who is identified in the May 19, 1997, letter at issue in DOAH Case No. 97-2692 as recipient number 8118661172, for ten days of acute inpatient care at the per diem rate of $452.53.

30. On the basis of the facts found herein, in light of AHCA's conclusion in the final order quoted above, the Agency did not present even minimal evidence to contradict the detailed and persuasive evidence presented by Indian River Memorial that the acute inpatient care provided to all of the Medicaid recipients identified in paragraph 21 and 22 was medically necessary. Accordingly, Indian River Memorial is not liable to repay the Agency the amounts claimed in the April 28, 1997, and May 19, 1997, letters, as modified by the stipulations noted in the Preliminary Statement and as set forth in paragraph 29.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order:

1. Requiring Indian River Memorial Hospital, Inc., to repay the Agency $4,525.30 for ten days of acute inpatient care provided to Medicaid recipient J. P.; and,

2. Finding that the Agency is not entitled to recoup from Indian River Memorial reimbursements made under the Medicaid Program for services provided to any other Medicaid recipients identified in the April 28, 1997, Agency letter, DOAH Case No.

97-2469, or in the May 19, 1997, Agency letter, DOAH Case No. 97-

2692.

DONE AND ENTERED this 28th day of June, 1999, in Tallahassee, Leon County, Florida.

PATRICIA HART MALONO

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 1999.

ENDNOTES

1 Petitioner's Exhibit 71 consisted of the transcript of the deposition of William L. Moore, M.D.

2 As set forth in the attachment to the April 28, 1997, letter, the Agency was seeking repayment of reimbursements for services provided to S. L. during two inpatient admissions, one in October 1992 and one in January 1993. The issues relating only to the January 1993 admission were resolved.

3 KePRO is no longer under contract with the Agency for peer review services; it is presumed that the evidence presented regarding the retrospective review procedures relates to those procedures utilized at the times material to these proceedings.

4 Dr. Moore was required by the Agency to review the medical records and evaluate the quality of the review provided by the physician advisors in ten percent of the cases in which KePRO denied reimbursement.

5 The denial letters sent to Indian River Memorial were of three types: "admission denials" in which payment was denied for the entire admission, "length-of-stay denials" in which payment was denied for some of the days of inpatient treatment, and "technical denials" in which payment was denied because all or an important part of the medical records for a patient had not been provided to KePRO.

6 Apparently, an unspecified number of the cases involved technical denials.

7 It is very difficult to reconcile the Medicaid recipients identified in the attachments to the Agency letters with the information provided by the Agency and Indian River Memorial in their Proposed Recommended Orders and with the Medicaid recipients discussed by Dr. Sullenberger in his testimony. As has been noted, reimbursements for services provided to seventy- two Medicaid recipients were placed at issue by the Agency in these two cases. Indian River Memorial stated in its Proposed Recommended Order that the reimbursements for services provided to sixty-four Medicaid recipients remained at issue, yet it submitted medical records for sixty-five recipients.

Dr. Sullenberger testified with respect to only fifty-four patients. Settlement was apparently reached regarding the payments made on behalf of some patients in addition to those identified in the Agency's Proposed Recommended Orders; requests for repayment for six patients apparently were dropped by the Agency because the patients were not listed in the attachment to the April 28, 1997, letter at issue in DOAH Case No. 97-2469, but these patients are not identified; the Agency withdrew its request for repayment of recipient W. G. during

Dr. Sullenberger's deposition; and no explanation was offered regarding Dr. Sullenberger's failure to testify as to the requests for repayment for the remaining patients.

Compounding the confusion is the fact that the Medicaid recipients were identified by initials in the testimony and that errors were made in the transcript of Dr. Sullenberger's deposition regarding the identity of several of the patients

Dr. Sullenberger discussed:

1. in volume I at page 24, the reference was to patient

   E. A., but Dr. Sullenberger was discussing patient P. A.;

2. in volume I at page 33, the reference was to patient

   1. E., but Dr. Sullenberger was discussing patient D. A.;

3. in volume I at page 36, the reference was to patient

   1. M., but Dr. Sullenberger was discussing patient E. B.;

4. in volume I at page 60, the reference was to patient

   M. C., but Dr. Sullenberger was discussing patient B. C.;

5. in volume I at page 65, the reference was to patient

   H. K., but Dr. Sullenberger was discussing patient H. C.;

6. in volume I at page 78, the reference was to patient

   G. F., but Dr. Sullenberger was discussing patient J. F.;

7. in volume I at page 83, the reference was to patient

   A. J., but Dr. Sullenberger was discussing patient E. J.;

8. in volume I at page 100, the reference was to patient

1. L., but Dr. Sullenberger was discussing patient C. L.;

   1. in volume I at page 113, the reference was to patient

D. R., but Dr. Sullenberger was discussing patient Y. R.;

1. in volume I at page 119, the reference was to patient

   C. R., but Dr. Sullenberger was discussing patient K. B. (C.);

2. in volume II at page 173, the reference was to patient

C. S., but Dr. Sullenberger was discussing patient K. S.

8 Because there was a KePRO letter dated subsequent to the reconsideration letter in which KePRO may have reversed its decision that the inpatient care provided W. G. was not medically necessary, the Agency stipulated on the record at the deposition that it would not seek repayment from Indian River Memorial for Medicaid reimbursements for services provided to W. G.

9 Indeed, Dr. Sullenberger appears to have abdicated his responsibility as the Agency's final arbiter of medical necessity to the KePRO physicians in these cases. At various points in his testimony, Dr. Sullenberger acknowledged that, for example, it was difficult to resolve the inconsistencies in the reasons stated by KePRO for some of its decisions; there were no explanations at all given for some of the decisions; he did not understand the reasons given by KePRO for some of its decisions; the decision appears incorrect on the face of one KePRO letter; KePRO could be arbitrary at times; he has no professional basis on which to question the decisions of the KePRO psychiatrists.

10 Repayment for the services provided the remaining patients identified in the April 28, 1997, letter is apparently no longer at issue.

11 Except for patients J. P. and R. D., repayment for the services provided the remaining patients identified in the May 19, 1997, letter is apparently no longer at issue.

COPIES FURNISHED:

John D. Buchanan, Jr., Esquire Henry, Buchanan, Hudson, Suber

& Williams, P.A.

117 South Gadsden Street Tallahassee, Florida 32303

Steven A. Grigas, Esquire Thomas Falkinburg, Esquire

Agency for Health Care Administration Fort Knox, Building III

2727 Mahan Drive

Tallahassee, Florida 32308-5403

Sam Power, Agency Clerk

Agency for Health Care Administration Fort Knox Building, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308

Julie Gallagher, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 97-002469

Orders for Case No: 97-002469