STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HENRY M. RUBINSTEIN, D.C., )

)

Petitioner, )

)

vs. ) Case No. 98-2772

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on October 26, 1999, at Miami, Florida, before Errol H. Powell, a designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Henry M. Rubinstein, D.C., pro se

9848 East Fern Street Miami, Florida 33157

For Respondent: Mark S. Thomas, Esquire

Agency for Health Care Administration Fort Knox Building 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308 STATEMENT OF THE ISSUE

The issue for determination is whether Petitioner is liable for overpayment of Medicaid claims for the period from 9/1/94 through 9/30/96, as stated in Respondent's Final Agency Audit Report dated May 5, 1998.

PRELIMINARY STATEMENT

By Final Agency Audit Report dated May 5, 1998, the Agency for Health Care Administration (Respondent) notified Henry M. Rubinstein, D.C., (Petitioner) that, among other things, he was liable for overpayment of Medicaid claims for the period from September 1, 1994, through September 30, 1996. Petitioner disputed being liable for reimbursement to Respondent for overpayment of the Medicaid claims and requested a hearing. On June 16, 1998, this matter was referred to the Division of Administrative Hearings.

The parties filed a joint pre-hearing stipulation on October 11, 1999. At hearing, Petitioner testified on his own behalf and entered 20 exhibits (Petitioner's Exhibits numbered 1-5, 7-9, 13-17, and 20-26) into evidence. Six of Petitioner's

exhibits (Petitioner's Exhibits numbered 6, 10-12, 18, and 19) were not admitted into evidence but were proffered by Petitioner. Respondent presented the testimony of one witness at hearing and of four witnesses by deposition and entered 12 exhibits (Respondent's Exhibits numbered 1-12) into evidence.

A Transcript of the hearing was ordered. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript.

The transcript, consisting of one volume, was filed on December 2, 1999. Petitioner timely filed his post-hearing submission on December 16, 1999. Respondent timely filed its post-hearing submission on December 14, 1999. The parties'

post-hearing submissions have been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. At all times material hereto, the Agency for Health Care Administration (Respondent) was the state agency charged with administration of the Medicaid program in the State of Florida pursuant to Section 409.907, Florida Statutes.

2. At all times material hereto, Henry M. Rubinstein, D.C., (Petitioner) was a licensed chiropractor in the State of Florida and was providing chiropractic services to Medicaid recipients. Petitioner provided the services pursuant to a contract with Respondent under the Medicaid provider number 0503517-00. His Medicaid patients for years have included children and multi-handicapped children. Petitioner has published in peer review journals and is a board certified chiropractor.

3. Dennis L. Jones, D.C., is a licensed chiropractor in the State of Florida. 1/ He was involved in the creation of Florida's Medicaid program and monitors the Florida Chiropractic Medicaid Program. Dr. Jones also serves as a Medicaid

   chiropractic consultant, including the issuance of prior authorizations for treatment.

4. Prior authorizations are required for a chiropractor to provide and bill for visits by Medicaid recipients in excess of the set limited number. The maximum number of visits allowed per year prior to July 1, 1994, was 12, and after July 1, 1994, was 24. After July 1, 1994, prior authorization was required for visits beyond 24 for Medicaid recipients under the age of

1. Prior authorization was granted for requests that demonstrated medical necessity.

   1. Dr. Jones denied many of Petitioner's requests for prior authorization. He denied the requests on the basis that the treatments were extending for periods of up to two years without detailed explanation of medical necessity to substantiate such extended periods of care. Dr. Jones observed that Petitioner's requests for such extended care routinely lacked substantiation and documentation for such extended care, such as x-rays, orthopedic and neurological findings, and subjective/objective descriptions.

   2. However, Dr. Jones granted some of Petitioner's requests for prior authorization to exceed the maximum number of visits. Dr. Jones had concerns as to the sufficiency of the documentation of Petitioner's requests for prior authorizations. As a result, when such requests were granted, Dr. Jones noted on

      the request forms that supplemental medical necessity needed to be documented more completely in the future.

   3. In 1996, Dr. Jones related his concerns about Petitioner in a letter to Respondent and included with the letter prior authorizations for primarily special needs children covering the years 1994 through 1996. Twenty-nine prior authorizations were included, with 25 of them for special needs children. His concerns related primarily to Petitioner's Medicaid patients who were special needs children and for whom Dr. Jones had reviewed only prior authorizations submitted by Petitioner. Further, in his letter, Dr. Jones requested an investigation into possible patient brokering, a criminal act. However, a request from a complainant for an investigation into a particular area of alleged violation does not prevent Respondent from identifying and investigating other areas of possible violation revealed by the documents provided.

   4. Dr. Jones' letter was referred to one of Respondent's employees, Judith M. Jensen. At that time, Ms. Jensen was also in the process of reviewing another complaint lodged against Petitioner by Dr. Jones, regarding prior authorizations for children, but covering a different time period--from 1993 through 1995. Ms. Jensen was, and is, employed by Respondent as a Human Services Program Specialist. Her duties include monitoring Medicaid claims and investigating Medicaid complaints

      and aberrant billings for Respondent's Medicaid Program Integrity Office.

   5. In investigating all billing irregularities or specific complaints, a review is typically made of the Medicaid provider's medical records. Substantiation of Medicaid claims that are submitted and paid is by adequate and proper medical record documentation.

   6. An audit, based upon a billing irregularity or complaint, is usually begun with the selection of a provider or a group of providers. Next, a sample of the chosen provider's Medicaid claims is chosen for a particular time period, which is the audit period. An analyst for Respondent then requests from the provider the medical records for the Medicaid recipients sampled for the audit period. The medical records are provided to and analyzed by a medical peer reviewer.

   7. If the medical peer reviewer recommends denial of payment for any of the claims, resulting in overpayment, Respondent forwards a preliminary audit letter to the Medicaid provider, describing the audit findings and requesting any supplemental medical records. A review of any submitted supplemental medical records is conducted, and the audit findings are adjusted in accordance with the results of the review. If an overpayment continues to be indicated after the

      review, Respondent forwards a final audit letter to the Medicaid provider.

   8. Respondent has a limited number of analysts and medical peer reviewers. Due to such constraints on Respondent, sampling is utilized due to its reliability, cost-effectiveness, and commonly accepted method for review of high volumes of Medicaid claims.

   9. Ms. Jensen initiated Respondent's review of Petitioner's Medicaid claims. She began the audit by requesting an ad hoc computer report on Petitioner's billing history for all Medicaid recipients under the age of 21 for the time period from 9/1/94 through 9/30/96. Ms. Jensen's request concentrated only on Medicaid recipients under the age of 21 because Dr. Jones alerted Respondent primarily to prior authorizations for children.

   10. Ms. Jensen received the ad hoc computer report, which was a detail of all of Petitioner's Medicaid billings for Medicaid recipients under the age of 21 for the period from 9/1/94 through 9/30/96. The report provided that for the time period indicated, Petitioner billed and was paid for 4,499 claims for 85 recipients, for a total amount of $71,731.30.

   11. Having received this information, Ms. Jensen requested a computer-generated selection of a random sample of 20 recipients from the total population of the 85 recipients.

       Twenty recipients were randomly selected from the total population of the 85 recipients, which showed, among other things, claims totaling 1,307 and payment for the claims totaling $20,710.69.

   12. Afterwards, Ms. Jensen requested Petitioner to provide all the medical records for the 20 sampled recipients for the time period from 9/1/94 through 9/30/96. Petitioner complied with Ms. Jensen's request.

   13. Having received the medical records, Ms. Jensen engaged a peer review consultant, Dr. Ronald J. Hoffman, D.C., to evaluate the records submitted by Petitioner. She provided the medical records to Dr. Hoffman.. 2/ He was provided with the medical records of only 10 Medicaid recipients on two separate occasions, instead of all 20 at the same time.

   14. The Medicaid recipients' medical records were not "sanitized" when they were submitted to Dr. Hoffman, meaning that the names of the Medicaid recipients and provider, Petitioner, were not redacted. Dr. Hoffman, as a peer reviewer, rarely reviews files which have been sanitized. The failure to sanitize the medical records found to be of no consequence to Dr. Hoffman's determinations.

   15. Dr. Hoffman is a licensed chiropractor in the State of Florida and has been practicing for over 30 years. His practice includes patients who are pediatric and multi-handicapped, but

       these patients comprise a very small number of his patients. He performs chiropractic Medicaid utilization review for Respondent and is a Medicaid provider. He has performed chiropractic utilization review for more than 15 years. For the Medicaid program, Dr. Hoffman has been a consultant since 1997, but Petitioner's review was the first peer review performed by

       Dr. Hoffman for the Medicaid program.

       
       

   16. When Dr. Hoffman performs peer reviews for Respondent, he relies upon State statutes and Respondent's guidelines, specifically, The Chiropractic Coverage and Limitation Handbook, and his years of experience

   17. Dr. Hoffman is knowledgeable about what a medical record should contain in order for the medical record to demonstrate medical necessity for Medicaid reimbursement purposes. The medical record should contain the complete medical history; an examination showing the condition of the patient and why the patient is being treated; symptoms; standardized testing, including orthopedic and neurological tests; treatment notes; a treatment program; objective findings; special procedures; and an evaluation of the patient's progress. 3/

   18. Petitioner agrees that, according to the Medicaid provider reimbursement handbook, the following are requirements for medical records: patient history; chief complaint for each

       visit; diagnostic tests and results; diagnosis; treatment plan, including prescriptions; medications, supplies, scheduling frequency for follow-up or other services; progress reports, treatment rendered; original signatures and dates; dates of service; and referrals to others.

   19. Dr. Hoffman was aware from review of the medical records provided by Petitioner that the Medicaid recipients were special needs children. However, he was unaware of Florida's special needs statutes (Subsections 409.803(1)(c) and 409.9126(1)(b), and Section 409.9121, Florida Statutes), which address, among other things, health care needs for special needs children, and he did not use the statutes in his determination. The failure to use the special needs statutes had little or no effect on Dr. Hoffman's review. The undersigned is persuaded and a finding of fact is made that Dr. Hoffman's failure to use the special needs statutes in his review did not invalidate his determinations.

   20. Dr. Hoffman was tendered and is accepted as an expert in chiropractic medicine. He is also found to be an appropriate peer reviewer for Petitioner's situation. Dr. Hoffman's testimony is found to be credible.

   21. After having reviewed the medical records, regarding the 20 randomly sampled Medicaid recipients, pursuant to Respondent's Medicaid peer review, Dr. Hoffman produced two

       reports of his findings. 4/ During his review, Dr. Hoffman considered all of the Medicaid recipients' visits, including those that had been granted prior authorization.

   22. Patient 1 was recipient K.K., with a date of birth of 5/18/86. 5/ Dr. Hoffman's opinion was that Patient 1's medical records did not support a finding of medical necessity. The medical records failed to support justification for Patient 1's

       198 visits from 11/10/94 through 9/10/96. X-rays contained in the medical records were of such poor quality that they were of no diagnostic value; however, the x-rays were not a factor in the determination of medical necessity. Petitioner's medical notes were practically the same for each visit, with Petitioner noting practically the same comment(s); and there was no recorded orthopedic or neurological testing and no standard chiropractic evaluation forms justifying the number of treatments billed.

   23. Patient 1's medical records failed to demonstrate medical necessity for the visits.

   24. For Patient 1, 198 claims were paid in the amount of

       
       

       $3,081.30. Prior authorizations granted totaled $2,964. 6/

       
       

   25. Patient 2 was recipient N.M., with a date of birth of 8/11/83. Dr. Hoffman's opinion was that Patient 2's medical records lacked documentation demonstrating that the treatments were a medical necessity for Medicaid reimbursement purposes for

       the 175 visits from 7/12/94 through 6/27/96. The medical records contained no standard medical notes or examination forms and no orthopedic, neurological or chiropractic examination forms to justify treatments; and were redundant and repetitive. X-rays contained in the medical records were of such poor quality that they were of no diagnostic value; but, the x-rays have no impact on the determination of medical necessity.

   26. Patient 2's medical records failed to demonstrate medical necessity for the visits.

   27. For Patient 2, 175 claims were paid in the amount of

       
       

       $2,726.50. Prior authorizations granted totaled $2,964.

       
       

   28. Patient 3 was recipient D.A., with a date of birth of 4/6/89. Dr. Hoffman's opinion was that Patient 3's medical records lacked justification for the 173 visits from 8/23/94 through 7/30/96. The medical records contained no standard procedures performed by an acceptable chiropractic physician licensed in the State of Florida. The medical records also indicated that a medical radiologist, Dr. Robert S. Elias, M.D., read the recipient's x-rays for the purpose of a medical diagnosis of treatment and that Dr. Elias' diagnosis directly conflicted with Petitioner's diagnosis; however, the x-rays were not a factor in the determination of medical necessity.

   29. Patient 3's medical records failed to demonstrate medical necessity for the visits.

   30. For Patient 3, 173 claims were paid in the amount of

       
       

       $2,693.70. Prior authorizations granted totaled $2,604.

       
       

   31. Patient 6 was recipient T.W., with a date of birth of 2/5/90. Dr. Hoffman's opinion was that Patient 6's medical records lacked justification for the 160 visits from 1/3/95 through 9/3/96. The medical records contained no standardized chiropractic notes, no specified diagnosis, and no routine re- examinations. Furthermore, the medical records failed to show why Petitioner was treating Patient 6. X-rays contained in the medical records were not of diagnostic quality and were, therefore, of no diagnostic value; however, the x-rays had no impact on the determination of medical necessity.

   32. Patient 6's medical records failed to demonstrate medical necessity for the visits.

   33. For Patient 6, 160 claims were paid in the amount of

       
       

       $2,502.20. Prior authorizations granted totaled $1,882.90.

       
       

   34. Patient 24 was recipient G.H., with a date of birth of 7/20/95. Dr. Hoffman's opinion was that Patient 24's medical records failed to justify the approximately 73 visits. The medical records contained no standardized chiropractic notes, no objective findings, and no standardized testing, including range of motion, muscle spasms, and orthopedic or neurological tests. For many of the visits, the only documentation contained in the

       medical records consisted of the same notation or statement: "Patient doing well."

   35. Patient 24's medical records failed to demonstrate medical necessity for the visits.

   36. For Patient 24, 72 claims were paid in the amount of

       
       

       $1,158.09. The medical records do reflect that any prior authorizations were granted.

   37. Patient 25 was recipient O.M., with a date of birth of 4/25/83. Dr. Hoffman's opinion was that Patient 25's medical records failed to justify the 87 visits. The medical records contained no standardized chiropractic notes, no justification of diagnosis, and no standard medical tests. The notes that were recorded were quite sparse and repetitive and typically recorded as "Doing well."

   38. Patient 25's medical records failed to demonstrate medical necessity for the visits.

   39. For Patient 25, 71 claims were paid in the amount of

       
       

       $1,131.69. Prior authorizations granted totaled $753.60.

       
       

   40. Patient 27 was recipient C.F., with a date of birth of 2/12/84. Dr. Hoffman's opinion was that Patient 27's medical records failed to justify the 67 visits from 10/11/95 through 3/25/96. The medical records contained no standardized chiropractic notes, no standardized examination forms, and no documentation of Patient 27's progress.

   41. Patient 27's medical records failed to demonstrate medical necessity for the visits.

   42. For Patient 27, 67 claims were paid in the amount of

       
       

       $1,079.59. The medical records do reflect that any prior authorizations were granted.

   43. Patient 28 was recipient K.H., with a date of birth of 8/22/94. Dr. Hoffman's opinion was that Patient 28's medical records failed to justify the 69 visits. The medical records contained no standardized chiropractic notes and no standardized testing, and showed no specific treatment provided based upon the requirements of the Medicaid laws.

   44. Patient 28's medical records failed to demonstrate medical necessity for the visits.

   45. For Patient 28, 66 claims were paid in the amount of

       
       

       $1,031.79. The medical records do reflect that any prior authorizations were granted.

   46. Patient 33 was recipient K.D., with a date of birth of 2/15/84. Dr. Hoffman's opinion was that Patient 33's medical records failed to justify the 73 visits. The medical records contained no standardized chiropractic notes and no standardized testing.

   47. Patient 33's medical records failed to demonstrate medical necessity for the visits.

   48. For Patient 33, 51 claims were paid in the amount of

       
       

       $800.70. Prior authorizations granted totaled $376.80.

       
       

   49. Patient 35 was recipient T.M., with a date of birth of 10/15/91. Dr. Hoffman's opinion was that Patient 35's medical records failed to justify the 51 visits from 2/15/95 through 6/10/96. The medical records contained no standardized chiropractic notes justifying the treatment provided. The medical records also stated that Dr. Elias read Patient 35's x- rays for the purposes of medical diagnosis of treatment and that Dr. Elias' diagnosis directly conflicted with Petitioner's diagnosis; however, the x-rays were not a factor in determining medical necessity.

   50. Patient 35's medical records failed to demonstrate medical necessity for the visits.

   51. For Patient 35, 51 claims were paid in the amount of

       
       

       $828.39. Prior authorizations granted totaled $753.60.

       
       

   52. Patient 39 was recipient B.T., with a date of birth of 8/8/95. Dr. Hoffman's opinion was that Patient 39's medical records failed to justify the 47 visits from 2/9/95 through 10/19/95. The medical records contained no standardized chiropractic notes justifying the treatment provided.

   53. Patient 39's medical records failed to demonstrate medical necessity for the visits.

   54. For Patient 39, 47 claims were paid in the amount of

       
       

       $765.59. Prior authorizations granted totaled $753.60.

       
       

   55. Patient 40 was recipient T.H., with a date of birth of 7/11/84. Dr. Hoffman's opinion was that Patient 40's medical records failed to justify the 46 visits from 11/15/94 through 2/28/95. The medical records contained no standardized chiropractic notes justifying the treatment provided. The medical records also indicated that Dr. Elias read the recipient's x-rays for the purposes of medical diagnosis of treatment and that Dr. Elias' diagnosis directly conflicted with Petitioner's diagnosis; however, the x-rays were not a factor in determining medical necessity.

   56. Patient 40's medical records failed to demonstrate medical necessity for the visits.

   57. For Patient 40, 46 claims were paid in the amount of

       
       

       $731.70. Prior authorizations granted totaled $753.60.

       
       

   58. Patient 45 was recipient T.W., with a date of birth of 9/26/90. Dr. Hoffman's opinion was that Patient 45's medical records failed to justify the 22 visits from 4/24/95 through 11/15/95. The medical records contained no standardized chiropractic notes justifying the treatment provided.

   59. Patient 45's medical records failed to demonstrate medical necessity for the visits.

   60. For Patient 45, 26 claims were paid in the amount of

       
       

       $408.20. Prior authorizations granted totaled $376.80.

       
       

   61. Patient 48 was recipient S.L., with a date of birth of 1/31/91. Dr. Hoffman's opinion was that Patient 48's medical records failed to justify the 23 visits from 3/25/96 through 9/11/96. The medical records contained no standardized chiropractic notes justifying the treatment provided.

   62. Patient 48's medical records failed to demonstrate medical necessity for the visits.

   63. For Patient 48, 23 claims were paid in the amount of

       
       

       $388.79. The medical records do reflect that any prior authorizations were granted.

   64. Patient 54 was recipient H.A., with a date of birth of 1/31/88. Dr. Hoffman's opinion was that Patient 54's medical records failed to justify the 7 visits from 9/6/95 through 10/2/95. The medical records contained no standardized chiropractic notes justifying the treatment provided.

   65. Patient 54's medical records failed to demonstrate medical necessity for the visits.

   66. For Patient 54, 19 claims were paid in the amount of

       
       

       $298.30. The medical records do reflect that any prior authorizations were granted.

   67. Patient 58 was recipient T.W., with a date of birth of 11/19/81. Dr. Hoffman's opinion was that Patient 58's medical

       records failed to justify the 23 visits from 3/25/96 through 9/30/96. The medical records contained no standardized chiropractic notes justifying the treatment provided.

   68. Patient 58's medical records failed to demonstrate medical necessity for the visits.

   69. For Patient 58, 17 claims were paid in the amount of

       
       

       $294.59. The medical records do reflect that any prior authorizations were granted.

   70. Patient 59 was recipient C.P., with a date of birth of 4/11/93. Dr. Hoffman's opinion was that Patient 59's medical records failed to justify the 22 visits from 4/10/96 through 10/9/96. The medical records contained no standardized chiropractic notes, no documentation of standardized testing of the spine, no documentation of standard tests, including orthopedic and neurological tests, and no medical justification for ongoing care and treatment.

   71. Patient 59's medical records failed to demonstrate medical necessity for the visits.

   72. For Patient 59, 16 claims were paid in the amount of

       
       

       $278.89. Prior authorizations granted totaled $376.80.

       
       

   73. Patient 64 was recipient M.L., with a date of birth of 8/20/89. Dr. Hoffman's opinion was that Patient 64's medical records failed to justify the 8 visits from 8/30/95 through 10/2/95. The medical records contained no standardized

       chiropractic notes, no documentation of standardized testing, and no description of Patient 64's pain or physical condition.

   74. Patient 64's medical records failed to demonstrate medical necessity for the visits.

   75. For Patient 64, 13 claims were paid in the amount of

       
       

       $204.10. The medical records do reflect that any prior authorizations were granted.

   76. Patient 69 was recipient A.L., with a date of birth of 1/14/92. Dr. Hoffman's opinion was that Patient 69's medical records failed to justify the 9 visits from 2/27/95 through 3/20/95. The medical records contained no standardized chiropractic notes, and the documentation contained in the records was minimal and repetitious.

   77. Patient 69's medical records failed to demonstrate medical necessity for the visits.

   78. For Patient 64, 13 claims were paid in the amount of

       
       

       $204.10. The medical records do reflect that any prior authorizations were granted.

   79. Patient 77 was recipient N.J., with a date of birth of 4/16/80. Dr. Hoffman's opinion was that Patient 77's medical records failed to justify the 7 visits from 3/6/95 through 3/29/95. The medical records contained no standardized chiropractic notes justifying the treatment provided.

   80. Patient 77's medical records failed to demonstrate medical necessity for the visits.

   81. For Patient 77, 7 claims were paid in the amount of

       
       

       $137.59. The medical records do reflect that any prior authorizations were granted.

   82. Dr. Hoffman recommended denial of all claims for the

       
       

       20 sampled Medicaid recipients for the period from 9/1/94 through 9/30/96 due to Petitioner's failure to adequately document medical necessity in the recipients' medical records.

   83. For the 20 sampled Medicaid recipients for the period from 9/1/94 through 9/30/96, the total of the Medicaid payments was $20,710.69. As a result, the denial amount, the overpayment, for the 20 sampled recipients was the same,

       $20,710.69.

       
       

   84. The overpayment for the 20 sampled Medicaid recipients was extrapolated to the entire universe or total population of the 85 Medicaid recipients under the age of 21 for the period from 9/1/94 through 9/30/96, which resulted in a total projected overpayment of $70,518.26. The actual total amount of Medicaid payments for the 85 Medicaid recipients for the covered time period was $71,731.30. Considering the actual total payment of

       $71,731.30, the projected overpayment of $70,518.26 is very close to the actual total payment and is inherently reasonable.

   85. There is an expectation that, because all the claims of the 20 sampled Medicaid recipients were denied, the projected denial for all the claims in the universe of 85 recipients would be very close to the actual total payment. The difference between the projected overpayment of $70,518.26 and the actual amount paid of $71,731.30 is $1,213.04. This difference is negligible and such negligible difference reflects the inherent accuracy and reliability of the statistical methodology utilized.

   86. The maximum error range is 5 percent. The difference between the projected overpayment total and the actual payment total is also well within the maximum error range of 5 percent, or $3,587, for a 95 percent statistical confidence interval.

   87. To illustrate Respondent's statistical methodology, first, begin with sampled Medicaid recipient Patient 1. As indicated previously, the total number of actual claims for the total population of 85 Medicaid recipients, who were under the age of 21, was 4,499, and the total amount paid for the claims was $71,731.30; the data being taken from Respondent's Medicaid claims database. For Patient 1, 198 claims were audited and

       $3,081.30 was the total amount paid for the claims. All of the

       
       

       $3,081.30 was denied and determined to be an overpayment.

       
       

   88. Second, the same process was used with all 20 Medicaid recipients sampled, which produced a total of 1,307 claims,

       which were all denied, and produced a total of $20,710.69 in overpayment. The total sampled overpayment of $20,710.69 was divided by the total number of sampled claims (1,307) to obtain a mean overpayment per sampled claim of $15.85. The overpayment per sampled claim of $15.85 was multiplied by the number of claims in the total population (4,499) to obtain a point estimate of the total population overpayment, which was

       $71,291.04.

       
       

   89. Third, adjusting the point estimate of $71,291.04 for any potential statistical error, Respondent's model reduces the point estimate by 1.73 standard deviations, yielding an error- adjusted total overpayment of $70,518.26. Respondent has a level of confidence that there is 95 percent chance that actual overpayment is a minimum of $70,518.26. The point estimate of

       $71,291.04 is very close to the actual payment of $70,731.30 for the claims of the total population of the 85 Medicaid recipients; therefore, the overpayment of $70,518.26 is relatively conservative.

   90. Respondent's audit was conducted in conformity with Respondent's standards and conformed to Respondent's manner in conducting audits. The audit also had no known deviations or irregularities or deficiencies in the technical processes utilized, except the failure to take into account the prior authorizations granted.

   91. As to the statistical aspect of Respondent's audit, Respondent presented the testimony of a statistical expert, Dr. James T. McClave, Ph.D. 7/ Dr. McClave's testimony is considered credible.

   92. Using statistical methods in Medicaid overpayment determinations is a common and well-accepted standard of practice. Statistical modeling in Medicaid auditing scientifically and accurately determines the extent of overpayments in a population of payments from a small sample of overpayments drawn from the population of payments. Statistical modeling is capable of providing reliable estimates of the integrity, or lack thereof, of a Medicaid provider's billings, within reasonable time and resource constraints.

   93. In the statistical formula, a sample of claims is used to obtain a valid statistical estimate of the overpayment, if any, associated with the entire population of claims from which the sample of claims was drawn. A point estimate, being the best estimate the sample has to offer of the overpayment, is taken; and then a factor, allowing for the uncertainty associated with the sample, is subtracted such that there is a specified level of confidence that what is obtained is the conservative estimate of what the total population overpayment would be. The point estimate is referred to as "the lower 95 percent confidence bound," 8/ and the number obtained is a

       number which one "can be 95 percent confident that it is an underestimate of what the total overpayment would be" 9/ if the entire population was sampled.

   94. Respondent complied with the statistical methodology.

       
       

       The random selection process and the ad hoc computer report were valid and reliable. The results of the sampling and extrapolation were valid and reliable on the basis of the total population of Petitioner's Medicaid patients was pediatric patients and the results were limited to Petitioner's Medicaid patients under the age of 21. Further, the sample size of 20 Medicaid recipients from the total population of 85 was adequate.

   95. However, the results of the sampling and extrapolation are not reliable as they pertain to the failure of Respondent to take into consideration the granted prior authorizations. Respondent is compelled and should be provided an opportunity to re-apply its statistical methodology in light of granted prior authorizations not being considered. Uncertainty now exists as to what effect the granted prior authorizations would have on the outcome of the total overpayments.

   96. The denial of all of Petitioner's claims was a situation of first impression for Respondent. Prior to the instant case, Respondent had had no chiropractor's Medicaid claims go through peer review and denial recommended.

   97. By letter dated February 4, 1998, Respondent forwarded to Petitioner a Preliminary Agency Audit Report (Preliminary Audit Report). The Preliminary Audit Report informed Petitioner, among other things, that Respondent's preliminary determination was that Petitioner had received an overpayment of $70,518.26 due to the claims being determined not medically necessary, and requested, among other things, that Petitioner submit any additional information or documentation which may reduce the overpayment. The Preliminary Audit Report also informed Petitioner of the overpayment calculation and statistical formula used by Respondent.

   98. In response to the request for additional information or documentation, Petitioner forwarded to Ms. Jensen a videotape and testimonials. Ms. Jensen did not send the testimonials and videotape to Dr. Hoffman, the peer reviewer, for his review because these items (1) were determined by her to have been created prior to recording of the medical records at issue, and, therefore, did not constitute a medical record for review; and

       (2) were, consequently, not relevant. The undersigned is persuaded and a finding of fact is made that the testimonials and videotape were not relevant and need not have been submitted to Dr. Hoffman for his review.

   99. By letter dated May 5, 1998, Respondent forwarded to Petitioner its Final Agency Audit Report (Final Audit Report).

       The Final Audit Report, based upon the recommendations of

       
       

       Dr. Hoffman, notified Petitioner, among other things, that the final determination was that he had received an overpayment of

       $70,518.26, due to the Medicaid claims not being medically necessary. The Final Audit Report also notified Petitioner, among other things, of the overpayment calculation and statistical formula used by Respondent. Moreover, Petitioner was notified that his type of violation warranted termination from the Medicaid program and a $2,000 fine, but that, in lieu of termination from the Medicaid program, he could continue as a provider by paying a $5,000 fine.

   100. In a subsequent letter to Petitioner, regarding clarification of continued participation in the Medicaid program, Ms. Jensen explained that, as a requirement for continued participation in the Medicaid program, in addition to the $5,000 fine, Petitioner must comply with Medicaid policy and Florida Statutes and rules. Petitioner was placed on notice that to continue as a Medicaid provider he must abide by Medicaid billing requirements.

   101. Respondent's Final Audit Report did not contain any notice of mediation being available. Section 120.573, Florida Statutes, requires notice of whether mediation (settlement) is available in agency action that affects substantial interests. There is no dispute that Respondent's Final Audit Report affects

        Petitioner's substantial interests. No evidence was presented that either Petitioner inquired about mediation or that Petitioner or Respondent sought or desired mediation. Moreover, no evidence was presented that Petitioner was harmed or suffered as a result of not receiving the notice.

   102. No evidence was presented to support a finding that the basis of the audit findings involved a conspiracy. A finding of fact is made that the basis of the audit findings does not involve a conspiracy between Respondent and its employees and Dr. Jones and Dr. Hoffman and Dr. McClave or anyone else.

   103. Respondent did not initiate any disciplinary action against Petitioner's license as a chiropractor and, therefore, Subsections 455.225(1) and 455.621(1), Florida Statutes, are not applicable.

   104. No evidence was presented that any criminal action was referred or taken against Petitioner as a result of Respondent's audit. No evidence was presented that Respondent suspected Petitioner of having committed a criminal violation, that a criminal act had been committed by Petitioner, or that Respondent had determined that Petitioner had committed a criminal act.

        CONCLUSIONS OF LAW

        
        

   105. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes.

   106. The burden of proof is on Respondent to establish by a preponderance of the evidence that its Final Agency Audit Report should be sustained. South Medical Services, Inc. v.

        Agency for Health Care Administration, 653 So. 2d 440 (Fla. 3d DCA 1995).

   107. Respondent is charged with overseeing the Florida Medicaid program and recovering overpayments of Medicaid monies. Section 409.913, Florida Statutes (1997).

   108. Section 409.13, Florida Statutes(1997), provides in pertinent part:

        1. For purposes of this section, the term:

           * * *

           
           

           1. "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. Determination of medical necessity must be

              made by a licensed physician employed by or under a contract with the agency and must be based upon information available at the time the goods or services are provided.

           2. "Overpayment" includes any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake.

           * * *

           
           

        2. The agency shall conduct, or may cause to be conducted by contract or otherwise, reviews, investigations, analyses, audits, or any combination thereof, to determine possible fraud, abuse, overpayment, or recipient neglect in the Medicaid program and shall report the findings of any overpayments in audit reports as appropriate.

           * * *

           
           

           (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. Medical 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.

           * * *

           1. The agency may seek any remedy provided by law, including, but not limited to, the remedies provided in subsections (12) and (15) and s. 812.035, if:

              * * *

              
              

              (d) The provider has failed to maintain medical records made at the time of service, or prior to service if prior authorization is required, demonstrating the necessity and appropriateness of the goods or services rendered;

              * * *

              
              

           2. The agency may impose any of the following sanctions on a provider or a person for any of the acts described in subsection (14):

           * * *

           
           

           (c) Imposition of a fine of up to $5,000 for each violation. . . .

           * * *

           
           

           1. In making a determination of overpayment to a provider, the agency must use accepted and valid auditing, accounting, analytical, statistical, or peer-review methods, or combinations thereof. Appropriate statistical methods may include, but are not limited to, sampling and extension to the population, parametric and nonparametric statistics, tests of hypotheses, and other generally accepted statistical methods. Appropriate analytical methods may include, but are not limited to, reviews to determine variances between the quantities of products that a provider had on hand and available to be purveyed to Medicaid recipients during the review period and the quantities of the same products paid for by the Medicaid program for the same period, taking into appropriate consideration sales of the same products to non-Medicaid customers during the same

              period. In meeting its burden of proof in any administrative or court proceeding, the agency may introduce the results of such statistical methods as evidence of overpayment.

              
              

           2. When making a determination that an overpayment has occurred, the agency shall prepare and issue an audit report to the provider showing the calculation of overpayments.

              
              

           3. The audit report, supported by agency work papers, showing an overpayment to a provider constitutes evidence of the overpayment. . . .

           
           

           (22)(a) In an audit or investigation of a violation committed by a provider which is conducted pursuant to this section, the agency is entitled to recover up to $15,000 in investigative, legal, and expert witness costs if the agency's findings were not contested by the provider or, if contested, the agency ultimately prevailed.

           * * *

           
           

           (24)(a) The agency may withhold Medicaid payments to a provider, up to the amount of the overpayment as determined by final agency audit report, pending completion of legal proceedings under this section. If the agency withholds payments under this section, the Medicaid payment may not be reduced by more than 10 percent. If it has determined that an overpayment has not occurred, the payments withheld must be paid to the provider within 60 days with interest at the rate of 10 percent a year. . . .

           (b) Overpayments owed to the agency bear interest at the rate of 10 percent per year from the date of determination of the overpayment by the agency, and payment arrangements must be made at the conclusion of legal proceedings. A provider who does not adhere to an agreed-upon repayment

           schedule may be terminated by the agency for nonpayment or partial payment.

           
           

   109. Respondent demonstrated that it used accepted and valid auditing, analytical, and statistical methods in the determination of the overpayment to Petitioner.

   110. Medical necessity is a required prerequisite to payment of Medicaid claims under the Medicaid program. Medical necessity for services rendered must be documented by records made at the time the services are rendered. In order for medical services to be medically necessary, both the medical basis and the specific need for the services must be fully and properly documented in the Medicaid recipient's medical records.

   111. Respondent is the final arbiter of medical necessity for determinations of medical necessity. Respondent used a contracted peer reviewer to recommend whether Petitioner's medical records of the pediatric Medicaid recipients showed that the services rendered by Petitioner were medically necessary.

   112. Respondent demonstrated that the medical services provided by Petitioner to the pediatric Medicaid recipients were not medically necessary, as recommended by the peer reviewer, except as to the granted prior authorizations. Petitioner failed to fully and properly document in the pediatric Medicaid recipients' medical records both the medical basis and the specific need for the services, except as to the granted prior

        authorizations. A showing of medical necessity is for the granting of prior authorization. Petitioner satisfied the requirement of medical necessity for the granting of the prior authorizations prior to Dr. Hoffman's peer review.

   113. Respondent may require repayment, as appropriate, in any situation in which medical necessity is not demonstrated in medical records. Repayment of the Medicaid claims, except as to the granted prior authorizations, is appropriate and justified.

   114. Respondent's Final Agency Audit Report is valid and should be sustained, except as to the granted prior authorizations and as to the total of the overpayment. Respondent is compelled to re-calculate and re-apply its statistical formula based upon the removal of granted prior authorizations from the random sample of Medicaid recipients under the age of 21.

   115. Petitioner argues several issues which have not been addressed. He contends that Respondent's Final Agency Audit Report (Final Audit Report) is defective and unenforceable because Respondent failed to notice mediation, pursuant to Section 120.573, Florida Statutes, in the Final Audit Report. Section 120.573, Florida Statutes, requires notice of whether mediation, commonly referred to as settlement, is available in agency action that affects substantial interests. It is undisputed that the Final Audit Report did not include such

        notice. Reasonableness is the standard for determining the adequacy of notice in administrative proceedings. Varney v. Florida Real Estate Commission, 515 So. 2d 383 (Fla. 5th DCA 1987). Notice, offering a point of entry for administrative relief, is sufficient if it is specific enough to inform the accused with reasonable certainty of the nature of the charges. Smith v. Department of Health and Rehabilitative Services, 555 So. 2d 1254, 1256 (Fla. 3d DCA 1989); Seminole County Board of

        County Commissioners v. Long, 422 So. 2d 938, 940 (Fla. 5th DCA 1982). The inquiry must also examine whether the error in the notice is material. In administrative matters, an error is generally found to be material where a party is not apprised of either the right to a hearing or as to the procedure involved in requesting a hearing. City of St. Cloud v. Department of Environmental Regulation, 490 So. 2d 1356, 1357 (Fla. 5th DCA

        1986); Brookwood Extended Care Centers, Inc. v. Department of Health and Rehabilitative Services, 453 So. 2d 865, 866 (Fla. 1st DCA 1984); FFEC-Six, Inc. v. Florida Public Service Commission, 425 So. 2d 152, 153 (Fla. 1st DCA 1983).

   116. There is no dispute that Respondent's Final Audit Report affects Petitioner's substantial interests. The undersigned is persuaded that the Final Audit Report was specific enough to inform Petitioner with reasonable certainty of the nature of the action against him, provided Petitioner a

        point of entry, and apprised Petitioner of a right to a hearing and the procedure involved in requesting a hearing. No evidence was presented that either Petitioner inquired about mediation or that Petitioner or Respondent sought or desired mediation. No evidence was presented that Petitioner was harmed or suffered as a result of not receiving the notice. The undersigned is also persuaded that Respondent's failure to include notice of whether mediation was available in the Final Audit Report was not material error.

   117. Petitioner also contends that Respondent improperly pursued this matter because Respondent should have referred this matter to Florida's Attorney General, pursuant to Section 409.913(4), Florida Statutes, as it constituted a criminal violation. Section 409.913, Florida Statutes, provides in pertinent part:

        (4) Any suspected criminal violation identified by the agency must be referred to the Medicaid Fraud Control Unit of the Office of the Attorney General for investigation.

        
        

        There is no evidence that Respondent suspected that a criminal violation had been committed or that a criminal act had been committed or that Respondent had made a determination that a criminal act had been committed. Consequently, the said statutory provision is not applicable.

   118. Further, Petitioner contends that, in violation of Subsection 409.913(11)(a), Florida Statutes, Respondent failed to release information to him about the complaint filed against him after probable cause was found. Section 409.913, Florida Statutes, provides in pertinent part:

        (11) The complaint and all information obtained pursuant to an investigation of a Medicaid provider, . . . relating to an allegation of fraud, abuse, or neglect are confidential and exempt from the provisions of s. 119.07(1):

        (a) Until the agency takes final agency action with respect to the provider and requires repayment of any overpayment, or imposes an administrative sanction; . . . .

        
        

        The undersigned is not persuaded that Respondent acted in violation of the said statutory provision. Respondent is required to report its findings of any overpayment in an audit report. Subsection 409.913(2), Florida Statutes. Respondent's Preliminary Agency Audit Report, which reported Respondent's findings of the overpayment, notified Petitioner of the charges brought against him, as a result of a complaint by Dr. Jones.

        10/ Respondent's Final Agency Audit Report was its final agency action, which also notified Petitioner of the charges brought against him.

   119. Respondent requests, among other things, that Petitioner be required to pay for investigative, legal, and expert witness costs pursuant to Subsection 409.913(22)(a),

        Florida Statutes. Fundamental fairness requires that Respondent be provided an opportunity to present evidence regarding its costs and that Petitioner be provided an opportunity to present evidence in opposition. The undersigned is unable to make a determination regarding investigative, legal, and expert witness costs. Respondent can provide a forum for the presentation of such evidence outside of and subsequent to the proceedings before the undersigned.

   120. Other issues not addressed by the undersigned, but raised by Petitioner, are not considered to be pertinent to the disposition of the case at hand.

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 against Henry M. Rubinstein, D.C. and therein:

1. Sustaining the failure of Dr. Rubinstein's medical records, except as to granted prior authorizations, for Medicaid recipients under the age of 21 for the period from 9/1/94 through 9/30/96, to demonstrate medical necessity.

2. Sustaining the Final Agency Audit Report, except as indicated and consistent with this Recommended Order.

3. Requiring Dr. Rubinstein to repay overpayments, without interest, in an amount subsequently determined in a proceeding by the Agency for Health Care Administration and within a time period under terms and conditions deemed appropriate.

4. Imposing a fine of $5,000.

DONE AND ENTERED this 11th day of April, 2000, in Tallahassee, Leon County, Florida.

ERROL H. POWELL

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 11th day of April, 2000.

ENDNOTES

1/ Dr. Jones is also Speaker pro tempore of the Florida House of Representatives and has been in the Florida Legislature since 1978.

2/ Dr. Hoffman's testimony was presented by deposition.

3/ Dr. Hoffman testified that the medical record must contain "confirmed symptoms, very specific individualized examinations and a confirmed diagnosis of the illness, and . . . the treatment [must] not be in excess of the recipient's needs."

4/ In his reports (Respondent's Exhibits numbered 7 and 8), Dr. Hoffman used the term "SOAP," which is an acronym for

symptoms, objective findings, analysis, and treatment plan and which are not inconsistent with the Medicaid guidelines.

5/ The Patient numbers correspond to the "Pt. No." reflected on Respondent's Exhibit numbered 5.

6/ This Administrative Law Judge performed the calculations for the prior authorizations for all of the Medicaid recipients in the random sample based upon the medical records, which contained each prior authorization granted and the dollar amount for each. There was no testimony regarding the dollar amount of the prior authorizations.

7/ Dr. McClave's testimony was presented by deposition. 8/ Testimony by Dr. McClave.

9/ Ibid.

10/ This Administrative Law Judge is not persuaded by Respondent's position that the term "complaint" does not refer to Dr. Jones' letter written to Respondent, regarding Petitioner's pediatric Medicaid claims, which initiated Respondent's investigation, as to overpayments.

COPIES FURNISHED:

Sam Power, Agency Clerk

Agency for Health Care Administration Fort Knox Building 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308-5403

Julie Gallagher, General Counsel Agency for Health Care Administration Fort Knox Building 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308-5403

Henry M. Rubinstein, D.C. 9848 East Fern Street Miami, Florida 33156

Mark S. Thomas, Esquire

Agency for Health Care Administration Fort Knox Building 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308-5403

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: 98-002772

Orders for Case No: 98-002772