The Issue The issue for determination is whether Petitioner is liable for overpayment of Medicaid claims for the period from 9/1/94 through 9/30/96, as stated in Respondent's Final Agency Audit Report dated May 5, 1998.
Findings Of Fact At all times material hereto, the Agency for Health Care Administration (Respondent) was the state agency charged with administration of the Medicaid program in the State of Florida pursuant to Section 409.907, Florida Statutes. At all times material hereto, Henry M. Rubinstein, D.C., (Petitioner) was a licensed chiropractor in the State of Florida and was providing chiropractic services to Medicaid recipients. Petitioner provided the services pursuant to a contract with Respondent under the Medicaid provider number 0503517-00. His Medicaid patients for years have included children and multi-handicapped children. Petitioner has published in peer review journals and is a board certified chiropractor. Dennis L. Jones, D.C., is a licensed chiropractor in the State of Florida. 1/ He was involved in the creation of Florida's Medicaid program and monitors the Florida Chiropractic Medicaid Program. Dr. Jones also serves as a Medicaid chiropractic consultant, including the issuance of prior authorizations for treatment. Prior authorizations are required for a chiropractor to provide and bill for visits by Medicaid recipients in excess of the set limited number. The maximum number of visits allowed per year prior to July 1, 1994, was 12, and after July 1, 1994, was 24. After July 1, 1994, prior authorization was required for visits beyond 24 for Medicaid recipients under the age of Prior authorization was granted for requests that demonstrated medical necessity. Dr. Jones denied many of Petitioner's requests for prior authorization. He denied the requests on the basis that the treatments were extending for periods of up to two years without detailed explanation of medical necessity to substantiate such extended periods of care. Dr. Jones observed that Petitioner's requests for such extended care routinely lacked substantiation and documentation for such extended care, such as x-rays, orthopedic and neurological findings, and subjective/objective descriptions. However, Dr. Jones granted some of Petitioner's requests for prior authorization to exceed the maximum number of visits. Dr. Jones had concerns as to the sufficiency of the documentation of Petitioner's requests for prior authorizations. As a result, when such requests were granted, Dr. Jones noted on the request forms that supplemental medical necessity needed to be documented more completely in the future. In 1996, Dr. Jones related his concerns about Petitioner in a letter to Respondent and included with the letter prior authorizations for primarily special needs children covering the years 1994 through 1996. Twenty-nine prior authorizations were included, with 25 of them for special needs children. His concerns related primarily to Petitioner's Medicaid patients who were special needs children and for whom Dr. Jones had reviewed only prior authorizations submitted by Petitioner. Further, in his letter, Dr. Jones requested an investigation into possible patient brokering, a criminal act. However, a request from a complainant for an investigation into a particular area of alleged violation does not prevent Respondent from identifying and investigating other areas of possible violation revealed by the documents provided. Dr. Jones' letter was referred to one of Respondent's employees, Judith M. Jensen. At that time, Ms. Jensen was also in the process of reviewing another complaint lodged against Petitioner by Dr. Jones, regarding prior authorizations for children, but covering a different time period--from 1993 through 1995. Ms. Jensen was, and is, employed by Respondent as a Human Services Program Specialist. Her duties include monitoring Medicaid claims and investigating Medicaid complaints and aberrant billings for Respondent's Medicaid Program Integrity Office. In investigating all billing irregularities or specific complaints, a review is typically made of the Medicaid provider's medical records. Substantiation of Medicaid claims that are submitted and paid is by adequate and proper medical record documentation. An audit, based upon a billing irregularity or complaint, is usually begun with the selection of a provider or a group of providers. Next, a sample of the chosen provider's Medicaid claims is chosen for a particular time period, which is the audit period. An analyst for Respondent then requests from the provider the medical records for the Medicaid recipients sampled for the audit period. The medical records are provided to and analyzed by a medical peer reviewer. If the medical peer reviewer recommends denial of payment for any of the claims, resulting in overpayment, Respondent forwards a preliminary audit letter to the Medicaid provider, describing the audit findings and requesting any supplemental medical records. A review of any submitted supplemental medical records is conducted, and the audit findings are adjusted in accordance with the results of the review. If an overpayment continues to be indicated after the review, Respondent forwards a final audit letter to the Medicaid provider. Respondent has a limited number of analysts and medical peer reviewers. Due to such constraints on Respondent, sampling is utilized due to its reliability, cost-effectiveness, and commonly accepted method for review of high volumes of Medicaid claims. Ms. Jensen initiated Respondent's review of Petitioner's Medicaid claims. She began the audit by requesting an ad hoc computer report on Petitioner's billing history for all Medicaid recipients under the age of 21 for the time period from 9/1/94 through 9/30/96. Ms. Jensen's request concentrated only on Medicaid recipients under the age of 21 because Dr. Jones alerted Respondent primarily to prior authorizations for children. Ms. Jensen received the ad hoc computer report, which was a detail of all of Petitioner's Medicaid billings for Medicaid recipients under the age of 21 for the period from 9/1/94 through 9/30/96. The report provided that for the time period indicated, Petitioner billed and was paid for 4,499 claims for 85 recipients, for a total amount of $71,731.30. Having received this information, Ms. Jensen requested a computer-generated selection of a random sample of 20 recipients from the total population of the 85 recipients. Twenty recipients were randomly selected from the total population of the 85 recipients, which showed, among other things, claims totaling 1,307 and payment for the claims totaling $20,710.69. Afterwards, Ms. Jensen requested Petitioner to provide all the medical records for the 20 sampled recipients for the time period from 9/1/94 through 9/30/96. Petitioner complied with Ms. Jensen's request. Having received the medical records, Ms. Jensen engaged a peer review consultant, Dr. Ronald J. Hoffman, D.C., to evaluate the records submitted by Petitioner. She provided the medical records to Dr. Hoffman.. 2/ He was provided with the medical records of only 10 Medicaid recipients on two separate occasions, instead of all 20 at the same time. The Medicaid recipients' medical records were not "sanitized" when they were submitted to Dr. Hoffman, meaning that the names of the Medicaid recipients and provider, Petitioner, were not redacted. Dr. Hoffman, as a peer reviewer, rarely reviews files which have been sanitized. The failure to sanitize the medical records found to be of no consequence to Dr. Hoffman's determinations. Dr. Hoffman is a licensed chiropractor in the State of Florida and has been practicing for over 30 years. His practice includes patients who are pediatric and multi-handicapped, but these patients comprise a very small number of his patients. He performs chiropractic Medicaid utilization review for Respondent and is a Medicaid provider. He has performed chiropractic utilization review for more than 15 years. For the Medicaid program, Dr. Hoffman has been a consultant since 1997, but Petitioner's review was the first peer review performed by Dr. Hoffman for the Medicaid program. When Dr. Hoffman performs peer reviews for Respondent, he relies upon State statutes and Respondent's guidelines, specifically, The Chiropractic Coverage and Limitation Handbook, and his years of experience Dr. Hoffman is knowledgeable about what a medical record should contain in order for the medical record to demonstrate medical necessity for Medicaid reimbursement purposes. The medical record should contain the complete medical history; an examination showing the condition of the patient and why the patient is being treated; symptoms; standardized testing, including orthopedic and neurological tests; treatment notes; a treatment program; objective findings; special procedures; and an evaluation of the patient's progress. 3/ Petitioner agrees that, according to the Medicaid provider reimbursement handbook, the following are requirements for medical records: patient history; chief complaint for each visit; diagnostic tests and results; diagnosis; treatment plan, including prescriptions; medications, supplies, scheduling frequency for follow-up or other services; progress reports, treatment rendered; original signatures and dates; dates of service; and referrals to others. Dr. Hoffman was aware from review of the medical records provided by Petitioner that the Medicaid recipients were special needs children. However, he was unaware of Florida's special needs statutes (Subsections 409.803(1)(c) and 409.9126(1)(b), and Section 409.9121, Florida Statutes), which address, among other things, health care needs for special needs children, and he did not use the statutes in his determination. The failure to use the special needs statutes had little or no effect on Dr. Hoffman's review. The undersigned is persuaded and a finding of fact is made that Dr. Hoffman's failure to use the special needs statutes in his review did not invalidate his determinations. Dr. Hoffman was tendered and is accepted as an expert in chiropractic medicine. He is also found to be an appropriate peer reviewer for Petitioner's situation. Dr. Hoffman's testimony is found to be credible. After having reviewed the medical records, regarding the 20 randomly sampled Medicaid recipients, pursuant to Respondent's Medicaid peer review, Dr. Hoffman produced two reports of his findings. 4/ During his review, Dr. Hoffman considered all of the Medicaid recipients' visits, including those that had been granted prior authorization. Patient 1 was recipient K.K., with a date of birth of 5/18/86. 5/ Dr. Hoffman's opinion was that Patient 1's medical records did not support a finding of medical necessity. The medical records failed to support justification for Patient 1's 198 visits from 11/10/94 through 9/10/96. X-rays contained in the medical records were of such poor quality that they were of no diagnostic value; however, the x-rays were not a factor in the determination of medical necessity. Petitioner's medical notes were practically the same for each visit, with Petitioner noting practically the same comment(s); and there was no recorded orthopedic or neurological testing and no standard chiropractic evaluation forms justifying the number of treatments billed. Patient 1's medical records failed to demonstrate medical necessity for the visits. For Patient 1, 198 claims were paid in the amount of $3,081.30. Prior authorizations granted totaled $2,964. 6/ Patient 2 was recipient N.M., with a date of birth of 8/11/83. Dr. Hoffman's opinion was that Patient 2's medical records lacked documentation demonstrating that the treatments were a medical necessity for Medicaid reimbursement purposes for the 175 visits from 7/12/94 through 6/27/96. The medical records contained no standard medical notes or examination forms and no orthopedic, neurological or chiropractic examination forms to justify treatments; and were redundant and repetitive. X-rays contained in the medical records were of such poor quality that they were of no diagnostic value; but, the x-rays have no impact on the determination of medical necessity. Patient 2's medical records failed to demonstrate medical necessity for the visits. For Patient 2, 175 claims were paid in the amount of $2,726.50. Prior authorizations granted totaled $2,964. Patient 3 was recipient D.A., with a date of birth of 4/6/89. Dr. Hoffman's opinion was that Patient 3's medical records lacked justification for the 173 visits from 8/23/94 through 7/30/96. The medical records contained no standard procedures performed by an acceptable chiropractic physician licensed in the State of Florida. The medical records also indicated that a medical radiologist, Dr. Robert S. Elias, M.D., read the recipient's x-rays for the purpose of a medical diagnosis of treatment and that Dr. Elias' diagnosis directly conflicted with Petitioner's diagnosis; however, the x-rays were not a factor in the determination of medical necessity. Patient 3's medical records failed to demonstrate medical necessity for the visits. For Patient 3, 173 claims were paid in the amount of $2,693.70. Prior authorizations granted totaled $2,604. Patient 6 was recipient T.W., with a date of birth of 2/5/90. Dr. Hoffman's opinion was that Patient 6's medical records lacked justification for the 160 visits from 1/3/95 through 9/3/96. The medical records contained no standardized chiropractic notes, no specified diagnosis, and no routine re- examinations. Furthermore, the medical records failed to show why Petitioner was treating Patient 6. X-rays contained in the medical records were not of diagnostic quality and were, therefore, of no diagnostic value; however, the x-rays had no impact on the determination of medical necessity. Patient 6's medical records failed to demonstrate medical necessity for the visits. For Patient 6, 160 claims were paid in the amount of $2,502.20. Prior authorizations granted totaled $1,882.90. Patient 24 was recipient G.H., with a date of birth of 7/20/95. Dr. Hoffman's opinion was that Patient 24's medical records failed to justify the approximately 73 visits. The medical records contained no standardized chiropractic notes, no objective findings, and no standardized testing, including range of motion, muscle spasms, and orthopedic or neurological tests. For many of the visits, the only documentation contained in the medical records consisted of the same notation or statement: "Patient doing well." Patient 24's medical records failed to demonstrate medical necessity for the visits. For Patient 24, 72 claims were paid in the amount of $1,158.09. The medical records do reflect that any prior authorizations were granted. Patient 25 was recipient O.M., with a date of birth of 4/25/83. Dr. Hoffman's opinion was that Patient 25's medical records failed to justify the 87 visits. The medical records contained no standardized chiropractic notes, no justification of diagnosis, and no standard medical tests. The notes that were recorded were quite sparse and repetitive and typically recorded as "Doing well." Patient 25's medical records failed to demonstrate medical necessity for the visits. For Patient 25, 71 claims were paid in the amount of $1,131.69. Prior authorizations granted totaled $753.60. Patient 27 was recipient C.F., with a date of birth of 2/12/84. Dr. Hoffman's opinion was that Patient 27's medical records failed to justify the 67 visits from 10/11/95 through 3/25/96. The medical records contained no standardized chiropractic notes, no standardized examination forms, and no documentation of Patient 27's progress. Patient 27's medical records failed to demonstrate medical necessity for the visits. For Patient 27, 67 claims were paid in the amount of $1,079.59. The medical records do reflect that any prior authorizations were granted. Patient 28 was recipient K.H., with a date of birth of 8/22/94. Dr. Hoffman's opinion was that Patient 28's medical records failed to justify the 69 visits. The medical records contained no standardized chiropractic notes and no standardized testing, and showed no specific treatment provided based upon the requirements of the Medicaid laws. Patient 28's medical records failed to demonstrate medical necessity for the visits. For Patient 28, 66 claims were paid in the amount of $1,031.79. The medical records do reflect that any prior authorizations were granted. Patient 33 was recipient K.D., with a date of birth of 2/15/84. Dr. Hoffman's opinion was that Patient 33's medical records failed to justify the 73 visits. The medical records contained no standardized chiropractic notes and no standardized testing. Patient 33's medical records failed to demonstrate medical necessity for the visits. For Patient 33, 51 claims were paid in the amount of $800.70. Prior authorizations granted totaled $376.80. Patient 35 was recipient T.M., with a date of birth of 10/15/91. Dr. Hoffman's opinion was that Patient 35's medical records failed to justify the 51 visits from 2/15/95 through 6/10/96. The medical records contained no standardized chiropractic notes justifying the treatment provided. The medical records also stated that Dr. Elias read Patient 35's x- rays for the purposes of medical diagnosis of treatment and that Dr. Elias' diagnosis directly conflicted with Petitioner's diagnosis; however, the x-rays were not a factor in determining medical necessity. Patient 35's medical records failed to demonstrate medical necessity for the visits. For Patient 35, 51 claims were paid in the amount of $828.39. Prior authorizations granted totaled $753.60. Patient 39 was recipient B.T., with a date of birth of 8/8/95. Dr. Hoffman's opinion was that Patient 39's medical records failed to justify the 47 visits from 2/9/95 through 10/19/95. The medical records contained no standardized chiropractic notes justifying the treatment provided. Patient 39's medical records failed to demonstrate medical necessity for the visits. For Patient 39, 47 claims were paid in the amount of $765.59. Prior authorizations granted totaled $753.60. Patient 40 was recipient T.H., with a date of birth of 7/11/84. Dr. Hoffman's opinion was that Patient 40's medical records failed to justify the 46 visits from 11/15/94 through 2/28/95. The medical records contained no standardized chiropractic notes justifying the treatment provided. The medical records also indicated that Dr. Elias read the recipient's x-rays for the purposes of medical diagnosis of treatment and that Dr. Elias' diagnosis directly conflicted with Petitioner's diagnosis; however, the x-rays were not a factor in determining medical necessity. Patient 40's medical records failed to demonstrate medical necessity for the visits. For Patient 40, 46 claims were paid in the amount of $731.70. Prior authorizations granted totaled $753.60. Patient 45 was recipient T.W., with a date of birth of 9/26/90. Dr. Hoffman's opinion was that Patient 45's medical records failed to justify the 22 visits from 4/24/95 through 11/15/95. The medical records contained no standardized chiropractic notes justifying the treatment provided. Patient 45's medical records failed to demonstrate medical necessity for the visits. For Patient 45, 26 claims were paid in the amount of $408.20. Prior authorizations granted totaled $376.80. Patient 48 was recipient S.L., with a date of birth of 1/31/91. Dr. Hoffman's opinion was that Patient 48's medical records failed to justify the 23 visits from 3/25/96 through 9/11/96. The medical records contained no standardized chiropractic notes justifying the treatment provided. Patient 48's medical records failed to demonstrate medical necessity for the visits. For Patient 48, 23 claims were paid in the amount of $388.79. The medical records do reflect that any prior authorizations were granted. Patient 54 was recipient H.A., with a date of birth of 1/31/88. Dr. Hoffman's opinion was that Patient 54's medical records failed to justify the 7 visits from 9/6/95 through 10/2/95. The medical records contained no standardized chiropractic notes justifying the treatment provided. Patient 54's medical records failed to demonstrate medical necessity for the visits. For Patient 54, 19 claims were paid in the amount of $298.30. The medical records do reflect that any prior authorizations were granted. Patient 58 was recipient T.W., with a date of birth of 11/19/81. Dr. Hoffman's opinion was that Patient 58's medical records failed to justify the 23 visits from 3/25/96 through 9/30/96. The medical records contained no standardized chiropractic notes justifying the treatment provided. Patient 58's medical records failed to demonstrate medical necessity for the visits. For Patient 58, 17 claims were paid in the amount of $294.59. The medical records do reflect that any prior authorizations were granted. Patient 59 was recipient C.P., with a date of birth of 4/11/93. Dr. Hoffman's opinion was that Patient 59's medical records failed to justify the 22 visits from 4/10/96 through 10/9/96. The medical records contained no standardized chiropractic notes, no documentation of standardized testing of the spine, no documentation of standard tests, including orthopedic and neurological tests, and no medical justification for ongoing care and treatment. Patient 59's medical records failed to demonstrate medical necessity for the visits. For Patient 59, 16 claims were paid in the amount of $278.89. Prior authorizations granted totaled $376.80. Patient 64 was recipient M.L., with a date of birth of 8/20/89. Dr. Hoffman's opinion was that Patient 64's medical records failed to justify the 8 visits from 8/30/95 through 10/2/95. The medical records contained no standardized chiropractic notes, no documentation of standardized testing, and no description of Patient 64's pain or physical condition. Patient 64's medical records failed to demonstrate medical necessity for the visits. For Patient 64, 13 claims were paid in the amount of $204.10. The medical records do reflect that any prior authorizations were granted. Patient 69 was recipient A.L., with a date of birth of 1/14/92. Dr. Hoffman's opinion was that Patient 69's medical records failed to justify the 9 visits from 2/27/95 through 3/20/95. The medical records contained no standardized chiropractic notes, and the documentation contained in the records was minimal and repetitious. Patient 69's medical records failed to demonstrate medical necessity for the visits. For Patient 64, 13 claims were paid in the amount of $204.10. The medical records do reflect that any prior authorizations were granted. Patient 77 was recipient N.J., with a date of birth of 4/16/80. Dr. Hoffman's opinion was that Patient 77's medical records failed to justify the 7 visits from 3/6/95 through 3/29/95. The medical records contained no standardized chiropractic notes justifying the treatment provided. Patient 77's medical records failed to demonstrate medical necessity for the visits. For Patient 77, 7 claims were paid in the amount of $137.59. The medical records do reflect that any prior authorizations were granted. Dr. Hoffman recommended denial of all claims for the 20 sampled Medicaid recipients for the period from 9/1/94 through 9/30/96 due to Petitioner's failure to adequately document medical necessity in the recipients' medical records. For the 20 sampled Medicaid recipients for the period from 9/1/94 through 9/30/96, the total of the Medicaid payments was $20,710.69. As a result, the denial amount, the overpayment, for the 20 sampled recipients was the same, $20,710.69. The overpayment for the 20 sampled Medicaid recipients was extrapolated to the entire universe or total population of the 85 Medicaid recipients under the age of 21 for the period from 9/1/94 through 9/30/96, which resulted in a total projected overpayment of $70,518.26. The actual total amount of Medicaid payments for the 85 Medicaid recipients for the covered time period was $71,731.30. Considering the actual total payment of $71,731.30, the projected overpayment of $70,518.26 is very close to the actual total payment and is inherently reasonable. There is an expectation that, because all the claims of the 20 sampled Medicaid recipients were denied, the projected denial for all the claims in the universe of 85 recipients would be very close to the actual total payment. The difference between the projected overpayment of $70,518.26 and the actual amount paid of $71,731.30 is $1,213.04. This difference is negligible and such negligible difference reflects the inherent accuracy and reliability of the statistical methodology utilized. The maximum error range is 5 percent. The difference between the projected overpayment total and the actual payment total is also well within the maximum error range of 5 percent, or $3,587, for a 95 percent statistical confidence interval. To illustrate Respondent's statistical methodology, first, begin with sampled Medicaid recipient Patient 1. As indicated previously, the total number of actual claims for the total population of 85 Medicaid recipients, who were under the age of 21, was 4,499, and the total amount paid for the claims was $71,731.30; the data being taken from Respondent's Medicaid claims database. For Patient 1, 198 claims were audited and $3,081.30 was the total amount paid for the claims. All of the $3,081.30 was denied and determined to be an overpayment. Second, the same process was used with all 20 Medicaid recipients sampled, which produced a total of 1,307 claims, which were all denied, and produced a total of $20,710.69 in overpayment. The total sampled overpayment of $20,710.69 was divided by the total number of sampled claims (1,307) to obtain a mean overpayment per sampled claim of $15.85. The overpayment per sampled claim of $15.85 was multiplied by the number of claims in the total population (4,499) to obtain a point estimate of the total population overpayment, which was $71,291.04. Third, adjusting the point estimate of $71,291.04 for any potential statistical error, Respondent's model reduces the point estimate by 1.73 standard deviations, yielding an error- adjusted total overpayment of $70,518.26. Respondent has a level of confidence that there is 95 percent chance that actual overpayment is a minimum of $70,518.26. The point estimate of $71,291.04 is very close to the actual payment of $70,731.30 for the claims of the total population of the 85 Medicaid recipients; therefore, the overpayment of $70,518.26 is relatively conservative. Respondent's audit was conducted in conformity with Respondent's standards and conformed to Respondent's manner in conducting audits. The audit also had no known deviations or irregularities or deficiencies in the technical processes utilized, except the failure to take into account the prior authorizations granted. As to the statistical aspect of Respondent's audit, Respondent presented the testimony of a statistical expert, Dr. James T. McClave, Ph.D. 7/ Dr. McClave's testimony is considered credible. Using statistical methods in Medicaid overpayment determinations is a common and well-accepted standard of practice. Statistical modeling in Medicaid auditing scientifically and accurately determines the extent of overpayments in a population of payments from a small sample of overpayments drawn from the population of payments. Statistical modeling is capable of providing reliable estimates of the integrity, or lack thereof, of a Medicaid provider's billings, within reasonable time and resource constraints. In the statistical formula, a sample of claims is used to obtain a valid statistical estimate of the overpayment, if any, associated with the entire population of claims from which the sample of claims was drawn. A point estimate, being the best estimate the sample has to offer of the overpayment, is taken; and then a factor, allowing for the uncertainty associated with the sample, is subtracted such that there is a specified level of confidence that what is obtained is the conservative estimate of what the total population overpayment would be. The point estimate is referred to as "the lower 95 percent confidence bound," 8/ and the number obtained is a number which one "can be 95 percent confident that it is an underestimate of what the total overpayment would be" 9/ if the entire population was sampled. Respondent complied with the statistical methodology. The random selection process and the ad hoc computer report were valid and reliable. The results of the sampling and extrapolation were valid and reliable on the basis of the total population of Petitioner's Medicaid patients was pediatric patients and the results were limited to Petitioner's Medicaid patients under the age of 21. Further, the sample size of 20 Medicaid recipients from the total population of 85 was adequate. However, the results of the sampling and extrapolation are not reliable as they pertain to the failure of Respondent to take into consideration the granted prior authorizations. Respondent is compelled and should be provided an opportunity to re-apply its statistical methodology in light of granted prior authorizations not being considered. Uncertainty now exists as to what effect the granted prior authorizations would have on the outcome of the total overpayments. The denial of all of Petitioner's claims was a situation of first impression for Respondent. Prior to the instant case, Respondent had had no chiropractor's Medicaid claims go through peer review and denial recommended. By letter dated February 4, 1998, Respondent forwarded to Petitioner a Preliminary Agency Audit Report (Preliminary Audit Report). The Preliminary Audit Report informed Petitioner, among other things, that Respondent's preliminary determination was that Petitioner had received an overpayment of $70,518.26 due to the claims being determined not medically necessary, and requested, among other things, that Petitioner submit any additional information or documentation which may reduce the overpayment. The Preliminary Audit Report also informed Petitioner of the overpayment calculation and statistical formula used by Respondent. In response to the request for additional information or documentation, Petitioner forwarded to Ms. Jensen a videotape and testimonials. Ms. Jensen did not send the testimonials and videotape to Dr. Hoffman, the peer reviewer, for his review because these items (1) were determined by her to have been created prior to recording of the medical records at issue, and, therefore, did not constitute a medical record for review; and (2) were, consequently, not relevant. The undersigned is persuaded and a finding of fact is made that the testimonials and videotape were not relevant and need not have been submitted to Dr. Hoffman for his review. By letter dated May 5, 1998, Respondent forwarded to Petitioner its Final Agency Audit Report (Final Audit Report). The Final Audit Report, based upon the recommendations of Dr. Hoffman, notified Petitioner, among other things, that the final determination was that he had received an overpayment of $70,518.26, due to the Medicaid claims not being medically necessary. The Final Audit Report also notified Petitioner, among other things, of the overpayment calculation and statistical formula used by Respondent. Moreover, Petitioner was notified that his type of violation warranted termination from the Medicaid program and a $2,000 fine, but that, in lieu of termination from the Medicaid program, he could continue as a provider by paying a $5,000 fine. In a subsequent letter to Petitioner, regarding clarification of continued participation in the Medicaid program, Ms. Jensen explained that, as a requirement for continued participation in the Medicaid program, in addition to the $5,000 fine, Petitioner must comply with Medicaid policy and Florida Statutes and rules. Petitioner was placed on notice that to continue as a Medicaid provider he must abide by Medicaid billing requirements. Respondent's Final Audit Report did not contain any notice of mediation being available. Section 120.573, Florida Statutes, requires notice of whether mediation (settlement) is available in agency action that affects substantial interests. There is no dispute that Respondent's Final Audit Report affects Petitioner's substantial interests. No evidence was presented that either Petitioner inquired about mediation or that Petitioner or Respondent sought or desired mediation. Moreover, no evidence was presented that Petitioner was harmed or suffered as a result of not receiving the notice. No evidence was presented to support a finding that the basis of the audit findings involved a conspiracy. A finding of fact is made that the basis of the audit findings does not involve a conspiracy between Respondent and its employees and Dr. Jones and Dr. Hoffman and Dr. McClave or anyone else. Respondent did not initiate any disciplinary action against Petitioner's license as a chiropractor and, therefore, Subsections 455.225(1) and 455.621(1), Florida Statutes, are not applicable. No evidence was presented that any criminal action was referred or taken against Petitioner as a result of Respondent's audit. No evidence was presented that Respondent suspected Petitioner of having committed a criminal violation, that a criminal act had been committed by Petitioner, or that Respondent had determined that Petitioner had committed a criminal act.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order against Henry M. Rubinstein, D.C. and therein: Sustaining the failure of Dr. Rubinstein's medical records, except as to granted prior authorizations, for Medicaid recipients under the age of 21 for the period from 9/1/94 through 9/30/96, to demonstrate medical necessity. Sustaining the Final Agency Audit Report, except as indicated and consistent with this Recommended Order. Requiring Dr. Rubinstein to repay overpayments, without interest, in an amount subsequently determined in a proceeding by the Agency for Health Care Administration and within a time period under terms and conditions deemed appropriate. Imposing a fine of $5,000. DONE AND ENTERED this 11th day of April, 2000, in Tallahassee, Leon County, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of April, 2000.
The Issue Whether Medicaid overpayments were made to Petitioner and, if so, what is the total amount of these overpayments.
Findings Of Fact Petitioner Petitioner is a family practice physician licensed to practice in Florida. His office is located in Carol City, Florida. The Provider Agreement During the period from July 11, 1994, through July 11, 1995 (hereinafter also referred to as the "audit period"), Petitioner was authorized to provide physician services to eligible Medicaid patients. Petitioner provided such services pursuant to a Non- Institutional Professional and Technical Medicaid Provider Agreement (Provider Agreement) he had entered into with the Department of Health and Rehabilitative Services, AHCA's predecessor. 3/ The Provider Agreement contained the following provisions, among others: The provider agrees to keep for 5 years complete and accurate medical and fiscal records that fully justify and disclose the extent of the services rendered and billings made under the Medicaid program and agrees to furnish the State Agency and Medicaid Fraud Control Unit upon request such information regarding payments claimed for providing these services. Access to the pertinent patient records and facilities by authorized Medicaid representatives will be held confidential as provided under 42 CFR 431.305 and 306. The provider agrees that services or goods billed to the Medicaid program must be medically necessary, Medicaid compensable and of a quality comparable to those furnished by the provider's peers, and the services or goods must have been actually provided to eligible Medicaid recipients by the provider prior to submitting a claim. The provider agrees to submit Medicaid claims in accordance with program policies and that payment by the program for services rendered will be based on the payment methodology in the applicable Florida Administrative Rule. The provider in executing this agreement acknowledges that he understands that payment of Florida Medicaid claims is made from Federal and State funds, and that any falsification or concealment of a material fact, may be prosecuted under Federal and State laws. . . . 6. The Department agrees to notify the provider of any major changes in Federal or State rules and regulations relating to Medicaid. . . . 8. The provider and the Department agree to abide by the Florida Administrative Code, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program and Federal laws and regulations. Handbook Provisions Among the "manuals of the Florida Medicaid Program" referenced in paragraph 8 of the provider agreement in effect during the audit period were the Medicaid Provider Reimbursement Handbook, HFCA-1500 (MPR Handbook) and the Medicaid Physician Provider Handbook (MPP Handbook). Copies of these "manuals" were provided to Petitioner. Accordingly, he should have been aware of their contents. MPR Handbook: "Medically Necessary" Defined The term "medically necessary" was defined in Appendix D of the MPR Handbook, in pertinent part, as follows: Medically Necessary or Medical Necessity Means that the medical or allied care, goods, or services furnished or ordered must: (a) Meet the following conditions: Be necessary to protect life, to prevent significant illness or significant disability, or to alleviate severe pain; 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; Be consistent with generally accepted professional medical standards as determined by the Medicaid program, and not experimental or investigational; 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 Be furnished in a manner not primarily intended for the convenience of the recipient, the recipient's caretaker, or the provider. . . . MPP Handbook: Chapter 10 Chapter 10 of the MPP Handbook addressed the subject of "provider participation." Section 10.9 of this chapter provided as follows Record Keeping You must retain physician records on services provided to each Medicaid recipient. You must also keep financial records. Keep the records for five (5) years from the date of service. Examples of the types of Medicaid records that must be retained are: Medicaid claim forms and any documents that are attached, treatment plans, prior authorization information, any third party claim information, x-rays, fiscal records, and copies of sterilization and hysterectomy consents. Medical records must contain the extent of services provided. The following is a list of minimum requirements: history, physical examination, chief complaint on each visit, diagnostic tests and results, diagnosis, a dated, signed physician order for each service rendered, treatment plan, including prescriptions for medications, supplies, scheduling frequency for follow-up or other services, signature of physician on each visit, date of service, anesthesia records, surgery records, copies of hospital and/or emergency records that fully disclose services, and referrals to other services. If time is a part of the procedure code description being billed, then duration of visit shown by begin time and end time must be included in the record. Authorized state and federal staff or their authorized representatives may audit your Medicaid records. You may convert your paper records to microfilm or microfiche. However, your microfilm or microfiche must be legible when printed and viewed. MPP Handbook: Chapter 11 Chapter 11 of the MPP Handbook addressed the subject of "covered services and limitations." Section 11.1 contained an "introduction," which read as follows: The physician services program pays for services performed by a licensed physician or osteopath within the scope of the practice of medicine or osteopathy as defined by state law. It also applies to all doctors of dental medicine or dental surgery if the services provided are services that if furnished by a physician, would be considered a physician's service. The services of this program must be performed for medical necessity for diagnosis and treatment of an illness on an eligible Medicaid recipient. Delivery of the services in this handbook must be done by or under the personal supervision of a physician, osteopath or oral and maxillofacial surgeon at any place of service. Personal supervision is defined as the physician being in the building when the services are rendered and signing and dating the medical record either on the date of service or within 24 hours. Each service type listed has special policy requirements that apply specifically to it. These must be adhered to for payment. This "introduction" was followed by a discussion of "HCPCS Codes and ICD-9-CM Codes": Procedure codes listed in Chapter 12 are HCPCS (Health Care Financing Administration Common Procedure Coding System) codes. These are based on the Physicians' Current Procedural Terminology, Fourth Edition. Determine which procedure describes the service rendered and enter that code on your claim form. HCPCS codes described as "unlisted" are used when there is no procedure among those listed that describes the service rendered. Physicians' Current Procedural Terminology, Fourth Edition, Copyright 1993 by the American Medical Association (CPT-4) is a listing of descriptive terms and numeric identifying codes and modifiers for reporting medical services and procedures performed by physicians. The Health Care Financing Administration Common Procedure Coding System (HCPCS) includes CPT-4 descriptive terms and numeric identifying codes and modifiers for reporting medical services and procedures and other materials contained in CPT-4 which are copyrighted by the American Medical Association. The Diagnosis Codes to be used are found in the International Classification of Diseases, 9th edition, Clinical Modifications (ICD-9-CM). A diagnosis code is required on all physician claims in field 24E. Use the most specific code available. Fourth and fifth digits are required when available. The American Medical Association, in cooperation with many other groups, replaced the old "visit" codes with new "Evaluation and Management" (E/M) service codes in the 1992 CPT. This is the result of the Physician Payment Reform which requires the standardization of policies and billing practices nationwide to ensure equitable payment for all services. The new E/M codes are a totally new concept for identifying services in comparison to the old visit codes. They are more detailed and specific to the amount of work involved The process involved in selecting "the [c]orrect E/M [c]ode" was then described: Terms Used to Select the Correct E/M Code The levels of E/M codes are defined by seven components: Extent of History There are four types of history which are recognized: -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; extended system review; pertinent past, family and/or social history. -Comprehensive- chief complaint; extended history of present illness; complete system review; complete past, family and social history. Extent of Examination There are four types of examinations which are recognized: -Problem Focused- an examination that is limited to the affected body area or organ system. -Expanded Problem Focused- an examination of the affected body area or organ system and other symptomatic or related organ systems. -Detailed- an extended examination of the affected body area(s) and other symptomatic or related organ system(s). -Comprehensive- a complete single system specialty examination or a complete multi- system examination. 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 following factors: -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. -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. There are four types of medical decision- making which are recognized: Straightforward, Low complexity, Moderate complexity, and High complexity. To qualify for a given type of decision- making, two of the three factors previously outlined must be met or exceeded as shown in the following table: Type of decision making: Straightforward; Number of diagnosis 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 diagnosis 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 diagnosis 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 diagnosis or management options: extensive; Amount and/or complexity of data to be reviewed: extensive; Risk of complications and/or morbidity or mortality: high Counseling is a discussion with a patient and/or family concerning one or more of the following areas: -Diagnostic results, impressions and/or recommended diagnostic studies; -Prognosis; -Risks and benefits of management (treatment) options; -Instructions for management (treatment) and/or follow-up; -Importance of compliance with chosen management (treatment) options; -Risk factor reduction; and -Patient and family education. Coordination of Care Coordination of care is coordination with other providers or agencies which is consistent with the nature of the problem(s) and the patient's and/or the family's needs. Nature of Presenting Problem A presenting problem is a disease, condition, illness, injury, symptom, sign, finding, complaint or other reason for encounter, with a diagnosis being established at the time of the encounter. There are five types of presenting problems: -Minimal- A problem that may not require the presence of a physician, but the service must be provided under the physician's personal supervision. -Self-limited or Minor- A problem that runs a definite and prescribed course, is transient in nature and not likely to permanently alter health status or has a good prognosis with management/compliance. -Low Severity- A problem where the risk of morbidity without treatment is low; there is little to no risk of mortality without treatment; full recovery without functional impairment is expected. -Moderate Severity- A problem where the risk of morbidity without treatment is moderate; there is a moderate risk of mortality without treatment; uncertain prognosis or increased probability of prolonged functional impairment. -High Severity- A problem where the risk of morbidity without treatment is high to extreme; there is moderate to high risk of mortality without treatment or high probability of severe, prolonged functional impairment. Time The inclusion of time in the old visit codes has been implicit in prior editions of CPT. Beginning in 1992, the inclusion of time as an explicit factor is done to assist physicians in selecting the most appropriate codes to report their services. However, the times indicated in each specific E/M code are average amounts of time a physician may spent with a patient. Thus, the actual content of the service should be used in determining the most appropriate code except in cases where the counseling and/or coordination of care dominates the patient encounter (more than 50%). The extent of counseling and/or coordination of care must be documented in the patient's records. Time is not a factor for emergency department levels of service because emergency department services are typically provided on a variable intensity basis, often involving multiple encounters over a period of time; therefore, making it difficult to provide accurate estimates of time spent with a particular patient. There are two types of time defined by CPT: "face-to-face" time for office and other outpatient visits and "unit/floor" time for hospital and other inpatient visits. This distinction is necessary because most of the work of typical office visits takes place during the face-to-face time with the patient, while most of the work of typical hospital visits takes place during the time spent on the patient's floor or unit. How to Select the Correct Evaluation and Management Code The following steps should be used to select the appropriate E/M code: Select the proper category (e.g., office, hospital, observation, consultation, etc.). Select the proper subcategory, if applicable (e.g., initial, subsequent, established patient, etc.). Select the code that best describes the level of E/M service within the category/subcategory as described below: Step 1: If more than 50% of the physician face-to-face time with the patient is spent on counseling/coordination of care, select the level based solely on the amount of time spent. Step 2. If time is not the controlling factor in selecting the level of E/M service, the following process should be used: Determine the extent of HISTORY obtained during the E/M service (i.e, problem focused, expanded problem focused, detailed or comprehensive). Determine the extent of the EXAMINATION performed during the E/M service (i.e., problem focused, expanded problem focused, detailed or comprehensive). Determine the complexity of the MEDICAL DECISION-MAKING associated with the E/M service (i.e., straightforward, low complexity, moderate complexity or high complexity). Step 3. Use the determinations made in Step 2 to select the level of E/M service performed. ALL three of the key components described in Step 2 must be met or exceeded when selecting from the following levels of E/M service. Code Description 992901-99205 Office, new patient . . . . If only two of the three key components described in Step 2 were performed (e.g., no history was performed for an established patient), then you must select from the following levels of E/M service: Code Description 99211-99215 Office, established patient . . . . The Physicians' Current Procedural Terminology At all times material to the instant case, the American Medical Association's Physicians' Current Procedural Terminology (or "CPT") referred to in the MPP Handbook contained the following codes and code descriptions for "E/M" office services: 4/ 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 problems 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 problems 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 problems 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 or 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/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 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. It is a rarity for a family practice physician to provide office services at the 99205 or 99215 "E/M" code level. Office services at the 99203 and 99213 "E/M" code levels are the most common types of office services that family practice physicians provide. The Audit and Aftermath Commencing in 1995, AHCA conducted an audit of Medicaid claims submitted by Petitioner for services rendered from July 11, 1994, through July 11, 1995. Petitioner had submitted 9,235 Medicaid claims for services rendered during the audit period to 826 patients, for which he had received payments totaling $294,554.57. From the 826 Medicaid patients to whom Petitioner had provided services during the audit period, AHCA randomly selected a "cluster sample" of 48, and asked Petitioner to produce the medical records he had on file for these 48 patients. According to the expert testimony of AHCA's statistician, Robert Pierce, which the undersigned has credited, a sample size of 30 or more is "uniformly and universally considered to be adequate for a sample of this type" (that is, a "cluster sample"). Petitioner had submitted a total of 577 claims for services rendered to the 48 patients in the "cluster sample" during the audit period. Each of these claims was reviewed by AHCA to determine whether it was supported by information contained in the medical records produced by Petitioner in response to AHCA's request. Based upon a preliminary review conducted by a Registered Nurse consultant (Stella Steinberg, R.N.) and physician consultant (John Sullenberger, M.D.), AHCA determined that Petitioner had been overpaid a total $183,283.94 for the Medicaid claims he had submitted for services rendered during the audit period. After having been advised of this preliminary determination, Petitioner sent additional documentation to AHCA. The additional documentation was reviewed by Dr. Sullenberger. Following Dr. Sullengerger's review, the overpayment was recalculated and determined to be $179,782.73. By letter dated May 25, 1999, Petitioner was notified of this recalculation and advised of his right to request an administrative hearing on the matter. Petitioner requested such a hearing. Thereafter, AHCA retained the services of Timothy Walker, M.D., a Board-certified family practice physician who is a faculty member of Tallahassee Memorial Hospital's Family Practice Residency Program. At AHCA's request, Dr. Walker reviewed the records that Petitioner had provided regarding the 48 patients in the "cluster sample" to determine whether there was documentation to support the Medicaid claims relating to these patients that Petitioner had submitted for services rendered during the audit period. Dr. Walker's review revealed "upcoding" on claims submitted for office services (that is, billing for a higher level of service than the patients' records revealed had actually been provided), 5/ billing for unnecessary medical services (in the form of aerosol treatments), and no documentation whatsoever relating to other claims. 6/ Based upon these findings of Dr. Walker, which the undersigned has accepted as accurate in the absence of any evidence to the contrary, AHCA determined, correctly, that Petitioner had been overpaid a total of $11,740.64, or $20.34772903 per claim, for the 577 claims he had submitted for services rendered during the audit period to the 48 patients in the "cluster sample." Using a generally accepted, appropriate, and valid statistical formula that "appears in many, many elementary statistical text books," AHCA extended these results to the total "population" of 9,235 Medicaid claims that Petitioner had submitted for services rendered during the audit period, and it correctly calculated that Petitioner had been overpaid a total of $175,992.84. 7/ Simple Mistake or Fraud? There has been no allegation made, nor proof submitted, that any of the overbillings referenced above were the product of anything other than simple mistake or inadvertence on Petitioner's part.
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 $175,992.84 in Medicaid overpayments for services rendered to his Medicaid patients from July 11, 1994, through July 11, 1995, and requiring him to repay this amount to the agency. DONE AND ENTERED this 23rd day of August, 2001, in Tallahassee, Leon County, Florida. 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 23rd day of August, 2001.
The Issue Whether Petitioner received Medicaid overpayments and, if so, the total amount of the overpayments.
Findings Of Fact AHCA is charged with administration of the Medicaid program in Florida pursuant to Section 409.907, Florida Statutes. Petitioner is a durable medical equipment provider that provided Medicaid services to Medicaid beneficiaries pursuant to a valid Medicaid Provider Agreement with AHCA under provider number 9512721 00. Petitioner was an authorized Medicaid provider during the period of October 1, 1999, through September 30, 2001, which is the audit period at issue here. AHCA conducted an audit of paid Medicaid claims for services claimed to have been performed by Petitioner from October 1, 1000, through September 30, 2001. On October 16, 2002, AHCA issued a Final Agency Audit Report ("FAAR") requesting Petitioner to reimburse AHCA in the amount of $28,407.90, for Medicaid claims submitted by and paid to Petitioner, for services allegedly rendered during the audit period. When the FAAR was issued, AHCA's claims for overpayment were based upon audit findings that paid Medicaid claims for certain services performed by Petitioner did not meet Medicaid requirements. The deficiencies in the subject Medicaid claims included a lack of documentation of required medication for nebulizer equipment, payments in excess of allowable total amounts for rent-to-purchase equipment, and payments for portable oxygen with a lack of documentation that the attending practitioner has ordered a program of exercise or an activity program for therapeutic purposes, that the recommended activities cannot be accomplished by the use of stationary oxygen service, and that the use of a portable oxygen system during exercise or activity results in improvement in the individual's ability to perform the exercises or activities. During the subject audit period, the applicable statutes, rules, and Medicaid handbooks required Petitioner to retain all medical, fiscal, professional, and business records on all services provided to a Medicaid recipient. Petitioner had to retain these records for at least five years from the dates of service. Petitioner had a duty to make sure that each claim was true and accurate and was for goods and services that were provided in accordance with the requirements of Medicaid rules, handbooks, and policies, and in accordance with federal and state law. Medicaid providers who do not comply with the Medicaid documentation and record retention policies may be subject to administrative sanctions and/or recoupment of Medicaid payments. Medicaid payments for services that lack required documentation and/or appropriate signatures will be recouped. Claire Cohen, AHCA's analyst, generated a random list of 30 Medicaid recipients (cluster sample) who had received services by Petitioner during the audit period. In addition, AHCA generated work papers revealing the following: the total number of Medicaid recipients during the audit period; the total claims of Petitioner, with dates of services; the total amount of money paid to the Petitioner during the audit period; and worksheets representing the analyst's review of each recipient's claims for the audit period. After Ms. Cohen reviewed the medical records and documentation provided by Petitioner, she reviewed the Medicaid handbook requirements, and arrived at a figure of $7,572.13 as the total overpayment for all cluster sample claims. Using the Agency's formula for calculating the extrapolated overpayment, Ms. Cohen determined that the overpayment in this case amounted to $29,703.63. Ms. Cohen then prepared the June 20, 2002, Preliminary Agency Audit Report (PAAR) and mailed it to Petitioner. At that point, the case was reassigned to Ellen Williams, a program analyst/investigator. Ms. Williams reviewed additional documentation submitted by Petitioner, and on October 16, 2002, issued on behalf of AHCA, the FAAR, which reduced the alleged overpayment to $28,407.90. Part of this reduction resulted from Petitioner's paying $369.97 to satisfy the issue concerning payments in excess of allowable totals for rent-to-purchase equipment. At the hearing, Ms. Williams testified that the adjusted overpayment amount was $27,473.27. The formula used by AHCA is a valid statistical formula, the random sample used by the Agency was statistically significant, the cluster sample was random, and the algebraic formula and the statistical formula used by AHCA are valid formulas. The DME/Medical Supply Services Coverage and Limitations Handbook provides, in part: Medicaid reimburses for portable oxygen when a practitioner prescribes activities requiring portable oxygen. The oxygen provider must document the following information in the recipient's record: the recipient qualifies for oxygen service; the attending practitioner has ordered a program of exercise or an activity program for therapeutic purposes; the recommended exercises or activities cannot be accomplished by the use of stationary oxygen services; and the use of a portable oxygen system during the activity or exercise results in an improvement in the individual's ability to perform the activities and exercises. The DME/Medical Supply Services Coverage and Limitations Handbook also provides, in part: Medicaid may reimburse for a nebulizer if the recipient's ability to breathe is severely impaired. The documentation of medial necessity must include required medications. The following payments are claimed by AHCA to be overpayments for failure to provide documentation of medical necessity and required medications: Recipient Date of Service Procedure Overpayment 4 7/19/00 E0570 $106.70 9 6/30/00 E0570 $106.70 10 10/24/00 E0570 $106.70 14 02/15/00 E0570 $106.70 16 05/08/00 E0570 $106.70 23 06/09/00 E0570 $106.70 26 06/14/00 E0570 $106.70 The remaining overpayments claimed by AHCA concern the failure to document that the attending practitioner had ordered a program of exercise or an activity program for therapeutic purposes that required the use of a portable oxygen system. The Medicaid Provider Reimbursement Handbook provides, in part, that "Records must be retained for a period of at least five years from the date of service." The types of records that must be retained include "patient treatment plans" and "prescription records." The handbook goes on to provide in pertinent part: Medical records must state the necessity for and the extent of services provided. The following minimum requirements may vary according to the services rendered: * * * Treatment plan, including prescriptions; Medications, supplies, scheduling frequency for follow-up or other services; Progress reports, treatment rendered; * * * Note: See the service-specific Coverage and Limitations Handbook for record keeping requirements that are specific to a particular service. Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid Payments. Medicaid payments for services that lack required documentation or appropriate signatures will be recouped. Note: See Chapter 5 in this handbook for information on administrative sanctions and Medicaid payment recoupment. Petitioner, through its owners and operators, is of the view that it does not need to have the documentation on file, and it does not ask physicians for details about their prescriptions, "because that's something private from doctors and patient." Petitioner, by signing a Medicaid Provider agreement, agreed that all submissions for payment of claims for services will constitute a certification that the services were provided in accordance with local, state, and federal laws, as well as rules and regulations applicable to the Medicaid program, including the Medical Provider Handbooks issued by AHCA. Petitioner routinely obtained from Medicaid beneficiaries to whom it provides goods or services a written statement authorizing other healthcare provides to furnish any information needed to determine benefits.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency issue a final order requiring Petitioner to reimburse the Agency for Medicaid overpayments in the total amount of $27,473.27, plus such interest as may statutorily accrue. DONE AND ENTERED this 22nd day of September, 2003, in Tallahassee, Leon County, Florida. S MICHAEL M. PARRISH 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 22nd day of September, 2003. COPIES FURNISHED: Tom Barnhart, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Lawrence R. Metsch, Esquire Metsch & Metsch, P.A. 1455 Northwest 14th Street Miami, Florida 33125 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
Findings Of Fact Billings for home health care services once made CCI the recipient of substantial Medicaid moneys. By resort to, among other things, "a variety of different types of statistical investigations," (T.82) the Office of Program Integrity within HRS' Medicaid Office is "continuously asking the question, do we get what we pay for?" Id. A separate, legislative agency, a unit of the Office of the Auditor General, investigates allegations of Medicaid fraud. Investigation In February of 1990, Ellen Williams, a medical health care program analyst in HRS' Office of Program Integrity, noticed that CCI was "suddenly showing up as either number one or number two in the State, and . . . was intrigued why a home health agency in Palatka would be [b]illing to the extent it appeared that they were." T.36. She "requested a printout of their billings" (T.37) and opened a file. Not long afterwards, Ms. Williams learned that the Medicaid Fraud Control Unit (MFCU) in the Auditor General's Office "had basically a new review of the same agency." T.37. MFCU investigators copied "a number of boxes" (T.116) of CCI's records, including "pieces of files" for ten of the 49 patients whose files HRS subsequently attempted to obtain from CCI. T.53. As far as the evidence showed, MFCU did not obtain "the entire files on any of these people." Id. In early May of 1990, Ms. Williams received an unsigned investigative report the Medicaid Fraud Control Unit had prepared. On the strength of this report, at her supervisor's direction, she prepared a letter which was sent to CCI by certified mail on May 20, 1991. Petitioner's Exhibit No. 3. She did not attempt at that time to verify the allegations in the MFCU report. Prosecution The letter dated May 20, 1991, initiated a recoupment and termination proceeding, Conval-Care, Inc. v. Department of Health and Rehabilitative Services, No. 91-4020, intended to end CCI's "participation in the Florida Medicaid program for [alleged] violation of federal and state laws and regulations respecting the Medicaid program," stating: Information has been received from the Medicaid Fraud Control Unit of the Office of the Auditor General (MFCU) to the effect that you have billed and been paid $591,082.00 for services that are not covered by Medicaid. Petitioner's Exhibit No. 3. HRS also sought to recover the alleged overpayment, and impose an administrative fine. The letter did not allege times. (HRS later concluded that the overbillings alleged in the letter occurred between December of 1989 and November of 1990, but HRS never sought leave to amend to allege this, and took no other step to limit the allegations in the recoupment and termination proceeding.) In response to CCI's request for formal administrative proceedings, HRS referred Case No. 91-4020 to the Division of Administrative Hearings. Discovery and Further Investigation On September 23, 1991, while Case No. 91-4020 was pending at the Division of Administrative Hearings, HRS' Ellen D. Williams wrote CCI's Inez Browning, as follows: In order to complete the Medicaid review of services billed by Conval-Care, Inc. to the Department of Health and Rehabilitative Services, it will be necessary to obtain completed home health records on a selected statistical sample of recipients. I plan to arrive at your Palatka office on Tuesday, October 8, 1991, for the purpose of copying the records for the individuals on the attached list. Please have them available at that office. If you have any problems or questions, please call me at (904) 488-3588. Respondent's Exhibit No. 1. Although not identified as such, the list of names was purportedly a random sample of Medicaid beneficiaries to whom CCI had provided services between December of 1989 and May of 1991, a period during which CCI's alleged overbillings were even higher. In response to Ms. Williams' letter of September 23, 1991, counsel for CCI wrote Ms. Williams, on September 30, 1991, as follows: Please recall that your office, due in large part to your actions, is involved in litigation with Conval-Care, Inc. As a result, any request for documents must be pursued through appropriate discovery channels pursuant to the Florida Rules of Civil Procedure. No records will be provided as a result of your letter of September 23rd. If you appear at the door, you will be refused entry. You referred to a "statistical sample" of recipients, yet requested information concerning both recipients whose records have already been provided and the remaining recipients whose records were not provided during the initial investigation. This hardly reflects any statistical sampling. Further, your letter contradicts your sworn testimony in which you indicated there was no pending investigation of Conval-Care, Inc. by DHRS. In any event, Conval-Care, Inc. is a represented party in active litigation with your agency and neither you or any other representative from DHRS may contact Conval- Care, Inc. or any of its employees without my consent. You and others at the agency may have realized the weakness of your claims against Conval-Care, Inc., since the credibility of several of your key witnesses has been seriously undermined, but we will not permit you to go on a fishing expedition to try to develop new allegations against our client. You made your case Ms. Williams, now live with it. If DHRS must seek other documents related to the matters at issue, its attorneys should know how to do that. Respondent's Exhibit No. 2. HRS did not file any request for production in Case No. 91-4020 under Fla. R. Civ. P. 1.310(b), 1.350 or 1.351, which are applicable to administrative proceedings by virtue of Rule 60Q-2.019, Florida Administrative Code. Instead, attaching the same list of 49 names that Ms. Williams had attached to her letter of September 23, 1991, counsel for HRS wrote CCI's counsel, on October 17, 1991, as follows: Pursuant to Chapter 400.484 and 409.913 Florida Statutes, representatives of the Department of Health and Rehabilitative Services intend to copy certain records in the possession of Conval-Care, Inc. It is their intention to go to your clients place of business on Tuesday, October 22, 1991 and obtain these copies. I have attached a list of those records which are of interest. Please advise the undersigned if this date is inconvenient. Respondent's Exhibit No. 3. Some, but not all, of the listed records concerned patients for whom reimbursement between December of 1989 and November of 1990 was at issue in Case No. 91-4020. On October 21, 1991, in response to Mr. Scott's letter dated four days earlier, Respondent's Exhibit No. 3, Julie Gallagher wrote, on behalf of CCI: Section 400.487, F.S., grants HRS the authority to make "such inspections and investigations as are necessary in order to determine the state of compliance with the provisions of this act and of rules or standards in force pursuant thereto." It is our position that HRS has already made such "inspections and investigations" and has determined that Conval-Care, Inc. is not in compliance with various provisions of the statute and rules and, hence, HRS has initiated termination proceedings to exclude Conval-Care, Inc. from the Medicaid Program. Further "inspections and investigations" are not necessary as required by the statute and will, therefore, not be permitted. The other statute you cited, Section 409.903 [sic], F.S., has nothing to do with the inspection of documents. Should you desire documents from Conval-Care, Inc., which are pertinent to the issue in the pending litigation, please submit a discovery request and we will respond appropriately. Respondent's Exhibit No. 4. Insisting it had the right to inspect the records in question, HRS sent Ms. Williams to Palatka where, as CCI's counsel had forewarned, nobody from CCI was on hand to receive her. Main Case Abandoned "In the month or so preceding" (T.52) September 23, 1991, Ms. Williams came to believe "that what MFCU referred to . . . as their sample was not in fact a [random] sample . . . [and] did not encompass the entire billing period." Id. At hearing, she testified that she wanted "to determine an overpayment amount, irrespective of the termination proceeding." T.60. But at the time this desire arose HRS was seeking to recover the "overpayment amount" in Case No. 91-4020, the recoupment and termination proceeding in which final hearing was then set for October 14, 1991. HRS' counsel in the recoupment and termination proceeding relied on the attempt to obtain records Ms. Williams initiated on September 23, 1991, as his sole means of securing records that HRS listed as exhibits it intended to offer in the recoupment and termination proceeding, Case No. 91-4020. Petitioner's Exhibit No. 7.; T. 134-5. After the attempt to gather evidence in this fashion proved unavailing, and after several continuances, HRS dropped the recoupment and termination proceeding it had initiated against CCI.
Recommendation It is, accordingly, RECOMMENDED: That HRS dismiss the sanctions letter which initiated these proceedings. DONE AND ENTERED this 30th day of June, 1993, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of June, 1993.
The Issue Whether Medicaid overpayments were made to Petitioner and, if so, what is the total amount of those overpayments. Whether Petitioner should be directed to submit to a "comprehensive follow-up review in six months."
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findingss of fact are made to supplement the factual stipulations set forth in the parties' Joint Prehearing Stipulation4: Petitioner Petitioner is co-owned by two Florida-licensed pharmacists, Howard Berkowitz and Warren Blatt. Mr. Berkowitz and Mr. Blatt are cousins. Petitioner operates Colonial Cut-Rate Drugs, a licensed community pharmacy located at 6835 West 12th Avenue in Hialeah, Florida (Pharmacy). Mr. Berkowitz started the business in 1964. Four years later, in 1968, Mr. Blatt became a partner. The two have been partners since. Petitioner's Participation in the Medicaid Program During the period from January 1, 1999, through October 20, 2000, Petitioner was authorized to provide pharmacy services to eligible Medicaid recipients in Florida. Petitioner provided such services pursuant to a Medicaid Provider Agreement Mr. Berkowitz and Mr. Blatt had signed on behalf of Petitioner (Provider Agreement). The Provider Agreement contained the following provisions, among others: The Provider agrees to participate in the Florida Medicaid program under the following terms and conditions: * * * Quality of Service. . . . The services or goods must have been actually provided to eligible Medicaid recipients by the provider prior to submitting the claim. Compliance. The provider agrees to comply with all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, manuals, handbooks and Statements of Policy as they may be amended from time to time. Term and signatures. The parties agree that this is a voluntary agreement between the Agency and the provider, in which the provider agrees to furnish services or goods to Medicaid recipients. . . . Provider Responsibilities. The Medicaid provider shall: * * * (b) Keep and maintain in a systematic and orderly manner all medical and Medicaid related records as the Agency may require and as it determines necessary; make available for state and federal audits for five years, complete and accurate medical, business, and fiscal records that fully justify and disclose the extent of the goods and services rendered and billings made under the Medicaid. The provider agrees that only records made at the time the goods and services were provided will be admissible in evidence in any proceeding relating to the Medicaid program. * * * (d) Except as provided by law, the provider agrees to provide immediate access to authorized persons (included but not limited to state and federal employees, auditors and investigators) to all Medicaid-related information, which may be in the form of records, logs, documents, or computer files, and all other information pertaining to services or goods billed to the Medicaid program. This shall include access to all patient records and other provider information if the provider cannot easily separate records for Medicaid patients from other records. * * * (f) Within 90 days of receipt, refund any moneys received in error or in excess of the amount to which the provider is entitled from the Medicaid program. * * * Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook Among the requirements with which Petitioner, in paragraph 3 of the Provider Agreement, agreed to comply were those set forth in the Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (PDSCLR Handbook). At all times material to the instant case, Chapter 2 of the PDSCLR Handbook contained substantially the following "record keeping requirements": Record Keeping Requirement The provider must retain all medical, fiscal, professional and business records on all services provided to a Medicaid recipient. Records may be kept on paper, magnetic material, film, or other media. In order to qualify as a basis for reimbursement, the records must be signed and dated at the time of service, or otherwise attested to as appropriate to the media. Rubber stamp signatures must be initialed. The records must be accessible, legible and comprehensible. Record Retention Records must be retained for a period of at least five years from the date of service. Types of Records That Must be Retained The following types of records, as appropriate for the type of service provided, must be retained (the list is not all inclusive): Medicaid claim forms and any documents that are attached; Professional records, such as patient treatment plans and patient records; Prior and past authorization, and service authorization information; Prescription records; Business records, such as accounting ledgers, financial statements, purchase/acquisition records, invoices, inventory records, check registers, canceled checks, sales records, etc.; Tax records, including purchase documentation; Patient counseling documentation; and Provider enrollment documentation. Requirements for Prescription Records The pharmacy must maintain a patient record for each recipient for whom new or refill prescriptions are dispensed. The record may be electronic. The pharmacy's patient record system must provide for the immediate retrieval of the information necessary for the pharmacist to identify previously dispensed drugs when dispensing a new or refill prescription. The patient record must contain the following information: The recipient's first and last name, address, date of birth, and gender; A list of all prescriptions that were obtained by the recipient at the pharmacy during the 12 months immediately preceding the most recent service that includes: the name of the drug or device, prescription number, strength of the drug, the quantity, date received, and the prescriber's full name and state license number. Any known allergies, drug reactions, idiosyncrasies, chronic conditions or disease states of the patient, and the identity of any over-the-counter drugs or devices currently being used by the patient that may relate to prospective drug use review; Any related health information indicated by a licensed health care practitioner; and The pharmacist's comments, if any, relevant to the patient's drug therapy. Right to Review Records Authorized state and federal agencies and their authorized representatives may audit or examine a provider's records. This includes all records that AHCA finds necessary to determine whether Medicaid payments were or are due. This requirement applies to the provider's records and records for which the provider is the custodian.[5] Incomplete Records Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid payments. Medicaid payments for services that lack required documentation or appropriate signatures will be recouped.[6] Note: See Chapter 5 in this handbook for information on administrative sanctions and Medicaid payment recoupment. At all times material to the instant case, Chapter 5 of the PDSCLR Handbook contained the following provisions, among others: Provider Abuse Abuse Abuse means provider practices that are inconsistent with generally accepted business or medical practices and that result in an unnecessary cost to the Medicaid program or in reimbursement for goods or services that are not medically necessary or that fail to meet professionally recognized standards for health care. Financial Abuse Financial abuse means abuse resulting in overpayments to providers. Overpayment 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 claims, unacceptable practices, fraud, abuse, or mistake. * * * Incomplete or Missing Records Incomplete records are records that lack documentation that all requirements or conditions for service provision have been met. Medicaid may recoup payment for services or goods when the provider has incomplete records or cannot locate the records. Note: See Chapter 2 in this handbook for Medicaid record keeping and retention requirements. At all times material to the instant case, Chapter 6 of the PDSCLR Handbook required that providers, in preparing a claim for reimbursement, enter on the claim form, among other things, "the prescriber's professional license number," the quantity dispensed, and "the estimated number of days that the prescription will last if it is consumed at the prescribed rate, based on the pharmacist's professional judgment and the prescription date." Florida Administrative Code Rule Provisions Additional requirements with which Petitioner, in paragraph 3 of its Provider Agreement, agreed to comply were those contained in the following provisions of the Florida Administrative Code governing the practice of pharmacy: Florida Administrative Code Rule 64B16- 27.103 Only a Florida registered pharmacist or registered pharmacy intern acting under the direct personal supervision of a Florida registered pharmacist may, in the State of Florida, accept an oral prescription of any nature. Upon so accepting such oral prescription it must immediately be reduced to writing, and only a Florida registered pharmacist or registered pharmacy intern acting under the direct personal supervision of a Florida registered pharmacist may, in the State of Florida, prepare a copy of a prescription or read a prescription to any person for purposes of providing reference concerning treatment of the person or animal for whom the prescription was written, and when said copy is given a notation shall be made upon the prescription that a copy has been given, the date given, and to whom given. Florida Administrative Code Rule 64B16- 27.400 * * * (3) Only a Florida licensed pharmacist may make the final check of the completed prescription thereby assuming the complete responsibility for its preparation and accuracy. Florida Administrative Code Rule 64B16- 28.140 (1) Requirements for records maintained in a data processing system. * * * Original prescriptions, including prescriptions received as provided for in Rule 64B16-28.130, F.A.C., Transmission of Prescription Orders, shall be reduced to a hard copy if not received in written form. All original prescriptions shall be retained for a period of not less than two years from date of last filling. To the extent authorized by 21 C.F.R. Section 1304.04, a pharmacy may, in lieu of retaining the actual original prescriptions, use an electronic imaging recordkeeping system, provided such system is capable of capturing, storing, and reproducing the exact image of the prescription, including the reverse side of the prescription if necessary, and that such image be retained for a period of no less than two years from the date of last filling. Original prescriptions shall be maintained in a two or three file system as specified in 21 C.F.R. 1304.04(h). * * * (3) Records of dispensing. Each time a prescription drug order is filled or refilled, a record of such dispensing shall be entered into the data processing system. The data processing system shall have the capacity to produce a daily hard-copy printout of all original prescriptions dispensed and refilled. This hard copy printout shall contain the following information: Unique identification number of the prescription; Date of dispensing; Patient name; Prescribing practitioner's name; Name and strength of the drug product actually dispensed, if generic name, the brand name or manufacturer of drug dispensed; Quantity dispensed; Initials or an identification code of the dispensing pharmacist; and If not immediately retrievable via CRT display, the following shall also be included on the hard-copy printout: Patient's address; Prescribing practitioner's address; Practitioner's DEA registration number, if the prescription drug order is for a controlled substance; Quantity prescribed, if different from the quantity dispensed; Date of issuance of the prescription drug order, if different from the date of dispensing; and Total number of refills dispensed to date for that prescription drug order. The daily hard-copy printout shall be produced within 72 hours of the date on which the prescription drug orders were dispensed and shall be maintained in a separate file at the pharmacy. Records of controlled substances shall be readily retrievable from records of non-controlled substances. Each individual pharmacist who dispenses or refills a prescription drug order shall verify that the data indicated on the daily hard-copy printout is correct, by dating and signing such document in the same manner as signing a check or legal document (e.g., J.H. Smith, or John H. Smith) within seven days from the date of dispensing. In lieu of producing the printout described in subparagraphs (b) and (c) of this section, the pharmacy shall maintain a log book in which each individual pharmacist using the data processing system shall sign a statement each day, attesting to the fact that the information entered into the data processing system that day has been reviewed by him or her and is correct as entered. Such log book shall be maintained at the pharmacy employing such a system for a period of two years after the date of dispensing provided, however, that the data processing system can produce the hard-copy printout on demand by an authorized agent of the Department of Health. If no printer is available on site, the hard-copy printout shall be available within 48 hours with a certification by the individual providing the printout, which states that the printout is true and correct as of the date of entry and such information has not been altered, amended or modified. The prescription department manager and the permit holder are responsible for the proper maintenance of such records and responsible that such data processing system can produce the records outlined in this section and that such system is in compliance with this subsection. Failure to provide the records set out in this section, either on site or within 48 hours for whatever reason, constitutes failure to keep and maintain records. In the event that a pharmacy which uses a data processing system experiences system downtime, the following is applicable: An auxiliary procedure shall ensure that refills are authorized by the original prescription drug order and that the maximum number of refills has not been exceeded or that authorization from the prescribing practitioner has been obtained prior to dispensing a refill; and All of the appropriate data shall be retained for on-line data entry as soon as the system is available for use again. * * * (5) Authorization of additional refills. Practitioner authorization for additional refills of a prescription drug order shall be noted as follows: On the daily hard-copy printout; or Via the CRT display. The Audit and Aftermath Commencing in December 2000, Heritage Information Systems, Inc. (Heritage), on behalf of AHCA, conducted an audit of Petitioner's paid Medicaid claims for the period from January 1, 1999, through October 20, 2000 (Audit Period).7 Petitioner had submitted 37,798 such claims (Audit Period Claims), for which it had received payments totaling $2,019,662.47. The purpose of the audit was to determine whether, and if so to what extent, Petitioner was overpaid for these Audit Period Claims. At the outset of the audit, Heritage's lead auditor, Rolando Veloso, provided Pharmacy personnel a Notice to Medicaid Provider of Initiation of On-Site Audit,8 which read as follows: The Agency for Health Care Administration (Agency), under federal and state laws, has the responsibility to oversee the activities of Medicaid providers. This is to advise you that an on-site audit of your billings to the Medicaid program has been initiated. Audits are performed in order to determine if Medicaid billings conform to applicable laws, rules, and policies. The fact that an audit is performed carries with it no implication of any wrongdoing. Audits are conducted as part of the responsibility of Medicaid for ensuring the integrity of the program. Medicaid audits generally involve a review of provider medical, professional, financial, and business records as required to determine the propriety of billings. Attachment B is a summary of applicable laws and rules governing the access to required information. If additional information is desired, please notify the auditor named below. In conducting the audit, Heritage performed both a "claims analysis" and a "purchase invoice analysis." For the "claims analysis," Heritage first selected a non-random, "judgmental sample" of 326 "high-dollar" Audit Period Claims, for which Petitioner had received payments totaling $175,838.54. It then selected (from the remaining Audit Period Claims) a "random sample" of 250 claims,9 for which Petitioner had received payments totaling $13,041.76. Thereafter, Petitioner's records were examined to determine whether they contained documentation sufficient to support the claims in the "judgmental sample" and in the "random sample." For the "purchase invoice analysis," Heritage selected the "top 20 drugs billed" for review. As Heritage explained in a May 15, 2001, Final Report it provided to AHCA, the purpose of the "purchase invoice analysis" was: to verify that the provider purchased selected drugs in quantities sufficient to account for the total number of units of each drug billed to Medicaid for the selected drugs over the same time period. The auditors compiled wholesaler and direct- account purchases for the selected drugs and calculated the number of units of each drug purchased during the audit period. Auditors then tabulated the number of units of each drug billed to Medicaid during the review period. Credits and returns were also considered in the tabulation. This model assumes that all drugs purchased were dispensed to Medicaid recipients. A prorated analysis was also performed. Auditors requested a "utilization report" (a standard report available from most pharmacy computers) from the pharmacy computer. The report states the total number of units of each drug allegedly dispensed by the pharmacy during the review period -- to all parties, not just Medicaid. Using this report, auditors were able to determine what percentage of the pharmacy's business (for each drug) Medicaid represents. This percentage was then applied to the pharmacy purchases for the corresponding drug. Since a portion of the purchases would have been dispensed to non-Medicaid patients, this proration allows a more realistic analysis than comparing Medicaid claims to all purchases. * * * In conducting the "purchase invoice analysis," the assumption was made that "the [Pharmacy's] shelf stock is going to remain equivalent month to month." During the audit, Mr. Veloso interviewed Mr. Blatt. As Mr. Veloso's "notes" of the interview indicate: Mr. Blatt stated to auditors that the pharmacy fills approximately 175 prescriptions daily. Of these, 60%-70% are for Medicaid prescriptions. He indicated that both he and Mr. Berkowitz own the pharmacy, and that Mr. Berkowitz has been the owner since 1964. Mr. Blatt was questioned regarding refill documentation. He indicated to auditors that he usually gives the prescriptions additional refills once he receives authorization from the physician. Mr. Blatt explained that he does not document refill authorizations routinely. He stated that instead, he automatically adds refills to existing prescriptions without generating a new prescription number or documenting the additional authorization electronically. Mr. Blatt indicated that he has been practicing pharmacy for a number of years and was unaware that refill authorizations must be documented. Auditors explained to Mr. Blatt that all claims must have a legitimate order to them. Mr. Blatt acknowledged the problem with refill authorizations and stated is was, "poor bookkeeping." Mr. Blatt continually questioned auditors about possible penalties for lack of refill documentation. Auditors explained that Medicaid would likely contact the pharmacy regarding any findings the auditors documented. Mr. Blatt stated at the conclusion of the audit, "if it's a fine for poor bookkeeping on the refills, I'll pay it." Heritage's May 15, 2001, Final Report to AHCA of the audit of the Pharmacy contained an Executive Summary, which summarized what the audit had revealed to date. This Executive Summary read as follows: Heritage Information Systems, Inc. ("Heritage") conducted an in-depth audit of Colonial Cut-Rate Drugs, Inc. ("Colonial") at the request of the Florida Agency for Health Care Administration ("AHCA"). The audit documented possible billing, policy and regulatory violations that resulted in apparent overpayments. The audit findings include the following: Auditors sampled 326 judgmental and 250 random prescription claims. A review of the judgmental sample documented $26,282.73 in overcharges. Findings from the random sample extrapolated to $243,699.90. The 95% one-sided lower confidence limit totals $177,658.67 in overcharges. Discrepancies documented in the sample include the following: The most common discrepancy documented was the Unauthorized Refill ("UR"). The pharmacy was unable to produce documentation of refill authorizations for 81 prescription refills. Pharmacy staff was unable to produce hard copy prescription records corresponding to ten (10) claims ("CF"). The pharmacy billed seven (7) claims for quantities greater than ordered by the prescriber and/or dispensed to the patient ("OBQ"). A comparison of paid Medicaid claims to the pharmacy's drug purchases yielded apparent purchase shortages totaling an estimated $24,848.68. A prorated purchase analysis yielded more significant overcharges totaling $82,263.46. Colonial's invoice records could not substantiate claims to Medicaid for this amount. Possible usual and customary pricing violations were identified. Medicaid paid more than other third party payers for the prescriptions reviewed by auditors. Heritage's audit documented apparent overcharges of $177,658.67. This figure represents the $26,283.73 in non- extrapolated findings from the judgmental sample, plus the 95% one-sided lower confidence limit of the extrapolated random sample ($151,375.94). This report is submitted to AHCA for action deemed appropriate. Based on the information Heritage provided, AHCA preliminarily determined that Petitioner had been overpaid a total of $177,658.67 for the Audit Period Claims. By letter dated January 25, 2002, which it denominated its Provisional Agency Audit Report, AHCA advised Petitioner of this preliminary determination. AHCA's Provisional Agency Audit Report read, in pertinent part, as follows: An on-site audit of your pharmacy was initiated on December 18, 2000. The Florida Medicaid Program through the Agency for Health Care Administration has determined that you have been overpaid $177,658.67 in connection with claims submitted to Medicaid during the audit period(s). This conclusion is supported by the audit results. This review and the determination were made in accordance with the provisions of Chapter 409, Florida Statutes (F.S.), and Chapter 59G, Florida Administrative Code (F.A.C.). In applying for Medicaid reimbursement, providers are required to follow applicable statutes, rules, Medicaid provider handbooks, statements of Medicaid policy, and federal laws and regulations. Medicaid cannot properly pay for claims that do not meet Medicaid requirements. When a provider receives payment in violation of these provisions, those funds must be repaid. This is, however, a provisional finding and we encourage you to submit any additional information or documentation that you may have that you feel may serve to change the overpayment. REVIEW DETERMINATION The audit included a judgmental sample review of selected paid claims and a separate review of a statistically valid random sample taken from the remaining population of paid claims with dates of service during the audit period. The overpayment found in the random sample was extended to the population using generally accepted statistical formulas and methods. The audit period for this review was from January 1, 1999, through October 20, 2000. This review identified an overpayment of $177,658.67. . . . The audit also included a comparison of your lawful documented product acquisitions with your paid Medicaid claims. The audit period for this review was from January 1, 1999, through October 20, 2000. The drug quantity paid for by Medicaid, in many instances, exceeded the quantity available to dispense to Medicaid recipients. This review identified an overpayment of $82,263.46. . . . Accordingly, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $177,658.67. If you have documentation that you wish to submit that you feel would alter these findings, submit your written explanation and legible copies of the organized documentation to us within 30 days of receipt of this notice. . . . If you concur or accept these findings, please send your check in the amount of $177,658.67 for this identified overpayment . . . . If you have not submitted a written explanation and documentation or made payment within 30 days, we will send you notice regarding the agency's final determination. * * * On January 29, 2002, Petitioner's attorney sent AHCA a letter, which read as follows: This is to let you know that I have been retained to represent Colonial Cut Rate Drugs and Warren Blatt with respect to the Medicaid audit. We are in the process of locating the misfiled prescriptions, and obtaining statements from the physicians that the questioned refills were, in fact, authorized. We will get that documentation to you as quickly as possible, but it will take more than 30 days since there are 81 claims that need to be verified. Thanks for your patience. In response this letter, AHCA granted Petitioner an extension of time to provide additional documentation. Petitioner provided AHCA with additional documentation in early May 2002. On or about May 15, 2002, AHCA sent this additional documentation to Heritage for "review, placement in [Heritage's] file, and action deemed appropriate." By letter dated November 8, 2002, AHCA informed Petitioner of its opportunity "to submit [any] further documentation" it wanted AHCA to consider. The letter read, in pertinent part, as follows: An audit of your pharmacy was initiated on December 18, 2000. The Florida Medicaid Program, through the Agency for Health Care Administration (Agency), issued a Provisional Agency Audit Report, dated January 25, 2002, and made a provisional overpayment determination. Subsequent to this determination, your pharmacy submitted additional documentation. However, the Agency extends to you an opportunity to submit further documentation that has not already been submitted that may change the overpayment. This review and determination were made in accordance with the provisions of Chapter 409, Florida Statutes (F.S.), and Chapter 59G, Florida Administrative Code (F.A.C.). In applying for Medicaid reimbursement, providers are required to follow the applicable statutes, rules, Medicaid provider handbooks, statements of Medicaid policy, and federal laws and regulations. Medicaid cannot properly pay for claims that do not meet Medicaid requirements. We encourage you to submit any additional information or documentation not already sent that you may have that you feel may serve to change the provisional overpayment. * * * Documentation standard for statistical audit review: Documents submitted after the completion of an audit may require an affidavit or other sworn statement, in addition to the documents, as a means to authenticate the documentation. Documentation that appears to be altered, or in any other way appears not to be authentic, will not serve to reduce the overpayment. Furthermore, additional documentation must clearly identify which discrepancy (claim) as set forth in the attached audit findings it purports to support. Documentation to be submitted: All documentation submitted will be considered even if it does not fall within one of the below categories. These are merely suggestions and are not stipulations that the suggested documentation will result in a reduction of the overpayment. It is recommended that you submit the best evidence of compliance with the Medicaid and Pharmacy laws, and that the documentation was on file at the time of the audit. Contemporaneous original hard-copy prescriptions found after the time of the audit (legible and complete copies of both front and back of prescription) Contemporaneous doctor/medical records specifically reflecting prescription ordered. Contemporaneous physician order. Contemporaneous approved MAR by physician or physician's agent. Contemporaneous dated print out of computer screen with DEA disclosed. Contemporaneous dated daily logs identifying the DEA number. Contemporaneous dated label identifying the DEA number. Dated one-year historical patient profile that includes drug name, quantity, directions for use, and/or strength. Written explanation and documentation to support rationale for different strengths or dosage forms dispensed. Written explanation and documentation to support that the physician's license number was incorrectly assigned to physician in computer system, or physician's name was incorrectly chosen from computer list with similar name, due to a data entry error. For the invoice review, additional proof of product acquisitions for the drugs listed in the invoice review. Any question you may have about this matter or any requests to submit further documentation should be directed to Kathryn N. Holland . . . . AHCA received no further documentation from Petitioner after sending this November 8, 2002, letter. After having reviewed the documentation that Petitioner had provided AHCA in early May 2002, Heritage prepared and submitted to AHCA an Addendum, dated February 27, 2003, to the Final Report it had previously submitted. The Addendum contained an Executive Summary, Revised Findings, and Conclusions, which read as follows: EXECUTIVE SUMMARY Colonial Cut-Rate Drugs, Inc. 6835 West 12th Avenue Hialeah, Florida 33014 Medicaid Provider Number: 101359900 Heritage Information Systems, Inc. ("Heritage") conducted an in-depth audit of Colonial Cut-Rate Drugs, Inc. ("Colonial") at the request of the Florida Agency for Health Care Administration ("AHCA"). The audit documented possible billing, policy and regulatory violations that resulted in apparent overpayments. An invoice analysis indicated that Colonial did not purchase sufficient quantities of seven [sic] drugs to substantiate claims billed to Medicaid. The apparent prorated purchase shortage was estimated to be $82,263.46. Auditors also reviewed a random sample of 250 claims and a judgmental sample of 326 claims. Record-keeping and regulatory violations were documented on 100 claims between the two samples. Based on the findings from the judgmental and the extrapolated (using a 95% one-sided lower confidence limit) random sample, Heritage's audit documented overcharges in the amount of $177,658.67. Post audit documentation from the pharmacy was forwarded to Heritage by AHCA and received on 5/21/02. Post audit documentation included copies of prescriptions, letters of explanation and photocopies of invoices. The accepted documentation was incorporated into the audit findings and a revised overcharge amount was calculated. The revised analysis by Heritage results in apparent overcharges of $137,431.56 based on the sum of the findings from the judgmental and the extrapolated findings (using a 95% one-sided lower confidence limit) from the random sample. REVISED FINDINGS Prescription Record Review Four prescription records submitted by Colonial as supplemental documentation were deemed acceptable, and resulted in the following changes: - Eight claims had Can't Find ("CF") discrepancies removed, however, based on the number of authorized refills, an Unauthorized Refill ("UR") was assessed on one claim. Invoice Audit Post audit documentation included photocopies of invoices dated prior to the invoice audit review period. Therefore, there were no changes to the invoice analysis.
Conclusions The additional documentation supplied by Colonial has been incorporated into the original audit findings, resulting in a reduction in overcharges to $137,431.56 based on the 95% one-sided lower confidence limit combined with findings of the judgmental sample. A copy of the revised audit findings and lists of the discrepant prescriptions [sic] is provided in Exhibit 1. The report is submitted to AHCA for action deemed appropriate. Appended to the Addendum were, what Heritage referred to as, "discrepancy listings." These "discrepancy listings" correctly specified those Audit Period Claims in the "judgmental sample" and in the "random sample" that were "discrepant" and, with respect to each such "discrepant" claim, accurately identified, using the following "codes," the nature of the "discrepancy" from which the claim suffered and, in addition, set forth (in the "overcharges" column) the correct amount of any resulting overpayment: CF (Original hard copy prescription cannot be found on file during the audit) DS (The days supply value submitted by the pharmacy is not consistent with the quantity and directions) OBQ (Quantity paid exceeds the quantity authorized by the prescriber or dispensed to the recipient) UR (The number of refills billed and paid to the pharmacy exceeds the number authorized by the prescriber. Refills are dispensed without documented authorization from the prescriber) WMDC (The claim for the prescription contains an incorrect prescriber license number, but the correct prescriber's name is documented in the pharmacy computer or is similar to the name of the prescriber billed) There were a total of 90 "discrepant" claims listed: two coded "CF" (with associated "overcharges" equal to the total amount paid for these claims); one coded "DS" (with no associated "overcharge"); four coded "OBQ" (with associated "overcharges" equal to the amount paid for the quantity in excess of that authorized); 82 coded "UR" (with associated "overcharges" equal to the total amount paid for these claims10); and one coded "WMBC" (with an associated "overcharge" equal to that portion of the payment denominated the "dispensing fee," which was $4.23). Of the 90 "discrepant claims, 67 were in the "judgmental sample" and 23 were in the "random sample." The total amount that Petitioner was overpaid for the discrepant claims in the "judgmental sample" was $25,088.30. The total amount that Petitioner was overpaid for the 23 "discrepant" claims in the "random sample" was $1,311.57, or 5.24628 dollars for each of the 250 claims in the sample. Extrapolating or projecting this result, in accordance with generally accepted statistical principles, to the entire universe of Audit Period Claims (which numbered 37,798) minus the 326 claims in the "judgmental sample" (a total of 37,472 claims), using a "95% one-sided lower confidence limit," yields an overpayment of $112,343.26.11 Adding this $112,343.26 overpayment to the $25,088.30 overpayment for the "discrepant" claims in the "judgmental sample" produces a total overpayment of $137,431.56. After having received Heritage's February 27, 2003, Addendum, AHCA prepared and sent to Petitioner its Final Agency Audit Report,12 which was dated March 19, 2003, and read, in pertinent part, as follows: Medicaid Integrity has completed the review of your Medicaid claims for dates of service during the period January 1, 1999, through October 20, 2000. A Provisional Agency Audit Report, dated January 25, 2002, was sent to you indicating that we had determined you were overpaid $177,658.67. Based upon a review of all documentation submitted, we have determined that you were overpaid $137,431.56 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 Florida Statutes, Section 409.913. In applying for Medicaid reimbursement providers are required to follow the guidelines set forth in the applicable rules 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) The audit included the review of a judgmental sample of selected claims and a statistically valid random sample taken from the population of paid claims with dates of service during the audit period. The overpayment found in the random sample was extended to the population using generally accepted statistical formulas and methods. The audit period for this review was from January 1, 1999, through October 20, 2000. This review identified an overpayment of $137,431.56. Attached are the overpayment calculations, a summary of documented discrepancies, and an itemized listing of discrepancies noted in the review of the judgmental and random sample[s]. The audit also included a comparison of your lawful documented product acquisitions with your paid Medicaid claims. The audit period for this review was from January 1, 1999, through October 20, 2000. The drug quantity paid for by Medicaid, in many instances, exceeded the quantity available to dispense to Medicaid recipients. This review identified an overpayment of $82,263.46. Attached are the overpayment calculations. * * * If you are not in bankruptcy and you concur with our findings, remit by check in the amount of $137,431.56. . . . * * * You have a right to request a formal or informal hearing pursuant to Section 120.569, F.S. . . . . [I]f a request for a hearing is made, the petition must be received by the Agency within twenty-one (21) days of receipt of this letter. . . . * * * AHCA has made no additional revisions to its overpayment calculation in the instant case. It continues to maintain (and correctly so) that Petitioner received $137,431.56 in Medicaid overpayments for services claimed to have been provided during the Audit Period.13
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 $137,431.56 in Medicaid overpayments for paid claims covering the period from January 1, 1999, through October 20, 2000, and requiring Petitioner to repay this amount to AHCA; and that AHCA decline to order a "comprehensive follow- up review [of Petitioner] in six months." DONE AND ENTERED this 14th day of March, T2005, in allahassee, 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 14th day of March, 2005.
