STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ADY OPTICAL, INC., )

)

Petitioner, )

)

vs. ) Case No. 04-0030MPI

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on March 4, 2004, in Tallahassee, Florida, before Patricia Hart Malono, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Pedro Luis Jimenez, Jr., President Ady Optical, Inc.

4740 West Flagler Street Miami, Florida 33134

For Respondent: Garnett Chisenhall, Esquire

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

STATEMENT OF THE ISSUE

Whether the Petitioner must reimburse the Respondent for Medicaid overpayments as set out in the Final Agency Audit

Report dated October 29, 2003, and, if so, the amount to be repaid.

PRELIMINARY STATEMENT

In a Final Agency Audit Report ("FAAR") dated October 29, 2003, the Agency for Health Care Administration (“AHCA”) notified Ady Optical Inc. ("Ady Optical"), that it had completed an audit of its paid Medicaid claims for the period extending from January 1, 1999, through June 30, 2000 (“Audit Period”) and that it had determined that Ady Optical had been overpaid by

$46,823.01 for claims not covered by Medicaid. AHCA stated in the FAAR that, in calculating the overpayment, it reviewed 294 claims submitted during the Audit Period for 30 randomly-chosen Medicaid recipients and found that some claims were not supported by documentation, that some claims were erroneously coded, and that the medical records did not support the medical necessity for some claims. AHCA determined that Ady Optical had been overpaid $4,363.00 during the Audit Period for the 294 claims in the statistical sample, or an average of $14.84013605 per claim, and that Ady Optical had submitted 3,512 claims during the Audit Period. With these figures, AHCA calculated the Medicaid overpayment specified in the October 29, 2003, FAAR.

Ady Optical, through its President, Pedro Luis Jimenez, Jr., timely disputed the overpayment determination and requested

an informal administrative hearing. Mr. Jimenez specifically "disputed issues of material facts" related to AHCA's disallowance of payment for codes V2430 and V2410.1 Mr. Jimenez did not challenge the methodology used by AHCA to calculate the amount of the overpayment. Because Mr. Jimenez's request for an administrative hearing disputed the facts on which AHCA based its overpayment determination, AHCA transmitted the matter to the Division of Administrative Hearings for assignment of an administrative law judge to conduct a formal hearing. Pursuant to notice, the hearing was conducted on March 4, 2004.

At the final hearing, AHCA presented the testimony of Ms. Lynette Whaley, a Medical Health Care Program Analyst with AHCA, and Dr. Michael Walby, who testified as AHCA's expert in

the field of optometry. Respondent's Exhibits L, M, M-1, N, and O-1 through O-30 were offered and received into evidence.

Mr. Jimenez testified on behalf of Ady Optical but offered no exhibits into evidence. At AHCA's request, official recognition was taken of Section 409.913, Florida Statutes (1999 & 2000); Section 409.9131, Florida Statutes (1999 & 2000); Florida Administrative Code Rule 59G-4.340, as amended October 13, 1998, June 10, 1999, and April 23, 2000; the 1999 and 2000 versions of the Visual Services Coverage and Limitations Handbook ("Coverage and Limitations Handbook"); and the Medicaid Provider Reimbursement Handbooks ("Reimbursement Handbook") in effect

from November 1996 through July 1999 and from July 1999 through the end of the Audit Period.2 (These documents were identified as Respondent's Exhibits A through K.)

The one-volume transcript of the final hearing was filed with the Division of Administrative Hearings on March 26, 2004, and the parties timely filed their proposed findings of fact and

conclusions of law.

FINDINGS OF FACT

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

1. AHCA is, and was at all times material to this proceeding, the state agency charged with administering Florida's Medicaid Program; with making payments to providers of goods and services on behalf of Medicaid recipients; and with overseeing the Medicaid Program, auditing Medicaid providers, and recovering overpayments made to Medicaid providers. See

   §§ 409.901, 409.902, and 409.913, Fla. Stat. (2003).

   
   

2. During the Audit Period, Ady Optical was an authorized Medicaid provider of opticianry services,3 having been issued Medicaid provider number 2002949-00. To become a Medicaid provider, Ady Optical executed a Medicaid Provider Agreement.

3. The FAAR dated October 29, 2003, was based on a review by Dr. Regina Manes of Ady Optical's records for the 30

   randomly-selected Medicaid recipients. At the time of the final hearing, Dr. Manes was no longer under contract with AHCA and, therefore, was not available to testify. AHCA requested that Dr. Walby testify at the final hearing as its expert in optometry. In preparation for the final hearing, Dr. Walby reviewed the records submitted by Ady Optical and made an independent determination of the appropriateness of the

   294 claims at issue for the Audit Period.

   
   

4. Dr. Walby's conclusions were not always consistent with those of Dr. Manes. Ms. Whaley reconciled the two reviews and allowed a claim if either Dr. Walby or Dr. Manes determined that it was covered by Medicaid. As a result of Dr. Walby's review and Ms. Whaley's reconciliation, AHCA lowered the amount it seeks to recover from Ady Optical to $45,914.17.

5. The purpose of Medicaid visual services, as stated in the Coverage and Limitations Handbook, is "to provide medically necessary eyeglasses, contact lenses, eyeglass repair services, and prosthetic eyes to Medicaid recipients." "Visual services" are described in the Coverage and Limitations Handbook as "the medically necessary provision of eyeglasses, prosthetic eyes, and contact lenses; the fitting, dispensing, and adjusting of eyeglasses; and eyeglass repair services." The Coverage and Limitations Handbook is to be used in conjunction with the

   Reimbursement Handbook, which provides information and guidance to assist Medicaid providers in filing claims properly.

6. The claims at issue in this case involve the provision of eyeglass lenses to Medicaid recipients by Ady Optical. Medicaid recipients bring their eyeglass prescriptions to Ady Optical, and Mr. Jimenez, as the licensed optician at Ady Optical, helps the recipient select eyeglass frames and orders lenses in the powers required by the prescription. An optician such as Mr. Jimenez has the discretion to order lenses with special features such as tints, plastic or glass lenses, variable asphericity lenses, and lenses with a special base curve, depending on the needs of the individual.

7. The lenses selected by an optician for a Medicaid recipient must be optically necessary, that is, necessary to enhance visual acuity, and information establishing the optical necessity for the selection of non-standard lenses must be contained in the documentation maintained by the optician. Sometimes the need for a non-standard lens is apparent from the prescription, but in most cases, the optical necessity must be noted in the documentation.

8. The claims for which AHCA disallowed full or partial payment to Ady Optical are claims for variable asphericity lenses, claims for lenses with special base curves, one claim for an oversized lens, claims for which Ady Optical provided

   inadequate documentation to establish that lenses were ordered for Medicaid recipients, and claims involving errors in coding. Claims for variable asphericity lenses

9. Prescriptions for eyeglass lenses are expressed in "plus or minus" diopter units. Variable asphericity lenses were originally designed to ameliorate the magnification and "off-of- the-center" effects of the very thick lenses necessary to correct the vision of persons with extremely high diopter prescriptions, such as the prescriptions of ± 15 diopters or more needed in the past by persons who had had cataract surgery.4 With advances in technology and surgical techniques, there are few patients with prescriptions this high, and variable asphericity lenses are now made for prescriptions with much lower diopters.

10. The curve of a variable asphericity lens is different from that of a regular lens, and variable asphericity lenses are lighter in weight than regular lenses, which can be a factor for persons with high diopter prescriptions. Variable asphericity lenses also provide significantly better peripheral vision for persons with high diopter prescriptions than regular lenses can provide. There is, however, a minimal difference in weight between variable asphericity lenses and regular lenses with low diopter prescriptions, and peripheral vision is usually not

    affected when regular lenses are used for low diopter prescriptions.

11. The Coverage and Limitations Handbook in effect during the Audit Period provides that both single vision variable asphericity lenses, assigned procedure code V2410, and bifocal variable asphericity lenses, assigned procedure code V2430, may be billed under the same codes for all powers ranging from .25 to over 6.0 diopters.5

12. In his review of the Medicaid claims submitted by Ady Optical for the 30 randomly-selected Medicaid recipients included in the audit, Dr. Walby disallowed all claims for variable asphericity lenses because the prescriptions were lower than ± 7.00 diopters. Dr. Walby reasoned that any optician should know that variable asphericity lenses should not be prescribed for prescriptions with diopters lower than ± 7 units. Dr. Walby variously described the ± 7 diopter cut-off for variable asphericity lenses as the standard he considered "the industry standard" and as the standard he chooses to use in his practice. Dr. Walby also testified that the ± 7-diopter standard had previously been chosen by Medicaid as the minimum prescription for which contact lenses are covered and that this standard was adopted in the current Coverage and Limitations Handbook "because somebody had to draw a line in the sand, and that's where it got drawn."6

13. Dr. Walby has failed to establish by persuasive evidence that, in the practice of opticianry, there is an absolute industry standard that dictates that variable asphericity lenses are never optically necessary for a person whose prescription is lower than ± 7.00 diopters.7 Because the Coverage and Limitations Handbook in effect during the Audit Period permitted the use of variable asphericity lenses for prescriptions of ± 0.25 diopters and above, Ady Optical is entitled to reimbursement for variable asphericity lenses provided to Medicaid recipients whose prescriptions are below

    ± 7.00 diopters as long as Ady Optical documented that variable asphericity lenses were optically necessary to provide adequate visual acuity and reasonable comfort.

14. Ady Optical ordered variable asphericity lenses for Recipients 1 through 3, 5 through 8, and 10 through 30. None of these recipients' prescriptions exceeded ± 5.25 diopters. Most of the prescriptions for these recipients were below

    ± 3.00 diopters, and several of the prescriptions called for "plano" lenses, that is, lenses with no magnification power. Ady Optical failed to indicate on any of the laboratory order forms any optical necessity for providing variable asphericity lenses to these recipients. The claims submitted by Ady Optical to Medicaid for payment for variable asphericity lenses for these recipients are, therefore, disallowed.

    Claims for lenses with special base curves

    
    

15. Although there is a standard base curve for eyeglass lenses, lenses can be made with different base curves to accommodate the special needs of an individual. The Coverage and Limitations Handbook in effect during the Audit Period provides that special base curves, assigned procedure code V2730, may be billed with no stated limitations.

16. In order to be covered by Medicaid, lenses with special base curves must be optically necessary, and the optical necessity must either be inherent in the prescription or documented in the optician's records. In addition, the optician is responsible for specifying the particular curvature of the lens required to meet the needs of the individual whenever a special base curve lens is ordered.

17. There is optical necessity for lenses with special base curves when a person's prescription for one eye is significantly larger than the prescription for the other eye; the image size in both lenses can be made the same by adjusting the curves of the lenses. There is also optical necessity for a lens with a special base curve when a person's eyelashes scrape the back of the lens in their eyeglasses; the lenses could be made with a steeper base curve than the standard base curve to remedy this problem. Although Dr. Walby testified that there

    are optical reasons for ordering a lens with a special base curve, he did not explain any reasons except those noted.

18. Ady Optical ordered lenses with special base curves for Recipients 1, 2, 4 through 8, 11 through 14, and 17 through

1. There is nothing on the laboratory order forms for these recipients to indicate that special base curves for the lenses ordered were optically necessary, and there is nothing inherent in the prescriptions that would justify lenses with special base curves.

   1. On the laboratory order forms for all of the above recipients except for Recipient 8 and Recipient 23, the special base curve specified was "variable," "special," "thinnest," "flat," "flattest," and "match Rx." These descriptive terms do not provide a specific base curve measurement to the laboratory, and the base curve measurement was determined by the laboratory rather than by an optician. On the laboratory order form for Recipients 8 and 23, base curve measurements of +4.0 and +6.0, respectively, were specified; these base curve measurements are, however, standard for the prescriptions of Recipients 8 and 23. The claims submitted by Ady Optical for payment for lenses with special base curves for these recipients are, therefore, disallowed.

   2. The laboratory order forms for Recipients 10, 15, 16, 20, and 30 did not include an order for lenses with special base

      curves. The claims submitted by Ady Optical to Medicaid for payment for lenses with special base curves for these recipients are disallowed.

      Oversized lenses

      
      

   3. Pursuant to the Coverage and Limitations Handbook, Medicaid will pay for oversized lenses, assigned procedure code V2780, for recipients whose eye-size is 56 millimeters or greater. Ady Optical submitted a claim to Medicaid for payment for oversized lenses for Recipient 23. Recipient 23's eye-size was specified on the laboratory order form as 50 millimeters, and the claim for payment for oversized lenses for this recipient is disallowed.

      Claims not supported by documentation

      
      

   4. All claims submitted to Medicaid for Recipient 6 for lenses ordered on June 13, 2000, are disallowed because the documentation provided by Ady Optical to AHCA does not include a laboratory order form for that date.

   5. All claims submitted to Medicaid for Recipient 9 for August 11, 1999, and for October 28, 1999, are disallowed because the documentation provided by Ady Optical to AHCA does not include laboratory order forms for those dates.

   6. All claims submitted to Medicaid for Recipient 10 for lenses ordered on September 29, 1999, are disallowed because the

      documentation provided by Ady Optical to AHCA does not include a laboratory order form for that date.

   7. All claims submitted to Medicaid for Recipient 19 for lenses ordered on May 29, 1999, and June 12, 2000, are disallowed because the documentation provided by Ady Optical to AHCA does not include laboratory order forms for those dates.

   8. All claims submitted to Medicaid for Recipient 22 for lenses ordered on April 7, 1999, are disallowed because the documentation provided by Ady Optical to AHCA does not include a laboratory order form for that date.

   9. All claims submitted to Medicaid for Recipient 26 for lenses ordered on July 16, 1999, are disallowed because the documentation provided by Ady Optical to AHCA does not include a laboratory order form for that date.

   10. All claims submitted to Medicaid for Recipient 27 for lenses ordered on August 23, 1999, are disallowed because the documentation provided by Ady Optical to AHCA does not include a laboratory order form for that date.

       Claims containing billing errors

       
       

   11. Mr. Jimenez does not challenge the disallowance of claims billed in error, specifically the claims for bifocal seg widths of over 28 millimeters for Recipients 20, 23, 26, and 27.

       Summary

       
       

   12. The evidence presented by AHCA is sufficient to support its determination that Ady Optical received Medicaid overpayments in the amount of $45,914.17.

       CONCLUSIONS OF LAW

       
       

   13. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2003).

   14. AHCA bears the burden of establishing a Medicaid overpayment by a preponderance of the evidence. 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); see also

       
       

       Section 120.57(1)(j), Florida Statutes (2002)("Findings of fact shall be based on a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute ").

   15. Section 409.913, Florida Statutes, provides in pertinent part:

       The agency shall operate a program to oversee the activities of Florida Medicaid recipients, and providers and their representatives, to ensure that fraudulent and abusive behavior and neglect of

       recipients occur to the minimum extent possible, and to recover overpayments and impose sanctions as appropriate. . . .

       
       

       1. For the purposes of this section, the term:

          
          

          * * *

          
          

          1. "Medical necessity" or "medically necessary" means any goods or services necessary to palliate the effects of a terminal condition, or to prevent, diagnose, correct, cure, alleviate, or preclude deterioration of a condition that threatens life, causes pain or suffering, or results in illness or infirmity, which goods or services are provided in accordance with generally accepted standards of medical practice. For purposes of determining Medicaid reimbursement, the agency is the final arbiter of medical necessity. 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.

             
             

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

          
          

          * * *

          
          

          1. When presenting a claim for payment under the Medicaid program, a provider has an affirmative duty 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.

          
          

          * * *

          
          

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

             
             

          2. 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.

          
          

   16. Florida Administrative Code Rule 59G-1.010(166) expands on the statutory definition of “medically necessary” or “medical necessity” and provides in pertinent part:

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

       
       

       (a) 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.

       
       

   17. Mr. Jimenez's argument that, because there were no limitations stated in the Coverage and Limitations Handbook in effect during the Audit Period, he was free to provide variable asphericity lenses and lenses with special base curves to all Medicaid recipients without regard to optical necessity, is rejected. Pursuant to Section 409.913(7)(b), Florida Statutes, all Medicaid claims must be for goods or services that are medically necessary. Ady Optical was, therefore, obligated to consider whether the lenses provided to Medicaid recipients were optically necessity and conformed to practices and standards generally recognized by those licensed to engage in the practice of opticianry.

   18. Based on the findings of fact herein, AHCA has proven by a preponderance of the evidence that Ady Optical received Medicaid overpayments in the amount of $45,914.17.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order finding that Ady Optical, Inc., received overpayments from the Medicaid program in the amount of $45,914.17 during the period extending from January 1, 1999, through June 30, 2000, and requiring Ady Optical, Inc., to repay the overpayment amount.

DONE AND ENTERED this 27th day of May, 2004, in Tallahassee, Leon County, Florida.

S

PATRICIA HART MALONO

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 27th day of May, 2004.

ENDNOTES

1/ Although Mr. Jimenez did not dispute in his request for an administrative hearing AHCA's disallowance of claims for codes V2730 and V2780, both AHCA's expert and Mr. Jimenez testified regarding these codes, and they were addressed by AHCA in its

proposed findings of fact and conclusions of law. These codes are, therefore, considered to be at issue and will be addressed in this Recommended Order.

2/ There appears to be no relevant differences in the 1999 and 2000 editions of the Florida Statutes; therefore, unless otherwise indicated, all references to the Florida Statutes herein shall be to the 2000 edition. The only difference in the three versions of Florida Administrative Code Rule 4.340 is that each amendment of the rule references a different edition of the Coverage and Limitations Handbook; therefore, reference will not be made herein to the dates of amendment of Rule 59G-4.340.

There do not appear to be any relevant differences in the 1999 and 2000 editions of the Coverage and Limitations Handbook; therefore, reference will not be made herein to a specific edition. Finally, there do not appear to be any relevant differences in the Reimbursement Handbook in effect from November 1996 through July 1999 and the Reimbursement Handbook in effect from July 1999 through the end of the Audit Period; therefore, reference will not be made herein to a specific edition.

3/ Section 484.002(3), Florida Statutes (2003), provides in pertinent part: "'Opticianry' means the preparation and dispensing of lenses, spectacles, eyeglasses, contact lenses, and other optical devices to the intended user or agent thereof, upon the written prescription of a licensed allopathic or osteopathic physician or optometrist who is duly licensed to practice or upon presentation of a duplicate prescription."

4/ Transcript at page 53. It must be noted that Dr. Walby did not give a very coherent explanation of the design and appropriate use of variable asphericity lenses, and it has, therefore, been difficult to construct from the evidence presented a definition that will be useful in discussing the optical necessity for such lenses.

5/ In contrast, the Coverage and Limitations Handbook currently in effect permits the use of variable asphericity lenses only for persons whose prescriptions are ± 7 diopters or greater.

6/ Transcript at pages 102-103, 107. According to Dr. Walby, the value of ± 7 diopters was chosen as the cut-off for contact lenses because very few people could qualify for contact lenses under this standard. The ± 7-diopter standard was included in the current Coverage and Limitations Handbook for variable

asphericity lenses for the same reason, to limit the number of recipients who could qualify for Medicaid coverage for such lenses. Dr. Walby explained that Medicaid does not "have money to fit everybody with variable asphericity lenses." Transcript at page 102.

7/ See Thompson v. Department of Children and Families, 835

So. 2d 357, 360 (Fla. 5th DCA 2003)("The trier of fact, however, may accept or reject all or any part of an expert's testimony and is in no way bound by uncontroverted expert opinion testimony.")

COPIES FURNISHED:

Garnett Chisenhall, Esquire

Agency for Health Care Administration Fort Knox Executive Center

2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

Pedro Luis Jimenez, Jr. Ady Optical, Inc.

4740 West Flagler Street Miami, Florida 33134

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

Rhonda M. Medows, M.D., 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: 04-000030MPI

Orders for Case No: 04-000030MPI