The Issue The issues are 1) whether Dr. Veloso's eligibility to participate in the Florida Medicaid program as a provider of physician services should be terminated, due to his guilty plea to a charge of Medicaid fraud in the Circuit Court for the 15th Judicial Circuit, Palm Beach County, Florida and 2) whether a stay of the termination should be granted pending disposition of Dr. Veloso's appeal.
Findings Of Fact At all times material hereto, Dr. Veloso was a provider of medical services to persons who qualify for the Medicaid program and received reimbursement from Medicaid funds for his services. The Department is designated to administer the provision of Medicaid funds in Florida. Dr. Veloso is a licensed physician and a licensed pharmacist who practices in South Florida and whose patients are primarily Medicaid eligible. Dr. Veloso does not necessarily maintain a regular office practice. In addition to treating patients at his offices in West Palm Beach and Miami, he sees them at their homes, at the pharmacy or wherever is most convenient to the patients. As a provider of services to Medicaid eligible patients, Dr. Veloso is charged with the responsibility of being familiar with the rules and law relating to the Medicaid program. On November 4 1987, the Medicaid Fraud Control Unit of the Office of the Auditor General received a call alleging that Dr. Veloso was making a copy of a Medicaid card when he filled a prescription. Dr. Veloso was employed at the caller's pharmacy as a part-time pharmacist. An investigation of Dr. Veloso's medicaid billing practice ensued. The investigation revealed that Dr. Veloso was billing for office visits on Miami Medicaid residents although his practice of record was located in West Palm Beach. The investigators interviewed sixteen households for whom Medicaid billings had been submitted by Dr. Veloso. The interviews resulted in the taking of sworn statements of six of the patients from the sample households who denied that they had received the treatment for which Dr. Veloso had filed reimbursement. None of the six patients was present or testified at the hearing. In his testimony, however, Dr. Veloso, countered the denials of each of the six patients. He described the treatment he had given each of the six and produced the patients' medical records to verify his statements. As to why the patients allegedly made the contradictory statements, Dr. Veloso asserted that they were quite possibly intimidated by the investigator since the patients did not have complete command of the English language and the investigator presented herself with an official badge for identification prior to the interview. Dr. Veloso also stated that if any mistakes had been made, they were only clerical. He explained that his wife prepared most of his billings at their home, and although he admitted that he was responsible for her actions, he represented that mistakes, if any, were inadvertently made. At the hearing, the investigator testified that it was her conclusion that Dr. Veloso did knowingly file false claims for services. Although the files for the six patients were received into evidence and each corroborates that he did in fact treat the patients, the actual disputed billings were not offered at the hearing. A comparison between the treatment given to the patients and the alleged fraudulent billings cannot be made. Given the demeanor of the witnesses, the competent substantial evidence received at the hearing and the lack of corroboration of the affidavits of the six patients, Dr. Veloso's testimony is deemed credible. Criminal proceedings were brought against Dr. Veloso. Dr. Veloso asserted that on the advice of his attorney, he entered his plea on October 2, 1989. The choice of plea on the judgment and sentencing form filed in this case is indicated by checking one of the three blocks on the form. The first block precedes the following statement, "Been tried and found guilty of the following crime(s)." The second block is followed by, "Entered a plea of guilty to the following crime(s)," and the final choice is a block notated by "Entered a plea of nolo contendere to the following crime(s)." The block checked in Dr. Veloso's case is the second block. Above the "X" in the block is a handwritten statement, "Alford Plea." Dr. Veloso argued that it was not his intent to enter a plea which would be an admission of culpability. He entered his plea as merely a matter of convenience and on the representation of his counsel that the plea would result in punishment similar to a misdemeanor traffic offense. Dr. Veloso, further, testified that his plea was on appeal. Except for Dr. Veloso's statements and the official court documents, no additional competent substantial evidence was presented at the instant hearing concerning the circumstances present at the time of Dr. Veloso's plea. However, the judgment and sentencing form dated October 2, 1989 clearly indicates that he entered a plea of guilty to and was adjudicated guilty of a lesser included offense of medicaid fraud under Paragraph 409.325(5)(b), Florida Statutes. His sentence was stayed, and on October 6, 1989, an Order was issued in the Circuit Court of Palm Beach County withholding adjudication for the offense and placing Dr. Veloso on probation for one year and requiring that restitution be paid to the Department of $492.00 plus costs. Although Dr. Veloso is a well intended physician, he was, in fact, found guilty of Medicaid fraud, based on a plea of guilty and is subject to termination from further participation in the Medicaid program under existent law, if the Department chooses to exercise its discretion to sanction him.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that the Department of Health and Rehabilitative Services issue a Final Order dismissing the charges against Dr. Veloso and not imposing the sanction permitted pursuant to Paragraph 409.236(11)(a), Florida Statutes, based on the exercise of its discretion. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 28 day of June, 1990. JANE C HAYMAN 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 28th day of June, 1990.
Findings Of Fact In November, 1987 a routine Medicaid audit was conducted on Petitioner's pharmacy by representatives of Respondent. The audit period was from January 1, 1987 to September 30, 1987. As a result of this audit, an overpayment in the amount of $43,708.05 was identified. Petitioner timely requested a hearing after receiving Respondent's notice of overpayment and imposition of administrative fine on or about March 14, 1988. A reaudit of Petitioner was performed by Jo Ann V. Padell, R. Ph., on May 26 and 27, 1988, on behalf of Respondent. Petitioner cooperated fully in this reaudit. After reviewing additional data, and making corrections in the initial calculations, the overpayment amount was identified to be either $6,079.34 or $32,683.31, depending upon varying assumptions used in the calculation. The overpayment amount relied upon, and pursued by Respondent at hearing is $32,683.31. Petitioner was informed by letter from Respondent dated June 15, 1988 that Respondent seeks the recoupment of the $32,683.31 overpayment, a $10,000 administrative fine and a three month suspension from the Medicaid program. Petitioner is under contract with Respondent to participate in the Medicaid program by providing prescription drugs to Medicaid patients, and receiving Medicaid reimbursement. It is located in a low socioeconomic neighborhood in Tampa, Florida, and most customers cannot afford medications unless paid for by the Medicaid program. Petitioner has participated in the Medicaid program for over ten years, and has not previously had any problems with Respondent's audits. David Cartaya is the owner and operator of Petitioner. He is a registered pharmacist, and has an excellent reputation in the community for truthfulness and veracity. Respondent's representative who conducted the reaudit in May, 1988, Jo Ann V. Padell, indicated in her report that she trusts Cartaya's sincerity and professionalism as a pharmacist and business owner. She also reported that it "seemed obvious that their (Petitioner's) business could substantiate their claims to Medicaid." In determining that Petitioner had been overpaid by the Medicaid program, Respondent followed a procedure which is not set forth by agency rule. Rather, the procedure used in this case had never been used before, and although this procedure is substantially set forth in a draft manual entitled "Florida Medicaid/PRO Pharmacy Audit Program," dated March, 1988, this manual has not been finally approved or adopted by Respondent. Additionally, an essential element of the audit procedure set forth in this draft manual, establishing a beginning and ending inventory of drugs available for dispensing, was not conducted by Respondent in this case. Therefore, there is no formally adopted rule or policy of Respondent which is applicable in this case and which sets forth the Medicaid audit procedure used in this case. The procedure in the draft manual was not followed in this case. Rather, the Respondent utilized incipient, non-rule policy, and then sought to explicate that policy at hearing. The audit policy followed by Respondent in this case is a four step process set forth in its letter to Petitioner dated March 14, 1988, as follows: We (Respondent) determined from your (Petitioner's) invoices and suppliers' statements the total number of units of the drug available to be dispensed to all customers during the audit period, and we multiplied that number by the fraction (proportion) of your business that is Medicaid to obtain the total number of units of the drug available to be dispensed to Medicaid recipients. We increased the number in (a) of the units of the drug available for Medicaid reci- pients by an additional one-fourth in case an unusually large proportion of that drug happens to be dispensed to Medicaid recipients. We multiplied the adjusted number found in (b) of the units available for Medicaid recipients by the unit price paid by Medicaid for that drug to determine the highest total dollar amount that Medicaid reasonably should have paid to you for that drug during the audit period based on your invoices from your suppliers. We subtracted the highest amount that Medi- caid reasonably should have paid you for the drug during the audit period found in (c) from the amount that Medicaid actually did pay you for the drug, and the result we must consider to be an overpayment, unless you can provide additional invoices showing that you had the drug available to be dispensed or unless you can provide documentation showing that an even larger proportion of that drug is, on the average over an extended period of time, dis- pensed to Medicaid recipients. Please bear in mind that we have already increased the proportion regarded to be available for Medi- caid recipients by one-fourth or 25 percent. The drugs audited were the 100 drugs for which the highest dollar amounts were paid to Petitioner by Medicaid during the audit period. Respondent's review was an attempt to determine if Petitioner had adequate inventory to cover the claims made. This audit policy has never been validated. Petitioner was the first pharmacy audited by Respondent using this procedure. Rather than it being an audit conducted in accordance with generally accepted accounting principles, the procedure followed results in an estimate of overpayments using a sample of drugs sold during the audit period. The sample consists of the 100 drugs for which Medicaid paid the highest dollar amounts to Petitioner. It is usual and customary for Respondent to rely on estimates based upon samples since this provides reasonable assurance that the estimates produced fairly represent the financial condition of the pharmacy under review. Sampling is also less onerous and time consuming for the pharmacy being audited. The use of the sample size identified in this case has never been validated. The beginning and ending inventories of the 100 drugs evaluated by Respondent in this case were not known by Respondent, and were not used in calculating what inventory was available during the audit period, although this is a mandatory step in Phase II of the audit process as stated in Respondent's draft manual which it relied upon at hearing as a statement of its incipient policy. The 25 percent by which a pharmacy's overall Medicaid percentage is to be increased, as provided at (b) of the incipient audit procedure set forth in Finding of Fact 7, was chosen arbitrarily, and Respondent presented no evidence which would form a reasonable basis for utilizing this figure. Respondent's own expert in accounting, Robert West, testified that he did not know how the Respondent came up with the 25 percent factor. It is well established that there are seasonal variations in the pharmacy business, especially in central and south Florida which have seasonal population increases. Seasonal variations in the volume and kinds of drugs dispensed result in variations in a pharmacy's inventory. Yet, according to Robert West, the audit procedure used in this case assumed that seasonal and inventory variations were immaterial, and did not account for such variations, other than through the arbitrary 25 percent factor. Additionally, the audit period itself only covered nine months, and therefore variations occurring in the remaining three months were not considered. Respondent utilized a strata sampling technique in conducting this audit, but this technique was never validated. The audited sample consisted of the strata of the top 100 drugs, by dollar amounts, dispensed at Petitioner. A more defensible sampling technique would have been a random sample of all prescriptions, according to Robert West, since this technique would have produced a more representative sample. The original audit of Petitioner was on November 16, 19, 20 and 27, 1987 by Patricia J. Vanderbeek of Professional Foundation for Health Care, Inc. (PFHC), representing Respondent. This original audit, termed a Phase I-Part B report, concluded: David's Pharmacy appears to be legitimate in their contractual agreement with Medicaid. PFHC does not recommend to proceed with Phase II Audit procedures. PFHC based this recommendation, in part, on the report of the certified public accounting firm of Copeland and Company, which concluded that no overpayment was indicated. Despite this recommendation, a Phase II audit was conducted, using the procedure set forth at Finding of Fact 7, above, and a report prepared in which the overpayment amount was initially identified as $43,708.05 The draft manual, upon which Respondent relies as a statement of its incipient policy, clearly requires the Phase I auditor to obtain authorization of the Medicaid Fraud and Abuse Section before proceeding with a Phase II review. A Phase II review can only be initiated at the request of the Phase I auditor, with the approval of the Medicaid Program Integrity Office. In this case, the Phase I audit resulted in the recommendation that Phase II not be conducted. Nothing in the record establishes that approval and authorization for the Phase II audit, or the Phase II reaudit conducted by Padell, as required by the draft manual on which Respondent relies, was ever sought or given. In the Phase II reaudit, Padell questioned Petitioner's owner and sole pharmacist, David Cartaya, about his estimate of the percentage of each of the top 100 drugs he dispensed to Medicaid patients, and she found his estimate to be credible. Utilizing Cartaya's percentages, the amount of the overpayment was calculated to be $6,079.34, which Padell felt was reasonably accurate. However, the estimate was also calculated without determining beginning and ending inventories. As a result of Padell's reaudit, 32 of the top 100 drugs were not shown to have been overpaid, but that 32 drugs were thereafter ignored in Respondent's calculation of the $32,683.31 overpayment which is the subject of this case. That is, Respondent estimated the overpayments on the remaining 68 days without crediting any amount of underpayments on these 32 drugs against the $32,683.31 overpayment. Beginning and ending inventories were also not calculated in arriving at this overpayment amount. Competent substantial evidence was not offered by Respondent to support its position that $32,683.31 has been overpaid to Petitioner, contrary to the reports and recommendations of its own representatives and consultants, Padell, PFHC and Copeland and Company. It has not been established that Petitioner overbilled Medicaid for medication patients did not receive. David Suhrweir, a representative of Respondent involved with post- payment review of Medicaid payments, testified at hearing and critiqued Padell's reaudit conclusion that the amount of overpayment was $6,079.34. He termed this calculation irrational since it results in the conclusion that the pharmaceutical needs of Medicaid patients are very different from the needs of non-Medicaid patients, which he found to be illogical. However, James E. Martinez, who was accepted as an expert in pharmacy, gave competent, credible testimony that Medicaid patients are more likely to obtain expensive brand-name drugs, and non-Medicaid patients are more likely to obtain the less expensive generic drugs. This is because persons without Medicaid coverage in the poor neighborhoods that use Petitioner for their pharmaceutical needs are more likely to request the less-expensive generic drugs than those persons with Medicaid coverage. Therefore, the utilization of drugs is skewed, and the procedure utilized by Respondent does not take this into account. The testimony of Suhrweir does not discredit Padell's calculation of the $6,079.34 overpayment, and does not establish a basis upon which the alleged $32,683.31 overpayment can be supported. It is common practice for pharmacies to exchange, or barter inventory, and such exchanges would not appear on any record of drugs purchased. There is no requirement that pharmacies account for non-controlled substance exchanges, or that they keep a level inventory of drugs. Since its March 14, 1988 letter, Respondent has been withholding payment of ten percent of Petitioner's Medicaid billings. Medicaid providers, such as Petitioner, are required to keep records and invoices to support Medicaid billings, and to provide them to Respondent upon request to facilitate audit procedures. Neither the auditor who performed the initial audit, or the reaudit found Petitioner's owner and operator, Cartaya, to be uncooperative, and in fact Padell was impressed with his truthfulness. There is no indication he withheld any information, or failed to produce requested information. None of Respondent's on-site auditors recommended pursuing the amount Respondent now contends was an overpayment.
Recommendation Based upon the foregoing, it is recommended that Respondent enter a Final Order dismissing this action against Respondent, refunding any funds withheld, plus appropriate interest as authorized by Section 409.335(3), Florida Statutes, and removing all other sanctions imposed upon Petitioner arising from the audit which is the subject of this case. DONE and ENTERED this 17th day of August, 1988, in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of August, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-1668 Rulings on Petitioner's Proposed Findings of Fact: Adopted in Finding of Fact 4. Adopted In Findings of Fact 1, 2. Adopted in Finding of Fact 7. Rejected as argument on the evidence rather than a proposed Finding of Fact. Adopted in Finding of Fact 2. Adopted in Finding of Fact 3. Adopted in Finding of Fact 7, but otherwise rejected as unnecessary. Adopted in Finding of Fact 9. Adopted in Finding of Fact. Adopted in Finding of Fact 16. 11.-12. Adopted in Finding of Fact 15. 13. Adopted in Finding of Fact 3, but otherwise rejected as irrelevant. 14.-15. Adopted in Findings of Fact 6 8. Adopted in Findings of Fact 6, 9, 10. Adopted in Findings of Fact 1, 3, 13, 15, 16, 18. Adopted in Findings of Fact 6, 7, 13. Adopted in Finding of Fact 13. Adopted in Findings of Fact 3, 13, 14 but otherwise rejected as irrelevant. Rejected as irrelevant. Adopted in Finding of Fact 12. Adopted in Findings of Fact 7, 8, 12. Rejected as unnecessary. Adopted in Finding of Fact 12. Adopted in Finding of Fact 11, but otherwise rejected as unnecessary. Adopted in Findings of Fact 9, 11, 18, 19 but otherwise rejected as cumulative and irrelevant. Adopted in Finding of Fact 4. Adopted in Finding of Fact 18, but otherwise rejected as argument rather than a proposed Finding of Fact. Adopted in Finding of Fact 15. Adopted in Finding of Fact 20. 32.-33. Rejected as a conclusion of law rather than a Finding of Fact. 34. Adopted in Findings of Fact 3, 21. 35.-36. Adopted in Finding of Fact 17. 37. Adopted in Findings of Fact 7-10, 12, 14. Rulings on Respondent's Proposed Findings of Fact. 1. Adopted in Finding of Fact 1. 2.-3. Adopted in Finding of Fact .2. 4.-9. Rejected as irrelevant and unnecessary. Adopted in part in Finding of Fact 3. Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 3. Adopted in Finding of Fact 3, but otherwise rejected as a conclusion of law. Adopted in Findings of Fact 7, 8. Adopted in Finding of Fact 7. Adopted in Findings of Fact 3, 14. Rejected as simply a summation of testimony rather than a proposed Finding of Fact. Adopted in Finding of Fact 8. Adopted in Finding of Fact 18. Rejected in Findings of Fact 3, 9, 19 and otherwise asirrelevant. 21.-23. Adopted in Finding of Fact 21. COPIES FURNISHED: William M. Furlow, Esquire 800 Barnett Bank Bldg. 315 South Calhoun Street Tallahassee, Florida 32301 M. Floy Mikell, Esquire 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 John Miller, Esquire Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power, HRS Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700
The Issue Whether the Petitioner should be required to reimburse the Respondent for Medicaid overpayments as set forth in the Final Agency Audit Report dated October 29, 2001.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: AHCA is, and was at the times material to this proceeding, the state agency responsible for administering the Medicaid program for the State of Florida. Section 409.901(2), Florida Statutes (1997 & 1998).2 AHCA is, and was at the times material to this proceeding, authorized to make payments on behalf of persons eligible for the Medicaid program for goods and services covered by the program to providers who are qualified under state and federal law to receive such payments. Section 409.902, Florida Statutes (1997 & 1998). AHCA is, and was at the times material to this proceeding, authorized to make payments for goods and services provided to persons eligible for Medicaid benefits only to persons who have in effect a provider agreement with AHCA. Section 409.907, Florida Statutes (1997 & 1998). At the times pertinent to this proceeding, IV Concepts operated under a Florida community/special pharmacy license, and its place of business was a suite of offices located in Broward County, Florida. IV Concepts was in the business of compounding medications and delivering them to patients to be administered in their homes. IV Concepts received prescriptions for medications submitted by physicians either by telephone or by facsimile transmittal, and the pharmacy was not open to the public. Many of the patients to whom IV Concepts dispensed medications were HIV-infected, and IV Concepts dispensed medications to these patients for administration orally or by injection. Other patients served by IV Concepts were not HIV- infected, and IV Concepts dispensed medications to these patients for the treatment of ordinary health problems. A provider agreement executed by AHCA and IV Concepts was in effect at the times material to this proceeding, and IV Concepts received payments from the Medicaid program under Medicaid Provider Number 102900200. IV Concepts executed the Non-Institutional Professional Technical Medicaid Provider Agreement on December 26, 1994. In the agreement, IV Concepts agreed, among other things: 2. . . . [T]o 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 any payments claimed for providing these services. . . . * * * . . . [T]o abide by the Florida Administrative Code, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program and Federal laws and regulations. AHCA is, and was at the times material to this proceeding, required "to operate a program to oversee the activities of Florida Medicaid recipients, and providers and their representatives, to ensure that fraudulent and abusive behavior and neglect of recipients occur to the minimum extent possible, and to recover overpayments and impose sanctions as appropriate." Section 409.913, Florida Statutes (1997 & 1998). As part of this program, AHCA is, and was at the times material to this proceeding, required to "conduct, or cause to be conducted by contract or otherwise, reviews, investigations, analyses, audits, or any combination thereof, to determine possible fraud, abuse, overpayment, or recipient neglect in the Medicaid program and shall report the findings of any overpayments in audit reports as appropriate." Section 409.913(2), Florida Statutes (1997 & 1998). Pursuant to this responsibility, AHCA's fiscal agent instituted a desk audit of Medicaid payments made to IV Concepts between February 1, 1997, and January 31, 1998. Twenty-five drugs were flagged in the desk audit because it appeared that the inventory of the drugs was not sufficient to match the claims submitted to Medicaid. After the results of the desk audit were received in AHCA's Medicaid Program Integrity office ("MPI office"), an audit of IV Concepts was begun by Susan Williams, a senior pharmacist employed in the MPI office. In a letter to IV Concepts dated June 25, 1998, Ms. Williams notified IV Concepts that AHCA's MPI office was conducting an audit of its pharmacy department and requested that IV Concepts provide, within 30 days: Documentation that identifies all purchases/acquisitions by IV Concepts, Inc., for the products listed on "Attachment A" for the period from January 1, 1997, through June 15, 1998. Documentation that identifies all credits/returns for the period stated above for the products listed on "Attachment A". "Attachment A" was a list of 18 different drugs for which IV Concepts was to provide documentation. Ms. Williams chose to limit her audit to the drugs listed in "Attachment A" because they were expensive drugs and because IV Concepts had claimed Medicaid reimbursement during the audit period for large quantities of these drugs. Ms. Williams requested the documentation so she could compare the quantities of drugs for which IV Concepts had claimed Medicaid reimbursement during the audit period and the quantities of drugs IV Concepts had available to dispense to Medicaid recipients during the audit period. Ms. Williams was advised in a letter from IV Concepts' attorney dated July 30, 1998, and in a letter from Juan Gallinal dated August 26, 1998, that IV Concepts was having difficulties compiling all of the requested documentation. In a separate letter dated July 30, 1998, IV Concepts' attorney requested an additional 30 days, or until September 1, 1998, to produce the documentation. Ms. Williams granted the requested extension. Ms. Williams was aware from telephone conversations during July and August 1998 that IV Concepts was considering a sale of its assets to another entity. She was advised by letter in September 1998 that IV Concepts had sold its assets to Flagship Health Care, Inc., and Flagship Pharmacy ("Flagship"). IV Concepts and Ms. Williams worked together cordially, and IV Concepts provided some documentation to Ms. Williams pursuant to her request in the June 25, 1998, letter. Ms. Williams proceeded with her audit, and AHCA's Provisional Agency Audit Report ("PAAR"), which was prepared by Ms. Williams, was issued on April 17, 2000. In the PAAR, IV Concepts was advised that AHCA had determined that IV Concepts had received an overpayment for Medicaid claims with service dates during the audit period in the amount of $3,105,471.66. In calculating this amount, AHCA had considered the Medicaid claims paid to IV Concepts with service dates during the audit period and the purchase/acquisition documentation provided by IV Concepts on August 12, 13, and 27, 1998; September 10, 1998; and October 5, 1998. According to the PAAR, IV Concepts had "failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid." In addition, IV Concepts was not given credit for "purported purchases from suppliers that were not a licensed drug wholesaler [sic] in accordance with Chapter 499, F.S." IV Concepts was advised in the PAAR that the overpayment determination was a provisional finding, and IV Concepts was encouraged to provide AHCA with any additional documentation that might change the overpayment determination. During the time she was working on the IV Concepts audit, Ms. Williams was also working on a Medicaid provider fraud and abuse investigation of a company named ImmuneCare. During the course of this audit, Ms. Williams received from AHCA's legal department copies of invoices provided to AHCA's legal department by ImmuneCare that purported to show that IV Concepts had transferred quantities of drugs during the audit period to ImmuneCare and/or to Dr. Mark Sachs, a physician affiliated with ImmuneCare. It was the practice of IV Concepts during 1997 and 1998 to provide drugs to ImmuneCare and/or Dr. Sachs for infusion into Dr. Sachs' patients. Each day, IV Concepts received a list of prescriptions to be filled for those of Dr. Sachs' patients scheduled for infusions on the next day; IV Concepts was also provided with a prescription for each patient. A pharmacist or a pharmacy technician employed by IV Concepts compounded and assembled the medications in accordance with the prescriptions provided by Dr. Sachs, and the drugs were delivered to Dr. Sachs each morning. Dr. Bebell worked as a pharmacist at IV Concepts, and he also, at the request of IV Concepts management, worked part-time at ImmuneCare, compounding and dispensing medications from ImmuneCare's small pharmacy. IV Concepts' usual business practice was to fill prescriptions for individual patients and to deliver the medications to the patients' homes, together with delivery slips the patients would sign indicating that they had received the medications. The medications shown on the invoices that came into Ms. Williams' possession were, however, all delivered to ImmuneCare and/or Dr. Sachs, rather then directly to the patients' homes. According to Mr. Gallinal, who supervised IV Concepts' billing department, invoices for the medications delivered to ImmuneCare and/or Dr. Sachs were sent along with the medications for payment by ImmuneCare or Dr. Sachs as a third party. Mr. Gallinal identified Invoice #1934 in Agency Exhibit 32 as an example of an invoice for the medications delivered by IV Concepts to ImmuneCare and/or Dr. Sachs. The invoice shows Dr. Sachs as the "insured," and the total amount billed on Invoice #1934 was $17,526.88 for medications transferred from IV Concepts to ImmuneCare on November 3, 5, 6, and 7, 1997. According to Mr. Gallinal, ImmuneCare paid IV Concepts for the medications delivered to ImmuneCare and/or Dr. Sachs. Ms. Williams left AHCA's MPI office in May 2000 to take another job with AHCA. Joann Jackson, a senior pharmacist with AHCA's MPI office, took over both the IV Concepts audit and the ImmuneCare fraud investigation after Ms. Williams' departure. Among the documents in the audit file for IV Concepts were the invoices showing that IV Concepts delivered quantities of drugs to ImmuneCare and/or Dr. Sachs. Because the PAAR had been recently issued when Ms. Jackson took over the IV Concepts audit, she was awaiting a response to the PAAR from IV Concepts. Ms. Jackson received a response dated May 16, 2000, from Mr. Green, who continued to act as IV Concepts' attorney for purposes of the audit. Mr. Green advised Ms. Jackson that IV Concepts disputed the overpayment assessed in the PAAR, and he stated that IV Concepts needed a copy of all of the invoices that it had provided to AHCA during the audit. Mr. Green also requested copies of the documents supporting the implication in the PAAR that IV Concepts had purchased drugs from unlicensed wholesalers. Finally, Mr. Green advised that IV Concepts would again be attempting to obtain additional documentation of its drug purchases during the audit period either from Flagship or from its wholesale pharmaceutical vendors. Mr. Green asked for, and was granted, an additional 90 days in which to provide the additional documentation. In letters dated August 23, 2000; September 12, 2000; October 16, 2000; November 17, 2000; and December 6, 2000, Mr. Green kept the MPI office apprised of the efforts IV Concepts was making to obtain additional documentation from Flagship and/or the wholesale drug distributors from which it purchased drugs during the audit period. Mr. Green also requested in the September 12, 2000, letter that the MPI office send him a list of the reimbursements made by Medicaid to IV Concepts during the audit period. Ms. Jackson provided Mr. Green with copies of the documents and with the information he requested. On January 16, 2001, Mr. Green sent the MPI office IV Concepts' formal response to the PAAR issued April 17, 2000. The response consisted of a letter and of a loose-leaf binder containing a worksheet presenting information on additional invoices located by IV Concepts and information relating to particular medications. In the letter, Mr. Green provided an explanation of the materials contained in the response as follows: IV Concepts had, during times of shortages, transferred to other pharmacies drugs which were not covered by the audit in exchange for an equal value of Abelcet, Proleukin, and Neupogen, drugs that were included in the audit, which transfers were addressed in affidavits submitted by Jose Gallinal, a pharmacy technician employed by IV Concepts, and by Dr. Bebell; IV Concepts had found it necessary, during times of shortages, to obtain Sandoglobulin and Gammar, two of the drugs included in the audit, from A.D. Allen, a wholesale pharmaceutical company operating in the United Kingdom, and it was providing in its response additional documentation for the purchase of these drugs, including invoices from A.D. Allen and documentation from the federal Food and Drug Administration releasing the medications for delivery to IV Concepts. Mr. Green also requested that IV Concepts receive credit in the audit for units of drugs that IV Concepts purchased in strengths that were not specified in the list of drugs attached to the PAAR. Mr. Green reported in the January 16, 2001, letter to the MPI office that he had re-calculated the amount of the overpayment based on the additional documentation and information provided in the response and that the overpayment should be reduced from $3,105,471.66 to $842,605.97. Ms. Jackson reviewed the materials submitted by IV Concepts on January 16, 2001, and gave IV Concepts credit for a number of drug purchases based on the documentation IV Concepts had provided in its response to the PAAR. The FAAR that is the subject of this proceeding was issued on October 29, 2001. IV Concepts was notified in the FAAR that the MPI office had determined that IV Concepts had received overpayments from Medicaid in the amount of $2,841,045.40 during the audit period. This overpayment related only to Medicaid claims paid IV Concepts during the audit period for nine specified drugs. IV Concepts was advised in the FAAR that it had "failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid." The FAAR also contained the following statement: The overpayment calculation is based upon the assumption that all stock, with the exception of stock purportedly acquired from unlicensed drug wholesalers, that you have demonstrated as available during the period was exclusively dispensed to Medicaid recipients; this is undoubtedly not the case and the assumption serves to reduce the amount of the calculated overpayment. Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid. The FAAR included four attachments to support the overpayment calculation: A compilation of the claims paid by Medicaid to IV Concepts for the nine drugs that were the subject of the audit report; A summary of the basis for the calculation of the total overpayment amount, including the amount of the Medicaid payments to IV Concepts during the audit period for each of the nine drugs, the number of units of each drug for which Medicaid paid IV Concepts, the number of units of the nine drugs that IV Concepts had documented it purchased during the audit period, the unit difference, the unit price, and the amount of the overpayment for each of the nine drugs; An Invoice Review listing purchases for which IV Concepts provided documentation, including the date of the invoice, the supplier, the drug and strength, the package size, the number of packages, and the number of units purchased, together with the total number of documented unit purchases made by IV Concepts; and A packet containing the invoices from IV Concepts to ImmuneCare and/or Dr. Sachs provided to Ms. Williams in the course of the fraud investigation of ImmuneCare, which do not constitute part of AHCA's audit work papers. Ms. Jackson prepared the October 29, 2001, FAAR. The focus of the audit was to establish that the drugs for which IV Concepts received payment from Medicaid during the audit period were actually available to IV Concepts to dispense to Medicaid recipients. In preparing the FAAR, Ms. Jackson first compiled a list of each payment made by Medicaid to IV Concepts during the audit period for each of the nine drugs included in the audit; these payments necessarily included payments for drugs dispensed prior to the first day of the audit period. This data included the numbers of units of each of these drugs for which payment was made to IV Concepts during the audit period. Ms. Jackson then computed the number of units of the specified drugs that IV Concepts had documented were available for dispensing to Medicaid recipients during the audit period.3 Ms. Jackson did not give IV Concepts credit for the units of drugs shown by the invoices provided by IV Concepts to have been purchased before January 1, 1997, or after June 15, 1998.4 These exclusions are consistent with AHCA's standard practice of assuming that a pharmacy's inventory remains relatively constant during the audit period and that the shelf inventory on the first day of the audit period is equal to the shelf inventory on the last day of the audit period. Ms. Jackson did not give IV Concepts credit for the units of drugs shown by the invoices provided by IV Concepts to have been shipped and billed to pharmacies other than IV Concepts.5 IV Concepts did not provide any supplementary documentation showing that it had subsequently purchased the drugs, and, therefore, it failed to provide documentation establishing that the units of drugs identified in this group of invoices were available to be dispensed to Medicaid recipients during the audit period. Ms. Jackson did not give IV Concepts credit for the units of drugs shown by invoices provided by IV Concepts to have been shipped to a pharmacy other than IV Concepts, even though the invoices show that IV Concepts was billed for the drugs.6 IV Concepts did not provide any supplementary documentation showing that it took possession of the drugs, and it, therefore, failed to provide documentation establishing that the units of drugs identified in this group of invoices were available to be dispensed to Medicaid recipients during the audit period. Ms. Jackson did not give IV Concepts credit for the units of the nine specified drugs that were purportedly obtained by IV Concepts through the barter of other drugs of equal value. IV Concepts provided AHCA with affidavits of Dr. Bebell and Jose Gallinal, which included averments that, during the audit period, IV Concepts acquired through barter approximately 1,000 of the units of Neupogen that was paid by Medicaid, approximately 5% of the units of Abelcet that was paid by Medicaid, and approximately 5% of the units of Proleukin that was paid by Medicaid.7 Dr. Bebell and Jose Gallinal further averred that no invoices or other documentation was typically received to evidence these barter transactions. The information contained in these affidavits is not sufficient, however, to establish that IV Concepts acquired through barter the amounts of the three drugs as specified in the affidavits and had these quantities of the drugs available for dispensing to Medicaid recipients during the audit period as a result of barter. The affidavits are imprecise and are not the types of documents that are acceptable to establish that quantities of drugs were available to IV Concepts for dispensing to Medicaid recipients because the affidavits were not prepared in the normal course of IV Concepts' business. Ms. Jackson did not give IV Concepts credit for the units of drugs shown on invoices provided by IV Concepts that showed the purchase of drugs from entities that Ms. Jackson determined were not licensed in Florida as wholesale drug distributors.8 "The purchase or receipt of a legend drug from a person that is not authorized under the law of the state in which the person resides to distribute legend drugs" is unlawful. Section 499.005(14), Florida Statutes (1997 & 1998). Even though IV Concepts provided documentation to establish that the units of drugs specified in these invoices were available for dispensing to Medicaid recipients during the audit period, IV Concepts should not be permitted to receive Medicaid payments for the unlawfully acquired units of drugs that it dispensed to Medicaid recipients during the audit period. Ms. Jackson did not give IV Concepts credit for the units of drugs shown on invoices provided by IV Concepts that showed purchases of drugs from A.D. Allen, a foreign drug wholesaler, that were not accompanied by a notice indicating that the federal Food and Drug Agency ("FDA") had either approved the shipment prior to entry into the United States or had appended a signed notice allowing the importation of the drugs without FDA examination.9 In the absence of FDA approval for these drugs to enter the United States, the drugs were not legally acquired by IV Concepts, and, even though IV Concepts provided documentation to establish that the units of drugs specified in these invoices were available for dispensing to Medicaid recipients during the audit period, IV Concepts should not be entitled to receive Medicaid payments for the units of drugs it imported into the United States without FDA approval. Finally, Ms. Jackson subtracted from the number of units of the nine specified drugs for which she had given IV Concepts credit the units of drugs delivered to ImmuneCare and/or Dr. Sachs, as shown by the invoices provided to AHCA by ImmuneCare.10 These units were not available to IV Concepts to dispense to Medicaid recipients, and, in addition, ImmuneCare and/or Dr. Sachs paid IV Concepts for the units of drugs delivered for infusion into Dr. Sachs' patients. After the FAAR was issued, Ms. Jackson re-calculated the amount of overpayment charged against IV Concepts, and reduced the amount to $2,815,847.32. The reduction was the result of Ms. Jackson's giving IV Concepts credit for invoices showing the purchase of drugs from wholesale drug distributors who were not licensed in Florida but were licensed in their home states. The unrefuted evidence presented by AHCA is sufficient to establish that IV Concepts received overpayments from Medicaid during the period extending from January 1, 1997, through June 15, 1998, in the amount of $2,815,847.32, which amount is subject to recoupment by AHCA.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order finding that IV Concepts received overpayments from the Medicaid program in the amount of $2,815,847.32 during the period extending from January 1, 1997, through June 15, 1998, and requiring IV Concepts to repay the overpayment amount. DONE AND ENTERED this 30th day of June, 2003, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of June, 2003.
The Issue Whether the Petitioner, Agency for Health Care Administration (Petitioner or Agency), is entitled to a Medicaid reimbursement and, if so, in what amount.
Findings Of Fact The Petitioner is the state agency charged with the authority and responsibility of administering the Florida Medicaid Program. As part of this authority, the Petitioner is required to recover Medicaid overpayments when appropriate. See § 409.913, Fla. Stat. (2006). At all times material to the allegations of this case, the Respondent was a licensed physician and a Medicaid provider subject to the provisions of Chapter 409. As a Medicaid provider, the Respondent was authorized to provide services to eligible patients but was obligated to comply with the Medicaid Provider Agreement in doing so. The Medicaid Program contemplates that authorized providers will provide services to eligible patients, bill the program and be paid according to the Medicaid standards. All Medicaid providers must practice within the guidelines of the Physicians Coverage and Limitations Handbook and applicable law. Providers may be audited so that it can be verified the process was appropriately followed. In this case, the Respondent was audited. According to the audit findings, the Respondent received payment for services that he did not perform. Dr. Eiber (a physician not part of the Respondent’s practice group) reviewed and signed off on x-ray studies and reports for which the Respondent billed and was paid by Medicaid. Dr. Eiber is a Medicaid provider but he is not affiliated with the Respondent or the Respondent’s group. In order for the Respondent to bill and receive payment for Dr. Eiber’s work, the latter physician would have to be listed and identified within the group in which the Respondent practiced. The Respondent was responsible for all billings for which he received payments. In connection with billing, the Respondent was required to maintain and retain all Medicaid- related invoices or claims for the audit period. In this regard, the Physician Coverage and Limitations Handbook specifies that when a radiological study is performed in an office setting, either the physician billing the maximum fee must have performed or indirectly supervised the performance and interpreted the study; or if a group practice, a member of the group must perform all components of the services. That procedure was not followed. When the Agency disallows a paid Medicaid claim, it must seek to recover the overpayment from the Medicaid provider who received payment on the claim. This is the basis of the “pay and chase” methodology used in the Medicaid program. The claims are paid, subject to audit, and recovery is sought when the claim is disallowed. Based on the audit findings in this cause, the Agency seeks $32,935.96 as an overpayment of Medicaid claims paid to the Respondent. The Petitioner also seeks an administrative fine in the amount of $1000.00. The Respondent was given the results of the audit and afforded an opportunity to respond and provide additional information to the Agency to show that the amounts billed were correct. The Respondent has presented no supplemental information to corroborate the correctness of the claims at issue.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Agency for Health Care Administration enter a Final Order sustaining the Final Audit Report and finding an overpayment against the Respondent in the amount of $32,9935.96. The Final Order should also impose an administrative fine in the amount of $1,000.00. S DONE AND ENTERED this 21st day of February, 2007, in Tallahassee, Leon County, Florida. J. D. 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 21st day of February, 2007. COPIES FURNISHED: Craig A. Brand, Esquire Law Offices of Craig A. Brand, P.A. Grove Forest Plaza 2937 Southwest 27th Avenue, Suite 101 Miami, Florida 33133 Willis Melvin, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III, Mail Stop 3 Tallahassee, Florida 32308 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Craig H. Smith, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Dr. Andrew C. Agwunobi, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308
The Issue Whether the Petitioner was overpaid for Medicaid prescriptions. The Agency for Health Care Administration (AHCA, Agency or Respondent) asserts the Petitioner, Compscript, Inc., d/b/a Compscript (Petitioner or Compscript) failed to maintain proper records to support and document the Medicaid prescription claims paid by the Agency for the audit period. According to the Agency, the audit findings must be extrapolated to the universe of all claims for the audit period. If so, the Agency maintains the Petitioner should reimburse AHCA for a Medicaid overpayment in the amount of $216,974.07 (this is the “recoupment” amount). The Petitioner denies it was overpaid any amount, asserts it kept records in accordance with applicable laws and regulations governing pharmacy records, and maintains that the Agency may not apply the extrapolation accounting procedure in this case.
Findings Of Fact At all times material to the allegations of this case, the Petitioner was a licensed pharmacy authorized to do business in the State of Florida; its pharmacy license number is PH0016271. At all times material to the allegations of this case, the Petitioner was authorized to provide Medicaid prescriptions pursuant to a provider agreement with the Respondent. The Petitioner’s Medicaid provider number is 106629300. The terms of the provider agreement govern the contractual relationship between this provider and the Agency. The parties do not dispute that the provider agreement together with the pertinent laws or regulations controls the relationship between the provider and the Agency. The provider agreement pertinent to this case is a voluntary agreement between AHCA and the Petitioner. Pursuant to the provider agreement, the Petitioner was to “keep, maintain, and make available in a systematic and orderly manner all medical and Medicaid-related records as AHCA requires for a period of at least five (5) years.” In addition to the foregoing, a Medicaid provider must maintain a patient record for each recipient for whom new or refill prescriptions are dispensed. Any Medicaid providers not in compliance with the Medicaid documentation and record retention policies may be subject to the recoupment of Medicaid payments. A Medicaid provider must retain all medical, fiscal, professional, and business records on all services provided to a Medicaid recipient. The records may be kept on paper, magnetic material, film, or other media. However, in order to qualify 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 comprehensive. Specific to the issues of this case, a Medicaid provider must also retain prescription records for five years. The Respondent is the state agency charged with the responsibility and authority to administer the Medicaid program in Florida. Pursuant to this authority AHCA conducts audits to assure compliance with the Medicaid provisions and provider agreements. These “integrity” audits are routinely performed and Medicaid providers are aware that they may be audited. At all times material to the allegations of this case, the Medicaid program in Florida was governed by a “pay and chase” procedure. Under this procedure, the Agency paid Medicaid claims submitted by Medicaid providers and then, after-the-fact, audited such providers for accuracy and quality control. These “integrity” audits are to assure that the provider maintains records to support the paid claims. In this case, the audit period is May 28, 1999 through July 18, 2000. The pertinent audit has been designated AHCA audit no. 01-0514-000-3/H/KNH and was initiated on October 23, 2000. The Petitioner does not dispute the Agency’s authority to perform audits such as the one at issue. The Petitioner maintains its records are sufficient to support the paid claims and that the Agency has unreasonably imposed its interpretation of the requirements. The Medicaid provider agreement that governs this case required that the Petitioner comply with all Medicaid handbooks in effect during the audit period. Essentially, this standard dictates the records that must be kept for quality control so that the after-the-fact audit can verify the integrity of the Medicaid claims that were paid by the Agency. During the audit period the Petitioner sold or dispensed drugs to Medicaid recipients. Equally undisputed is the fact that Medicaid claims were paid by the Agency during the audit period. Each claim reviewed and at issue in this cause was a paid Medicaid claim subject to the Petitioner’s provider agreement and the pertinent regulations. The Agency required that each and every claim submitted by the Petitioner during the audit period under the Medicaid program be filed electronically. Each claim submitted was filed electronically. Nevertheless, the Agency also required the Petitioner to retain records supporting the claim. Additionally, the Petitioner was to make such supporting records available to the Agency upon request. The Agency asked the Petitioner to present its records to support the claims for the audit period. The disclosure of the records proved difficult for this Medicaid provider because it does not operate in a conventional pharmacy setting. More specifically, it operates solely to serve a nursing home population. All of the patients whose prescriptions were filled were nursing home residents. Compscript maintains its manner of doing business is slightly different from the conventional pharmacy. Rather than the walk-in patient who presents a written prescription to be filled, this Petitioner receives its pharmacy orders by telephone or facsimile transmission from nursing homes. Typically, the staff at Compscript takes the call, writes down the pertinent information, enters the data into the pharmacy’s computer system, and the item is dispensed and routed to the nursing home via the delivery driver. All drugs are dispensed in sealed containers and are delivered with a manifest listing all the medications by name and patient. Given the volume of prescriptions being prepared and delivered, for the audit period at issue in this case, the Petitioner made 2-3 trips to the nursing home per day. Once the information for the prescription was entered into the Petitioner’s computer system, Compscript had little interest in maintaining the written telephone message or the facsimile sheet that generated the request. In some instances the Compscript employee did not make a written record of the prescription request. In those instances the employee entered the request directly into the Petitioner’s computer system and bypassed the written step altogether. The Compscript computer system tracks the initials of the pharmacist who entered the prescription information and cannot be altered without such alteration being tracked and noted. Since the pharmacy fills “over the counter” items, as well as controlled and non-controlled pharmacy products, the computer record denotes that information along with the patient information. When the Respondent’s audit agents went into the Compscript facility to audit the Medicaid claims, the Petitioner could not readily produce the written documentation to support the dispensed drugs. In fact, many of the records that verified the prescriptions dispensed were found on the nursing home records. The nursing home patient’s physician order sheet specified the item or items requested for the patient. This “physician order sheet” (POS) should theoretically always support the dispensing of the product from the Petitioner. In this case there were instances when the POS did not corroborate the claim. When the auditors from the Agency presented at Compscript, the Petitioner did not have the POS records to produce. Obviously, those records were maintained within the nursing home. Additionally, Compscript did not have the telephone notes or the facsimile transmission sheets to support items dispensed during the audit period. When the hearing in this cause proceeded it was also discovered that records that were generated daily by the Petitioner’s computer system that would have corroborated the claims (and which were allegedly maintained in storage) were not produced or available to support Medicaid claims submitted during the audit period. During the audit the Agency’s auditors requested records from a random sample of the claims submitted during the audit period. The results from that sample where then applied to the universe of claims for the audit period. When this mathematical calculation was performed the audit produced a Medicaid overpayment in the amount of $1,341,466.27. Afterwards, when the Petitioner was able to locate additional records to correspond to and support the prescriptions dispensed, the amount of overpayment was reduced to $217,715.28 (the amount set forth in the parties’ Pre-hearing Stipulation). At hearing, the Agency maintained that the amount of overpayment was $216,974.07 for which the Petitioner could produce no adequate documentation. At hearing, the Petitioner continued to dispute the procedure of applying the audit sample overpayment to the population of claims to mathematically compute the overpayment for the audit period. This “extrapolation” process was admitted into evidence and has been fully considered in the findings reached in this case. The Petitioner was required to maintain Medicaid- related records for a period of 5 years. Thus, for the audit period in this case, any record supporting the claims should have been maintained and made available for the Agency. Such records would have been within the five-year period. The Agency designates Medicaid compliance to its office of Medicaid Program Integrity. In turn, that office contracted with Heritage Information Systems, Inc. (Heritage) to perform and report pharmacy audits of the numerous pharmacy providers within the state. Auditors from Heritage were assigned the Compscript audit. At the time of the audit the Heritage auditors were not privy to any of the POS documents later produced in the case. Ken Yon is the Agency’s administrator who was responsible for managing the instant case and who worked with the Heritage auditors to assure the policies and practices of the Agency were met. In this case, the Heritage auditors presented at Compscript unannounced on October 23, 2000, and sought 250 randomly selected claims for review. By limiting the number of claims, the auditors were not required to sift through the records of 46,000+ claims (the approximate number of claims that the Petitioner submitted during the audit period). For the universe of 46,000+ claims, 250 randomly selected claims is a reasonable sample to audit. The adequacy of the sample number as well as the manner in which it was generated is supported by the weight of credible evidence presented in this matter. Also, the results of a sample of 250 from the universe of 46,000+ would be statistically valid if randomly chosen as they were in this case. In this regard the testimony of Dr. Mark Johnson, an expert in statistical sampling and analysis, has been deemed credible and persuasive as to the issues of the appropriateness of the sample (as to size and how it was generated), the use of the sample overpayment to calculate an overall payment, and the statistical trustworthiness of the amounts claimed in this cause. If anything, as Dr. Johnson asserted, the actual overpayment would be greater than the recoupment amount sought by the Agency. The Agency has used a statistical extrapolation method to compute overpayments for years. The statistical concept and process of applying a sample to a universe to mathematically compute an overpayment is not novel to this case. After the auditors completed their review of the records at the Compscript pharmacy, Kathryn Holland, a licensed pharmacist (who is also a consulting pharmacist) prepared the Respondent’s Final Agency Audit Report. Prior to completing the report, Ms. Holland received and reviewed the information provided by the Petitioner through the auditors. As a result of the review, a number of “can’t find” conclusions were reached. By “can’t find” the auditors and Ms. Holland meant that the original prescription or refill documentation could not be located for the paid Medicaid claim. These “can’t find” claims were reported to the Petitioner, who was given additional time to locate and produce documents to support the claims. In fact, the Agency continued to accept documentation for claims up through the time of hearing. Consequently, the amount sought for overpayment has been substantially reduced. Whether the Agency had the authority to accept documents outside the prescription records maintained by the pharmacy is not an issue. In fact, the Agency did reduce the overpayment amount when subsequent supporting documents were located. A second error in the documentation for the Petitioner’s prescriptions was noted as “no doctor’s address on the prescription.” That expression meant that pursuant to state and federal law the physician’s address is required for a controlled substance and when it was not provided the auditor deemed the documentation incomplete. Although the Petitioner maintained doctor addresses in its computer system, the records did not correspond to the specific prescriptions that were filled for the audited claims. In order to stand as a sufficient prescription form, a writing must be created contemporaneous to the order (phone requests that are transcribed are acceptable), must contain specific information (type of drug, strength, dose, patient, doctor, DEA number, refill, etc.), and it must be kept for the requisite time. It would be acceptable for the prescription to be computer generated so long as it was written contemporaneous to the order and preserved as required by law. In this case, at the conclusion of the audit, the Agency identified 194 discrepant claims within the random sample of 250. The vast majority of those discrepancies were noted as “can’t find.” Had the Agency not accepted other documentation to support the dispensing of the drugs, the calculated overpayment would have been $1,575,707.44. Applying a lower confidence limit of 95 percent to that amount generated the calculated overpayment of $1,341,466.27. The audit findings set forth in the Agency’s Final Agency Audit Report (dated April 6, 2001) is supported by the weight of credible evidence in this case. Nevertheless, the Agency did allow the provider here to supplement the documentation disclosed during the audit. And, to that end, the calculated overpayment was reduced to $216,974.07 (this amount is 95% of the calculated overpayment). In reality, the amount owed by this Petitioner for failure to maintain proper documentation for this audit would be greater than the recoupment amount sought by the Agency. Had the Agency held the Petitioner to a standard of “no prescription, no payment” standard arguably 194 of the 250 audited claims could have been disallowed. That is not the standard applied by the Agency. A “patient record” may include information regarding the patient’s prescription history. The terms “patient record” and “prescription” are not synonymous. For example, while a prescription would contain information such as patient's name, doctor, DEA number, doctor's address, dosage, drug, and whether it may be refilled, it would be expected that the “patient record” would contain additional information not typically found on a prescription. For instance, a “patient record” might contain a historical track of past medications or known patient allergies. In this case, the computer records or “patient records” maintained by the Petitioner did not retain the prescriptions in the format dictated by rule. An electronic imaging recording system may be used when the system captures, stores, and can reproduce the exact image of the prescription, including the reverse side of the prescription if necessary. The Petitioner’s system did not do that. An electronic system must be able to produce a daily hard-copy printout of all original prescriptions dispensed and refilled. If the Petitioner’s system could do that, it did not. An acceptable electronic system must generate the prescription contemporaneous to the dispensing order. The Petitioner’s system did not do that. The Agency has not alleged, and there is no evidence to suggest, fraud in the Petitioner’s failure to maintain its records. The Agency’s interpretation of the requirement that a prescription be reduced to writing is consistent with the rules and regulations in effect at the time of this audit. The last category of discrepant items was “UR” which stood for “unauthorized refills.” These were claims for refills on drugs for which the original prescription could not be located or documentation from the nursing home could not be found. Again, the Petitioner the maintained that within the nursing home setting a physician’s reorder for medications for the patient could be found on the POS. These refill requests were handled orally among the physician, the nursing home staff, and the pharmacy. Nevertheless, because they were not documented in writing the Agency disallowed this claims and included them among the discrepant list. If the Petitioner was able to produce a physician order to support the UR claims, it was removed from the recoupment list. In most instances, the Petitioner did not have the requisite paperwork to support the refill. Instead, the Petitioner relied on its computer records (again not kept in accordance with the applicable standards) to support the UR claims. The Agency has not claimed that the refills were not dispensed, merely that the paperwork to support the claim cannot be produced.
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 that accepts an amended Final Agency Action Report to support an overpayment and recoupment against the Petitioner in the amount of $216,974.07. S DONE AND ENTERED this 6th day of October, 2005, in Tallahassee, Leon County, Florida. J. D. 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 6th day of October, 2005. COPIES FURNISHED: Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 William Roberts, Acting General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 L. William Porter, II, Esquire Agency for Health Care Administration Fort Knox Executive Center III 2727 Mahan Drive, Building 3, Mail Stop 3 Tallahassee, Florida 32308-5403 Kenneth W. Sukhia, Esquire Fowler, White, Boggs, Banker, P.A. 101 North Monroe Street, Suite 1090 Post Office Box 11240 Tallahassee, Florida 32302 Ralph E. Breitfeller, Esquire McGrath & Breitfeller, LLP 140 East Town Street, Suite 1070 Columbus, Ohio 43215
The Issue The issue in this case concerns whether the Petitioner, H. J. Dental, Inc. (“Petitioner” or "HJD"), is obligated to repay $313,415.44 to the Respondent, Agency for Health Care Administration ("Respondent" or "AHCA") for Medicaid payments that were claimed by and were paid to the Petitioner for services which the AHCA asserts in its audit report were not eligible for payment under the terms of the Medicaid program.
Findings Of Fact At all times material to this case, the Petitioner was an enrolled Medicaid provider, having been enrolled under Provider number 071468200. As an enrolled Medicaid provider, the Petitioner was authorized to provide certain dental services to Medicaid recipients and to bill the Medicaid program for those services. All Medicaid provider agreements, including the one entered into by HJD, contain a specific provision that the provider agrees to abide by the statutes, laws, rules, and policies of the Medicaid Program in connection with the provisions of services to recipients. The "audit period" that is the subject of the AHCA's recoupment effort is January 1, 1998, to December 31, 1998. During this audit period, the Medicaid Program paid the Petitioner $313,415.44 for the dental services that are at issue in this proceeding. The AHCA contends that the entire $313,415.44 is subject to recoupment. On or about March 5, 2000, the AHCA prepared and mailed to HJD a Preliminary Agency Audit Report ("PAAR"). The PAAR advised HJD that the AHCA had "made a preliminary determination that certain claims for which you [HJD] were paid $313,415.44, were for services not covered by Medicaid." The PAAR described the process by which the AHCA had arrived at its audit conclusions and specifically advised HJD of the following specific reasons for the audit conclusion that HJD had been overpaid in the amount of $313,415.44: The documentation submitted for x-ray procedure codes D0220, D0230, D0240, and D0272, whch are not considered to be of diagnostic quality by the Medicaid dental consultant. The Medicaid Dental Coverage and Limitations Handbook states in chapter 2-21, Radiographic Examination: "All radiographs must be of diagnostic quality." Claims for radiographic film that is not considered to be of diagnostic quality are considered overpayments in the sample. You billed and were paid for specific claims in the sample that are not documented as having been actually provided, or that lack sufficient documentation in the recipient's dental records to support the medical necessity for the claims. Claims that lack appropriate documentation are considered overpayments in the sample. The PAAR also described the AHCA's sample methodology (a random sample of 42 Medicaid recipients for whom 306 claims were submitted by HJD), as well as the statistical formula used by the AHCA for cluster sampling. On the last page of the PAAR, HJD was also advised: "Since the findings of our review are provisional, you may submit information that you believe would reduce the amount of improper payments identified." On or about August 18, 2000, the law firm that was then representing HJD mailed to the AHCA a letter responding to the PAAR. The letter of August 18, 2000, criticized the validity of the AHCA's audit methodology and offered to settle the matter for a small fraction of the $313,415.44 sought by the AHCA. The letter of August 18, 2000, did not include any additional information regarding any of the sampled claims that provided the factual basis for the audit conclusions. On or about October 27, 2000, the AHCA issued a Final Agency Audit Report ("FAAR") in this case. The overpayment amount in the FAAR remained the same as in the PAAR, beause HJD did not provide any additional evidence following its receipt of the PAAR. The audit in this case was performed in a manner consistent with the AHCA's established practices and procedures for audits of Medicare Program providers. The audit in this case was performed using accepted and valid auditing, accounting, analytical, statistical, and peer-review methods. During the subject audit period from January 1, 1998, through December 31, 1988, HJD received overpayments from the Medicare Program in the amount of $313,415.44. As of the date of the hearing in this case, HJD has not repaid any of the overpayment amount to the AHCA.
Recommendation On the basis of the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be issued in this case concluding that HJD was overpaid by the Medicaid Program in the amount of $313,415.44, and requiring that HJD promptly pay to the AHCA the amount of $313,415.44, plus interest at the statutory rate. DONE AND ENTERED this 1st day of July, 2004, 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 1st day of July, 2004.
The Issue The issue for determination is whether Petitioner was overpaid by the Medicaid program as set forth in Petitioner's Final Agency Audit Report dated June 12, 2006 for the period January 1, 2002 through December 31, 2004.
Findings Of Fact AHCA audited certain of Dr. Negrette's Medicaid claims pertaining to services rendered between January 1, 2002 and December 31, 2004, hereinafter the audit period. Dr. Negrette was an authorized Medicaid provider during the audit period. During the audit period, Dr. Negrette had been issued Medicaid provider number 061422000. No dispute exists that, during the audit period, Dr. Negrette had a valid Medicaid Provider Agreement with AHCA. For services provided during the audit period, Dr. Negrette received in excess $79,523.70 in payments for services to Medicaid recipients. By a preliminary audit report dated August 25, 2005, AHCA notified Dr. Negrette that a preliminary determination was made that he was overpaid by the Medicaid program in the amount of $137,051.25. Subsequently, by a FAR dated June 12, 2006, AHCA notified Dr. Negrette that, after a review of all documentation submitted, it determined that he had been overpaid by the Medicaid program in the amount of $79,523.70, thus, reducing the amount of the overpayment. The FAR further provided how the overpayment was calculated using a sample of the claims submitted during the audit period, including the statistical formula for cluster sampling; and indicated that the statistical formula was generally accepted and that the statistical formula showed an overpayment in the amount of $79,523.70, with a 95 percent probability of correctness. Dr. Negrette agrees that the mathematical computation of the audit is correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order finding that Jesus Negrette, M.D., received overpayments from the Medicaid program in the amount of $79,523.70, during the audit period January 1, 2002 through December 31, 2004, and requiring Jesus Negrette, M.D., to repay the amount of overpayment. DONE AND ENTERED this 5th day of February, 2007, in Tallahassee, Leon County, Florida. S 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 5th day of February, 2007.
The Issue Whether Medicaid overpayments were made to Petitioner and, if so, what is the total amount of these overpayments.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the stipulations of fact set forth in the parties' March 5, 2002, Joint Prehearing Stipulation: Petitioner Petitioner was incorporated in 1989 by Mr. Taylor. It operated Choice Pharmacy, a pharmacy located at 9920 Northwest 27th Avenue in Miami, Florida, from around the time of its incorporation until approximately 1999. The Provider Agreement During the period from September 10, 1997, through August 31, 1998, Petitioner was authorized to provide pharmacy services and goods to eligible Medicaid recipients in Florida. Petitioner provided such services and goods pursuant to a Medicaid Provider Agreement Mr. Taylor had signed, on behalf of Petitioner, on February 21, 1997. 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 or 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. This provider agreement shall become effective the date the provider's Florida Medicaid Enrollment Application is received by the state or its fiscal agent. It shall remain in effect until July 1, 1999, unless otherwise terminated. . . . 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. . . . Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook, and the Medicaid Provider Reimbursement Handbook The Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case contained the following "record keeping " provisions, among others: 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. Records must be retained for a period of at least five years from the date of service. The following types of records, as appropriate for the type of service provided, must be retained (the list is not all inclusive): . . . . 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; . . . . 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. . . . The Medicaid Provider Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case contained similar provisions. The Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case further provided that "[r]eimbursement for prescribed drug services is based on the cost of the drug to the pharmacy plus a dispensing fee." The Audit and Aftermath In July of 1998, AHCA's Medicaid fiscal agent contractor (Unysis Corporation) conducted a "desk audit" of Medicaid claims submitted by Petitioner. Following the completion of the "desk audit," the matter was referred to AHCA's Office of Medicaid Program Integrity to conduct "a more in depth" audit (involving an examination of invoices and other documentation to determine whether Petitioner had available during the period under review sufficient quantities of goods to support its billings to the Medicaid program). The audit, which covered the period from September 10, 1997, through August 31, 1998 (Audit Period), was conducted by Kathryn Holland, with the assistance of an accounting firm retained by AHCA, Krause, Humphress, Pace & Wadsworth, CPA (Krause). Ms. Holland is a Florida-registered pharmacist who has been a senior pharmacist with AHCA for the past 12 years. She has no formal education or training in accounting, but does have 12 years of experience "doing the kind of audits" she conducted in the instant case. In an effort to obtain information needed for the audit, Krause requested that Petitioner fill out and return a Questionnaire for Medicaid Providers. The questionnaire was filled out and returned by Mr. Taylor, on behalf of Petitioner, on or about October 30, 1998. Mr. Taylor indicated on the questionnaire that, during the Audit Period, the "percentage of [Petitioner's] prescription business that [was] Medicaid" was approximately 90 percent. He further indicated on the questionnaire that Petitioner's "total dollar sales volume of prescription drugs" during the Audit Period was $5,732,028.84; Petitioner's "cost of prescription drugs sold during [the] Audit Period" was $5,220,200.27; Petitioner's "prescription drug inventory at cost, [at the] beginning of [the Audit] Period" was $180,721.00; and Petitioner's "prescription drug inventory at cost, [at the] end of [the Audit] Period" was $306,081.00. The questionnaire requested the name(s) of Petitioner's "major drug suppliers during the review period." All suppliers that "provided more than 10% of [Petitioner's] drug purchases" were to be listed. Mr. Taylor listed on the questionnaire the following "major drug suppliers": "McKesson Inc.," "Quality Medical," "Pharma Plus Wholesale Inc.," and "Quest Medical Supply." IV Pharmaceutical Wholesalers, Inc., was not among the "major drug suppliers" named by Mr. Taylor. According to the information provided on the questionnaire by Mr. Taylor, the purchases made by Petitioner from "McKesson Inc.," "Quality Medical," "Pharma Plus Wholesale Inc.," and "Quest Medical Supply" represented approximately 20 percent, 20 percent, 40 percent, and 10 percent, respectively, of Petitioner's "total [drug] purchases" during the Audit Period. By letter dated November 9, 1998, Krause requested Pharma Plus Wholesale, Inc. (Pharma Plus) to provide it "with a download of all transactions (all accounts) for the period September 1, 1997 through August 31, 1998," between Pharma Plus and Choice Pharmacy. Pharma Plus, in a letter dated January 18, 1999, provided the following response to Krause's request: [A]s per our conversation I am submitting this document to formally inform you and your office that Pharma Plus Wholesale, Inc. has never done any business with Choice Pharmacy (Legal Name: OKAN, Inc) 9920 N.W. 27th Avenue Miami, FL 33147.) By letter dated January 20, 1999, Ms. Holland requested McKesson Drug Company (McKesson) to provide her "with a download of all transactions for the period July 1, 1997, through August 31, 1998" between McKesson and Choice Pharmacy. On February 16, 1999, McKesson provided Ms. Holland with a "paper printout" containing the requested information. The material submitted by McKesson revealed that there were a considerable number of transactions between McKesson and Choice Pharmacy during the period in question. On April 2, 1999, Ms. Holland sent a letter to Mr. Taylor, which read, in part, as follows:: On or around July 16, 1998, an auditor from Unisys Corporation, the fiscal agent contractor for the Florida Medicaid program, conducted an audit of your pharmacy department. The audit is being reviewed by Medicaid Program Integrity. In order for us to complete our review, we are requesting and must receive the following: Documentation that identifies all purchases/acquisitions by Choice Pharmacy for the products listed on "Attachment A" for the period from July 1, 1997, through August 31, 1998. Documentation that identifies all credits/returns for the period stated above for the products listed on "Attachment A." . . . You have 30 days from the receipt of this letter to submit the requested information. . . . The "products" listed on "Attachment A" did not include "every single drug Petitioner had billed to Medicaid. Only the 50 "highest paid" drugs were listed on "Attachment A." Mr. Taylor responded to Ms. Holland's letter by providing her with, on May 13, 1999, a three-inch stack of documents reflecting transactions between Petitioner and "quite a few different [drug] wholesalers." Ms. Holland attempted (successfully in some instances and unsuccessfully in others) to contact wholesalers whose names appeared on the documentation provided by Mr. Taylor to obtain from them documentation regarding their transactions with Petitioner. After analyzing the documentation with which she had been provided by Petitioner and by the drug wholesalers she had been able to contact, and examining AHCA's records of the claims filed by Petitioner during the Audit Period, Ms. Holland determined that there was insufficient documentation to demonstrate that, during the Audit Period, Petitioner had available sufficient inventory to support $4,248,262.37 of its billings to the Medicaid program. By letter dated July 28, 1999, Ms. Holland advised Mr. Taylor of this "provisional finding." The letter read, in part, as follows: Medicaid Program Integrity has reviewed your paid Medicaid claims with dates of service from September 10, 1997, through August 31, 1998. We have also reviewed your product purchase/acquisition documentation received on May 13, 1999. Some of the purchase/acquisition documents that you furnished could not be substantiated by the distributor/wholesaler and were therefore not included in the review. You have failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid. Based on this review, we have made a provisional determination that you were overpaid $4,248,262.37 for claims that in whole or in part are not covered by Medicaid. The amount due for the overpayment is $4,248,262.37. 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. * * * Based on the above, we have reason to believe that you have been overpaid by the Medicaid program. The overpayment identified in the summary sheet attachment is with regard only to the 45 drugs listed and comprehends only the period audited, namely September 10, 1997, through August 31, 1998. A printout identifying all relevant claims involved in the overpayment and a copy of the drug purchase/acquisitions are attached. The overpayment calculation is based upon the assumption that all stock demonstrated as available during the audit period was exclusively dispensed to Medicaid recipients; this is undoubtedly not the case and the assumption serves to reduce the amount of the overpayment. Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid. Accordingly, as shown in the summary sheet attachment, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $4,248,262.37. If additional overpayments are found subsequently, you will be notified. * * * If you have any additional invoices or other relevant documentation that you wish to submit that you feel would alter these findings, please submit your written explanation and legible copies of the documentation to us immediately. . . . If you have not submitted documentation or made payment within 30 days, we will send you notice regarding the agency's final determination, taking into consideration any information or documentation that you submit within this time period. On August 16, 1999, Mr. Diamond, on behalf of Petitioner, telephonically requested a 21-day extension of time to submit additional documentation for Ms. Holland's consideration. By letter dated August 17, 1999, Ms. Holland advised Mr. Diamond that the requested extension of time had been granted. Mr. Diamond, on behalf of Petitioner, on September 14, 1999, provided Ms. Holland with an "additional package of documentation." Ms. Holland reviewed these documents. "Most everything in this package was a duplicate" of documents that Ms. Holland had already been provided by Mr. Taylor. The following day, Ms. Holland, by facsimile transmission, requested Mr. Diamond to provide her with cancelled checks evidencing Petitioner's payment of eight, specified invoices included in the "additional package of documentation" she had received from Mr. Diamond. Mr. Diamond provided Ms. Holland with five cancelled checks on October 8, 1999. Ms. Holland determined, in light of the additional documentation she had received following her "provisional finding" that Petitioner had been overpaid $4,248,262.37 by the Medicaid program, that the amount of that overpayment should be reduced by $764.67. She advised Mr. Taylor of this "final agency audit" determination, by letter dated October 27, 1999, which read, in part, as follows: Medicaid Program Integrity has completed a review of your paid Medicaid claims with dates of service from September 10, 1997, through August 31, 1998. We have also reviewed your product purchase/acquisition documentation received on May 13, 1999, September 14, 1999, and October 8, 1999. You have failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid. You are hereby notified that Okan, Inc. d/b/a Choice Pharmacy was overpaid $4,247,497.70 for claims that in whole or in part are not covered by Medicaid. The total amount due for the overpayment is $4,247,497.70. The above action and your right or appeal are discussed below. * * * We have required that you submit invoices from your suppliers to substantiate the availability of drugs that you billed to Medicaid. You have not fully substantiated such availability. Section 409.913(10), F.S., states in part that the Agency may require repayment for inappropriate, medically unnecessary, or excessive goods or services. Section 409.913(14)(n), F.S., states that "The agency may seek any remedy provided by law, including but not limited to, the remedies provided in subsection (12) and (15) and s. 812.035, if: * * * (n) The provider fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods, or sufficient time in the case of services, to support the provider's billings to the Medicaid program." Billing Medicaid for drugs that have not been demonstrated as available for dispensing is a violation of Medicaid laws and regulations and has resulted in the finding that you been overpaid by the Medicaid program. The overpayment identified in the summary sheet attachment is with regard only to the 45 drugs listed and comprehends only the period audited, namely September 10, 1997, through August 31, 1998. A printout identifying all relevant claims involved in the overpayment and a copy of the drug purchase/acquisition review are attached. The overpayment calculation is based upon the assumption that all stock demonstrated as available during the audit period was exclusively dispensed to Medicaid recipients; this is undoubtedly not the case and the assumption serves to reduce the amount of the calculated overpayment. All Medicaid payments sufficient to cover documented inventory have been assumed to be valid, and payments in excess of that amount are regarded to be invalid. Accordingly, as shown in the summary sheet attachment, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $4,247,497.70. If additional overpayments are found subsequently, you will be notified. * * * If you accept or concur with these finding, please send your check in the amount of $4,247,497.70, made payable to the Florida Agency for Health Care Administration, to: . . . . You have the 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 request or petition must be received within twenty-one (21) days of receipt of this letter. Failure to timely request a hearing shall be deemed a waiver of your right to a hearing. . . . Mr. Diamond, on behalf of Petitioner, filed with AHCA a Petition for Formal Hearing on December 7, 1999. The Petition for Formal Hearing was accompanied by 50 "invoices" purporting to reflect sales of prescription drugs (totaling approximately $4 million dollars) made by IV Pharmaceutical Wholesalers, Inc., to Choice Pharmacy during the Audit Period, as well as the following cover letter from Mr. Diamond to Ms. Holland: Consistent with our prior discussions regarding our above referenced client, you will find enclosed the final documentation from [IV] Pharmaceutical Wholesalers, Inc. As I indicated in our prior discussions it would appear at this time that our independent audit has concluded. Our accounting reveals, based on all invoices provided, our above referenced client has correctly accounted for all medications billed through Medicaid. I also enclose consistent with our prior discussion a copy of our request for a formal hearing in the event that you are not in agreement with our conclusions. In the event that you are satisfied with the conclusions, please advise Mr. John A. Owens, Chief, Medicaid Program Integrity, that we will withdraw our request for formal hearing. Prior to the submission of these "invoices," AHCA had not received any information (in the form of documentation or otherwise) indicating that Petitioner had purchased or otherwise acquired drugs from IV Pharmaceutical Wholesalers, Inc. Ms. Holland examined the "invoices." "They did not look like forms [she had] seen from this wholesaler before, and . . . after years of looking at invoices they just appeared not right" to her. On January 28, 2000, Ms. Holland sent the following letter to Mr. Diamond: Thank you for the documents received on December 7, 1999. As they were received after the Final Agency Action, the Agency will consider them as possible evidence for trial or hearing. Once the hearing date and discovery schedule are set, we will propound interrogatories and take depositions in conjunction with these documents. If you have any question, please contact Mr. L. William Porter, II, senior attorney . . . . Ms. Holland's suspicions regarding the genuineness of the IV Pharmaceutical Wholesalers, Inc., "invoices" submitted by Petitioner were correct. Petitioner had never purchased or otherwise acquired any drugs from IV Pharmaceutical Wholesalers, Inc. The "invoices" were fabricated. They were created by Mr. Pinkoff, for a fee ($800,000.18, which he was paid, in two installments, in November of 1999), at the request of Mr. Taylor and a Betty Bills. 13/ Mr. Pinkoff was told that the "invoices" were needed for an audit to "substantiate the purchases of [certain] product[s]." 14/ Mr. Pinkoff was subsequently charged with criminal wrongdoing for his participation in this fraudulent scheme and "voluntarily surrendered" to the authorities. 15/ The charges were filed after Mr. Pinkoff's place of business had been searched by law enforcement authorities on December 1, 1999, pursuant to a search warrant obtained by the Florida Attorney General's Medicaid Fraud Control Unit, which was conducting a criminal investigation of another matter unrelated to Choice Pharmacy. 16/ The computer that Mr. Pinkoff used to create the falsified "invoices" for Petitioner was seized during the search. Mr. Pinkoff entered into a Plea Agreement with the State of Florida in his criminal case. The Plea Agreement was filed in Leon County Circuit Court (Case No. 2000-4310) on November 8, 2000. Section II of the Plea Agreement contained the "Factual Predicate for this Plea Agreement." It provided as follows: The Defendant and the State agree that the following is the factual basis for the entry of plea in this matter, (hereafter "SUBJECT MATTER"): In June of 1999, the Defendant was approached by Louis A. Petrillo ("Petrillo"),[17/] who told the Defendant that Choice Pharmacy (Okan, Inc. d/b/a Choice Pharmacy ("Choice") and "Betty," an owner, needed certain invoices. Specifically, Choice and Betty needed to demonstrate that Choice had purchased a number of prescription drugs with a value of $4,000,000 dollars dating back to the period of 1997 through 1998. Choice was owned and operated by Raufu ("Ralph") Taylor and Betty (Last Name Unknown). The Defendant owned a 1/2 interest in IV Pharmaceuticals, Inc., a Florida corporation that was a licensed prescription drug wholesale company. IV Pharmaceuticals had not sold any prescription drugs to Choice in 1997 or at any other time. Petrillo knew this fact but asked the Defendant if he could produce invoices for a specific list of drugs; the understanding was that the invoices would be false. The Defendant told Petrillo, Betty and Ralph that he could create or otherwise produce invoices from IV Pharmaceutical[s] to give to Choice for prescription drugs that IV Pharmaceutical[s], Inc. had previously purchased from manufacturers or other licensed wholesalers. This was necessary in case IV Pharmaceutical[s] was asked to produce its records to substantiate the invoices from IV Pharmaceutical[s] to Choice. All of the drugs Betty and Ralph requested invoices for were oncology or HIV prescription drugs, largely Neup[o]g[e]n and Procrit. IV Pharmaceutical[s] had invoices to substantiate its own purchases of those drugs. A meeting was arranged by Petrillo. In attendance were the Defendant, Petrillo, Betty, and Ralph. After making introductions, Petrillo left the meeting.[18/] Before leaving, Petrillo told the Defendant that it was up to him whether or not to create the invoices. The Defendant discussed with Betty and Ralph what specific prescription drug invoices were required. Betty and Ralph provided the Defendant with a list of drugs, including dates of purchase and quantities. The Defendant believed that the invoices were to be used for some unlawful purpose, presumably involving AHCA, since the Defendant was familiar with the AHCA audit process and knew that AHCA required such invoices when conducting an audit. Betty and Ralph told the Defendant that the invoices were needed for drugs they had actually purchased but had no invoices for. The Defendant had at least one conversation with Petrillo related to the production following the meeting. Six months after the meeting, the Defendant drafted invoices under the IV Parmaceutical[s] name based upon the list provided by Betty and Ralph. The Defendant gave the invoices to Petrillo to give to Betty and Ralph. Each false invoice produced by Defendant was submitted to AHCA. The foregoing assertions of fact made in this section of the Plea Agreement are true and accurate. Section III of the Plea Agreement indicated that Pinkoff understood that "pursuant to this plea agreement his minimum potential exposure under the Sentencing Guidelines [was] 55.5 months of imprisonment" and "[h]is maximum potential exposure under the Sentencing Guidelines [was] the statutory maximum of thirty-five years in State Prison and a $25,000.00 fine." Section IV of the Plea Agreement set forth the "Defendant's Obligations." It read as follows: The Defendant agrees to plead Guilty to the following charges contained in the information filed in the above-styled criminal case: one count of "Racketeering activity" in violation of Florida Statutes, Section 895.03(3), a first degree felony; and one count of Medicaid Provider Fraud in violation of Florida Statutes, Section 409.920(2)(a), a third degree felony. The Defendant agrees to make himself accessible upon notice to receive and testify truthfully pursuant to any subpoena lawfully issued compelling such testimony pursuant to §914.04, Florida Statutes, However, by this AGREEMENT Defendant does not and shall not waive his Fifth Amendment privilege as to any statement or testimony except and only as to the specific facts set forth as the SUBJECT MATTER of this AGREEMENT; Defendant shall maintain his Fifth Amendment rights as to all other allegations of facts, including those facts related to the charges alleged in the Information not included in the factual predicate herein. The Defendant understands that if lawfully compelled to provide testimony, any perjury committed by him would constitute a violation of the ordinary terms and conditions of Defendant's community control and probation even if related to the charges alleged in the Information. Section V of the Pleas Agreement contained the "sentence the State will recommend," which was as follows: Seven (7) years of probation with the following special conditions: Defendant with will serve 24 months of community control under the terms and conditions set by the Department of Corrections. . . . Defendant shall pay a total of $3,475,000 to the State of Florida as compensation to the State of Florida for its losses, both known and unknown. Such reimbursement shall not be deemed or otherwise construed as a fine or similar penalty. . . . At the entry of this plea, Defendant agrees to provide the State of Florida with sufficient security to guarantee the payment of one million dollars ($1,000,000.00). This security shall be in the form of two Notes secured by two mortgages to be held by the State of two properties. The first property is located at 5721 Oakview Terrace, Hollywood, Florida. The Note on this property shall be in the amount of $400,000.00. The second property secured by a Note is located at 6001 North Ocean Drive, PHS, Hollywood, Florida [and the note on this property] shall be in the amount of $600,000.00.[19/] . . . Defendant shall pay a fine in the amount of $25,000.00 which is the Statutory maximum; Defendant shall be Adjudicated Guilty on all counts; Defendant shall be precluded from working or having a business interest in or receiving remuneration or payment of any kind from any health care related facility that receives any funds or participates in any way with the Medicare and/or Medicaid programs under Titles XVIII and XIX of the United States Code. However, this does not preclude the Defendant from receiving proceeds from the divestment of his interests or assets through the sale or transfer of said assets or interest to an entity that receives any funds or participates in any way with the Medicare and/or Medicaid programs of the United States. Defendant shall pay court costs; The monetary obligation under the AGREEMENT shall be paid over the course of probation and community control. However, the STATE and the Defendant agree that there is a value to the STATE in terms of economics and deterrence to receive swift and complete payment and the commitment of the Defendant to attempt to do so reflects his willingness to accept responsibility for his acts. Therefore, in the event that the Defendant pays $3,000,000.00 within 15 months of sentencing and has satisfied all other terms and conditions of community control and probation, the State agrees to the following: the community control portion of the defendant's sentence shall be reduced to 15 months; the term of probation shall be reduced to five (5) years; The STATE agrees to return to court for an Order reducing the total obligation by $500,000.00. Thus, the Defendant's total obligation under this Agreement would become Three Million dollars ($3,000,000.00). . . . The State has no objection to the entry of any Order by the court to permit travel outside of the United States for business purposes upon at least 2 weeks notice to the probation department and the permission of the defendant's probation officer. The Defendant understands that he may not travel outside the United States during the course of the community control portion of his sentence. Section VI was entitled "Withdrawal of Guilty Plea and Vacation of Sentence." It read as follows: In the event that the State files additional charges against the Defendant for matters currently under investigation, but not charged in the Information described in this AGREEMENT, the Defendant shall have the right and full entitlement to vacate the sentence imposed pursuant to this AGREEMENT and to withdraw his plea of guilty. The only condition to the Defendant's right and entitlement to vacate (as just described) shall be that the Defendant must not have breached this AGREEMENT prior to the additional charges being filed. If the Defendant does vacate and withdraw, all monies paid pursuant to this AGREEMENT shall be returned to the Defendant. The Plea Agreement also contained a "Waiver of Rights," which provided, in pertinent part, as follows: My entering into the AGREEMENT is not the result of force, threats, assurances or promises other than the promises contained in the attached agreement. I agree to the provision of this agreement as a voluntary act on my part, rather than at the discretion of or because of the recommendation of any other person, and I agree to be bound by its provisions. I agree that this written plea agreement contains all the terms and conditions of my plea and that promises made by anyone that are not contained within this written agreement are without force and effect and are null and void. . . . The Plea Agreement was signed by Mr. Pinkoff (on September 26, 2001), his attorneys (on September 26, 2001 and November 8, 2000), and the Special Counsel of Health Care Fraud Prosecution (on September 26, 2000). Mr. Pinkoff is currently under "house arrest" at his residence (which he owns) located at 5721 Oakview Terrace in Hollywood, Florida; however, he is allowed to leave his home to work at his office (which is also located in Florida). Mr. Pinkoff is still in the "pharmaceutical wholesaling" business. His business is licensed "out of Georgia." Mr. Pinkoff has paid approximately $200,000.00 of the amount that he owes the State of Florida pursuant to the terms of his Plea Agreement. He sold the 6001 North Ocean Drive property referenced in the Plea Agreement for $1.2 million. The state received approximately $192,000.00 of the proceeds from the sale Mr. Pinkoff is presently paying the state $1,000.00 a month.
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 $4,247,497.70 in Medicaid overpayments for claims covering the period from September 10, 1997, through August 31, 1998, and requiring Petitioner to repay this amount to AHCA. DONE AND ENTERED this 3rd day of October, 2002, 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 3rd day of October, 2002.
The Issue Whether Petitioner was overpaid by the Florida Medicaid Program and, if so, the amount of the overpayment.
Findings Of Fact At all times material to this proceeding, Respondent has been the state agency charged with responsibility for overseeing the Florida Medicaid Program, including the recovery of overpayments to Medicaid providers pursuant to Section 409.913, Florida Statutes. At all times material to this proceeding, Petitioner was an authorized Medicaid provider, having been issued provider number 377290000. Petitioner had valid Medicaid Provider Agreements with the Agency for Health Care Administration (AHCA) during the Audit Period, which began on January 1, 1996, and ended on May 10, 1999. Petitioner graduated from the University of Puerto Rico School of Medicine in 1987, did an internship at Tulane University, did a residency in internal medicine at Eastern Virginia Graduate Medical School, and did a fellowship in hematology at Washington Hospital Center. He served as Chief of Hematology for Kessler Medical Center in Biloxi, Mississippi, while serving in the United States Air Force (with the rank of major). At the time of the final hearing, Petitioner was licensed to practice medicine in Florida, Virginia, Puerto Rico, and Washington, D.C. At the time of the final hearing, Petitioner was employed by the National Institutes of Health (NIH) as a Medical Officer, Health Scientist Administrator. Petitioner served as an advisor to the director of the NIH on issues related to HIV (human immunodeficiency virus) and AIDS (acquired immunodeficiency syndrome). Petitioner’s specialty is internal medicine with a sub- specialty in hematology. Petitioner has extensive experience treating persons suffering with HIV and AIDS dating back to 1987. Pursuant to his Medicaid Provider Agreements, Petitioner agreed to: (1) retain for five years complete and accurate medical records that fully justify and disclose the extent of the services rendered and billings made under the Medicaid program; (2) bill Medicaid only for services or goods that are medically necessary; and (3) abide by the Florida Administrative Code, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program and Federal laws and regulations. Respondent audited Petitioner’s Medicaid claims during the Audit Period and conducted a peer review of Petitioner’s billings and medical records of 25 of Petitioner’s patients as part of that audit.2 Joseph W. Shands, M.D., conducted the peer review of the documentation provided by Petitioner for purposes of the audit conducted by AHCA. Dr. Shands first reviewed documentation provided by Petitioner in 1999. He had no further participation in the audit until he reviewed information in preparation for his deposition in this proceeding. Dr. Shands graduated from medical school in 1956, trained in internal medicine, and worked as a microbiologist for approximately 15 years. He served as Chief of Infectious Diseases at the University of Florida for 23 years and also treated patients through the Alachua County Public Health Department and Shands Hospital at the University of Florida. Dr. Shands' practice was devoted almost entirely to the treatment of patients diagnosed with HIV/AIDS. Dr. Shands retired from the practice of medicine in May 2002. For three years prior to his retirement, Dr. Shands practiced medicine part-time. Petitioner was sent a Preliminary Agency Audit Report (PAAR) dated May 25, 1999, that found an overpayment in the amount of $862,576.72. In response to that PAAR, Petitioner had the attorney representing him at that time respond to AHCA in writing. The letter from the attorney, dated June 2, 1999, requested a copy of AHCA’s supporting materials and clarification of certain matters. AHCA did not respond. AHCA issued its FAAR on January 22, 2004, asserting that Petitioner was overpaid by the Florida Medicaid Program in the total amount of $261,336.14 for services that in whole or in part were not covered by Medicaid. There was no plausible explanation why the FAAR was not issued until 2004, whereas the audit period ended in 1999. The difference between the amount of the alleged overpayment reflected by the PAAR and the amount of the alleged overpayment reflected by the FAAR is attributable to the use of different methodologies in calculating the amounts overpaid. The FAAR used the correct methodology that was not challenged by Petitioner. The FAAR sets forth five categories of alleged overpayments. Each category accurately describes an overpayment based on applicable Medicaid billing criteria. The five categories are as follows: Medicaid policy specifies how medical records must be maintained. A review of your medical records revealed that some service for which you billed and received payment were not documented. Medicaid requires documentation of the services and considers payments made for services not appropriately documented an overpayment. (For ease of reference, this will be referred to as Category I.) Medicaid policy defines the varying levels of care and expertise required for the evaluation and management procedure codes for office visits. The documentation you provided supports a lower level of office visit than the one for which you billed and received payment. The difference between the amount you were paid and the correct payment for the appropriate level of service is considered an overpayment. (For ease of reference, this will be referred to as Category II.) Medicaid policy addresses the type of pathology services covered by Medicaid. You billed and received payment for laboratory tests that were performed outside your facility by an independent laboratory. Payments made to you in these instances are considered overpayments. (For ease of reference, this will be referred to as Category III.) Medicaid policy requires the Medicaid services be provided by or under the personal supervision of a physician. Personal supervision is defined as the physician being in the building when the services are rendered and signing and dating the medical records within twenty-four hours of service delivery. You billed and received payment for services which your medical records reflect you neither personally provided nor supervised. Payment made to you for all or a part of those services is considered an overpayment. (For ease of reference, this will be referred to as Category IV.) Medicaid policy requires services performed be medically necessary for the diagnosis and treatment of an illness. You billed and received payments for services for which the medical records, when reviewed by a Medicaid physician consultant, indicated that the services provided did not meet the Medicaid criteria for medical necessity. The claims which were considered medically unnecessary were disallowed and the money you were paid for these procedures is considered an overpayment. (For ease of reference, this will be referred to as Category V.) CATEGORY I CLAIMS The disputed Category I claims can be separated into two subcategories: services performed while an employee of a corporate employer and services performed while a recipient was hospitalized. As to both subcategories Petitioner argues that he has been prejudiced by Respondent’s delay in issuing the FAAR because Medicaid requires providers to retain medical records only for five years from the date of service.3 Although Respondent was dilatory in prosecuting this matter, Petitioner’s argument that Respondent should be barred (presumably on equitable grounds such as the doctrine of laches) should be rejected. Petitioner has cited no case law in support of his contention, and it is clear that any equitable relief to which Petitioner may be entitled should come from a court of competent jurisdiction, not from this forum or from an administrative agency. All billings for which there are no medical records justifying the services rendered should be denied. CATEGORY II CLAIMS The following findings as to the Category II claims are based on the testimony of the witnesses and on the information contained in the exhibits.4 Although nothing in the record prior to the final hearing reflects that position, Petitioner did not dispute most of the down-codings at the final hearing. Office visits, whether supported by a doctor’s note or a nurse’s note, for the sole purpose of administering IVIG treatment, will be discussed in the section of this Recommended Order dealing with Category V claims. The office visits, which were for the purpose of intravenous immunoglobulin (IVIG) treatment and for other reimbursable medical services, are set forth as part of the Category II disputes. The following findings resolve the Category II disputes. The date listed is the date the service was rendered. The billing code following the date is the billing code that is supported by the greater weight of the evidence. Recipient 1:5 01-20-98 99213 Recipient 2 09-27-96 99214 10-10-96 99213 11-13-96 99214 12-23-96 99212 02-24-97 99214 04-21-97 99213 04-28-97 99214 05-21-97 99213 06-02-97 99213 07-09-97 99213 07-23-97 99212 08-06-97 99213 08-11-97 99212 10-01-97 99213 10-10-97 99213 10-15-97 99214 10-21-97 99214 11-10-97 99213 12-08-97 99213 12-17-97 99213 12-29-97 99213 01-21-98 99213 Recipient 3 10-21-97 99213 11-04-97 99213 11-25-97 99213 12-16-97 99213 01-27-98 99214 02-26-98 99214 Recipient 4 01-03-98 99254 01-04-98 99261 01-05-98 99261 Recipient 5 09-29-97 99204 Recipient 6 11-11-97 99204 11-18-97 99213 Recipient 7 01-26-98 99204 02-23-98 99213 Recipient 8 09-26-96 99214 09-30-96 99213 10-03-96 99213 10-10-96 99212 10-25-96 99214 11-29-96 99213 12-04-96 99213 12-30-96 99213 01-22-97 99214 01-31-97 99211 02-14-97 99212 03-17-97 99214 04-04-97 99213 04-25-97 99212 05-30-97 99211 07-11-97 99213 08-08-97 99213 08-22-97 99213 09-05-97 99212 09-19-97 99214 10-31-97 99214 11-24-97 99214 12-03-97 99213 12-29-97 99213 01-09-98 99214 01-16-98 99213 01-30-98 99214 02-13-98 99214 Recipient 9 11-24-97 99203 Recipient 10 10-14-96 99205 11-04-96 99213 11-11-96 99213 11-25-96 99214 12-30-96 99213 01-27-97 99214 02-24-97 99214 03-10-97 99213 03-24-97 99212 04-07-97 99213 04-21-97 99214 05-05-97 99212 05-19-97 99213 05-21-97 Deny 06-09-97 99213 07-07-97 99212 08-04-97 99213 08-18-97 99213 09-24-97 992136 10-06-97 99213 10-10-97 99214 10-27-97 99213 11-10-97 99213 11-19-97 99214 11-24-97 99213 12-08-97 99213 02-02-98 99213 Recipient 11 06-30-97 99204 11-06-97 Recipient 12 Deny due to lack of documentation. 10-14-97 99213 11-06-97 99204 11-20-97 99213 12-16-97 99213 01-06-98 99213 Recipient 13 There are no Category II billings at issue for this Recipient. Recipient 14 There are no Category II billings at issue for this Recipient. Recipient 15 09-16-97 992157 Recipient 16 02-19-98 99212 Recipient 17 There are no Category II billings at issue for this Recipient. Recipient 18 There are no Category II billings at issue for this Recipient. Recipient 19 09-27-96 99212 10-01-96 99213 10-10-96 99213 10-23-96 99213 11-06-96 99213 11-20-96 99213 12-18-96 99211 12-30-96 Deny due to lack of 01-09-97 documentation. Deny due to lack of 01-22-97 documentation. 99211 02-05-97 99214 03-05-97 99214 03-19-97 99211 03-24-97 99214 03-26-97 04-02-97 Deny due to lack documentation. 99213 of 04-21-97 99213 05-05-97 99212 05-19-97 99213 06-02-97 99212 06-30-97 99213 07-07-97 99213 07-14-97 99213 07-28-97 99212 08-18-97 99213 08-25-97 99213 09-08-97 99213 09-15-97 99214 09-22-97 99213 10-28-97 99214 11-04-97 11-07-97 Deny due to lack documentation. 99213 of 11-24-97 99213 12-29-97 99213 01-12-98 99213 01-26-98 99213 02-19-98 99214 02-23-98 99213 Recipient 20 12-04-96 99204 12-13-96 99213 01-03-97 99213 01-17-97 99213 01-27-97 99213 02-07-97 99214 02-21-97 99213 03-07-97 99214 03-21-97 99212 04-04-97 99214 04-21-97 99212 05-06-97 99213 06-04-97 99213 06-13-97 99213 06-30-97 99213 07-14-97 99213 08-04-97 99213 01-19-98 99213 Recipient 21 04-29-97 99204 05-13-97 99214 05-16-97 99213 05-23-97 99212 06-09-97 99212 06-23-97 99212 07-11-97 99211 07-25-97 99213 08-11-97 99213 09-10-97 99213 11-05-97 99214 11-19-97 99213 12-22-97 99213 01-07-98 99214 01-21-98 99213 02-04-98 99213 Recipient 22 02-16-98 99205 02-20-98 99213 02-23-98 99213 Recipient 23 06-23-97 99215 10-02-97 992138 Recipient 24 There are no Category II billings at issue for this Recipient. Recipient 25 01-24-97 99213 02-07-97 99213 02-24-97 99212 03-10-97 99213 03-24-97 99212 05-05-97 99212 05-19-97 99212 06-02-97 99212 06-16-97 99212 07-14-97 99213 07-23-97 99212 07-28-97 99213 08-18-97 99213 08-25-97 99213 09-15-97 99213 10-01-97 99213 10-13-97 99213 10-27-97 99214 12-08-97 99213 12-22-97 99213 12-29-97 99213 01-13-98 99212 01-19-98 99214 02-02-98 99212 CATEGORY III As set forth in the Physician Coverage and Limitation Handbook (Respondent’s Exhibit 6), Petitioner is not entitled to billings for laboratory tests that were performed outside his facility by an independent laboratory. The only billing arguably in Category III is the billing for Recipient 1 on February 19, 1998. That billing should have been approved because it was for a urinalysis by dip stick or tablet that was administered and analyzed by Petitioner. It was not analyzed by an independent laboratory. CATEGORY IV All Category IV billings pertained to Petitioner’s supervision of his staff while patients were receiving treatments of IVIG. Those billings will be subsumed in the Category V billings discussion. CATEGORY V The alleged Category V overpayments relate to Petitioner’s IVIG treatment of Patients 2, 8, 10, 19, 20, 21, and 25, each of whom was an adult diagnosed with AIDS. In many of these cases a nurse administered the IVIG treatment. A dispute as to whether Petitioner properly supervised the nurse while he or she administered the IVIG treatment is moot because of the findings pertaining to the IVIG treatments set forth in Paragraphs 20 and 21. The Physician Coverage and Limitations Handbook requires that rendered services be medically necessary, as follows: Medicaid reimburses for services that are determined medically necessary and do not duplicate another provider’s service. In addition, the services must meet the following criteria: the services must be individualized, specific, consistent with symptoms or confirmed diagnosis of the illness or injury under treatment, and not in excess of the recipient’s needs; the services cannot be experimental or investigational; the services must reflect the level of services that can be safely furnished, and for which no equally effective and more conservative or less costly treatment is available statewide; and the services must be furnished in a manner not primarily intended for the convenience of the recipient, the recipient’s caretaker, or the provider. The use of IVIG in adult AIDS patients is not approved by the Federal Drug Administration (FDA). The use of a drug for a purpose other than the uses approved by the FDA is referred to as an “off-label” use. The off-label use of IVIG in adult AIDS patients is not effective either from a medical standpoint or from an economic standpoint. There was a conflict in the evidence as to whether any of the Recipients at issue in this proceeding had a medical condition or conditions other than AIDS that would justify the IVIG treatment administered by Petitioner. The following finding resolves that conflict. Utilizing applicable Medicaid billing criteria, the medical records produced by Petitioner fail to document that any of the Recipients at issue in this proceeding had a medical condition or conditions that warranted treatment with IVIG.9 All of Petitioner’s billings for IVIG treatments for Recipients 2, 8, 10, 19, 20, 21, and 25 were properly denied under the rationale of the FAAR’s Category V. Included in the billings that were properly denied were billings for office visits (whether documented by a doctor’s note or a nurse’s note) when the sole purpose of the office visit was the administration of an IVIG treatment.
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 adopting the Findings of Fact and Conclusions of Law set forth in this Recommended Order. It is further RECOMMENDED that the Final Order require that Petitioner repay the sum of the overpayment as determined by Respondent’s staff based on the Findings of Fact set forth in this Recommended Order. DONE AND ENTERED this 20th day of January, 2005, in Tallahassee, Leon County, Florida. S CLAUDE B. ARRINGTON 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 20th day of January, 2005.
The Issue Whether the petitions for formal administrative hearing filed by Petitioner in these consolidated cases should be dismissed as contended by Respondent? If not, whether Petitioner should be granted the relief sought in these petitions?
Findings Of Fact Based upon the record evidence and the factual stipulations entered into by the parties, the following Findings of Fact are made: Petitioner is a Florida Medicaid provider. Its provider number is 027856400. Paragraph 8 of the provider agreement that it entered into with the Department provides that it 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." The Department is the state agency that administers the Florida Medicaid program. The Department's Medicaid Program Integrity Unit audits and investigates claims for reimbursement submitted by Florida Medicaid providers. John M. Whiddon is Chief of the Unit. Ellen Williams is one of his subordinates. In November, 1991, Whiddon received a letter from the Director of the Auditor General's Fraud Control Unit. The body of the letter read as follows: The Florida Medicaid Fraud Control Unit is currently in the process of conducting a criminal investigation of [Petitioner]. Our investigation has established that there is a basis for criminal prosecution for the billing of services not rendered and for providing treatment that was not prescribed (there were no treatment plans). As of today's date the provider's YTD earnings are in excess of $444,000. I believe that a review of the claims submitted the last 90-120 days will indicate a high volume of the claims being false and that you may want to proceed administratively to stop the improper claims. Shortly after receiving this letter, Whiddon ordered that each of Petitioner's claims be subjected to prepayment review. On February 17, 1992, Petitioner filed with the Department his petition requesting an award of "damages in excess of $10,000.00." The petition contains four counts. Count I of the petition alleges that "[i]n refusing to reimburse [Petitioner] for services rendered, [the Department] has violated Section 409.266, et seq., Fla. Stat." Count II of the petition alleges that "[i]n refusing to reimburse [Petitioner] for services rendered and failing to notify [Petitioner] of [the Department's] intent to withhold any payment due [Petitioner], [the Department] has violated Rule 10C-7.060, et seq., Fla. [Admin. Code]." Count III of the petition alleges that "[b]y withholding monies due and owing to [Petitioner] for services rendered without prior notice to [Petitioner], in violation of its own rules and regulations, and failing to provide for any procedure for a post-deprivation hearing, [the Department] violated [Petitioner's] due process rights." Count IV of the petition alleges that "[the Department] has breached its agreement to reimburse [Petitioner] for services rendered." Each of the foregoing counts contained the following prayer for relief: WHEREFORE, Our Lady requests this Court enter judgment against HRS for compensatory damages, attorneys' fees, costs and interest and such other relief as the Court deems just and proper. On March 7, 1992, Petitioner received a letter from Whiddon, dated January 28, 1992. The body of the letter read in part as follows: In accordance with 42 CFR 455.23, the Department of Health and Rehabilitative Services is withholding payments for Medicaid claims submitted by Our Lady Health Care Services. Based on our review of a sample of your home health records for the period February 1, 1991-November 30, 1991, we find evidence of willful misrepresentation on your part. Your home health records revealed that: You billed for services for which there was not a valid treatment plan, and You billed for nursing and aide services that were not documented as having been provided. As stated in 42 CFR 455.23, this action is temporary and will not continue after: the department determines that there is insufficient evidence of willful misrepresentation by the provider; or legal proceedings related to the provider's alleged willful misrepresentation are completed. In accordance with 42 CFR 455.23, you have the right to submit written evidence for consideration by the department. If you have such evidence, please send it to Ms. Ellen D. Williams, 2002 Old St. Augustine Road, Suite B-10, Tallahassee, Florida 32301. Pursuant to Section 120.57, Florida Statutes (F.S.) and Rule Section 10- 2.056, Florida Administrative Code (F.A.C.) you may request either a formal or informal hearing on the department's action. Your request for such hearing must be received by the department within 30 days of the date you received this letter. A request for informal hearing must be in writing and a request for formal hearing must be in the form of a petition in compliance with Rule Section 28-5.201, F.A.C. Either request must be substantive and state clearly the specific actions to which you object and why you object to them. . . . The purpose of either a formal or informal hearing is to determine whether the action taken in this letter is within the authority of the Department of Health and Rehabilitative Services and in accordance with the department's applicable rules and policies. . . . If a hearing request is not received within 30 days from the date of receipt of this letter, the right to such hearing is waived. On March 19, 1992, Petitioner filed a petition with the Department requesting a formal hearing on the matter. On June 4, 1992, Whiddon sent Petitioner a letter. The body of the letter read as follows: Please be advised that this office has concluded its investigation of Our Lady Health Services, pursuant to 42 CFR 455.23. Based upon this investigation, your claims are now pended for medical review pursuant to Section 409.913(2), Florida Statutes. Please forward copies of all supporting documentation for those claims which are now in pend status. Attached hereto are the claims which are the subject of this review. The supporting documentation must be received by this office within 30 days of receipt of this letter. If you have any questions, please contact Ms. Ellen Williams at (904) 488- 3588. As of June 8, 1992, the date of the final hearing in these cases, the Department had not made any official determination regarding overpayments made to Petitioner, nor had it decided to pay or deny the pended claims. These matters were still under review and investigation.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Health and Rehabilitative Services enter a final order dismissing the petitions filed by Petitioner in these consolidated cases. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 4 day of August, 1992. STUART M. LERNER 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 4 day August, 1992.
