STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROLANDO B. PADRO, M.D. )

)

Petitioner, )

)

vs. ) Case No. 03-4227MPI

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held in this case pursuant to Sections 120.569 and 120.57(1), Florida Statutes, on February 2, 2004, and March 29, 2004, by video teleconference at sites in Miami and Tallahassee, Florida, before Stuart M. Lerner, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Hosey Hernandez, Esquire

2701 South Bayshore Drive, Suite 602 Coconut Grove, Florida 33133

For Respondent: Jeffries H. Duvall, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Building 3

Tallahassee, Florida 32308-5403

STATEMENT OF THE ISSUES

Whether Medicaid overpayments were made to Petitioner and, if so, what is the total amount of those overpayments.

PRELIMINARY STATEMENT

By letter dated January 28, 2003 (Final Agency Audit Report), the Agency for Health Care Administration (AHCA) advised Petitioner that, following a "review of [Petitioner's] Medicaid claims for the procedures specified [in the letter] for dates of service during the period May 22, 1998 through May 22, 2000" (Audit Period), AHCA had determined that Petitioner had been "overpaid $58,157.96 for services that in whole or in part [were] not covered by Medicaid." AHCA further advised Petitioner in the letter, among other things, that he had "the right to request a formal or informal hearing pursuant to section 120.569, F.S." on this overpayment determination.

Petitioner subsequently requested a "formal" hearing on the matter. In his hearing request, Petitioner stated that he "dispute[d] the Final Agency Audit Report for the following

reasons":

1. Petitioner complied with each and every Medicaid requirement while performing his billing;

   
   

2. The agency has not complied with South[pointe] Pharmacy v. Department of Health and Rehabilitative Services, 596 So. 2d 106 ([Fla.] 1st DCA 1992).

   On April 1, 2003, the matter was referred to the Division of Administrative Hearings (Division or DOAH) for the assignment of a Division administrative law judge to conduct the hearing Petitioner had requested. The Division Clerk docketed the case as DOAH Case No. 03-1198. A hearing in the case was originally scheduled for May 28, 2003, but it was continued at Petitioner's request and rescheduled for July 21, 2003. On July 14, 2003, Petitioner filed an unopposed motion requesting that the hearing be continued on the grounds that the "parties ha[d] agreed to a meeting on August 20th, 2003 in Tallahassee in order to resolve all the issues." On July 16, 2003, the undersigned issued an order canceling the hearing scheduled for July 21, 2003, and closing the file of the Division in DOAH Case No. 03-1198MPI, "without prejudice to either party requesting that the file be reopened should a settlement not be finalized."

   On November 7, 2003, AHCA filed a Motion to Reopen Case, explaining that the "parties ha[d] been unsuccessful in their attempt to settle this matter." On November 12, 2003, the undersigned issued an order reopening the file, as requested, and indicating that the Division Clerk had assigned the case a new case number, DOAH Case No. 03-4227MPI. On November 19, 2003, after obtaining input from the parties regarding their availability for hearing, the undersigned issued a Notice of Hearing by Video Teleconference advising that a hearing in this

   case would be held on February 2, 2004, at sites in Miami and Tallahassee, Florida. The notice was mailed to the parties' counsel of record.

   On January 30, 2004, the parties filed a Joint Prehearing Stipulation, which provided, in pertinent part, as follows:

   1. STATEMENT OF THE NATURE OF THE CASE

      
      

      The Petitioner is a licensed physician in the State of Florida. The Agency notified the Petitioner by letter dated January 28, 2003 that an audit covering the period

      May 22, 1998 through May 22, 2000 (hereinafter "audit period") indicated that the Petitioner had submitted claims and had been overpaid in the amount of $58,157.96. The determination of overpayment was based upon a statistical projection of probable overpayment derived from a random sample of recipients serviced by the Petitioner and the procedure codes, descriptions, policies, limitations, and exclusions found in the Medicaid provider handbooks and section 409.913, F.S. Such method of calculation of overpayment is based upon the method provided for in section 409.[9]13(19).

      
      

      The parties met in Tallahassee on August 20, 200[3] and discussed the claimed discrepancies in billing and reimbursement. It was agreed that some of the claims for reimbursement could be removed from the list and the Agency reduced the claimed amount of overpayment to $47,931.79 which is now the amount in question.

      
      

      2. The Petitioner has appealed the agency action of January 28, 2003, as amended above, and sought an administrative hearing pursuant to Section 120.56[9] and Section 120.57([]1), F.S. (2001).

   2. PARTIES' POSITIONS.

1. The Petitioner's position is that the letter of January 28, 2003, as amended, constituted final agency action and can be appealed to the Division of Administrative Hearings for determination.

   
   

2. The Agency's position is that the letter of January 28, 2003, as amended, reflects a proper application of the provisions of section 409.913, the Florida Administrative Code, and the applicable Medicaid Handbooks and the amount of $47,931.79 is a correct computation of statistical probability that such was the overpayment to the Petitioner and should be repaid.

* * *

1. STATEMENT OF ADMITTED FACTS.

   
   

   1. [Petitioner] has operated as an authorized Medicaid provider and has been issued the Medicaid provider number 3759873 00.

      
      

   2. During the period immediately prior to January 28, 2003 and during the audit period, the Petitioner had a valid Medicaid provider agreement with AHCA.

   
   

2. STATEMENT OF FACTS REMAINING TO BE LITIGATED

   
   

   The Petitioner has raised the following areas of disputed material facts:

   
   

   1. The Petitioner has complied with each and every Medicaid requirement while performing his billing; and

      
      

   2. The Agency has not complied with South[pointe] Pharmacy v. Department of Health and Rehabilitative Services, 596 So. 2d 106 ([Fla.] 1st DCA 1993).

   It is the Respondent's position that:

   
   

   1. The Petitioner has not complied with Medicaid requirements regarding billing; and

   
   

   [2]. The investigative requirements referred to in South[pointe] Pharmacy do not apply to claims of overpayment based upon no documentation of services billed, improper upcoding for services performed, no documentation of medical necessity for services performed, or for double billing.

   
   

3. STATEMENT OF AGREED ISSUES OF LAW.

   
   

   1. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding pursuant to § 120.57(1), Fla. Stat.[]

      
      

   2. Venue for this proceeding is in Leon County, Florida.

      
      

   3. The Agency for Health Care Administration is an executive agency created by Sections 20.42 and 23.21, Fla. Stat.

   
   

   2. The Agency for Health Care Administration has the responsibility for overseeing and administering the Medicaid Program for the State of Florida.

   
   

   1. The Agency has the burden of proof in this proceeding and must show by a preponderance of the evidence that there exists an overpayment to the Petitioner.

      
      

   2. All pleadings were timely and appropriately filed in this matter.

   
   

4. ISSUES OF LAW REMAINING TO BE DETERMINED.

1. Does the Agency have the authority pursuant to Sec. 409.913 to audit and determine the extent of any overpayment on

   Medicaid claims and is the amount state[d] in the letter of April 25, 2002 [sic] a correct statement of overpayment?

   
   

2. Is the Agency required to comply with the investigative requirements of South[pointe] Pharmacy in order to maintain an action for reimbursement from a physician when the claim for reimbursement is based upon no documentation of services billed, improper upcoding for services performed, no documentation of medical necessity for services performed, and for double billing.

* * *

The hearing commenced on February 2, 2004, as scheduled.

AHCA was represented by its counsel, who was at the Tallahassee hearing site, along with the undersigned. Neither Petitioner, Petitioner's counsel, nor any of Petitioner's witnesses appeared in person at either the Miami or Tallahassee hearing site.

Petitioner's counsel, however, did participate in the hearing by telephone (after having been contacted). He explained that he was under the impression that the hearing was scheduled for the fourth, not the second, of February and that he had so advised Petitioner and his witnesses. He therefore asked for the hearing to be continued to another date. The undersigned granted the request, which AHCA did not oppose, and the hearing was adjourned without any testimony having been taken, although

11 exhibits, Respondent's Exhibits B through L, were offered and received into evidence without objection prior to the adjournment.1

The hearing resumed and concluded on March 29, 2004. At this hearing session, AHCA offered one additional exhibit, Respondent's Exhibit M, which was received into evidence. In addition, it presented the testimony of one witness, Dorothea Solomon. Petitioner testified on his own behalf and also presented the testimony of Mariana De La Torre, Luisa Guerra, and Lisette Sanchez.2 He presented no documentary evidence.

At the close of the evidentiary portion of the hearing on March 29, 2004, the undersigned announced on the record that the parties would have until 30 days from the date that the transcript of that day's hearing session was filed with the Division3 to file their proposed recommended orders."

The transcript of the March 29, 2004, hearing session (consisting of one volume) was filed with the Division on May 5, 2004. Accordingly, proposed recommended orders were due on Friday, June 4, 2004, in accordance with Florida Administrative Code Rule 28-106.103.

On Monday, June 7, 2004, AHCA filed its Proposed Recommended Order. On Wednesday, June 9, 2004, Petitioner filed his Proposed Recommended Order, as well as a motion seeking an extension of time to file his Proposed Recommended Order. The motion was granted by Order issued June 10, 2004. The undersigned has carefully considered both AHCA's and Petitioner's Proposed Recommended Orders.

FINDINGS OF FACT

Based upon the evidence adduced at hearing, and the record as a whole, including the parties' Joint Prehearing Stipulation, the following findings s of fact are made:

Petitioner and his Practice

1. Petitioner is a general practice physician.

   
   

2. He has been licensed to practice medicine in Florida for the past ten years.

3. He is now, and has been at all times material to the instant case, in private practice in Miami-Dade County, Florida Petitioner's Participation in the Medicaid Program

4. During the Audit Period, Petitioner was authorized to provide physician services to eligible Medicaid patients.

5. Petitioner provided such services pursuant to a valid provider agreement with AHCA.4

6. Petitioner's Medicaid provider number was, and remains, 3759873 00

7. Petitioner billed all of the Medicaid claims that are the subject of the instant controversy under this (individual) provider number.

   Handbook Provisions

   
   

8. As a prerequisite to his entitlement to Medicaid payment for services rendered during the Audit Period, Petitioner was required to comply with, among other things, the

   provisions of the Physician Coverage and Limitations Handbook (PCL Handbook) then in effect.

   Medical Necessity

   
   

9. Chapter 2 of the PCL Handbook provided that the Medicaid program would reimburse physician providers for services "determined [to be] medically necessary" and not duplicative of another provider's service, and it went on to state as follows:

   In addition, the services must meet the following criteria:

   
   

   • the services must be individualized, specific, consistent with symptoms or confirmed diagnosis of the illness or injury under treatment, and not in excess of the recipient's needs;

     
     

   • the services cannot be experimental or investigational;

     
     

   • the services must reflect the level of services that can be safely furnished and for which no equally effective and more conservative or less costly treatment is available statewide; and

     
     

   • the service must be furnished in a manner not primarily intended for the convenience of the recipient, the recipient's caretaker, or the provider.

     
     

     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 covered services.

     Radiology Services

     
     

10. Chapter 2 of the PCL Handbook further provided that, "[t]o be reimbursed the maximum fee [or 'global fee'] for a radiology service, the physician must provide both the technical and professional components." A physician provider billing the "global fee" was not authorized, pursuant Chapter 2 of the PCL Handbook, to also seek additional payment for the "professional component" of that fee. Doing so amounted to impermissible "double-billing."

    Coding

    
    

11. Chapter 3 of the PCL Handbook "describe[d] the procedure codes for the services reimbursable by Medicaid that [had to be] used by physicians providing services to eligible recipients."

12. As explained on the first page of this chapter of the handbook:

    The procedure codes listed in this chapter [were] Health Care Financing Administration Common Procedure Coding System (HCPCS) Levels 1, 2 and 3. These [were] based on the Physician[]s['] Current Procedural Terminology (CPT) book.

    
    

    The CPT include[d] HCPCS descriptive terms and numeric identifying codes and modifiers for reporting services and procedures. . . .

    The Physicians' Current Procedural Terminology

    
    

13. At all times material to the instant case, the American Medical Association's Physicians' Current Procedural Terminology (or the "CPT") referred to in Chapter 3 of the PCL Handbook contained an "[i]ntroduction," which read, in pertinent part, as follows:

    Current Procedural Terminology, Fourth Edition (CPT) is a systematic listing and coding of procedures and services performed by physicians. Each procedure or service is identified by a five digit code. . . .

    
    

    Inclusion of a descriptor and its associated specific five-digit identifying code number in CPT is generally based upon the procedure being consistent with contemporary medical practice and being performed by many physicians in clinical practice in multiple locations. . . .

    
    

    * * * Section Numbers and Their Sequences

    Evaluation and Management 99201 to 99499

    
    

    * * *

    
    

    Surgery 10040 to 69979

    
    

    Radiology (Including Nuclear Medicine and Diagnostic Ultrasound) 70010 to 79999

    Pathology and Laboratory 80002 to 89399 Medicine (except Anesthesiology)

    90701 to 99199

    
    

    * * *

14. The CPT had "[e]valuation and [m]anagement (E/M) [s]ervice [g]uidelines" (E/M Guidelines).

15. It was noted on the first page of the E/M Guidelines that:

    The E/M section is divided into broad categories such as office visits, hospital visits, and consultations. Most of the categories are further divided into two or more subcategories of E/M services. For example, there are two subcategories of office visits (new patient and established patient) and there are two subcategories of hospital visits (initial and subsequent).

    The subcategories of the E/M services are further classified into levels of E/M services that are identified by specific codes. . . .

    
    

16. "New and [e]stablished patient[s]" were described in the E/M Guidelines as follows:

    A new patient is one who has not received any professional services from the physician or another physician of the same specialty who belongs to the same group practice, within the past three years.

    
    

    An established patient is one who has received professional services from the physician or another physician of the same specialty who belongs to the same group practice, within the past three years.

    
    

17. The concept of "[l]evels of E/M [s]ervices" was described, in pertinent part, as follows in the E/M Guidelines:

    Within each category or subcategory of E/M service, there are three to five levels of E/M services available for reporting purposes. Levels of E/M services are not interchangeable among the different

    categories of service. For example, the first level of E/M services in the subcategory of office visit, new patient, does not have the same definition as the first level of E/M services in the subcategory of office visit, established patient.

    
    

    The levels of E/M services include examinations, evaluations, treatments, conferences with or concerning patients, preventative pediatric and adult health supervision, and similar medical services, such as the determination of the need and/or location for appropriate care. Medical screening includes the history, examination, and medical decision-making required to determine the need and/or location for appropriate care and treatment of the patient (e.g., office and other outpatient setting, emergency department, nursing facility, etc.). The levels of E/M services encompass the wide variations in skill, effort, time, responsibility and medical knowledge required for the prevention or diagnosis and treatment of illness or injury and the promotion of optimal health. Each level of E/M services may be used by all physicians.

    
    

    The descriptors for the levels of E/M services recognize seven components, six of which are used in defining the levels of E/M services. These components are:

    
    

    • history;

      
      

    • examination;

      
      

    • medical decision making;

      
      

    • counseling;

      
      

    • coordination of care;

    • nature of presenting problem; and

      
      

    • time.

    
    

    The first three of these components (history, examination and medical decision making) are considered the key components in selecting a level of E/M services. . . .

    
    

    The next three components (counseling, coordination of care, and the nature of the presenting problem) are considered contributory factors in the majority of encounters. . . .

    
    

    * * *

    
    

    The actual performance and/or interpretation of diagnostic tests/studies ordered during a patient encounter are not included in the levels of E/M services. Physician performance of diagnostic tests for which specific CPT codes are available may be reported separately, in addition to the appropriate E/M code. The physician's interpretation of the results or diagnostic tests/studies (i.e., professional component) with preparation of a separate distinctly identifiable signed written report may also be reported separately, using the appropriate CPT code with the modifier -26 appended.

    
    

    * * *

    
    

    Time

    
    

    . . . . The inclusion of time as an explicit factor beginning in CPT 1992 is done to assist physicians in selecting the most appropriate level of E/M services. It should be recognized that the specific times expressed in the visit code descriptors are averages, and therefore represent a range of

    times which may be higher or lower depending on actual clinical circumstances.

    
    

    * * *

    
    

18. The E/M Guidelines contained "[i]nstructions for [s]electing a [l]evel of E/M [s]ervice," which read, in pertinent part, as follows:

    * * *

    
    

    Review of Level of E/M Service Descriptors and Examples in the Selected Category or Subcategory

    
    

    The descriptors for the levels of E/M services recognize seven components, six of which are used in defining the levels of E/M services. These components are:

    
    

    • history;

      
      

    • examination;

      
      

    • medical decision making;

      
      

    • counseling;

      
      

    • coordination of care;

      
      

    • nature of presenting problem; and

      
      

    • time.

      
      

      The first three or these components (i.e., history, examination and medical decision making) are considered the key components in selecting a level of E/M services. An exception to this rule is in the case of visits which consist predominantly of counseling or coordination of care. . . .

      
      

      The nature of the presenting problem and time are provided in some levels to assist

      the physician in determining the appropriate level of E/M service.

      
      

      Determine the Extent of History Obtained

      
      

      The extent of history is dependent upon clinical judgment and on the nature of the presenting problem(s). The levels of E/M services recognize four types of history that are defined as followed:

      
      

      Problem Focused: chief complaint; brief history of present illness or problem.

      Expanded Problem Focused: chief complaint; brief history of present illness; problem pertinent system review.

      
      

      Detailed: chief complaint; extended history of present illness; problem pertinent system review extended to include a review of a limited number of additional systems; pertinent past, family and/or social history directly related to the patient's problems.

      
      

      Comprehensive: chief complaint; extended history of present illness; review of systems which is directly related to the problem(s) identified in the history of the present illness plus a review of all additional body systems; complete past, family and social history.

      
      

      * * *

      
      

      Determine the Extent of Examination Performed

      
      

      The extent of the examination performed is dependent on clinical judgment and on the nature of the presenting problem(s). The levels of E/M services recognize four types of examinations that are defined as follows:

      
      

      Problem Focused: a limited examination of the affected body area or organ system.

      Expanded Problem Focused: a limited examination of the affected body area or organ system and other symptomatic or related organ system(s).

      
      

      Detailed: an extended examination of the affected body area(s) and other symptomatic or related organ system(s).

      
      

      Comprehensive: a general multi-system examination or a complete examination of a single organ system. . . .

      
      

      For the purposes of these CPT definitions, the following body areas are recognized

      
      

    • Head, including the face

      
      

    • Neck

      
      

    • Chest, including breasts and axilla

      
      

    • Abdomen

      
      

    • Genitalia, groin, buttocks

      
      

    • Back

      
      

    • Each extremity

      
      

      For the purposes of these CPT definitions, the following organ systems are recognized

      
      

    • Eyes

      
      

    • Ears, Nose, Mouth and Throat

      
      

    • Cardiovascular

      
      

    • Respiratory

      
      

    • Gastrointestinal

      
      

    • Genitourinary

      
      

    • Musculoskeletal

    • Skin

      
      

    • Neurologic

      
      

    • Psychiatric

      
      

    • Hematologic/Lymphatic/Immunologic

      
      

      Determine the Complexity of Medical Decision Making

      
      

      Medical decision making refers to the complexity of establishing a diagnosis and/or selecting a management option as measured by:

      
      

    • the number of possible diagnoses and/or the number of management options that must be considered;

      
      

    • the amount and/or complexity of medical records, diagnostic tests, and/or other information that must be obtained, reviewed and analyzed; and

    
    

    -The risk of significant complications, morbidity and/or mortality, as well as comorbidities, associated with the patient's presenting problem(s), the diagnostic procedure(s) and/or the possible management options.

    
    

    Four types of medical decision making are recognized: straightforward; low complexity; moderate complexity; and high complexity. To qualify for a given type of decision making, two of the three elements [shown below] must be met or exceeded.

    
    

    Type of Decision Making: straightforward; Number of Diagnoses or Management Options: minimal; Amount and/or Complexity of Data to be Reviewed: minimal or none; Risk of Complications and/or Morbidity or Mortality: minimal

    Type of Decision Making: low complexity; Number of Diagnoses or Management Options: limited; Amount and/or Complexity of Data to be Reviewed: limited; Risk of Complications and/or Morbidity or Mortality: low

    
    

    Type of Decision making: moderate complexity; Number of Diagnoses or Management Options: multiple; Amount and/or Complexity of Data to be Reviewed: moderate; Risk of Complications and/or Morbidity or Mortality: moderate

    
    

    Type of Decision Making: High complexity; Number of Diagnoses or Management Options: extensive; Amount and/or Complexity of Data to be Reviewed: extensive; Risk of Complications and/or Morbidity or Mortality: high

    
    

    Comorbidities/underlying diseases, in and of themselves, are not considered in selecting a level of E/M services unless their presence significantly increases the complexity of the medical decision making.

    
    

    Select the Appropriate Level of E/M Services Based on the Following

    
    

    1. For the following categories/ subcategories, all of the key components, i.e., history, examination, and medical decision making, must meet or exceed the stated requirements to qualify for a particular level of E/M service: office, new patient; hospital observation services; initial hospital care; office consultations; initial inpatient consultations; confirmatory consultations; emergency department services; comprehensive nursing facility assessments; domiciliary care, new patient; and home, new patient. . .

       
       

    2. For the following categories/ subcategories, two of the three key components, (i.e., history, examination, and medical decision making) must meet or exceed

       the stated requirements to qualify for a particular level of E/M service: office, established patient; subsequent hospital care; follow-up inpatient consultations; subsequent nursing facility care; domiciliary care, established patient; and home, established patient.

       
       

    3. In the case where counseling and/or coordination of care dominates (more than 50%) of the physician/patient and/or family encounter (face-to-face time in the

    office or other outpatient setting or floor/unit time in the hospital or nursing facility) then time is considered the key or controlling factor to qualify for a particular level of E/M services. The extent of counseling and/or coordination of care must be documented in the medical record.[5]

    
    

19. The CPT contained the following codes and code descriptions for "E/M" office and other outpatient services:

    New Patient

    
    

    99201 Office or other outpatient visit for the evaluation and management of a new patient, which requires these three key components:

    
    

    • a problem focused history;

    • a problem focused examination; and

    • straightforward medical decision making.

      
      

      Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problems are self- limited or minor. Physicians typically spend 10 minutes face-to-face with the patient and/or family.

      
      

      * * *

      
      

      99202 Office or other outpatient visit for the evaluation and management of a new patient which requires these three key components:

      
      

    • an expanded problem focused history;

    • an expanded problem focused examination; and

    • straightforward medical decision making.

      
      

      Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problem(s) are of low to moderate severity. Physicians typically spend 20 minutes face-to-face with the patient and/or family.

      
      

      * * *

      
      

      99203 Office or other outpatient visit for the evaluation and management of a new patient which requires these three key components:

      
      

    • a detailed history;

    • a detailed examination; and

    • medical decision making of low complexity.

      
      

      Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problem(s) are of moderate severity. Physicians typically spend 30 minutes face-to-face with the patient and/or family.

      
      

      * * *

      
      

      99204 Office or other outpatient visit for the evaluation and management of a new

      patient which requires these three key components:

      
      

    • a comprehensive history;

    • a comprehensive examination; and

    • medical decision making of moderate complexity.

      
      

      Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problem(s) are of moderate to high severity. Physicians typically spend 45 minutes face-to-face with the patient and/or family.

      
      

      * * *

      
      

      99205 Office or other outpatient visit for the evaluation and management of a new patient which requires these three key components:

      
      

    • a comprehensive history;

    • a comprehensive examination; and

    • medical decision making of high complexity.

      
      

      Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problems are of moderate to high severity. Physicians typically spend 60 minutes face-to-face with the patient and/or family.

      
      

      * * * Established Patient

      99211 Office or other outpatient visit for the evaluation and management of an established patient that may not require the

      presence of a physician. Usually, the presenting problem(s) are minimal.

      Typically, 5 minutes are spent performing or supervising these services.

      
      

      * * *

      
      

      99212 Office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components:

      
      

    • a problem focused history;

    • a problem focused examination;

    • straightforward medical decision making.

      
      

      Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problem(s) are self- limited or minor. Physicians typically spend 10 minutes face-to-face with the patient and/or family.

      
      

      * * *

      
      

      99213 Office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components:

      
      

    • an expanded problem focused history;

    • an expanded problem focused examination;

    • medical decision making of low complexity.

      
      

      Counseling and coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problem(s) are of low to moderate severity. Physicians

      typically spend 15 minutes face-to-face with the patient and/or family.

      
      

      * * *

      
      

      99214 Office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components:

      
      

    • a detailed history;

    • a detailed examination;

    • medical decision making of moderate complexity.

      
      

      Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problem(s) are of moderate to high severity. Physicians typically spend 25 minutes face-to-face with the patient and/or family.

      
      

      * * *

      
      

      99215 Office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components:

      
      

    • a comprehensive history;

    • a comprehensive examination;

    • medical decision making of high complexity.

      
      

      Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs.

      
      

      Usually, the presenting problem(s) are of moderate to high severity. Physicians typically spend 40 minutes face-to-face with the patient and/or family.

20. The CPT provided separate codes for "prolonged physician service with direct (face-to-face) patient contact" and contained the following explanation as to when these codes were to be used:

    Codes 99354-99357 are used when a physician provides prolonged service involving direct (face-to-face) patient contact that is beyond the usual service in either the inpatient or outpatient setting. This service is reported in addition to other physician service, including evaluation and management service at any level.

    Appropriate codes should be selected for supplies or procedures performed in the care of the patient during this period.

    
    

    Codes 99354-99357 are used to report the total duration of face-to-face time spent by a physician on a given date providing prolonged service, even if the time spent by the physician on that date is not continuous.

    
    

    Code 99354 or 99356 is used to report the first hour of prolonged service on a given date, depending on the place of service.

    
    

    Either code also may be used to report a total duration of prolonged service of 30-60 minutes on a given date. Either code should be used only once per date, even if the time spent by the physician is not continuous on that date. Prolonged service of less than

    30 minutes total duration on a given date is not separately reported because the work involved is included in the total work of the evaluation and management codes.

    
    

    Code 99355 or 99357 is used to report each additional 30 minutes beyond the first hour, depending on the place of service. Either code may also be used to report the final 15-30 minutes of prolonged service on a

    given date. Prolonged service of less than

    15 minutes beyond the first hour or less than 15 minutes beyond the final 30 minutes is not reported separately.

    
    

    * * * The Audit and Aftermath

21. Commencing in or around August 2000, AHCA conducted an audit of paid Medicaid claims submitted by Petitioner for services assertedly rendered from May 22, 1998, through May 22, 2000.6

22. Petitioner had submitted 4,574 Medicaid claims for services assertedly rendered during the Audit Period to 492 patients, for which he had received payments totaling

    $156,903.14.

    
    

23. From the 492 Medicaid patients to whom Petitioner had assertedly provided services during the Audit Period, AHCA randomly selected a "cluster sample" of 41, and obtained from Petitioner medical records he had on file for these 41 patients.

24. Petitioner had submitted a total of 325 claims for services assertedly rendered to the 41 patients in the "cluster sample" during the Audit Period and had received a total of

    $11,562.14 in Medicaid payments for these services.7

25. Each of these claims was reviewed to determine whether it was supported by information contained in the medical records obtained from Petitioner.

26. Based on a preliminary review, AHCA determined that Petitioner had been overpaid a total $58,157.96 for the Medicaid claims he had submitted for services assertedly rendered during the Audit Period. By letter dated September 10, 2002, AHCA advised Petitioner of this preliminary determination and "encourage[d] [him] to submit any additional information or documentation" in his possession that he believed would "serve to reduce the overpayment." The antepenultimate and penultimate paragraphs of the letter read as follows:

    Since you have a choice of accepting the above overpayment or submitting additional information, this is not a final action by the Agency for Health Care Administration.

    
    

    If you have not made payment within thirty

    (30) days, we will prepare and send to you the final agency determination, taking into consideration any information or documentation that you submit within that time period.

    
    

27. Petitioner did not "ma[k]e payment within thirty (30) days" of AHCA's September 10, 2002, letter. As promised, following another review conducted after the expiration of this 30-day period, AHCA "prepare[d] and sen[t] to [Petitioner]" its Final Agency Audit Report showing the calculation of overpayments made to Petitioner during the Audit Period.8 AHCA's Final Agency Audit Report was dated January 28, 2003, and in the form of a letter to Petitioner, which read, in pertinent part, as follows:

    Medicaid Integrity has completed the review of your Medicaid claims for the procedures specified below for dates of service during the period May 22, 1998 through May 22, 2000. A Provisional Agency Audit Report, dated September 10, 2002, was sent to you indicating that we had determined you were overpaid $58,157.96. Based upon a review of all documentation submitted, we have determined that you were overpaid $58,157.96 for services that in whole or in part are not covered by Medicaid. Pursuant to Section 409.913, Florida Statutes (F.S.), this letter shall serve as notice of the following sanction(s): The provider is subject to comprehensive follow-up review in six months.

    
    

    In determining the appropriateness of Medicaid payment pursuant to Medicaid policy, the Medicaid program utilizes procedure codes, descriptions, policies, limitations and requirements found in the Medicaid provider handbooks and Section 409.913, F.S. In applying for Medicaid reimbursement providers are required to follow the guidelines set forth in the applicable rules[9] and Medicaid fee schedules, as promulgated in the Medicaid policy handbooks, billing bulletins, and the Medicaid provider agreement. Medicaid cannot pay for services that do not meet these guidelines.

    
    

    The following is our assessment of why certain claims paid to your provider number do not meet Medicaid requirements. The audit work papers detailing the claims affected by this assessment are attached.

    
    

    REVIEW DETERMINATION(S)

    
    

    Medicaid policy specifies how medical records must be maintained. A review of your medical records revealed that some services for which you billed and received payment were not documented. Medicaid

    requires documentation of the services and considers payments made for services not appropriately documented an overpayment.

    
    

    Medicaid policy defines the varying levels of care and expertise required for the evaluation and management procedure codes for office visits. The documentation you provided supports a lower level of office visit than the one for which you billed and received payment. The difference between the amounts you were paid and the correct payment for the appropriate level of service is considered an overpayment.

    
    

    Medicaid policy requires services performed be medically necessary for the diagnosis and treatment of an illness. You billed and received payments for services for which the medical records, when reviewed by a Medicaid physician consultant, indicated that the services provided did not meet the Medicaid criteria for medical necessity. The claims, which were considered medically unnecessary, were disallowed and the money you were paid for these procedures is considered an overpayment.

    
    

    Medicaid policy addresses specific billing requirements and procedures. In some instances, you billed a procedure code as global and also billed the professional when the professional component was incorporated in the global fee. The difference between the amounts you were paid and the appropriate fee is considered an overpayment.

    
    

    The overpayment was calculated as follows:

    
    

    A random sample of 41 recipients respecting whom you submitted 325 claims was reviewed. For those claims in the sample which have dates of service from May 22, 1998, through May 22, 2000, an overpayment of $5,004.04 or

    $15.39704606 per claim was found, as indicated on the accompanying schedule.

    Since you were paid for a total (population) of 4,574 claims for that period, the point estimate of the total overpayment is

    $15.39704606 x 4,574=$70,426.09. There is a

    50 percent probability that the overpayment to you is that amount or more.

    
    

    There was then an explanation of the "statistical formula for cluster sampling" that AHCA used and how it "calculated that the overpayment to [Petitioner was] $58,157.96 with a ninety-five percent (95%) probability that it is that amount or more." The concluding portions of the letter advised Petitioner of his right to "request an administrative hearing [on this overpayment determination] pursuant to Sections 120.569 and 120.57, Florida Statutes."

28. The "Medicaid physician consultant" referred to in AHCA's January 28, 2003, letter was Lisa Kohler, M.D., a Florida-licensed "family physician," who is certified by the American Board of Family Practice and is a fellow of the American Academy of Family Physicians. Dr. Kohler received her medical education at the University of South Florida College of Medicine, from which she graduated in 1985. After graduation, she did her internship and residency at Tallahassee Memorial Regional Medical Center's Family Practice Residency program. In 1988, following the completion of her residency, she entered private practice. She currently serves as the Associate Director of the Tallahassee Memorial Regional Medical Center's

    Family Practice Residency program. In addition, she is a Clinical Assistant Professor in the Department of Family Medicine at the University of South Florida College of Medicine and the Volunteer Medical Director of the Neighborhood Health Services in Tallahassee, Florida, a health clinic that provides free medical care to indigent patients.

29. In accordance with the "peer review" provisions of Section 409.9131, Florida Statutes, which became effective

    July 1, 1999, AHCA had Dr. Kohler review all of the records that Petitioner had provided regarding the 41 patients in the "cluster sample"10 to determine whether there was documentation to support the Medicaid claims relating to these patients that Petitioner had submitted for services assertedly rendered during the Audit Period.

30. In conducting her "peer review," Dr. Kohler did not interview any of the 41 patients in the "cluster sample," nor did she take any other steps to supplement the information contained in the records she examined. Her assessment of the propriety of Petitioner's billing was based exclusively on what was in those records and no other information.

31. On February 19, 2003, Petitioner requested an administrative hearing on the overpayment determination (announced in AHCA's January 28, 2003, letter to Petitioner).

32. On or about August 20, 2003, following a meeting between the parties, AHCA made a downward revision in its overpayment calculation, to $47,931.79.

33. AHCA has made no additional revisions to its overpayment calculation in the instant case. It maintains that Petitioner received $47,931.79 in Medicaid overpayments for services claimed to have been provided during the Audit Period.

34. In making this final overpayment calculation, AHCA determined, correctly, that Petitioner was overpaid a total of

    $3,867.62, or $11.90036931 per claim, for the 325 claims he had submitted seeking reimbursement from Medicaid for services assertedly rendered during the Audit Period to the 41 patients in the "cluster sample."

35. Using a statistical formula the validity of which Petitioner has not disputed, AHCA extended these results to the total "population" of 4,574 Medicaid claims that Petitioner had submitted for services assertedly rendered during the Audit Period, and it correctly calculated that Petitioner had been overpaid a total of $47,931.79.

    Simple Mistake or Fraud?

    
    

36. There has been no allegation made, nor proof submitted, that any of Petitioner's overbillings was the product of anything other than simple mistake or inadvertence on Petitioner's part.

    CONCLUSIONS OF LAW

    
    

37. Effective July 1, 1993, by operation of Section 58 of Chapter 93-129, Laws of Florida, AHCA was transferred "[a]ll powers, duties and functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds of the Medicaid program within the Department of Health and Rehabilitative Services [HRS], as well as the infrastructure and support services that support the program, including, but not limited to, investigative, licensing, legal, and administrative activities."

38. Among the powers transferred to AHCA was the power to recover overpayments made to Medicaid providers, a power it still possesses. See Colonnade Medical Center, Inc. v. State, Agency for Health Care Administration, 847 So. 2d 540, 541-42 (Fla. 4th DCA 2003).

39. An overpayment occurs when a Medicaid provider receives monies beyond those to which it is legally entitled.

40. In the instant case, AHCA is seeking to recover

    
    

    $47,931.79 in Medicaid overpayments allegedly made to Petitioner for services he claimed he rendered during the Audit Period.

41. To determine the merits of AHCA's allegation that Petitioner received a total of $47,931.79 in overpayments from Medicaid, it is necessary to examine the substantive law governing Medicaid payments to Florida physician providers like

    Petitioner that was in effect during the Audit Period. See Toma v. Agency for Health Care Administration, No. 95-2419, 1996 WL 1059900 *23 (Fla. DOAH July 26, 1996)(Recommended Order)("The statutes, rules, Medicaid Physician Provider Handbook and Medicaid EPSDT Provider Handbook in effect during the period for which the services were provided govern the outcome of the dispute.").

42. During the Audit Period, Section 409.907(1)-(3) and (5), Florida Statutes, provided as follows:

    The agency [AHCA] may make payments for medical assistance and related services rendered to Medicaid recipients only to an individual or entity who has a provider agreement in effect with the agency, who is performing services or supplying goods in accordance with federal, state, and local law, and who agrees that no person shall, on the grounds of handicap, race, color, or national origin, or for any other reason, be subjected to discrimination under any program or activity for which the provider receives payment from the agency.

    
    

    1. Each provider agreement shall require the provider to comply fully with all state and federal laws pertaining to the Medicaid program, as well as all federal, state, and local laws pertaining to licensure, if required, and the practice of any of the healing arts, and shall require the provider to provide services or goods of not less than the scope and quality it provides to the general public.

       
       

    2. Each provider agreement shall be a voluntary contract between the agency and the provider, in which the provider agrees to comply with all laws and rules pertaining

       to the Medicaid program when furnishing a service or goods to a Medicaid recipient and the agency agrees to pay a sum, determined by fee schedule, payment methodology, or other manner, for the service or goods provided to the Medicaid recipient. Each provider agreement shall be effective for a stipulated period of time, shall be terminable by either party after reasonable notice, and shall be renewable by mutual agreement.

       
       

    3. The provider agreement developed by the agency, in addition to the requirements specified in subsections (1) and (2), shall require the provider to:

       
       

       1. Have in its possession at the time of signing the provider agreement, and maintain in good standing throughout the period of the agreement's effectiveness, a valid professional or facility license pertinent to the services or goods being provided, as required by the state or locality in which the provider is located, and the Federal Government, if applicable.

          
          

       2. Maintain in a systematic and orderly manner all medical and Medicaid-related records that the agency requires and determines are relevant to the services or goods being provided.

          
          

       3. Retain all medical and Medicaid-related records for a period of 5 years to satisfy all necessary inquiries by the agency.

          
          

       4. Safeguard the use and disclosure of information pertaining to current or former Medicaid recipients and comply with all state and federal laws pertaining to confidentiality of patient information.

          
          

       5. Permit the agency, the Attorney General, the Federal Government, and the authorized agents of each of these entities access to all Medicaid-related information,

          which may be in the form of records, logs, documents, or computer files, and other information pertaining to services or goods billed to the Medicaid program, including access to all patient records and other provider information if the provider cannot easily separate records for Medicaid patients from other records.

          
          

       6. Bill other insurers and third parties, including the Medicare program, before billing the Medicaid program, if the recipient is eligible for payment for health care or related services from another insurer or person, and comply with all other state and federal requirements in this regard.

          
          

       7. Promptly report any moneys received in error or in excess of the amount to which the provider is entitled from the Medicaid program, and promptly refund such moneys to the agency.

          
          

       8. Be liable for and indemnify, defend, and hold the agency harmless from all claims, suits, judgments, or damages, including court costs and attorney's fees, arising out of the negligence or omissions of the provider in the course of providing services to a recipient or a person believed to be a recipient.

          
          

       9. At the option of the agency, provide proof of liability insurance and maintain such insurance in effect for any period during which services or goods are furnished to Medicaid recipients.

          
          

       10. Accept Medicaid payment as payment in full, and prohibit the provider from billing or collecting from the recipient or the recipient's responsible party any additional amount except, and only to the extent the agency permits or requires, copayments, coinsurance, or deductibles to be paid by the recipient for the services or goods

    provided. The Medicaid payment-in-full policy does not apply to services or goods provided to a recipient if the services or goods are not covered by the Medicaid program.

    
    

    * * *

    
    

    (5) The agency:

    
    

    1. Is required to make timely payment at the established rate for services or goods furnished to a recipient by the provider upon receipt of a properly completed claim form. The claim form shall require certification that the services or goods have been completely furnished to the recipient and that, with the exception of those services or goods specified by the agency, the amount billed does not exceed the provider's usual and customary charge for the same services or goods.

       
       

    2. Is prohibited from demanding repayment from the provider in any instance in which the Medicaid overpayment is attributable to error of the department in the determination of eligibility of a recipient.

       
       

    3. May adopt, and include in the provider agreement, such other requirements and stipulations on either party as the agency finds necessary to properly and efficiently administer the Medicaid program.

    
    

    * * *

    
    

43. During the Audit Period, Section 409.913(1)(c), (7), (8), and (10), Florida Statutes, provided as follows:

    * * *

    
    

    (1) For the purposes of this section, the term:

    
    

    * * *

    
    

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

    
    

    * * *

    
    

    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.[11]

    2. 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 is responsible for furnishing to the agency, and keeping 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.

    
    

    * * *

    
    

    (10) The agency may require repayment for inappropriate, medically unnecessary, or excessive goods or services from the person furnishing them, the person under whose

    supervision they were furnished, or the person causing them to be furnished.

    
    

44. The law now in effect governs the procedures that AHCA must follow in determining whether a Florida physician provider has been overpaid by Medicaid. See Gupton v. Village Key & Saw Shop, Inc., 656 So. 2d 475, 477 (Fla. 1995)("Statutes that relate only to procedure or remedy generally apply to all pending cases."); Young v. Altenhaus, 472 So. 2d 1152, 1154 (Fla. 1985)("[S]tatutes which relate only to the procedure or remedy are generally held applicable to all pending cases."); Turro v. Department of Health and Rehabilitative Services, 458 So. 2d 345, 346 (Fla. 1st DCA 1984)("In part because Rule 10- 5.11(23) did not become formally effective until after commencement of the hearing on the applications, Community argues that it was improper to apply the standards stated in the rule to their application. However, the rule prescribes an evidentiary standard and is thus procedural in nature. As such it became applicable and controlling on its effective date."); Batch v. State, 405 So. 2d 302, 304 (Fla. 4th DCA 1981)("This section became effective on October 1, 1978, which was after appellant's criminal act but before his trial and sentencing. Nevertheless, the section is procedural and such statutory changes apply to pending cases."); Florence Western Medical

    Clinic v. Coye, 91 Cal. Rptr. 2d 609, 616 (Cal. App. 2000)("A

    statute addressing procedures to be utilized in legal proceedings not yet concluded operates prospectively for acts to be performed after the effective date of the statute."); Union of American Physicians and Dentists v. Kizer, 272 Cal. Rptr.

    886, 894-95 (Cal. App. 1990)("The Department submits that since statistical probability sampling is a currently effective procedure or process and not a matter of substance, it properly may be utilized on reexamination of individual Medi-Cal providers. The UAPD contends the use of CCR section 51458.2 in audits commenced prior to its effective date would be an impermissible retroactive application of the regulation. The UAPD's retroactivity argument lacks merit. . . . CCR section 51458.2 does not substantially alter the legal effect of past events and merely serves to expedite provider audits. Assuming the use of random sampling and extrapolation is statistically valid, such audit method does nothing to alter the amount of compensation to which a provider otherwise is entitled. Because the use of statistical sampling and extrapolation pursuant to CCR section 51458.2 will not substantially change the legal effect of events which occurred prior to its May 13, 1988 effective date, the regulation may be utilized in audits which were commenced prior to that date."); State v. Kummer, 741 S.W.2d 285, 289 (Mo. App. 1987)("The State contends that

    §§ 577.020.3, 577.026.1 and 577.037.4 do not require that the method of analysis be approved at the time of the incident but that it is sufficient if the method of analysis was approved at the time it is offered in evidence. We agree. It is sufficient if the method of gas chromatography analysis is approved at the time the results are offered, despite the respondent's position that this would constitute a retrospective application of the rules and regulations. . . . The methods and techniques 'approved' by the Department of Health deal with the 'admissibility' of blood alcohol chemical analysis. As such, the rules and regulations relate to 'evidence' and the admissibility of such evidence. These regulations are 'procedural' so that the respondent cannot complain that the rules were not promulgated at the time of the fatal incident.

    It is sufficient, for procedural admissibility and evidentiary purposes, that the rules were approved at the time of the motion hearing and that the test and analysis were conducted in accordance with those rules."); and Colgan v. Hammond, 472 A.2d 497, 500 (Md. App. 1984)("The 1982 Amendment is procedural in nature, changing the evidentiary rule governing admissibility of the blood test results. The amendment does not modify the parties' substantive rights. Ordinarily, where a statute makes a change affecting procedure only, and not substantive rights, the change applies to all actions whether accrued, pending or

    future, unless a contrary intention is expressed.")(citation omitted).

45. Pursuant to Section 409.9131(5), Florida Statutes:

    
    

    In making a determination of overpayment to a physician, [AHCA] must:

    
    

    1. 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, other generally accepted statistical methods, review of medical records, and a consideration of the physician's client case mix. Before performing a review of the physician's Medicaid records, however, the agency shall make every effort to consider the physician's patient case mix, including, but not limited to, patient age and whether individual patients are clients of the Children's Medical Services network established in chapter 391. In meeting its burden of proof in any administrative or court proceeding, the agency may introduce the results of such statistical methods and its other audit findings as evidence of overpayment.

       
       

    2. Refer all physician service claims for peer review when the agency's preliminary analysis indicates a potential overpayment, and before any formal proceedings are initiated against the physician, except as required by s. 409.913.

    
    

46. A "physician," as that term is used in Section 409.9131, Florida Statutes, is defined in subsection (2)(e) of

    the statute as "a person licensed to practice medicine under chapter 458 [Florida Statutes]."

47. "Peer review," as that term is used in Section 409.9131, Florida Statutes, is defined in subsection (2)(d) of the statute as "an evaluation of the professional practices of a Medicaid physician provider by a peer or peers in order to assess the medical necessity, appropriateness, and quality of care provided, as such care is compared to that customarily furnished by the physician's peers and to recognized health care standards, and to determine whether the documentation in the physician's records is adequate."

48. "Peer," as that term is used in Section 409.9131, Florida Statutes, is defined in subsection (2)(c) of the statute as "a Florida licensed physician who is, to the maximum extent possible, of the same specialty or subspecialty, licensed under the same chapter, and in active practice."

49. "Active practice," as that term is used in Section 409.9131, Florida Statutes, is defined in subsection (2)(a) of the statute to mean "a physician must have regularly provided medical care and treatment to patients within the past 2 years."

50. It is undisputed that Dr. Kohler is Petitioner's "peer," as that term is used in Section 409.9131(5), Florida Statutes.

51. "Medical necessity," as that term is used in Section 409.9131, Florida Statutes, is defined in subsection (2)(b) of the statute, which provides as follows:

    "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. In making determinations of medical necessity, the agency must, to the maximum extent possible, use a physician in active practice, either employed by or under contract with the agency, of the same specialty or subspecialty as the physician under review. Such determination must be based upon the information available at the time the goods or services were provided.

    
    

52. Section 409.913(20), Florida Statutes, provides that,"[w]hen making a determination that an overpayment has occurred, [AHCA] shall prepare and issue an audit report to the provider showing the calculation of overpayments."

53. A provider who is the subject of an audit report that reveals overpayments is entitled to an administrative hearing pursuant to Chapter 120, Florida Statutes, before AHCA takes final agency action ordering repayment.

54. At any such hearing, AHCA has the burden of establishing, by a preponderance of the evidence, that Medicaid overpayments in the amount it is seeking to recoup were made to the provider. See South Medical Services, Inc. v. Agency for Health Care Administration, 653 So. 2d 440, 441 (Fla. 3d DCA 1995); Southpointe Pharmacy v. Department of Health and

    Rehabilitative Services, 596 So. 2d 106, 109 (Fla. 1st DCA 1992); Florida Department of Transportation v. J.W.C. Co., Inc.,

    396 So. 2d 778, 788 (Fla. 1st DCA 1981); Florida Department of Health and Rehabilitative Services, Division of Health v. Career

    Service Commission, 289 So. 2d 412, 415 (Fla. 4th DCA 1974).; and Full Health Care, Inc. v. Agency for Health Care Administration, No. 00-4441, 2001 WL 729127 *8 (Fla. DOAH

    June 25, 2001) (Recommended Order).

    
    

55. Section 409.913(21), Florida Statutes, provides that "[t]he audit report, supported by agency work papers, showing an overpayment to a provider constitutes evidence of the overpayment." It has been said that this language enables AHCA to "make a prima facie case without doing any heavy lifting: it need only proffer a properly-supported audit report, which must be received in evidence." Full Health Care, Inc. v. Agency for Health Care Administration, 2001 WL 729127 *8.

56. Section 409.913(21), Florida Statutes, further provides that, "[n]otwithstanding the applicable rules of

    discovery, all documentation that will be offered as evidence at an administrative hearing on a Medicaid overpayment must be exchanged by all parties at least 14 days before the administrative hearing or must be excluded from consideration."

57. As is reflected in the Findings of Fact set forth above, at the administrative hearing that Petitioner requested and was granted in the instant case, AHCA met its burden of proving, by a preponderance of the evidence, that Petitioner received Medicaid overpayments in the amount AHCA is seeking to recover from him ($47,931.79).

58. It did so through the presentation of documentary evidence (including the Final Agency Audit Report and the audit work papers) and testimonial evidence (including the unrebutted deposition testimony of Dr. Kohler, the physician who "peer review[ed]" Petitioner's medical records) that established the existence of, among the 325 fully paid, sampled claims, claims (identified in Respondent's Exhibit E) that were for services that were wholly non-reimbursable (either because they were not documented, as required, as having been provided; because they were not documented, as required, as having been "medically necessary"; or because submitting them amounted to "double- billing") or were only partially reimbursable (because they lacked the necessary documentation to show that the level of service actually provided was as high as that reflected by the

    procedure code billed) and for which Petitioner was overpaid a total of $3,867.62 (or $11.90036931 for each claim of the 325 in the "cluster sample"). Applying a statistical extrapolation technique that Petitioner has not challenged (and which, in any event, is statutorily authorized), AHCA showed that Petitioner was overpaid, for all 4,574 paid claims submitted during the Audit Period, a total of $47,931.79, which AHCA is entitled to recover.

59. The only evidence Petitioner presented at hearing was his own testimony, as well as the testimony of three of his patients, who testified concerning the length of time Petitioner spent with them and their children during office visits. This evidence was unpersuasive and insufficient to overcome the prima facie case (of $47,931.79 in overpayments) AHCA had made through its evidentiary presentation.

60. Much of Petitioner's case was devoted to the subject of the duration of Petitioner's encounters with patients during office visits. Time, however, under the E/M Guidelines (in effect during the Audit Period), was not one of the six enumerated "key" or "contributory" components/factors in "selecting a level of E/M services," and it had significance only in those instances where there existed written proof (lacking in the instant case) demonstrating that "counseling and/or coordination of care dominate[d]" the encounter.

    Moreover, pursuant to the controlling statutory law then in effect, to have been payable, any Medicaid claim Petitioner submitted seeking reimbursement for goods or services provided during the Audit Period had to have been supported "by records made at the time the goods or services were provided." Testimony given at hearing is no substitute for this required supporting documentation. To hold otherwise would render meaningless the clear and unambiguous statutory language that imposed this documentation requirement upon reimbursement- seeking Medicaid providers like Petitioner. See State v. Goode, 830 So. 2d 817, 824 (Fla. 2002)("[A] basic rule of statutory construction provides that the Legislature does not intend to enact useless provisions, and courts should avoid readings that would render part of a statute meaningless."); and Florida

    Department of Education v. Cooper, 858 So. 2d 394, 396 (Fla. 1st DCA 2003)("[C]ourts should not construe a statute so as to render any term meaningless.").

61. In his Proposed Recommended Order, in the section entitled "Conclusion of Law," Petitioner makes the following argument:

    The Petitioner Rolando B. Padro is relying on Southpointe Pharmacy v. Department of Health and Rehabilitative Services, 596 So. 2d 106, 109 (Fla. 1st DCA 1992). That case establishes that should the Agency perform one of these audits, they need to interview at least some of the patients involved in

    the audit. During the testimony of [those who] testified on behalf [of] the Agency, they all denied ever having interviewed any of the patients from the sample group[].[12]

    
    

62. Petitioner's reliance on Southpointe Pharmacy is misplaced. Southpointe Pharmacy involved a Medicaid audit of, not a physician provider, but a "provider of prescription medications." An "aggregate analysis" was used in conducting the audit. As the court explained in its opinion, "aggregate analysis focuses on inventory and purchasing patterns" and is

    an examination, over the period comprehended by the audit, of the top 100 drugs that have been billed to and paid for by the Medicaid program in order to determine whether for each of those drugs the pharmacy purchased a sufficient quantity to cover its billing to the Medicaid program. The underlying premise to this analysis is that before a drug is dispensed and billed to and paid for by the Medicaid program, the pharmacy should have the drug in its possession.

    
    

    Id. at 110-11. The court determined that, in using an "aggregate analysis," HRS (the agency then responsible for administering the state's Medicaid program) "was proceeding not under any existing rule but rather under incipient policy." Explaining as follows, the court found that, at the administrative hearing below, the agency had "failed in its mission to support and defend the aggregate analysis with competent and substantial evidence":

    In an earlier final order issued by the Department, David's Pharmacy v. Department

    of Health and Rehabilitative Services, 11 FALR 2935 (HRS 1988), wherein aggregate analysis was utilized for the first time, the Department found HRS had not appropriately explicated this non-rule policy by its failing to produce evidence that would establish a rational, reasonable basis for the procedure.

    
    

    In the instant case, despite rather pat testimony to the effect that the aggregate analysis is indeed contemplated by the rule, it was shown that HRS had not checked a single Medicaid patient to determine if the medication had been dispensed, or a single physician to see if the medication had been prescribed. Robert P[ie]rce testified that the only thing HRS had done to validate the aggregate analysis auditing method since David's Pharmacy, was to delete the requirement of utilizing a "percentage of Medicaid sales" from the formula. As pointed out by Southpointe, none of the other shortcomings of aggregate analysis which were identified in the David's final order were remedied by HRS at the hearing below. For example, neither a beginning nor ending inventory had been taken into consideration, and no consideration was given as to whether Southpointe had acquired additional drugs to augment its inventory by means other than direct purchase from its manufacturers. Although the Department in its final order found that Southpointe was given an opportunity to provide evidence of any bulk purchases, including purchases made outside the audit period, or additional purchases not originally computed in the overpayment calculations, the record shows that the only witness who spoke directly with anyone from Southpointe stated specifically that the owner was asked only to produce invoices. Nowhere in the record does it show that the reason behind this request was explained to the owner, much less that he should provide evidence of other acquisitions, such as bulk purchases,

    trades, inventory acquisition, etc. Consequently, the hearing officer's findings on the issue of whether or not HRS had satisfactorily validated and explicated its non-rule policy were based on competent and substantial evidence and should not have been rejected by the Department.

    
    

    Id. at 111-112. Agreeing with the hearing officer that HRS's "aggregate analysis was flawed," the court reversed the overpayment determination the agency had made based upon this "flawed" analysis. Id. at 112.

63. In auditing Petitioner in the instant case and determining that he was overpaid $47,931.79, AHCA, unlike HRS in Southpointe Pharmacy, employed methods that were expressly authorized by statute and did not amount to "incipient policy" that AHCA needed "to support and defend . . . with competent and substantial evidence" at hearing. That these methods did not include interviewing the patients in the "cluster sample" did not render AHCA's methodology "flawed" or in any way unfairly prejudice Petitioner. Given the statutory requirement that Medicaid claims had to have been supported "by records made at the time the goods or services were provided," it was entirely appropriate for AHCA to have based its overpayment determination solely upon a review of Petitioner's records and to have not sought from Petitioner's patients information that was missing from these records. Indeed, had it obtained such missing information from Petitioner's patients and relied upon it in

    making an overpayment determination, AHCA would have been acting in derogation of its responsibility to exercise "oversight of the integrity of the [state] Medicaid program."13

64. In view of the foregoing, AHCA should enter a final order finding that Petitioner was overpaid a total $47,931.79 for Medicaid claims submitted for services assertedly rendered

during the Audit Period.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby

RECOMMENDED that AHCA enter a final order finding that Petitioner received $47,931.79 in Medicaid overpayments for paid claims covering the period from May 22, 1998, through May 22, 2000, and requiring Petitioner to repay this amount to AHCA.

DONE AND ENTERED this 15th day of June, 2004, in Tallahassee, Leon County, Florida.

S

STUART M. LERNER

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 15th day of June, 2004.

ENDNOTES

1 Among these 11 exhibits was the transcript of a deposition of Lisa Kohler, M.D., which was offered and received into evidence in lieu of Dr. Kohler's live testimony at hearing.

2 Ms. De La Torre, Ms. Guerra, and Ms. Sanchez are all patients of Petitioner's.

3 The transcript of the February 2, 2004, hearing session (consisting of one volume) had already been filed with the Division (on February 11, 2004).

4 The provider agreement that was in effect during the Audit Period is not a part of the evidentiary record in the instant case. Respondent's Exhibit B contains a provider agreement, but it was signed by Petitioner on November 25, 2002, after the end of the Audit Period.

5 In 1999, this paragraph was revised to read as follows:

When counseling and/or coordination of care dominates (more than 50%) of the physician/patient and/or family encounter (face-to-face time in the

office or other outpatient setting or floor/unit time in the hospital or nursing facility) then time may be considered the key or controlling factor to qualify for a particular level of E/M services. The extent of counseling and/or coordination of care must be documented in the medical record.

In 2000, this paragraph was again revised, this time by the addition of the following as the paragraph's penultimate sentence:

This includes time spent with parties who have assumed responsibility for the care of the patient or decision making whether or

not they are family members (e.g., foster parents, person acting in locum parentis, legal guardian).

6 In taking such action, AHCA was exercising its statutory authority under Section 409.913(2), Florida Statutes, to "conduct . . . audits . . . to determine possible . . . overpayment . . . in the Medicaid program." The purpose of the audit was to ascertain whether Petitioner was overpaid for services he billed Medicaid during the Audit Period, not to determine whether there were any services Petitioner provided during the Audit Period for which he could have billed Medicaid but did not.

7 In none of these claims did Petitioner use a "prolonged physician service with direct (face-to-face) patient contact" code.

8 This Final Agency Audit Report was, in actuality, only proposed, and not final, agency action. See Beverly Enterprises-Florida, Inc. v. Department of Health and Rehabilitative Services, 573 So. 2d 19, 23 (Fla. 1st DCA 1990)("A request for a formal administrative hearing commences a de novo proceeding intended to formulate agency action, and not to review action taken earlier or preliminarily."); Boca Raton Artificial Kidney Center, Inc. v. Florida Department of Health and Rehabilitative Services, 475 So. 2d 260, 261-62 (Fla. 1st DCA 1985)("Although the CON in question does not so state, it represents preliminary agency action. That the actual certificate fails to state that it is a 'notice of intent to

issue CON' or that it is 'subject to administrative review' does not change the character of the certificate as preliminary agency action. Such action is subject to administrative review via Section 120.57(1) or (2) hearings on the petition of a substantially affected party."); Capeletti Brothers, Inc. v.

Department of General Services, 432 So. 2d 1359, 1363 (Fla. 1st DCA 1983)("Capeletti misconceives the purpose of the [Section]

120.57 hearing. The rejection of bids never became final agency action. As we have previously held, APA hearing requirements are designed to give affected parties an opportunity to change the agency's mind."); and McDonald v. Department of Banking and Finance, 346 So. 2d 569, 584 (Fla. 1st DCA 1977)("Section 120.57 proceedings are intended to formulate final agency action, not to review action taken earlier and preliminarily.").

9 The evidentiary record in the instant case contains no such "applicable rules." Respondent's Exhibit K is a copy of Florida Administrative Code Rule 59G-4.230, but not the version that was in effect during the Audit Period.

10 These "peer reviewed" patient records, unlike the audit work papers reflecting the results of the "peer review," are not included in the evidentiary record in this case.

11 To meet this requirement, the provider's records must be legible and comprehensible. Cf. Tsoutsouris v. Shalala, 977 F. Supp. 899, 905 (N.D. Ind. 1997)("Dr. Freeman stated that although Dr. Tsoutsouris' medical records alone would not enable a third party to make a determination that medical necessity existed in the cases of Hazel Kershaw and Emma MacIntosh,

Dr. Tsoutsouris' testimony deciphering his illegible handwriting and explaining his abbreviations and 'as above' references would permit a determination of medical necessity. . . . However, as in the cases of Mr. Walker and Mrs. Potts, this conclusion does not compel a finding of medical necessity because the issue that the ALJ was reviewing was whether Dr. Tsoutsouris provided sufficient documentation for a third party to find that the appropriate medical necessity existed to enable payment of

Dr. Tsoutsouris' claims.").

12 Only one of the two witnesses who gave testimony on behalf of AHCA addressed the issue of whether patients in the "sample group" were interviewed; however, this witness, Dr. Kohler, did "den[y] ever having interviewed any of the[se] patients "

13 This is not to say that AHCA was foreclosed from interviewing Petitioner's patients for purposes of confirming the accuracy of the patient records that were "peer reviewed." Conducting such interviews, however, could not have resulted in a more favorable audit outcome for Petitioner.

COPIES FURNISHED:

Hosey Hernandez, Esquire

2701 South Bayshore Drive, Suite 602 Coconut Grove, Florida 33133

Jeffries H. Duvall, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Building 3

Tallahassee, Florida 32308-5403

Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308

Alan Levine, Secretary

Agency for Health Care Administration Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 03-004227MPI

Orders for Case No: 03-004227MPI