STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AGENCY FOR HEALTH CARE ADMINISTRATION,

Petitioner,

vs.

AMADO VIERA, d/b/a VIERA MEDICAL CENTERS,

Respondent.

/

Case No. 14-1671MPI

RECOMMENDED ORDER

This case came before Administrative Law Judge John G. Van Laningham for final hearing by video teleconference on December 4 and 5, 2014, at sites in Tallahassee and West Palm Beach, Florida.

APPEARANCES

For Petitioner: Jeffries H. Duvall, Esquire

Agency for Health Care Administration Fort Knox Building III, Mail Stop 3 2727 Mahan Drive

Tallahassee, Florida 32308

For Respondent: G. Michael Keenan, Esquire

G. Michael Keenan, P.A.

1700 Old Okeechobee Road, Suite 103 West Palm Beach, Florida 33490

STATEMENT OF THE ISSUE

The issue for determination is whether Respondent must repay Petitioner an amount of up to $144,471.25 in alleged Medicaid overpayments, for paid claims covering the period from January 1, 2010, to December 31, 2012.

PRELIMINARY STATEMENT

Petitioner Agency for Health Care Administration ("AHCA" or the "Agency") is the state agency responsible for administering the Florida Medicaid Program. Respondent Amado Viera, d/b/a Viera Medical Centers ("VMC"), is a Medicaid provider.

After auditing VMC's claims-payment history and selected medical records, AHCA issued a Final Audit Report ("FAR") on March 11, 2014, wherein it alleged that VMC had been overpaid

$179,660.46 for paid claims covering the period from

January 1, 2010, to December 31, 2012. By letter dated April 3, 2014, VMC requested an administrative hearing on the overpayment assessment. The Agency referred the matter to the Division of Administrative Hearings ("DOAH"), which opened a file on

April 15, 2014.

At the final hearing, which took place as scheduled on December 4 and 5, 2014, with both parties present, the Agency presented four witnesses, namely its employees Robi Olmstead and Jennifer Ellingsen, together with Ronald Machado, M.D., who

testified as a medical expert (both at hearing and by deposition); and Fred Huffer, Ph.D., a statistician whose deposition was received in lieu of a personal appearance. AHCA offered 17 exhibits, identified as Petitioner's Exhibits 1 through 15 and 17, and Joint Exhibit 16, all of which were admitted into evidence. Joint Exhibit 16 is a composite exhibit comprising the medical records for 35 of VMC's patients.

VMC called two witnesses: Amado Viera, M.D., and L. Lamar Blount, a health-care consultant who testified as an expert in the field of Medicaid reimbursement. In addition, VMC tendered Respondent's Exhibits JJ, KK, LL, MM, and NN, and these were received into evidence. The record was held open for VMC to submit additional records, and on March 9, 2015, the undersigned admitted Respondent's Composite Exhibit OO, without objection.

The undersigned took official recognition of all Florida Statutes, Florida Administrative Code Rules, and Medicaid handbooks asserted to be relevant.

The two-volume final hearing transcript was filed on February 25, 2015. The parties timely filed proposed recommended orders ahead of the established deadline, which (after two extensions) was March 27, 2015. These papers were carefully considered in the preparation of this Recommended Order.

Unless otherwise indicated, citations to the Florida Statutes refer to the 2014 Florida Statutes.

FINDINGS OF FACT

1. AHCA is the agency responsible for administering Medicaid in the state of Florida.

2. VMC was, at all relevant times, an enrolled Medicaid provider authorized to receive reimbursement for covered goods and services rendered to Medicaid beneficiaries.

3. Exercising its statutory authority to oversee the integrity of Medicaid, the Agency conducted a review of VMC's medical records to verify that claims paid by Medicaid during the period from January 1, 2010, to December 31, 2012 (the "Audit Period"), had not exceeded authorized amounts.

4. During the Audit Period, VMC had submitted claims for 9,783 discrete billable goods or services ("BGOSs") rendered to 1,313 patients (or recipients), on which Medicaid had paid a total of $459,572.82. Rather than examine the records of all 1,313 recipients served, the Agency selected a sample of 35 patients, whose records were reviewed first by a nurse consultant, and then by a physician "peer reviewer."

5. VMC had submitted claims for 302 BGOSs during the Audit Period in connection with the 35 patients in the sample population. Medicaid had paid a total of $13,909.94 on these claims. The Agency's reviewers determined that, for various

   
   

   reasons, VMC had received a total of $6,901.64 in reimbursement of claims in the sample for services not covered by Medicaid, in whole or in part.

6. Having discovered this alleged "empirical overpayment" of $6,901.64, the Agency employed a statistical formula for cluster sampling——for purposes of which a "cluster" comprises all claims relating to an individual patient in the sample population——to ascertain the alleged "probable total overpayment" that VMC had received from Medicaid for the 9,783 BGOSs presented in the totality of claims submitted during the Audit Period.1/ The statistical analysis revealed a probable total overpayment of $179,660.46, with a 95 percent probability that the actual overpayment is equal to or greater than such amount. (As discussed below, VMC disputes the cluster sampling methodology that AHCA used in determining the probable total overpayment based on the empirical overpayment associated with the sample population.)

7. Shortly before the final hearing, based on documents which VMC belatedly produced, the Agency revised its preliminary adjudication of certain claims associated with four of the patients in the sample population, resulting in a reduction of the alleged empirical overpayment to $5,976.00. AHCA's statistical formula extended this figure to VMC's entire patient

   
   

   population for the Audit Period, calculating a total probable overpayment of $144,471.25.

8. VMC does not dispute every one of AHCA's preliminary adjudications. To begin, for five recipients (Patient Nos. 15, 17, 19, 21, and 28) AHCA found no overpayments. Thus, none of the claims presented for BGOSs furnished to these patients is in dispute. In many additional instances, VMC agrees not only with the Agency's determination that Medicaid paid too much for a particular BGOS (or "encounter" as VMC refers to an individual good or service for which a claim was submitted), but also with the amount of the alleged overpayment. As a result of these admissions, none of the claims presented for BGOSs furnished to Patient Nos. 2, 9, 11, 13, 16, 25, and 34 is in dispute.

9. In some instances, VMC suggests that the empirical overpayment for a particular BGOS should be more than the amount that AHCA has alleged. The sum of these suggested additional overpayments ("SAOs") is $303.19. Owing to VMC's inculpatory suggestions of insufficiently aggressive recoupment, it is undisputed that all of the overpayments AHCA has alleged in connection with the claims submitted for the treatment of Patient Nos. 3, 10, 23, 24, 26, and 32 are, in fact, overpayments.

10. In sum, out of 35 patients in the sample population, only 17 involve one or more disputed encounters, where the

    
    

    existence of an overpayment must be decided. As for the 18 patients listed in the two preceding paragraphs, all of the overpayments alleged in those clusters are accepted as such based on the evidence presented, including the Agency's work papers and VMC's admissions, leaving only the question of what to do about the SAOs.

11. All told, VMC admits having received an empirical overpayment of at least $2,488.50. VMC contends, however, that it was underpaid a total of $27.76 in connection with two BGOSs provided to Patient No. 18. VMC asserts that this alleged underpayment offsets the admitted overpayment by an equal amount, so that, in VMC's eyes, the net admitted empirical overpayment (taking into account the SAOs totaling $303.19) is

    $2,763.93.2/

    
    

12. VMC disputes the Agency's determinations regarding 55 specific BGOSs. Of these, AHCA found in 48 instances that the particular service which VMC had provided was not medically necessary. These 48 determinations relate to ten separate diagnostic procedures. AHCA further found a single instance of incomplete documentation in connection with one of those same ten procedures, bringing to 49 the total number of disputed adjudications pertaining to ten different procedures.

13. Four disputed Agency determinations relate to what are known as "evaluation and management services" ("E/M services")

    
    

    provided (a) in the doctor's office or other outpatient setting to new or established patients or (b) to patients in hospitals. E/M services are billed to Medicaid using codes that reflect the intensity level of service provided. The codes are called "CPT codes"——"CPT" being short for Current Procedural Terminology®, a registered trademark of the American Medical Association, which developed and keeps up-to-date this widely used system for reporting medical procedures and services.

14. Medicaid reimburses providers for E/M services pursuant to fee schedules that specify the amount payable for each level of service according to the CPT codes. It is the provider's responsibility, in presenting a claim to Medicaid for payment, to determine the appropriate CPT code for the service provided. Medicaid generally pays claims upon receipt, without second-guessing the provider's judgment regarding the level of care.

15. When the Agency conducts an investigation to determine possible overpayment to a provider, however, one thing it might review is whether the provider's claims were properly "coded"—— that is, whether the CPT codes on the bills accurately reflected the level of service provided to the patients, as documented in the medical records. If the Agency determines that the level of service provided was lower than that claimed, then it will "downcode" the claim to the proper level and seek to recoup from

    
    

    the provider, as an overpayment, the difference between what Medicaid paid on the claim as originally coded and what it would have paid on the claim as downcoded. In this case, four of the

    55 disputed claim determinations involve a downcode.

    
    

    Collectively, these four disputed items total $13.55.

    
    

16. In two instances involving Patient No. 18, VMC agrees with AHCA's determination that there was no overpayment for the BGOS in question, but it asserts that Medicaid paid too little on the claims, which could have been billed under higher paying codes. As mentioned above, these alleged underpayments ("UPs") total $27.76.

17. The table below summarizes the disputed overpayments, sorted by disputed overpayment ("OP") amount per patient (largest to smallest):

    Pt. #	Disputed OP (w/SAOs)	Admitted OP (w/SAOs)	Alleged OP	Number of Disputed BGOSs	Number of SAOs	Amount of SAOs	Number of alleged UPs	Amount of Claimed UP
    22	545.00	401.83	946.83	8
    7	523.79	57.75	581.54	5
    35	466.10	112.83	578.93	7
    6	376.65	91.89	468.54	5	1	15.98
    31	194.88	73.21	268.09	3	1	14.85
    27	157.73	479.12	636.85	2
    8	157.73	12.85	170.58	2
    5	153.54	16.61	170.15	4
    18	150.97	280.56	431.53	5			2	-27.76
    4	106.29	38.85	145.14	1
    33	105.44	182.80	288.24	2
    14	89.94	120.37	210.31	1	1	20.60
    20	84.39	264.56	348.95	6	11	168.79
    12	51.09	0	51.09	1
    30	47.53	0	47.53	1
    29	35.46	50.99	86.45	1	1	15.98
    1	4.77	0	4.77	1
    Subtotal	3,251.30	2,184.22	5,435.52	55	15	236.20	2	-27.76

    
    

    
    

    Pt. #	Disputed OP (w/SAOs)	Admitted OP (w/SAOs)	Alleged OP	Number of Disputed BGOSs	Number of SAOs	Amount of SAOs	Number of alleged UPs	Amount of Claimed UP
    2	0	23.32	23.32
    9	0	23.32	23.32
    11	0	37.58	37.58
    13	0	32.57	32.57
    16	0	33.10	33.10
    25	0	46.85	46.85
    34	0	36.14	36.14
    Subtotal	0	232.88	232.88
    32	(1.50)	37.64	36.14		1	1.50
    26	(2.00)	203.04	201.04		1	2.00
    3	(15.56)	37.64	22.08		1	15.56
    24	(15.97)	34.13	18.16		1	15.97
    10	(15.98)	31.07	15.09		1	15.98
    23	(15.98)	31.07	15.09		1	15.98
    Subtotal	(66.99)	374.59	307.60		6	66.99
    15	n/a		0
    17	n/a		0
    19	n/a		0
    21	n/a		0
    28	n/a		0
    TOTAL	3,184.31	2,791.69	5,976.00	55	21	303.19	2	-27.76

    
    

18. Before addressing the disputed BGOSs, two subjects will be resolved, to further refine the issues. First, the undersigned has decided that each of the 21 separate SAOs should be treated as no more or less than corroboration that the alleged overpayment is correct——not used as a basis for increasing the amount AHCA alleges is due. Thus, for example, if AHCA alleged that the overpayment for a particular encounter was $36.14 and VMC offered evidence that the overpayment for that encounter was actually $37.64, the undersigned will find that the undisputed overpayment is $36.14. As a result, nothing else needs to be decided in regard to any of the claims

    
    

    presented for BGOSs furnished to Patient Nos. 3, 10, 23, 24, 26,

    
    

    and 32.

    
    

19. Second, the undersigned rejects VMC's assertion that the empirical overpayment should be reduced by a total of $27.76 because it provided BGOSs to Patient No. 18 for which it did not bill Medicaid enough.3/ This reduces the number of disputed encounters from 55 to 53.

20. The table below summarizes the disputed overpayments after taking account of the foregoing determinations, sorted by disputed overpayment amount per patient (largest to smallest):

    Pt. #	Disputed OP	Admitted OP	Alleged OP	Number of Disputed BGOSs
    22	545.00	401.83	946.83	8
    7	523.79	57.75	581.54	5
    35	466.10	112.83	578.93	7
    6	392.63	75.91	468.54	5
    20	253.18	95.77	348.95	6
    31	209.73	58.36	268.09	3
    27	157.73	479.12	636.85	2
    8	157.73	12.85	170.58	2
    5	153.54	16.61	170.15	4
    18	150.97	280.56	431.53	3
    14	110.54	99.77	210.31	1
    4	106.29	38.85	145.14	1
    33	105.44	182.80	288.24	2
    29	51.44	35.01	86.45	1
    12	51.09	0	51.09	1
    30	47.53	0	47.53	1
    1	4.77	0	4.77	1
    Subtotal	3,487.50	1,948.02	5,435.52	53
    2	0	23.32	23.32	0
    3	0	22.08	22.08	0
    9	0	23.32	23.32	0
    10	0	15.09	15.09	0
    11	0	37.58	37.58	0
    13	0	32.57	32.57	0
    16	0	33.10	33.10	0
    23	0	15.09	15.09	0
    24	0	18.16	18.16	0
    25	0	46.85	46.85	0

    
    

    
    

    Pt. #	Disputed OP	Admitted OP	Alleged OP	Number of Disputed BGOSs
    26	0	201.04	201.04	0
    32	0	36.14	36.14	0
    34	0	36.14	36.14	0
    Subtotal	0	540.48	540.48	0
    15	n/a		0	n/a
    17	n/a		0	n/a
    19	n/a		0	n/a
    21	n/a		0	n/a
    28	n/a		0	n/a
    TOTAL	3,487.50	2,488.50	5,976.00	53

    
    

21. Each side presented opinion testimony regarding the compensability of the disputed BGOSs under Medicaid. On the question of medical necessity, AHCA's medical expert was Ronald Machado, M.D., upon whose testimony, together with the notations of the Agency's nurse reviewer appearing in the audit worksheets, AHCA relies in support of its overpayment allegations. VMC's medical expert was Dr. Michael Sterns, whose written opinions were presented through the report of L. Lamar Blount, a health-care consultant who, at VMC's request, conducted a shadow audit of the claims AHCA had examined. To assist in his review, Mr. Blount engaged the services of a coding specialist (Rae Freeman) and a statistician (Frank Collins) in addition to Dr. Sterns.

22. The undersigned has considered all of the opinion testimony presented, together with the medical records and other evidence received. Each of the findings that follow is based upon a preponderance of the evidence which the undersigned deemed credible and persuasive, and each constitutes a rejection

    
    

    of other evidence to the extent of any conflict between the finding and such evidence.

23. In determining whether a particular claim should be allowed or disallowed, the undersigned considered, as necessary, the relevant provisions of the pertinent statutes, rules, and Medicaid handbooks, the operative terms of which are identified in the Conclusions of Law following these Findings of Fact.

24. The undersigned's determinations as to each of the disputed BGOSs are set forth below in summary fashion, using abbreviations where possible. This is consistent with the manner in which the parties' respective experts addressed the individual claims. The brevity of the discrete rulings is not a reflection of the attention that has been given each item, all of which were carefully and thoroughly examined.

25. For analytical efficiency, the undersigned sorted the disputed claims by procedure, from highest to lowest overpayment subtotal. The claim-specific findings are presented below in that fashion. The descriptions of the procedures are adapted from the American Medical Association's Physician's Current Procedural Terminology® Handbook. Each disputed claim is identified by Patient Number – Encounter Number ("Pt. # -

    Enc. #"), using the recipient numbers assigned by AHCA. The Encounter Numbers correspond to the identically designated numbers in column C of Appendix D to Respondent's Exhibit JJ,

    
    

    which in turn match the claim numbers appearing in AHCA's "Listing of All Claims in Sample by recip name" worksheet, a 73- page document attached to the FAR, Petitioner's Exhibit 4.

26. Ultrasound, retroperitoneal (e.g., renal, aorta, nodes), real time with image documentation, complete – CPT

    76770. A complete ultrasound examination of the retroperitoneum consists of real time scans of the kidneys, abdominal aorta, common iliac artery origins, and inferior vena cava, including any demonstrated retroperitoneal abnormality. If the clinical history suggests urinary tract pathology, a complete evaluation of the kidneys and urinary bladder also comprises a complete retroperitoneal ultrasound. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 76770
    5-15	NMN	52.00	MN established by diagnosis of microscopic hematuria. 0.00
    6-2	NMN	53.44	78-year-old man presents with hematuria and nocturia plus a renal cyst. MN established to rule out BPH (enlarged prostate). 0.00
    8-1	NMN	51.44	Patient reports pain and history of kidney stones during review of genitourinary ("GU") system plus low back pain. MN established to rule out recurrence of renal calculi. 0.00
    18-12	NMN	51.44	Patient complains of flank pain, giving reason to rule out renal calculi. No evidence that a kidney, ureter, and bladder ("KUB") X-ray would have been cheaper, nor proof that renal US was outside generally accepted standards of medical practice. MN shown. 0.00
    18-27	NMN	52.00	Patient continues to complain of unexplained right flank/abdominal pain. Diagnoses of hydronephrosis and renal colic. MN established. 0.00

    
    

    
    

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 76770
    20-8	NMN	51.44	Patient presents with complaint of dark- colored urine. Dysuria and hematuria noted. MN shown. 0.00
    22-2	NMN	53.44	1/11/10 Patient experiencing unexplained hematuria. US revealed two kidney cysts. MN shown. 0.00
    22-11	NMN	53.44	7/12/10 US to follow up on kidneys cysts. No documentation of symptoms or need for such close monitoring. NMN 53.44
    22-16	NMN	53.44	11/10/10 Repeat US of kidney to monitor cysts. Excess of need for a benign condition. NMN 53.44
    22-21	NMN	51.44	11/29/11 Patient presents with hematuria and history of kidney cysts. MN established in light of symptom and need to reexamine the cysts for possible enlargement. 0.00
    27-17	NMN	53.44	No reason given for repeat study of kidney after apparently asymptomatic cyst found via renal US on 6/30/10. NMN 53.44
    29-4	NMN	51.44	Contemporaneous urinalysis ("UA") found occult blood and renal epithelial cells, warranting study to rule out kidney disease. MN shown. 0.00
    31-12	NMN	51.44	Patient in his early 70s complains of dysuria and abdominal pain. US not preceded by review of UA results and prostate exam. NMN 51.44
    31-20	NMN	52.00	Progress notes do not provide grounds for this study. NMN 52.00
    33-6	NMN	53.44	Patient presents with persistent hematuria notwithstanding treatment of UTI. MN shown. 0.00
    33-11	NMN	52.00	Patient reports dysuria and renal colic. MN for US established by new symptoms. 0.00
    35-2	NMN	51.44	Progress note reports patient complaint of nephrolithiasis plus hematuria per UA results. MN established. 0.00
    35-26	NMN	50.00	Patient presents with undiagnosed hematuria plus absence of menstruation. MN shown. 0.00
    Subtotal		938.72	263.76

    
    

27. Echocardiography, transthoracic, real-time with image

    
    

    documentation, complete, with spectral Doppler echocardiography,

    
    

    and with color flow Doppler echocardiography – CPT 93306. A standard echocardiogram is also known as a transthoracic

    
    

    echocardiogram ("TTE"). The echocardiography transducer (or probe) is placed on the chest wall of the patient, and images are taken through the chest wall. This noninvasive procedure allows for the assessment of the overall health of the patient's heart valves and degree of heart muscle contraction, which is an indicator of the ejection fraction. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 93306
    4-3	NMN	106.29	Patient presents with heart murmur and/or rub. TTE ordered to assess left ventricular ejection fraction ("LVEF") and rule out valvular disease of heart, which was confirmed by finding of mitral valve disease. MN shown. 0.00
    7-4	NMN	104.29	Patient presents with history of palpitations and chest pain and has a heart murmur on examination. MN for TTE shown. 0.00
    8-2	NO DOC	106.29	Patient presents with murmur, palpitation, and chest pain, as documented in progress note. TTE ordered to rule out valvular disease. Echocardiogram Report is in the file. Documentation shown. 0.00
    14-4	NMN	110.54	Teenage patient presents with recent history of seizure and loss of consciousness. TTE ordered to rule out mitral valve prolapse. MN shown. 0.00
    27-14	NMN	104.29	85-year-old man reports dizziness and has murmur on examination. TTE ordered to rule out worsening of valvular disease and assess LVEF. MN shown. 0.00
    31-10	NMN	106.29	Patient presents with heart murmur. TTE one year earlier found numerous abnormalities. TTE ordered to assess function and rule out worsening of condition. MN shown. 0.00
    35-23	NMN	104.29	Patient presents with complaint of migraine. No cardiac symptoms. History of mitral valve prolapse indicated. NMN 104.29
    Subtotal		742.28	104.29

    
    

28. Duplex scan of lower extremity arteries or arterial

    
    

    bypass grafts, complete bilateral study – CPT 93925. Duplex Doppler ultrasound uses standard ultrasound methods to produce an image of a blood vessel and the surrounding organs. A computer converts the Doppler sounds into a graph that provides information about the speed and direction of blood flow through the blood vessel being evaluated. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 93925
    6-9	NMN	156.21	Patient presents with limb swelling, symptomatic varicose veins, chronic venous insufficiency, and peripheral edema. MN shown. 0.00
    7-7	NMN	156.21	Patient presents with limb pain or swelling and symptomatic varicose veins. Diagnoses of peripheral artery disease and venous insufficiency. MN shown. 0.00
    35-9	NMN	156.21	Patient presents with lower extremity swelling, chronic venous insufficiency, and peripheral edema; heart murmur noted on exam. MN shown. 0.00
    Subtotal		468.63	0.00

    
    

29. Noninvasive physiologic studies of upper or lower

    
    

    extremity arteries, multiple levels or with provocative functional maneuvers, complete bilateral study (e.g., segmental

    blood pressure measurements, segmental Doppler waveform analysis, segmental volume plethysmography, segmental

    transcutaneous oxygen tension measurements, measurements with

    
    

    postural provocative tests, measurements with reactive hyperemia) – CPT 93923. The undersigned makes the following

    findings of fact regarding VMC's claims for this BGOS:

    
    

    
    

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 93923
    6-10	NMN	91.02	Patient presents with limb swelling, symptomatic varicose veins, chronic venous insufficiency, and peripheral edema. This study excessive in combination with lower extremity study of same date. NMN 91.02
    7-8	NMN	91.02	Patient presents with limb pain or swelling and symptomatic varicose veins. Diagnoses of peripheral artery disease and venous insufficiency. This study excessive in combination with lower extremity study of same date. NMN 91.02
    22-6	NMN	91.02	Patient presents with muscle pain in the left leg but progress note lacks support for this study to check blood flow. NMN 91.02
    35-10	NMN	91.02	Patient presents with lower extremity swelling, chronic venous insufficiency, and peripheral edema; heart murmur noted on exam. This study excessive in combination with lower extremity study of same date. NMN 91.02
    Subtotal		364.08	364.08

    
    

30. Duplex scan of extremity veins including responses to compression and other maneuvers, complete bilateral study – CPT

    93970/93971. The CPT code 93970 is described as a "complete

    
    

    bilateral study." The CPT code 93971 states: "unilateral or limited study." The undersigned makes the following findings of fact regarding VMC's claims for this BGOS:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 93970/93971
    7-5	NMN	122.74	Patient presents with limb pain or swelling and symptomatic varicose veins. Diagnoses of peripheral artery disease and venous insufficiency. This study excessive in combination with lower extremity study of same date. NMN 122.74
    22-7	NMN	122.74	Patient presents with muscle pain in the left leg but progress note lacks support for this study. NMN 122.74
    22-27 (93971)	NMN	70.20	Insufficient support in the progress notes for this study. NMN 70.20
    Subtotal		315.68	315.68

    
    

31. Ultrasound, pelvic (nonobstetric), real time with

    
    

    image documentation; complete – CPT 76856. Pelvic ultrasound codes are used for both female and male anatomy. Elements of a complete female pelvic examination include a description and measurement of the uterus and adnexal structures, endometrium, bladder, and of any pelvic pathology (e.g., ovarian cysts, uterine leiomyomata, free pelvic fluid). Elements of a complete male pelvic examination include the evaluation and measurement (when applicable) of the urinary bladder, prostate and seminal vesicles to the extent they are visualized transabdominally, and any pelvic pathology (e.g., bladder tumor, enlarged prostate, free pelvic fluid, pelvic abscess). The undersigned makes the following findings of fact regarding VMC's claims for this BGOS:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 76856
    5-5	NMN	51.09	Patient is reported to have pelvic pain on 5/3/11 and referral to GYN is made. Pelvic pain again noted on 8/24/11. Study performed on 9/13/11 found uterine fibroid. MN established. 0.00
    5-16	NMN	47.68	Excessive in light of retroperitoneal US of same date. NMN 47.68
    6-4	NMN	51.09	78-year-old man presents with hematuria and nocturia plus a renal cyst. Excessive in light of retroperitoneal US of same date. NMN 51.09
    12-2	NMN	51.09	Patient presents complaining of irregular periods, pelvic pain (non- radiating, pressure-like), nausea, and urinary changes for several weeks. MN for study shown. 0.00
    20-9	NMN	51.09	Patient presents with complaint of dark-colored urine. Dysuria and hematuria noted. Excessive in light of retroperitoneal US of same date. NMN 51.09
    Subtotal		252.04	149.86

    
    

32. Ultrasound, soft tissues of the head and neck (e.g.,

    
    

    thyroid, parathyroid, parotid), real time with image documentation – CPT 76536. The undersigned makes the following

    findings of fact regarding VMC's claims for this BGOS:

    
    

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 76536
    7-3	NMN	49.53	Patient presents complaining of neck mass and swollen glands. MN shown. 0.00
    18-10	NMN	47.53	Patient presents with complaints of memory loss and dizziness. Progress notes reflect presence of carotid bruits and possible neck swelling. Insufficient documentation of grounds for this study. NMN 47.53
    20-4	NMN	49.53	Patient presents with swollen glands and physical exam reveals thyroid abnormality. MN established. 0.00
    22-30	NMN	49.28	Insufficient documentation of grounds for the study; no mention of history or findings relating to thyroid issue. NMN 49.28
    30-1	NMN	47.53	Patient presents with swollen glands and neck lumps, complaining of dizziness, and physical exam reveals thyroid abnormality. MN established. 0.00
    Subtotal		243.40	96.81

    
    

33. Ultrasound, abdominal, real time with image documentation, limited (e.g., single organ, quadrant, follow-up)

    – CPT 76705. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 76705
    6-3	NMN	40.87	78-year-old man presents with hematuria and nocturia plus a renal cyst. Excessive in light of retroperitoneal US of same date. NMN 40.87
    20-7	NMN	42.87	Patient presents with complaint of dark-colored urine. Dysuria and hematuria noted. Excessive in light of retroperitoneal US of same date. NMN 42.87
    Subtotal		83.74	83.74

    
    

34. Ultrasound, abdominal, real time with image

    
    

    documentation; complete – CPT 76700. A complete ultrasound examination of the abdomen consists of scans of the liver, gallbladder, common bile duct, pancreas, spleen, kidneys and the upper abdominal aorta and inferior vena cava including any demonstrated abdominal abnormality. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 76700
    20-17	NMN	55.01	Patient presents with abdominal pain and abdominal mass related to an incisional hernia. This study was in excess of need in light of CT scan ordered same date. NMN 55.01
    Subtotal		55.01	55.01

    
    

35. Electrocardiogram, routine EKG with at least 12 leads; with interpretation and report – CPT 93000. The undersigned

    makes the following findings of fact regarding VMC's claims for this BGOS:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 93000
    35-25	NMN	10.37	Patient presents with heart murmur. TTE one year earlier found numerous abnormalities. This EKG excessive in combination with TTE ordered on same date to assess function and rule out worsening of condition. NMN 10.37
    Subtotal		10.37	10.37

    
    

36. Office or other outpatient visit (established patient)

    
    

    – CPT 99213. This level of care is located in the middle of the

    
    

    coding spectrum for office visits with established patients. Usually the presenting problems are of low to

    
    

    moderate severity. The documentation for this encounter requires two out of three of the following: (1) expanded problem focused history; (2) expanded problem focused examination; and (3) low complexity medical decision making. Physicians typically spend 15 minutes face-to-face with the patient in connection with a 99213-level appointment. In contrast, 99212 is a CPT code for office or other outpatient visit for the evaluation and management of an established patient with a problem focused history and examination, and straightforward medical decision making. The documentation for this encounter requires two out of three of the following:

    1. problem focused history; (2) problem focused examination; and (3) straightforward medical decision making. Physicians typically spend ten minutes face-to-face with the patient in connection with a 99212-level appointment.

37. The undersigned makes the following findings of fact regarding VMC's claims for office or other outpatient visits:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 99213
    1-1	LL - 99212	4.77	Problem focused history and exam plus straightforward medical decision making. 99212 4.77
    5-6	LL - 99212	2.77	Problem focused history and exam plus straightforward medical decision making. 99212 2.77
    35-19	LL - 99212	2.77	Problem focused history and exam plus straightforward medical decision making. 99212 2.77
    Subtotal		10.31	10.31

    
    

38. Initial Hospital Care – CPT 99223. The undersigned

    
    

    makes the following findings of fact regarding VMC's claim for a patient being admitted to the hospital:

    Pt.# - Enc.#	AHCA Determination	Disputed Overpayment	ALJ Determination of Overpayment – CPT 99223
    20-20	LL - 99221	3.24	Evidence supports 99221, not 99223 as billed. Applicable Fee Schedule (eff. Jan. 1, 2011) provides for payment of 49.12, not 52.36 as VMC urges. 3.24
    Subtotal		3.24	3.24

    
    

39. The table below summarizes the foregoing findings, showing the per-patient overpayments (including both the adjudicated and admitted subtotals per patient, listed in separate columns), sorted from lowest to highest numbered patient:

    Pt. #	ALJ Disallow	Admitted OP	Finding of OP
    1	4.77	0	4.77
    2	Undisputed	23.32	23.32
    3	Undisputed	22.08	22.08
    4	0	38.85	38.85
    5	50.45	16.61	67.06
    6	182.98	75.91	258.89
    7	213.76	57.75	271.51
    8	0	12.85	12.85
    9	Undisputed	23.32	23.32
    10	Undisputed	15.09	15.09
    11	Undisputed	37.58	37.58
    12	0	0	0
    13	Undisputed	32.57	32.57
    14	0	99.77	99.77
    15	n/a	n/a	n/a
    16	Undisputed	33.10	33.10
    17	n/a	n/a	n/a
    18	47.53	280.56	328.09
    19	n/a	n/a	n/a
    20	152.21	95.77	247.98
    21	n/a	n/a	n/a
    22	440.12	401.83	841.95
    23	Undisputed	15.09	15.09
    24	Undisputed	18.16	18.16
    25	Undisputed	46.85	46.85
    26	Undisputed	201.04	201.04
    27	53.44	479.12	532.56

    
    

    
    

    Pt. #	ALJ Disallow	Admitted OP	Finding of OP
    28	n/a	n/a	n/a
    29	0	35.01	35.01
    30	0	0	0
    31	103.44	58.36	161.80
    32	Undisputed	36.14	36.14
    33	0	182.80	182.80
    34	Undisputed	36.14	36.14
    35	208.45	112.83	321.28
    TOTAL	1,457.15	2,488.50	3,945.65

    
    

40. Thus, the undersigned finds that the entire empirical overpayment for the Audit Period is $3,945.65, an amount that comprises $1,457.15 as the sum of all adjudicated overpayments and $2,488.50 as the sum of all admitted overpayments. To be clear, each of the numbers in the "ALJ Disallow" column above is based on findings supported by a preponderance of the evidence. The figure of $1,457.15 is not supported, however, by clear and convincing evidence. The grand total of $3,945.65 is, more likely than not, the correct empirical overpayment for the claims in the sample population. The figure of $3,945.65 is not supported, however, by clear and convincing evidence.

41. As mentioned above, AHCA determines the probable total overpayment based upon the empirical overpayment observed in the sample population, using a statistical formula for cluster sampling to extend the empirical data to the provider's entire patient population. AHCA is statutorily authorized to use generally accepted statistical methods in making a determination of overpayment to a provider, and to offer the results of such

    
    

    statistical methods as proof of overpayment.4/ The formula that AHCA uses is reproduced below:

    
    

42. VMC contends that the statistical formula upon which AHCA has relied produces less accurate results than other methods that could have been used, and that AHCA made mistakes when it employed the formula in this case. The latter argument is rejected as contrary to the persuasive evidence, which shows that AHCA correctly performed the calculations required to implement the statistical formula for cluster sampling.

43. As for the efficacy of the Agency's formula, the undersigned accepts that there are other statistical methodologies that AHCA could use, and that it would be possible to obtain a more accurate result using other methods. The Agency does not dispute this. But, according to AHCA's expert

    
    

    witness, Dr. Fred Huffer, a statistician whose testimony the undersigned credits with qualifications as explained below, increasing the accuracy of the statistical methodology most likely would result in a higher probable total overpayment because there is supposed to be only a five percent chance that the figure AHCA's formula produces is too high. The undersigned determines that the statistical formula for cluster sampling that AHCA uses is a generally accepted, valid, and reliable method of extending the overpayment observed in a sample population to the entire relevant population.

44. That said, there is less to the relative persuasiveness of the number produced by the Agency's formula than meets the eye. The confidence level of 95 percent assumes that every numerical value going in to the formula is absolutely (not just probably) true. For some of the values, i.e., F, Bi, U, and N, this degree of confidence (namely, 100 percent) is justified. For others, i.e., Ai, it clearly is not. The total overpayment in the sample cluster is not an objective truth, such as the number of clusters in the random sample, or a mathematical constant such as pi. Rather, each alleged overpaid claim in the sample reflects a judgment by AHCA (or more precisely its medical reviewers) founded on findings of historical fact, legal conclusions, and determinations of ultimate fact. Indeed, each figure contributing to the total

    
    

    empirical overpayment numerically represents an ultimate factual determination based upon the application (and interpretation when necessary) of Medicaid rules to a limited body of evidence——mostly medical records——of past events. Of none (or very few) of those figures can it be said with 100 percent certainty that the number is absolutely (not just probably) true. No one involved in the decision making process is omniscient or infallible.

45. As here, the provider may dispute some or all of AHCA's preliminary adjudications of the claims behind the total alleged overpayment in the sample cluster and demand a hearing, at which each (disputed) individual overpayment in the sample cluster must be proved by a preponderance of the evidence. The standard of proof being what it is, the Agency does not need to prove each of the disputed overpayments to an absolute certainty. To recoup an overpayment, it is sufficient for AHCA to show with a 51 percent probability that the amount alleged to have been overpaid for a given claim is, in fact, the amount overpaid.

46. In the paragraphs above, the undersigned has set forth his findings regarding the disputed claims. Each individual finding of an overpayment reflects the undersigned's determination that the disallowed amount is, more likely than not, the correct adjudication of the disputed claim. There is,

    
    

    in the undersigned's estimation, approximately a 60 percent probability that the sum of all adjudicated overpayments ($1,457.15) is the correct figure, which satisfies the preponderance of evidence standard. In contrast, the undersigned estimates that there is approximately an 80 percent probability that the sum of all admitted overpayments ($2,488.50) is the correct figure, meaning that this portion of the empirical overpayment was established by clear and convincing evidence.

47. This discussion of the undersigned's relative confidence in the overpayment findings made in this Recommended Order is meant to demonstrate that using the figure $3,945.65 as the value Ai in the Agency's formula for cluster sampling, while consistent with the standard of proof for an action to recoup an overpayment, nevertheless injects uncertainty into the equation, which logically must reduce the confidence level in the formula's outcome from 95 percent to something less than that.5/ Based on the instant record, the undersigned cannot quantify the probable accuracy of the formula's output, as applied to the facts found here. The bottom line is that although the undersigned finds AHCA's statistical formula to be a sufficiently reliable method of calculating, to the degree of certainty required under the preponderance of evidence standard of proof, the total probable overpayment to VMC, the formula's

    
    

    output (in this instance) does not satisfy the stricter clear and convincing standard.6/

    CONCLUSIONS OF LAW

    
    

48. The Division of Administrative Hearings has personal and subject matter jurisdiction in this proceeding pursuant to sections 120.569 and 120.57(1), Florida Statutes.

49. The Agency is empowered to "recover overpayments and impose sanctions as appropriate." § 409.913, Fla. Stat. An "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."

    § 409.913(1)(e), Fla. Stat. Specifically, as well, the Agency is authorized to "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."

    § 409.913(11), Fla. Stat.

    
    

50. The burden of establishing an alleged Medicaid overpayment by a preponderance of the evidence falls on the Agency. S. Medical Servs., Inc. v. Ag. for Health Care Admin.,

    653 So. 2d 440, 441 (Fla. 3d DCA 1995); Southpointe Pharmacy v.

    
    

    Dep't of HRS, 596 So. 2d 106, 109 (Fla. 1st DCA 1992).

    
    

51. Although the Agency bears the ultimate burden of persuasion, section 409.913(22), Florida Statutes, provides that "[t]he audit report, supported by agency work papers, showing an overpayment to the provider constitutes evidence of the overpayment." Thus, the Agency can make a prima facie case by proffering a properly supported audit report, which must be received in evidence. See Maz Pharm., Inc. v. Ag. for Health

    Care Admin., Case No. 97-3791, 1998 Fla. Div. Adm. Hear. LEXIS

    
    

    6245, *6-*7 (Fla. DOAH Mar. 20, 1998); see also Full Health Care, Inc. v. Ag. for Health Care Admin., Case No. 00-4441, 2001

    WL 729127, *8-9 (Fla. DOAH June 25, 2001; Fla. AHCA Sept. 28,

    
    

    2001).

    
    

52. In addition to recovering overpayments, the Agency is authorized to impose sanctions or disincentives on a provider, including, among other enumerated penalties, a "fine of up to

    $5,000 for each violation." § 409.913(16)(c), Fla. Stat. Punishable violations are described in section 409.913(15) and

    include:

    
    

    (e) The provider is not in compliance with provisions of Medicaid provider publications that have been adopted by reference as rules in the Florida Administrative Code; with provisions of state or federal laws, rules, or regulations; with provisions of the provider agreement between the agency and the provider; or with certifications found on claim forms or on transmittal forms for electronically submitted claims that are submitted by the provider or authorized

    
    

    representative, as such provisions apply to the Medicaid program.

    
    

53. The imposition of an administrative fine is a punitive action that implicates significant property rights. Therefore, to sanction a provider with a fine, AHCA must establish the factual grounds for doing so by clear and convincing evidence. Dep't of Banking & Fin., Div. of Sec. & Investor Prot. v.

    Osborne Stern & Co., 670 So. 2d 932, 935 (Fla. 1996); see also Dep't of Child. & Fams. v. Davis Fam. Day Care Home, 2015 Fla.

    LEXIS 578 (Fla. Mar. 26, 2015).

    
    

54. Regarding the standard of proof, in Slomowitz v.

    
    

    Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983), the court developed a "workable definition of clear and convincing evidence" and found that of necessity such a definition would need to contain "both qualitative and quantitative standards." The court held that:

    clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.

    
    

    Id. The Florida Supreme Court later adopted the Slomowitz

    
    

    court's description of clear and convincing evidence. See In re

    
    

    Davey, 645 So. 2d 398, 404 (Fla. 1994). The First District

    
    

    Court of Appeal also has followed the Slomowitz test, adding the interpretive comment that "[a]lthough this standard of proof may be met where the evidence is in conflict, . . . it seems to preclude evidence that is ambiguous." Westinghouse Elec. Corp.

    v. Shuler Bros., Inc., 590 So. 2d 986, 988 (Fla. 1st DCA 1991), rev. denied, 599 So. 2d 1279 (Fla. 1992)(citation omitted).

    Overpayment

    
    

55. Section 409.913(7) spells out the duties of providers who make claims under Medicaid:

    1. 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:

       
       

       1. Have actually been furnished to the recipient by the provider prior to submitting the claim.

          
          

       2. Are Medicaid-covered goods or services that are medically necessary.

          
          

       3. Are of a quality comparable to those furnished to the general public by the provider’s peers.

          
          

       4. Have not been billed in whole or in part to a recipient or a recipient’s responsible party, except for such copayments, coinsurance, or deductibles as are authorized by the agency.

          
          

       5. Are provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law.

          
          

       6. 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.

    
    

    The agency shall deny payment or require repayment for goods or services that are not presented as required in this subsection.

    
    

56. The terms "medical necessity" and "medically necessary" are defined for purposes of Medicaid to mean:

    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.

    
    

    § 409.913(1)(d), Fla. Stat. AHCA has amplified the statutory definition by rule as follows:

    
    

    "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 effective and more conservative or less costly treatment is available; statewide; and

          
          

       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.

       
       

       Fla. Admin. Code R. 59G-1.010(166).

       
       

57. Section 409.913(9), Florida Statutes, sets forth the record-retention requirements:

    A Medicaid provider shall retain medical, professional, financial, and business records pertaining to services and goods furnished to a Medicaid recipient and billed to Medicaid for a period of 5 years after the date of furnishing such services or goods. The agency may investigate, review, or analyze such records, which must be made available during normal business hours.

    However, 24-hour notice must be provided if patient treatment would be disrupted. The provider must keep the agency informed of the location of the provider's Medicaid- related records. The authority of the agency to obtain Medicaid-related records from a provider is neither curtailed nor limited during a period of litigation between the agency and the provider.

    
    

58. During the Audit Period, Florida Administrative Code Rule 59G-4.230 provided that "all physician services providers enrolled in the Medicaid program must be in compliance with the Florida Medicaid Physician Services Coverage and Limitations Handbook, January 2010, which is incorporated by reference, and the Florida Medicaid Provider Reimbursement Handbook, CMS-1500, which is incorporated by reference in Rule 59G-4.001, F.A.C."7/

59. The applicable Florida Medicaid Physician Services Coverage and Limitations Handbook, at 2-57, provides that

    
    

    "[m]edical records must state the necessity for and the extent of services provided." It specifies further that:

    Providers who are not in compliance with the Medicaid documentation and record retention polices . . . may be subject to administrative sanctions and recoupment of Medicaid payments.

    
    

    Medicaid payments for services that lack required documentation or appropriate signatures will be recouped.

    
    

    Id.

    
    

60. The applicable Florida Medicaid Physician Services Coverage and Limitations Handbook, at 3-1, directs that physicians providing services to Medicaid eligible recipients must use the procedure codes "described in the Physician's Current Procedure Terminology (CPT) book."

61. Florida Administrative Code Rule 59G-5.020(1)(Feb. 25, 2009) required "[a]ll Medicaid providers enrolled in the Medicaid program . . . [to] comply with the provisions of the Florida Medicaid Provider General Handbook, July 2008, which is incorporated by reference." The applicable Florida Medicaid Provider General Handbook defines "provider abuse" as follows:

    Abuse means provider practices that are inconsistent with generally accepted business or medical practices and that result in an unnecessary cost to the Medicaid program or in reimbursement for goods or services that are not medically necessary, coded incorrectly on the claim,

    
    

    or that fails to meet professionally recognized standards for health care.

    
    

    (Emphasis added.)

    
    

62. Based on the foregoing principles, as applied to the specific facts of this case, the undersigned has determined that VMC is liable to the Agency for an empirical overpayment of

    $3,945.65.

    
    

    Sanctions

    
    

63. In the FAR, AHCA notified VMC of its intent to impose a fine "for violation(s) of Rule Section 59G-9.070(7)(e), F.A.C." The cited rule provision implements section 409.913(15)(e), Florida Statutes, which makes failure to comply with provisions of the Medicaid laws a punishable offense.

64. The current version of rule 59G-9.070 took effect on September 7, 2010 (the "Current Rule"). Under the Current Rule, "the Agency will impose sanctions as outlined in" subsection (7) unless the secretary elects not to impose a sanction. For a first offense of failing to comply with the Medicaid laws, Current Rule 59G-9.070(7)(e) calls for a fine of $1,000 "per claim found to be in violation." Current Rule 59G-9.070(4)(a) provides, however, that where "a sanction is applied for violations of Medicaid laws," and the violations are a first offense, "the fine shall be [limited] to twenty-percent of the amount of the overpayment" if "the cumulative amount of the fine

    
    

    to be imposed as a result of the violations giving rise to that overpayment exceeds twenty-percent of the amount of the overpayment." This limitation, plainly, is based on the ratio of (i) the "cumulative amount" of the per-claim sanctions to

    (ii) the cumulative (as opposed to per-claim) overpayment. If (i)/(ii) is greater than 0.2, then (i) must be reduced to 0.2 times (ii). Under Current Rule 59G-9.070(4)(a), therefore, there can be but one potential cap on sanctions for first-time Medicaid-laws violations because there is but one cumulative overpayment per audit.8/

65. The Audit Period at issue ran from January 1, 2010, through December 31, 2012, and hence began before the Current Rule took effect. On January 1, 2010, an earlier version of rule 59G-9.070, which had taken effect on October 29, 2008, governed Medicaid sanctions (the "Old Rule"). The Old Rule was in effect during the first eight months of the 36-month Audit Period. Under the Old Rule, the sanction for a first offense of failing to comply with provisions of the Medicaid laws is a "$500 fine per provision, not to exceed $3,000 per agency action. For a pattern: a $1,000 fine per provision, not to exceed $6,000 per agency action." See Old Rule 59G-

    9.070(10)(i). This per-provision sanctions formula is completely different from the per-claim fines prescribed in the Current Rule. Like the Current Rule, however, the Old Rule——

    
    

    with its per-action sanctions ceiling——establishes one, and only one, potential cap on sanctions for first-time Medicaid-laws violations because there is only one agency action per audit.9/

66. Given that the Old Rule controlled during the first portion of the Audit Period before being supplanted by the Current Rule, which thereafter controlled for the balance of the Audit Period and beyond, and given further that the Old Rule and the Current Rule cannot both apply to a single audit,10/ the question that arises is which version of rule 59G-9.070 is applicable? The general rule is that the penalty guidelines applicable to a disciplinary offense are those found in the rule in effect at the time of commission of the offense. See Orasan

    v. Ag. for Health Care Admin., 668 So. 2d 1062, 1063 (Fla. 1st DCA 1996); Willner v. Dep't of Prof'l Reg., 563 So. 2d 805, 806

    (Fla. 1st DCA 1990). Here, however, the auditable unit giving rise to the overpayment comprises a course of conduct that took place over a three-year period during which two different versions of the penalty guidelines were in effect, seriatim.

67. Under these circumstances, the undersigned concludes that the applicable penalty guidelines are those that were in effect when the course of conduct AHCA defined as the auditable unit began, which was January 1, 2010, in this case. Accordingly, the undersigned turns to the Old Rule for guidance concerning the sanctions to be applied against VMC.

    
    

68. As stated above, under the Old Rule the amount of the per-provision fines to be applied depends on whether the Medicaid-laws violations constituted a "pattern." Old Rule 59G- 9.070(2)(r) defines the term "pattern," in relevant part, as follows:

    1. As it relates to paragraph (7)(e) of this rule (generally, failure to comply with the provisions of Medicaid laws, the laws that govern the provider's profession, or the Medicaid provider agreement), a pattern is sufficiently established if within a single Agency action:

       
       

       1. The number of individual claims found to be in violation is greater than 6.25 percent of the total claims that were reviewed to support the Agency action; or

          
          

       2. The overpayment determination by the Agency is greater than 6.25 percent of the amount paid for the claims that were reviewed to support the Agency action.

    
    

69. The facts establishing a pattern must be proved by clear and convincing evidence. Here, it is undisputed that the Agency reviewed 302 claims in support of this action, and that the amount paid for those claims was $13,909.94. Thus, the existence of a pattern could be shown by clear and convincing proof either that (a) more than 19 claims (out of 302) were in violation, or (b) the empirical overpayment is greater than

    $869.37.

    
    

70. As stated above, the sum of $2,488.50, which is a portion of the total empirical overpayment determination of

    
    

    $3,945.65, was proved by clear and convincing evidence.11/ Accordingly, VMC's violations of the Medicaid laws constitute a "pattern" by definition.

71. Under Old Rule 59G-9.070(10)(i), the fine for a first- time pattern of Medicaid-laws violations is $1,000 per provision, not to exceed $6,000 per agency action. In the FAR, AHCA charged VMC with violating five provisions, and VMC offered evidence demonstrating that it had violated each of the five provisions at least once. Clear and convincing evidence shows that the following claims (identified by Patient Number - Encounter Number) violated the Medicaid laws as alleged: 6-8 (No medical necessity); 16-1 (No documentation); 18-6 (Improper coding of the level of services provided); 13-1 (Failure to document required components of an Adult Health Screening Service); and 9-1 (Failure to document required components of a Child Health Check-Up). Consequently, a fine of $5,000 should be assessed against VMC.12/

    Costs

    
    

72. The Agency seeks an award of costs pursuant to section 409.913(23), Florida Statutes, which provides in pertinent part as follows:

    1. 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 all investigative, legal, and expert witness

       
       

       costs if the agency's findings were not contested by the provider or, if contested, the agency ultimately prevailed.

       
       

    2. The agency has the burden of documenting the costs, which include salaries and employee benefits and out-of- pocket expenses. The amount of costs that may be recovered must be reasonable in relation to the seriousness of the violation and must be set taking into consideration the financial resources, earning ability, and needs of the provider, who has the burden of demonstrating such factors.

       
       

73. On March 25, 2015, after the final hearing, the Agency filed a Motion to Assess Costs in which it listed expenses totaling $16,006.64. Costs cannot be awarded, however, until after VMC has been afforded an opportunity to present evidence concerning its financial resources, earning ability, and needs, which has not yet occurred. The Agency should provide such an opportunity in the first instance and make a preliminary assessment of costs taking into consideration any relevant information that VMC submits. If irresolvable disputes of material fact thereafter arise, AHCA may remand the matter to DOAH for an evidentiary hearing on recovery of costs.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that AHCA:

1. Recalculate the probable total overpayment using the statistical formula for cluster sampling to extend the empirical

   
   

   overpayment of $3,945.65 in the sample population to the entire population during the Audit Period.

2. Make a preliminary determination of the amount of costs that may be recovered from VMC, taking into consideration the financial resources, earning ability, and needs of VMC to the extent VMC demonstrates such factors. Remand the matter to DOAH for an evidentiary hearing on recovery of costs if necessary.

3. Enter a final order directing VMC to repay the Agency the total probable overpayment as recalculated using the findings herein, plus statutory interest, for paid claims covering the period from January 1, 2010, to December 31, 2012; imposing an administrative fine against VMC in the amount of

$5,000; and taxing recoverable costs, full payment of these monies to be due within 30 days after the rendition of the final order and payable on the Agency's instructions.

DONE AND ENTERED this 10th day of April, 2015, in Tallahassee, Leon County, Florida.

S

JOHN G. VAN LANINGHAM

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 10th day of April, 2015

ENDNOTES

1/ The undersigned will use the term "empirical overpayment" to reference the sum of all amounts received by VMC in excess of Medicaid-authorized amounts on the claims made during the Audit Period in connection with the 35 patients in the sample population. The term "probable total overpayment" will refer to the total amount by which VMC was likely overpaid on claims made during the Audit Period in connection with the entire population of 1,313 patients served, as determined through the use of a statistical formula.

2/ The mathematical calculation is ($2,488.50 + $303.19) -

$27.76 = $2,763.93.

3/ AHCA conducted the subject investigation pursuant to its responsibility under section 409.913(2) "to determine possible fraud, abuse, overpayment, or recipient neglect in the Medicaid Program." This statute does not charge AHCA with the duty of determining whether a provider furnished services for which it could have billed Medicaid more but did not. See Minkes v. Ag. for Health Care Admin., Case No. 03-1186MPI, 2003 Fla. Div. Adm.

Hear. LEXIS 1077, *101 n.18 (Fla. DOAH Dec. 31, 2003). The

argument that the Agency must set off unmade claims against the empirical overpayment is rejected. See The Children's Office, Inc. v. Ag. for Health Care Admin., Case No. 05-0807MPI, 2006 Fla. Div. Adm. Hear. LEXIS 43, *39 (Fla. DOAH Feb. 3, 2006; Fla. AHCA Dec. 22, 2006).

4/ § 409.913(2), Fla. Stat.

5/ To be sure, this uncertainty does not arise from any flaw in the statistical methodology. The undersigned is persuaded that the formula operates mathematically to produce a result which,

95 percent of the time, would be less than or equal to the overpayment that would be found if a manual audit of the entire population were performed, provided the value of Ai were absolutely correct. Because the value of Ai will never (or very rarely) be known with such certainty, however, for reasons unrelated to the formula, the total probable overpayment is not, in reality, as precise a figure as the statistical methodology could theoretically achieve. To illustrate, imagine computing VMC's total probable overpayment using X as the value of Ai, where X is a randomly generated number between 100 and 10,000. The soundness of the Agency's preferred statistical formula for cluster sampling would not be affected by this exercise, but the result of the computation would be entitled to no confidence because the probability of Ai being correct in this scenario is effectively zero percent.

6/ Put another way, the formula cannot enhance the degree of confidence one has in the numbers that are plugged in to the equation. Thus, because the total overpayment in the sample has not been proved by clear and convincing evidence, the overpayment determination that the formula extrapolates from that number likewise is not supported by clear and convincing evidence.

7/ Rule 59G-4.230 has since been repealed, effective October 27, 2013.

8/ This is how AHCA understands the Current Rule to operate, for it urges that VMC be fined $28,894.25, a sum which is 20 percent of $144,471.25——the alleged cumulative probable overpayment.

9/ Old Rule 59G-9.070(2)(w) defines "single agency action" to mean "an audit or review that results in notice to the provider

of violations of Medicaid laws, the laws that govern the provider's profession, or the Medicaid provider agreement."

10/ This is because each version of the rule prescribes a different sanctions regime, and——more importantly——each imposes a unique per-audit cap on sanctions. If both versions could be applied in the same audit, the effect would be to authorize the imposition of two separate cumulative fines, the sum of which would not be limited to the per-audit cap under either version of the penalty rule, exposing the provider to an enhanced penalty for no reason except that the audit period happened to fall under two versions of AHCA's penalty guidelines.

11/ This portion of the empirical overpayment is the amount which VMC admitted should be disallowed. VMC did not merely decline to contest the preliminary determinations behind this amount (without admitting error), nor did it make a limited admission, e.g., that the greater weight of the evidence would support these allegations, but not clear and convincing evidence. Rather, VMC offered expert testimony to the effect that numerous claims in the sample cluster had contained an error, resulting in a cumulative overpayment of $2,488.50. In other words, VMC corroborated AHCA's proof with additional evidence that certain claims had been erroneous. Thus, the undersigned need not and does not conclude here that the absence of a dispute regarding an allegedly erroneous claim is sufficient in itself to meet the strict standard of proof applicable to findings upon which administrative sanctions may be imposed against providers. Instead, the undersigned finds more narrowly that, under the present circumstances, clear and convincing evidence supports an overpayment determination of

$2,488.50.

12/ If the Current Rule were applicable, the fine would have been limited to 20 percent of the overpayment. See Current Rule 59G-9.070(4)(a). The amount of the overpayment for this purpose, however, could not exceed the amount proved by clear and convincing evidence. In this case, that amount——for reasons discussed at length in the text——is neither $3,945.65 nor, alternatively, the probable overpayment that the statistical formula for cluster sampling will extrapolate from an empirical overpayment of $3,945.65; it is, rather, $2,488.50.

Consequently, under the Current Rule, the fine would have been

$497.70.

COPIES FURNISHED:

Jeffries H. Duvall, Esquire

Agency for Health Care Administration Fort Knox Building III, Mail Stop 3 2727 Mahan Drive

Tallahassee, Florida 32308 (eServed)

G. Michael Keenan, Esquire

G. Michael Keenan, P.A.

1700 Old Okeechobee Road, Suite 103 West Palm Beach, Florida 33490 (eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 (eServed)

Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 (eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308 (eServed)

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: 14-001671MPI

Orders for Case No: 14-001671MPI