Conclusions THE PARTIES resolved all disputed issues and executed a Settlement Agreement. The parties are directed to comply with the terms of the attached settlement agreement, attached as Exhibit “1.” Based on the foregoing, this file is CLOSED. DONE and ORDERED on this the /S Hay of Kfar . 2014, in Tallahassee, Florida. XN eth A fe. Agency for Health Care Administration Filed April 16, 2014 10:25 AM Division of Administrative Hearings A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHING 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Horace Dozier Field Office Manager 2727 Mahan Drive, MS 6 Tallahassee, Florida 32308 (Via Interoffice Mail) Julie Gallagher, Esquire Akerman Senterfitt 106 East College Avenue Suite 1200 Tallahassee, Florida 32301 (Via US Mail) Shena Grantham, Esquire Agency for Health Care Administration 2727 Mahan Drive, MS 3 Tallahassee, Florida 32308 (Via Interoffice Mail) Eric Miller, Inspector General Agency for Health Care Administration 2727 Mahan Drive Building 2, MS 4 Tallahassee, Florida 32308 (Via Interoffice Mail) Katherine B. Heyward, Esquire Agency for Health Care Administration 2727 Mahan Drive, MS 3 Tallahassee, Florida 32308 (Via Interoffice Mail) Agency for Health Care Administration Bureau of Finance and Accounting 2727 Mahan Drive Building 2, MS 14 Tallahassee, Florida 32308 (Via Interoffice Mail) Rick Zenuch, Chief Medicaid Program Integrity 2727 Mahan Drive Building 2, MS 6 Tallahassee, Florida 32308 (Via Interoffice Mail) Bureau of Health Quality Assurance 2727 Mahan Drive, MS 9 Tallahassee, Florida 32308 (Via Interoffice Mail) Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (Via US Mail) Shawn McCauley, Medicaid Contract Manager Agency for Health Care Administration 2727 Mahan Drive, MS 22 Tallahassee, Florida 32308 (Via Interoffice Mail) iS) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to Richard Shoop, Esqu ire Agency Clerk State of Florida Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 STATE OF FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION, Petitioner, Case No.: 12-193PH A Provider No.: 049207800 Cl. No.: 12-1060-000 DAVID M. KENTON, Respondent. / SETTLEMENT AGREEMENT. The STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION (hereinafter “AHCA” or “the Agency”), and DAVID M. KENTON (hereinafter “Dr. Kenton”), by and through the undersigned, hereby stipulate and agree as follows: RECITALS A. These Recitals are true and correct to the best knowledge of the parties. B, AHCA is the single state agency responsible for Medicaid in the state of Florida. c. A Medicaid provider must enter into an agreement with AHCA in order to receive payments for services rendered under the Medicaid program. D. DAVID M, KENTON is a Medicaid provider in the State of Florida, provider number 049207800, E, On August 20, 2010, Dr. Kenton entered a plea of guilty to one count of conspiracy in violation of 18 U.S.C. Sec. 371; and on November 10, 2010, Dr. Kenton was found guilty of the charge in the United States District Court, Southern District of Florida, Case No. 09-60344-CR-MARRA, (26803191;1}Page 1 of 6 ea {2680319151} On November 30, 2011, AHCA sent Dr. Kenton a letter notifying him of AHCA’s intent to terminate for cause, pursuant to Florida Statute 409.913(13) and Rule 59G-9,070 Florida Administrative Code, his participation in the Medicaid program as a result of his conviction in the federal court action described above. On June 13, 2012, the State of Florida Board of Medicine (hereinafter “the Board”) entered a Final Order in DOH Case No, 2010-22219, Department of Health v. David Mitchell Kenton, M.D. pursuant to a Settlement Agreement. The Settlement Agreement provides, inter alia, that Dr. Kenton would be permitted to continue to practice medicine under certain terms and conditions; the Board allowed Dr. Kenton to renew his Florida medical license; and the Board recognized that Dr, Kenton was placed on the List of Excluded Individuals and Entities (LEIE) maintained by the Office of Inspector General with the Federal Department of Health and Human Services before that law, which would disqualify him from license renewal, became effective. On June 21, 2012, Dr. Kenton filed a request for hearing in this matter. The Parties have agreed to settle the matter addressed in the recitals, By execution of this Settlement Agreement, the parties affirm, warrant and represent that they have full and complete authority to enter into this Settlement Agreement and settle the matters addressed herein. AGREEMENT In consideration of the mutual promises and agreements set forth herein, the Parties agree as follows 1. {26803191,1} The parties agree that Dr. Kenton shall be immediately terminated from the Florida Medicaid program and that the termination shall be for “no cause.” Dr, Kenton agrees that the thirty (30) day notice period from the date of the November 30, 2011 termination letter has run. Dr, Kenton agrees that he will never again apply to the Florida Medicaid program regardless of his status with the Office of the Inspector General with the Federal Department of Health and Human Services. Dr. Kenton agrees that, regardless of his status with the Office of the Inspector Genera! with the Federal Department of Health and Human Services, AHCA has full discretion to deny any application Dr. Kenton submits to the Florida Medicaid program regardless of the reason for such denial. Dr. Kenton agrees to reimburse AHCA five thousand ($5,000.00) dollars for costs incurred in this matter. Dr, Kenton agrees to pay the costs within sixty (60) days of the date of the Final Order herein, This Agreement is expressly contingent upon the condition that neither Dr. Kenton nor anyone in his immediate family (to include any spouse, child, or parent of Dr. Kenton) shall own a health care facility within the State of Florida. Payment shall be made to: AGENCY FOR IIEALTH CARE ADMINISTRATION Medicaid Accounts Receivable 2727 Mahan Drive, M.S. #14 Tallahassee, Florida 32308-5403 9. Failure to pay the costs within the said sixty (60) days shall result in this Settlement Agreement being nul! and void and the case shall return to is pre- settlement status, 9. AHCA reserves the right to enforce this Agreement under the laws of the State of Florida, the rules of the Medicaid Program, and all other applicable rules and regulations. 10. Other than the cost reimbursement provided for herein, each party shal! bear its own attorney's fees and costs. IL. This settlement docs not constitute an admission of wrongdoing or error by either party with respect to this case or any other matter, The costs reimbursed by Dr. Kenton are not a sanction or penalty. 12, The signatories to this Agreement, acting in a representative capacity, represent that they are duly authorized to enter into this Agreement on behalf of the respective parties. 13. This Agreement shall be construed in accordance with the provisions of the laws of Florida. Venue for any action arising from this Agreement shall be the Circuit Court located in Leon County, Florida. 14, This Agreement constitutes the entire agreement between Dr. Kenton and AHCA, including anyone acting for, associated with or employed by them, concerning all matters, and this Agreement supersedes any prior discussions, agreements of understandings; there are no promises, representations or agreements between Dr. Kenton {2680319151} and AHCA other than as set forth herein. No modification or waiver of any provision shall be valid unless a written amendment to the Agreement is completed and properly executed by the parties, 15. This is an Agreement of Settlement and Compromise, made in recognition that the parties may have different or incorrect understandings, information, and contentions as to facts and law, and with each party compromising and settling any potential correctness or incorrectness of its understandings, information and contentions as to facts and law, so that no misunderstanding or misinformation shall be a ground for rescission hereof. 16. Dr. Kenton expressly waives in this matter his right to any hearing pursuant to Sections 120.569 or 120.57, Florida Statutes, any making of findings of fact and conclusions of law by the Agency, and all further and other proceedings to which he may be otherwise entitled to under the law or the rules of the Agency regarding this proceeding and the issues raised herein. Dr. Kenton further agrees that he shall not challenge or contest any Final Order entered in this matter which is adopts the terms of this Settlement Agreement in any forum available to it now or in the future, including its right to any administrative proceeding, circuit or federal court action, or any appeal. 17. This Agreement is and shall be deemed jointly drafted and written by all parties to it, and shall not be construed or interpreted against the party originating or preparing it. 18, To the extent that any provision of this Agreement is prohibited by law for any reason, such provision shall be effective to the extent not so prohibited, and such prohibition shall not affect any other provision of this Agreement. (26803191;1} fl { 19, Ths Agreement shall inure to the benefit of and be binding on each party's successors, assigns, heirs, administrators, representatives and trustees. 20. All times stated herein ate of the essence in this Agreement. 21, This Agreement shall be in full force and effect upon execution by the respective parties, Dated: Oetemhat 37 2013 Dated: Wy 2013 106 East College Avenne, Ste. 1200 Tallahassee, FL 32301 Attorney for Respondent AGENCY FOR HEALTH CARE , ; ; ADMINISTRATION a 2727 Mahan Drive, Bldg. 3, Mail Stop #3 seg, FL 32308-54 - ; ye ‘ Dated: 4, Sy ‘Lr a ies, ’ / . . , Erle Miller oS Inspector Gprietgl a oa o> en y freA 6m ee Dated: Stuart Williams, Esq. 0 Dated: Al & af fof General Counsel Chief Medicaid ounsel ; ave a nae oats Fyesl Y, _e oe ~ : ‘ oy Shena L. Grant Esq. oo , {26800911} -,
Findings Of Fact On August 23, 1995, the undersigned entered a Recommended Order in DOAH Case 94-1365. The Petitioner in that proceeding was Billy Beeks, M.D., and the Respondent was the Agency for Health Care Administration (AHCA). At issue in that proceeding was whether Dr. Beeks had been overpaid by the Medicaid program. The Recommended Order contained extensive findings of fact, including findings as to the appropriate levels at which certain services should have been billed to the Medicaid program by Dr. Beeks. It was concluded that because certain of his services were billed at levels higher than justified by Medicaid protocol, Dr. Beeks had been overpaid by the Medicaid program. Because the calculation of such overpayments are done by computer, it was recommended that the overpayment be recalculated based on the findings of fact contained in the Recommended Order. On October 19, 1995, Douglas M. Cook, Director of AHCA, entered a Final Order in DOAH Case 94-1365. That Final Order adopted the findings of fact and conclusions of law contained in the Recommended Order and provided, in pertinent part, as follows: The dollar amount of the overpayment liability shall be calculated based on the findings and conclusions made by the hearing officer. The amount of the overpayment claimed by AHCA at the beginning of the hearing in DOAH Case 94-1365 was $50,852.56. An overpayment to Medicaid is calculated by computer using a statistical analysis of a sampling of the provider's billings to Medicaid. AHCA asserted that the level at which Dr. Beeks had billed Medicaid for certain of these services in the sample was excessive. It was found in that underlying proceeding that while Dr. Beeks had billed certain of his services at excessive levels as asserted by AHCA, some of the challenged billings were not excessive and others were not as excessive as asserted by AHCA. Logically, one would expect that the recalculation of overpayment would result in a smaller figure than that claimed prior to the hearing. Following the entry of the Final Order, Vickie Givens, an employee of AHCA, made a detailed analysis of the evidence presented at the formal hearing, including the deposition of Joni Leterman, M.D.. Ms. Givens compared her analysis with the findings of fact contained in the Recommended Order and discovered certain billings by Dr. Beeks that she believed should have been included in the Recommended Order as being excessive. 1/ These billings were not included in the Recommended Order and, consequently, were not incorporated by reference into the Final Order. Thereafter the overpayment was recalculated by an appropriately trained AHCA employee. As instructed, this employee included in the recalculation of the overpayment the additional billings for the services identified by Ms. Givens, but not included in the Recommended Order. AHCA staff recalculated the amount of the overpayment to Dr. Beeks to be $51,745.13, which is slightly higher than the amount claimed prior to the hearing in DOAH Case NO. 94-1365. The figure that resulted from this recalculation was higher than it would have been had these additional billings not been included.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order that adopts the findings of fact and conclusions of law contained herein and that the Agency recalculate the total amount of the overpayment during the audit period based solely on the findings of fact contained in the Recommended Order in DOAH Case 94-1365. DONE AND ENTERED this 8th day of July, 1996, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, 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 8th day of July, 1996.
The Issue The issue for determination is whether Petitioner must reimburse Respondent an amount up to $269,456.35, which sum Petitioner received from the Florida Medicaid Program in payment of claims arising from Petitioner's treating of AIDS patients with infusions of intravenous immune globulin between January 1, 1996, and August 11, 2000. Respondent contends that Petitioner is not entitled to retain the payments in question for several reasons, the principal one being that the subject treatments allegedly were not medically necessary.
Findings Of Fact Background Petitioner Patrick Cadigan, M.D. ("Cadigan") is a physician who has been licensed to practice medicine in Florida since 1988. Board certified in internal medicine, Cadigan specializes in the treatment of patients with HIV infection and AIDS.2 At all times relevant to this case, Cadigan practiced in Miami-Dade County. Respondent Agency for Health Care Administration ("AHCA" or the "Agency") is the state agency responsible for administering the Florida Medicaid Program ("Medicaid"). Cadigan was, at all relevant times, a Medicaid provider. From time to time, therefore, he had entered into various written contracts with the Agency, which will be referred to collectively as the "Provider Agreement." During the relevant time frame, from 1996 to 2000, Cadigan saw patients in two separate clinics, one in North Miami and the other in Miami Beach. Cadigan had a separate Medicaid Provider Number for each office. Around the mid-1990s, Cadigan began infusing some of his AIDS patients with intravenous immune globulin ("IVIG"). IVIG is a biological product derived from blood. Its use in treating adult AIDS patients was controversial, if for no other reason because there was relatively little data on the efficacy of IVIG replacement therapy as an AIDS treatment.3 Some studies, however, had concluded that IVIG could, in fact, be used to beneficial effect in the treatment of AIDS. The most important of these studies, according to the instant record, was conducted by Dr. Michael Kiehl at the University of Munster, Germany, between August 1991 and June 1994 (the "Kiehl Study"). In December 1996, an article reporting on the Kiehl Study was published in the American Medical Association's Archives of Internal Medicine. In this article, Dr. Kiehl and his research colleagues stated their conclusion that the prophylactic use of IVIG therapy to treat AIDS patients "decreases the frequency of serious infections and is associated with a reduction of hospitalization for short-term care." It should be noted that the Kiehl Study did not purport to be the last word on the issue of IVIG therapy as an AIDS treatment; while confident that the results of their "randomized open study" had demonstrated the "obvious benefits of [IVIG] treatment," the Kiehl Study's authors nevertheless acknowledged that "a double-blinded, placebo-controlled study [was] urgently needed." Cadigan was impressed by the Kiehl Study. The results of the Kiehl Study were consistent with Cadigan's empirical findings that his patients seemed to feel healthier, have fewer infections, and otherwise respond positively to treatment with IVIG. Cadigan was not alone in prescribing IVIG for AIDS patients in the 1990s. In fact, quite a few physicians, mostly in South Florida, were billing Medicaid for this treatment——so much so that AHCA began to take notice. At around $1,800 per infusion, IVIG was relatively expensive, and the Agency became concerned about the amount of money that Medicaid was spending on IVIG replacement therapy for AIDS patients. In 1995, the Agency started identifying Medicaid providers who were prescribing IVIG, for the purpose of auditing them. The first provider to be audited was the Mayer Foundation, a clinic in Miami that primarily treated AIDS patients. The Agency conducted the audit using a so-called "generalized analysis," or "GA" for short. In a GA audit, the provider's claims history is reviewed for policy violations—— usually of an obvious nature. One such a violation, as an example, would be billing for an office visit and a urinalysis with respect to a single patient on the same day. Medicaid will not pay both charges, on the theory that the urinalysis should be included in the office visit. A generalized analysis can spot this kind of policy violation without resort to reviewing individual patient's charts. In the case of the Mayer Foundation, the putative violation was less obvious, because Medicaid did not have a policy specifically prohibiting the use of IVIG in the treatment of AIDS patients. However, because Medicaid only reimburses providers for medically necessary services, there is effectively a general prohibition against any and all treatments that can retrospectively be deemed medically unnecessary. Thus, as part of the GA audit of the Mayer Foundation, the Agency consulted with a physician peer reviewer, Dr. Scott Folk, who gave the opinion that IVIG was not a medically necessary——and hence not a Medicaid compensable——treatment for patients with AIDS. Dr. Folk's opinion became the basis of an incipient policy of exclusion regarding IVIG——a policy that could easily be applied using the GA auditing method. In due course, other South Florida Medicaid providers known to be prescribing IVIG, including Cadigan, came under AHCA's scrutiny as well. In January 1996, AHCA asked Cadigan to produce the records of five patients, which he did.4 After receiving these records on February 8, 1996, the Agency forwarded them to Dr. Folk for review. On April 18, 1996, Dr. Folk again gave AHCA his opinion that IVIG was not a medically necessary treatment for patients with AIDS. After that, Dr. Folk refused to review additional medical records until his (and the Agency's) opinion that IVIG was not a medically necessary treatment for AIDS had been vetted in an administrative proceeding. Consequently, the Agency decided to demand recoupment from the Mayer Foundation and pursue that demand as a test case. In the meantime, the audit of Cadigan was put on hold pending the outcome of the test case. The Agency did not notify Cadigan that emerging Medicaid policy deemed IVIG medically unnecessary for the treatment of AIDS patients.5 As it happened, the case against the Mayer Foundation was settled before an administrative hearing was had. To proceed with the audits of Cadigan and others, the Agency decided to obtain a second opinion on medical necessity, so it sent various providers' medical records to Dr. Margaret A. Fischl at the University of Miami School of Medicine. Although these records remained with Dr. Fischl for about a year and half, she did not render an opinion for the Agency, one way or the other, regarding the efficacy of IVIG. As a result, the Agency retrieved the documents from Dr. Fischl and sought out another suitable peer reviewer. In November 1998, the Agency retained Dr. Joseph W. Shands, Jr., a professor at the University of Florida College of Medicine, as its peer reviewer. At the time, Dr. Shands was 68 years old and partially retired, although he was still seeing patients, including persons with AIDS. (Dr. Shands was fully retired as of the final hearing.) Dr. Shands believed, as had Dr. Folk, that IVIG replacement therapy was not medically indicated for AIDS patients. After being hired as the Agency's expert, Dr. Shands reviewed the medical records that the Agency had gathered from Cadigan two years earlier. In October 1999, he told the Agency that there was "no justification" for Cadigan's having prescribed IVIG for his AIDS patients. Based upon Dr. Shands's opinions and its audit of Cadigan's claims-payment history and selected medical records, the Agency issued two Final Agency Audit Reports on July 31, 2001——one report for each of Cadigan's offices. In these reports, the Agency alleged that Cadigan had been overpaid $28,020.38 and $241,435.97, respectively, for Medicaid claims involving IVIG infusions. (Later, on August 21, 2002, the Agency would issue an Amended Final Agency Audit Report concerning the alleged $241,435.97 overpayment which added additional grounds for recovering such amount.) On January 8, 2002, the Agency published its policy regarding IVIG as a so-called "Banner Notice," that is, a statement inscribed upon the remittance vouchers sent to physicians participating in Medicaid. One of the first public pronouncements of the Agency's policy,6 the Banner Notice advised providers that Medicaid coverage for IVIG would be limited to specified diagnoses. Some of the Medicaid authorized uses of IVIG were "off-label" (meaning not FDA-approved) uses. As a preface to the ultimate factual determinations, issue-framing findings will next be made regarding the parties' respective positions. The Agency's Case As pleaded, the Agency' main theory of recovery was premised on the "policy" that IVIG replacement therapy is not a medically necessary treatment for AIDS patients.7 The Agency further alleged, as distinct but related grounds, that this use of IVIG was "experimental," "clinically unproven," and not FDA- approved (i.e. "off-label"). In its Amended Final Agency Audit Report issued on August 21, 2002, the Agency added, with regard to the alleged $241,435.97 overpayment, that (a) Cadigan's medical records failed to demonstrate the medical necessity of the IVIG treatments for which Medicaid had reimbursed him and (b) Cadigan was unable to produce documents proving that he had had enough IVIG on hand at the relevant times to dispense to his patients in the quantities shown in the claims at issue. On the question of medical necessity, the Agency's expert witness at hearing was Dr. Shands, whose opinion remained that IVIG therapy is not appropriate for AIDS patients because it affords little or no benefit at great cost.8 Dr. Shands did allow that IVIG might be medically necessary for AIDS patients who happened also to be diagnosed with a separate (perhaps secondary) condition such as thrombocytopenia, for which IVIG would be indicated. But this possibility did not amount to an exception to his negative opinion regarding the treatment of AIDS patients with IVIG because in such instances the AIDS diagnosis would be neither determinative nor even especially relevant; instead, the other condition (e.g. thrombocytopenia) would drive the determination of medical necessity.9 Dr. Shands also reviewed the medical charts of the 28 patients whose treatments led to the alleged $241,435.97 overpayment. Specifically, Dr. Shands looked in the charts for evidence that a particular patient or patients might have had one of the several conditions, besides AIDS, that reasonably could have been treated, in his opinion, with IVIG replacement therapy. He found one——Patient #6——whose IVIG infusions were, in his opinion, medically necessary. With regard to the other patients, Dr. Shands found nothing in the medical records justifying the use of IVIG. On other issues, Dr. Shands essentially disclaimed the Agency's contention that the use of IVIG in the treatment of AIDS patients was "experimental." He also acknowledged that IVIG is (and was, at all relevant times) an FDA-approved product. Dr. Shands conceded that some off-label uses of IVIG are medically necessary and thus Medicaid compensable.10 In short, Dr. Shands's testimony did not persuasively support the Agency's allegations that the claims at issue should be denied on grounds that the use of IVIG to treat AIDS patients was experimental or not FDA-approved. In support of its allegation that Cadigan's medical records failed adequately to document medical necessity, the Agency offered (in addition to Dr. Shands's testimony) the charts of 28 patients. After the final hearing, the Agency agreed to remove six of these patients from the audit. One, just mentioned, was Patient #6. The others were Patient ##7, 11, 19, 21, and 26. The total dollar amount of the claims associated with these six patients is $3,980.78, which sum, the Agency stipulated, could be subtracted from the original demand of $241,435.97. After these adjustments, therefore, the relevant documentary evidence regarding Cadigan's medical records comprises 22 patient-charts, and the total demand for recoupment in connection with this group of patients is $237,455.19. With regard to the allegation that Cadigan was unable to produce documentary evidence of his IVIG inventory, the evidence is undisputed: Cadigan admitted that he possessed no records showing that he had purchased IVIG for resale to his patients. Cadigan's Case Cadigan challenged the Agency's case along two fronts. First, he sought affirmatively to prove that the IVIG treatments at issue were, in fact, medically necessary. Second, he raised several points as affirmative defenses. On medical necessity, Cadigan testified credibly that his patients actually benefited from IVIG replacement therapy. He claimed——and the evidence does not disprove——that his patients felt better, had more stamina, needed fewer hospitalizations, had fewer infections, and experienced fewer neuropathies, when treated with IVIG. While this sort of "anecdotal evidence" is not the equivalent of data from a controlled clinical study, it is some evidence, at least, that the treatment works for some patients some of time. There is little evidence in the record of a technical nature explaining how or why IVIG might benefit AIDS patients. Cadigan described his understanding of the operation of IVIG in laymen's terms, stating that the product provides a temporary (approximately one month) boost to the patient's immune system, which protects the patient against opportunistic infections and other complications of immunosuppression until other types of treatment allow the patient's immune function to improve. One important indicator of the health of a patient's immune system is his CD4-cell count. A normal, healthy immune system will produce a CD4-cell count, which is measured through a blood test, in the range between 500 and 1800. A count below 200 is generally considered a sign that AIDS has developed. Cadigan testified that many of the patients whose treatment is at issue had CD4-cell counts below 200 and that some had counts in double or single digits.11 Cadigan also testified that many of his patients had blood disorders secondary to AIDS that required treatment with IVIG. These disorders were thrombocytopenia, which is characterized by low blood platelet counts; agranulocytosis, which results in low white blood cell counts; and neutropenia, a condition manifested by low neutrophil counts in the blood. As Cadigan further pointed out, the Agency's existing policy recognizes that IVIG might be medically indicated for the treatment of these illnesses.12 As mentioned, Cadigan urges, through a number of positions that are effectively affirmative defenses, that he should not be liable to Medicaid even if the IVIG treatments at issue be found medically unnecessary. A summary of his principal defenses follows. Unadopted rule. Cadigan maintains that the Agency's policy——that IVIG is not a medically necessary treatment for AIDS——is a statement of general applicability meeting the definition of the term "rule" set forth in Section 120.52(15), Florida Statutes.13 He contends that the Agency should be precluded from relying upon the policy because it failed properly to adopt the policy as a rule, in violation of Section 120.54(1)(a). Breach of Duty. Cadigan claims that, in early 1996, the Agency knew (or at least was inclined to believe) that IVIG was not medically necessary for AIDS patients and also knew that Cadigan was actively prescribing IVIG for his AIDS patients, yet failed immediately to tell Cadigan that IVIG was likely to be declared noncompensable, allowing him to run up several years' worth of alleged overpayments that could have been avoided. Cadigan contends, in short, that the Agency breached a duty to prevent him from continuing to prescribe IVIG to his Medicaid- covered AIDS patients. Cadigan suggests various sources of this duty, including public policy, tort law, and an Internal Operating Procedure that requires the Agency to notify a provider of proposed agency action "[w]hen . . . a determination of . . . a violation [of Medicaid law]" has been made. Such a duty is not, however, imposed under federal law, the state Medicaid statutes or rules, or the Medicaid Provider Agreement. Waiver and Estoppel. Cadigan asserts that the Agency should be barred from recovery in this case under equitable principles borrowed from federal Medicare law, which latter forgives providers for overpayment liability if (to oversimplify) they are without fault. The inherent weakness in this argument——which Cadigan concedes——is that, for whatever reasons, neither Congress nor the Florida Legislature has chosen to include similar provider protections in the Medicaid laws. As additional and alternative grounds for waiver or estoppel, Cadigan again points to the Agency's conduct in paying claims for IVIG despite having decided (without telling Cadigan) that such treatment was medically unnecessary. Lack of Peer Review. Cadigan attacks the evaluation of his professional practices by Dr. Shands as violative of the statutory requirements for peer review. This attack takes two distinct forms. One focuses primarily on the fact that Dr. Shands was in the process of retiring when he began his review and was fully retired as of the final hearing. Thus, Cadigan claims, Dr. Shands was not in "active practice" as required by Section 409.9131(2), Florida Statutes. The other relies on the fact that Dr. Shands (evidently) did not review the charts of the patients whose treatments led to the alleged $28,020.38 overpayment. On this latter point, it should be noted that there is no testimony specifically relating to these patients, and their medical records are not in evidence.14 Third-Party Records Custodian. As an explanation for his failure to produce inventory records, Cadigan states that he was an employee of Home Patient Care of America, Inc. ("HPC") from September 1995 until March 1998, and that HPC not only purchased the medications (including IVIG) that Cadigan dispensed but also maintained the records of these transactions. Unfortunately for Cadigan, however, HPC later went out of business, and Cadigan was unable to obtain the records showing that IVIG had been bought in sufficient amounts to support the Medicaid claims at issue. AHCA did not refute Cadigan's evidence in this regard. Instead, it maintains that Cadigan, as the Medicaid provider, was personally responsible for maintaining the records. Thus, claims the Agency, the fact that HPC kept the records (and perhaps lost them) is no defense. (The Agency might have added that, even if this were a defense, it would not be a great one, because, as will be seen, the majority of the infusions in question occurred after March 1998, when Cadigan presumably was again in control of all his records.) Ultimate Factual Determinations The Policy. The undersigned agrees with Cadigan that, at some point prior to the final hearing, but not later than the date of the Banner Notice, the Agency's policy of denying Medicaid coverage for "medically unnecessary" IVIG replacement therapy (when administered as a treatment for AIDS) matured into a statement of general applicability that prescribes Medicaid policy. It is determined, therefore, that this policy of IVIG exclusion is a rule-by-definition. See § 120.52(15), Fla. Stat. (definition of "rule"). This finding is of limited utility, however, because Cadigan did not file an original petition with DOAH challenging the Agency's policy pursuant to Section 120.56(4), Florida Statutes. As a result, the undersigned does not have jurisdiction in this action to determine whether the Agency violated Section 120.54(1)(a), Florida Statutes. Further, Cadigan never notified the Agency that he might be seeking relief pursuant to Section 120.57(1)(e), Florida Statutes. Thus, the undersigned is constrained not to subject the policy to a de novo review in accordance with Section 120.57(1)(e).15 The question next arising is whether the Agency established an adequate factual predicate for its policy. In this regard, it is determined that, at least as of the final hearing, the Agency had reasonable, nonarbitrary grounds for a general policy of exclusion with regard to IVIG as a treatment for AIDS.16 The Agency's general policy of exclusion was supported by such considerations, taken together, as IVIG's efficacy (which is fairly debatable), cost (which is high), and availability (which is limited).17 Here, the undersigned must make——and emphasize——a negative finding: The evidence, taken as a whole, does not establish that IVIG was never medically necessary for any AIDS patient during the relevant period.18 That is, the Agency's policy of exclusion was not justified solely on the basis that IVIG was an ineffective treatment for AIDS patients in the years 1996 through 2000.19 Rather, the general policy, as proved, admits the possibility that medical necessity might exist in a given instance. Thus, the Agency's proving-up of its policy- based exclusion is not the equivalent of demonstrating that the IVIG treatments in question were not medically necessary for the individual patients whom Cadigan cared for between 1996 and 2000.20 The upshot is that the Agency's policy-based exclusion, as proved, cannot be applied to deny coverage for the subject treatments, which might otherwise have been within Medicaid coverage per the governing laws and Provider Agreement in effect at the time services were provided.21 Thus, medical necessity must be determined in this case on a patient-by- patient basis. The patients. To make patient-specific determinations of medical necessity, the undersigned carefully reviewed the charts in evidence, as well as the testimony provided by Doctors Shands and Cadigan. In the course of this review, it became apparent that the most relevant patient-data were those pertaining to a patient's condition at or around the time of a disputed infusion. This is because: (a) most of the charts cover several or more years of treatment; (b) patients' conditions, generally speaking, were fluid, getting better or worse over time; and (c) although the audit period covers four years, seven months, and 11 days, 90 percent of the disputed infusions occurred in 1998 and 1999.22 Thus, the undersigned determined that if a patient received, say, one disputed infusion in February 1999, that patient's condition in February 1996 would not be relevant in deciding whether the disputed infusion was medically necessary.23 It was then determined a "snapshot" of these patients' conditions on the relevant dates could be obtained from the blood test results, which for most of these patients are available on a monthly basis. Based on the testimony presented at hearing, the undersigned decided to focus on five lab values: CD4-cell count ("CD4"); absolute neutrophil count ("ANC"); white blood cell count ("WBC"); platelet count ("PLT"); and the CD4/CD8 ratio. Based on the evidence in this case, the undersigned developed the following framework for determining medical necessity in a given patient's case.24 Medical necessity would be established for a particular infusion if, at or around the time of the disputed infusion, the patient met one of the following profiles: The patient's CD4 count was less than 200 and at least one of the following lab values was out-of-range: ANC, WBC, PLT, and CD4/CD8 ratio (collectively the "Other Results"). The patient's CD4 count was 200 or greater but less than 500 and at least two of the Other Results were abnormal. (1) (a) The patient's CD4 count was less than 200; (b) The patient's CD4 count was 200 or greater but less than 500 and at least one of the Other Results was abnormal; or (c) Any two of Other Results were abnormal; and (2) contemporaneous clinical progress notes specifically document a condition or conditions suggesting a significant impairment of immune function, such as recurrent serious infections. To implement this decisional framework, the undersigned extracted the relevant data from the charts and recorded such data on tables created for each of the 22 patients. The tables are hereby incorporated by reference in this Recommended Order. The original tables will be transmitted to the Agency as Appendix A of the Confidential Appendix to this Recommended Order.25 (A copy of the entire Confidential Appendix will be provided to all counsel of record.) Next, on separate tables, the undersigned recorded each of the dates of service in question for the 22 patients, and noted whether, on these dates, the patient met either Profile A, B, or C as described above. The tables showing this information are hereby incorporated by reference in this Recommended Order. The original tables will be transmitted to the Agency as Appendix B of the Confidential Appendix to this Recommended Order. Finally, on separate tables, the undersigned recorded the disallowed claims per patient, according to dates of service, claim code, and amount. This facilitated the computation of a per-patient overpayment. The sum of these per- patient overpayments equals the total overpayment. The tables showing this information are hereby incorporated by reference in this Recommended Order. The original tables will be transmitted to the Agency as Appendix C of the Confidential Appendix to this Recommended Order. Before turning to the per-patient overpayment data, some additional observations on the above methodology are in order. First, it turned out that 26 infusions (out of 126) were found medically necessary because the patient met Profile A. Eighteen were found medically necessary because the patient met Profile B. Thirty of the infusions were given to a patient who satisfied the criteria of Sub-Profile C(1)——but in none of these instances did the patient also meet Sub-Profile C(2). Thus, none of the infusions at issue could be found medically necessary under Profile C. At bottom, 44 infusions were found medically necessary; 82 were not. Second, all of the 44 infusions that the undersigned has determined were medically necessary were also proved, by contemporaneous records in the charts, to have been performed, as claimed. In other words, lack of documentation did not provide a basis to disallow an otherwise medically necessary infusion. Third, various problems with the blood test records were observed in connection with 40 of the 82 disallowed infusions. Because the problems were potentially outcome determinative, more needs to be said about them. The problems in question fall into three groups: the relevant blood test record was either illegible, or incomplete, or unavailable. The undersigned determined that these problems neither undermine nor invalidate the methodology used, for the following reasons. Illegibility played a role in the determination in 15 instances. It is possible that some of these infusions might have been found medically necessary if good copies of the blood work had been offered into evidence. However, because the burden was on Cadigan, ultimately, to ensure that legible copies of the medical records were received in evidence, it is determined that the consequences of bad copies should fairly fall on him. In ten instances, the blood work was available but incomplete, meaning that one or more of the values that the undersigned was looking for were not found in the record. Interestingly, nine of these involved infusions administered to one patient (#16) in just three months (February, April, and May of 1996). Any potential unfairness to Cadigan was ameliorated, however, by the fact that both of the patients involved (the other was Patient #4) satisfied Sub-Profile C(1) for each of the ten infusions under consideration. Thus, their charts were carefully examined for indicia of medical necessity apart from the blood work, and none was found. Finally, there were 15 instances where blood work was unavailable for a disputed infusion. This category was determined to present the greatest potential for unfairness to Cadigan. The undersigned reasoned that a particular blood test record could be unavailable either because (a) although it exists (or once existed), it was not (or could not be) offered into evidence at hearing or (b) no blood test was ordered for the particular month in with the infusion was given. As with illegible documents, the negative consequences of situation (a) can fairly be assigned to Cadigan, whose burden it was to maintain and produce complete medical files. Situation (b) is distinguishable, however, because there was no proof that blood work needed to be ordered every month for every patient. Fortunately, it is possible to make a simple adjustment to mitigate any unfairness that might have arisen from situation (b). In this regard, it is worth noting, initially, that the problem of unavailable blood tests results is relatively minor, affecting only 15 out of 126 claims. There was, in fact, a remarkable consistency in Cadigan's ordering of blood work on a regular——usually monthly——basis. Getting to specifics, of the 15 dates of service for which there is no corresponding blood work, eight involve one patient (#17). Seven of these eight comprise all of the disputed infusions administered to Patient #17 in 1999. Put another way, there is no blood work for Patient #17 in connection with any of the seven infusions for which claims were made in 1999. Because Cadigan routinely ordered blood work, it is reasonable to infer, and is found, that blood tests were taken contemporaneously with these seven visits. Thus, the unavailability of test results for Patient #17's seven infusions in 1999 can be attributed to situation (a) as described above. In contrast, the other eight instances of unavailable blood test results cannot be as easily characterized. Giving Cadigan the benefit of the doubt, the undersigned infers that these eight instances can be attributed to situation (b). Because 44 out of 118 infusions were found medically necessary, it is inferred that the same rate of success——37 percent——would obtain with respect to the remaining eight infusions if blood tests were available, which means that three of these eight should be allowed. It is therefore determined that to mitigate any possible unfairness to Cadigan resulting from the use of blood tests to evaluate medical necessity in connection with infusions administered at times where it might not have been necessary to order such blood tests, an amount equal to three times the average per-claim overpayment should be subtracted from the total overpayment. Having described the methodology for determining medical necessity in this case and explained that the details of this methodology's implementation are set forth in the Confidential Appendix, the bottom-line findings can be disclosed. The table below shows the per-patient overpayments that the undersigned has determined exist. Patient Number Overpayment This Patient 1 9,001.58 2 1,803.11 3 1,801.47 4 1,801.47 5 4,751.47 8 14,365.67 9 1,801.47 10 0 12 8,935.36 13 1,801.47 14 6,881.78 15 11,474.34 16 19,939.20 17 26,630.85 18 0 20 1,801.47 22 6,552.94 23 1,801.47 24 1,493.87 25 3,593.89 27 32,062.82 28 1,450.61 The sum of these per-patient overpayments is $159,746.31. To offset the possible unfairness stemming from unavailable blood test results, an amount equal to three times the average per-claim overpayment ($1,948.13),26 or $5,844.39, should be subtracted from the foregoing sum, producing an overpayment liability of $153,901.92. As a check on the preceding results, the undersigned re-reviewed the clinical progress notes for Patient ##8, 15, 16, 17, and 27, whose disallowed claims comprise approximately 65 percent of the total. This second-level review, which produced the following observations, did not persuade the undersigned that using the above-described framework had led to an unjust or incorrect result. Patient #8 was given disputed IVIG infusions between January and August 1998. Then in her late 20s, this patient presented in November and December 1998 with swollen lymph nodes in her neck. Evidently this complaint was resolved, however, because it is not mentioned in the treatment notes made contemporaneously with the disputed infusions. In or around January 1999, the patient was hospitalized for an unspecified viral infection, which was apparently treated successfully. Yet, at the time, her CD4-cell count was in the normal range at 504, which suggests that the HIV infection was under control.27 In January and February 1999, the treatment notes indicate that Patient #8 might have had a fungal infection in her ears. In March 1999, she was treated for a yeast infection. On the whole, the medical records do not persuasively establish that Patient #8 was suffering from recurrent, serious infections warranting the disallowed IVIG infusions. The disputed infusions that Patient #15 received occurred between January and July 1999. This patient, then in his early 50s, had medical problems unrelated to AIDS, such as diabetes and hypertension. In January and February, and at least through April 1999, he suffered from kidney stones. Also during that period, he had an upper respiratory infection, which produced mild symptoms and was treated conservatively. The treatment notes do not describe the respiratory condition as serious, however, and Patient #15's CD4-cell count remained in the normal range throughout. Patient #16, who was infused between February and May 1996, is described in the contemporaneous treatment notes as doing well, except for a bout of diarrhea in February. There is no indication that he was suffering from serious, recurring infections at the time of the disputed IVIG infusions. Patient #17 received 16 disputed infusions between April 1998 and September 1999. There are no clinical progress notes in the record for 1999 after January 19. The records in evidence do not indicate that Patient #17 was suffering from serious, recurring infections at the time of the disputed IVIG infusions (although the IVIG infusion given in May 1998 was deemed covered based on his blood work). Patient #27 was in his late 30s when he received 19 disputed IVIG infusions between April 1998 and August 1999. He was diabetic, obese, and mildly hypertensive. The progress notes report that Patient #17 had an infection on his left earlobe at the end of 1998, which was treated with antibiotics and appears not to have been serious. He also had bronchitis in May 1999, but the notes do not establish that this was a serious or recurring problem (and his CD4-cell count was in the normal range at the time). The second-level review of the foregoing five patients persuaded the undersigned that the decisional framework was not unduly restrictive but, rather, operated fairly to separate the justifiable claims from those that were not justified. Peer Review. Because Dr. Shands was still regularly providing medical care to patients in 1998 when the Agency retained him, and because it appears that he continued to see patients within the two-year period before the commencement of the final hearing, it is determined that Dr. Shands sufficiently qualified as a "peer" to authorize his testimony as the Agency's expert on medical necessity. However, because there is no evidence of a patient- specific peer review of the patients whose treatments led to the alleged overpayment of $28,020.38, it is determined that this latter sum was not shown by the evidence to constitute an overpayment. Inventory. Although Cadigan failed to produce documents showing that he had purchased IVIG, it is determined that, in fact, Cadigan did have sufficient quantities of the product available during the audit period to support the Medicaid claims at issue. This finding is based on the fact (which was not genuinely disputed) that Cadigan actually provided the infusions and related services that led to the disputed claims, as documented by the medical records maintained in the ordinary course of Cadigan's business. Obviously, the infusions could not have been accomplished unless Cadigan had IVIG on hand.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Cadigan to repay the Agency the principal amount of $153,901.92. DONE AND ENTERED this 9th day of February, 2004, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of February, 2004.
The Issue The issue for determination is whether Petitioner must reimburse Respondent an amount up to $1,048,242.62, which sum Petitioner received from the Florida Medicaid Program in payment of claims arising from Petitioner's treating of pediatric patients between October 28, 2000 and October 25, 2002. Respondent alleges that the amount in controversy represents an overpayment arising from Petitioner's submission of claims that were not covered by Medicaid, in whole or in part.
Findings Of Fact Respondent Agency for Health Care Administration ("AHCA" or the "Agency") is the state agency responsible for administering the Florida Medicaid Program ("Medicaid"). Petitioner The Children's Office, Inc. ("TCO") was, at all relevant times, a Medicaid provider authorized to receive reimbursement for covered services rendered to Medicaid beneficiaries. From time to time, therefore, TCO had entered into various written contracts with the Agency, which will be referred to collectively as the "Provider Agreement." Exercising its statutory authority to oversee the integrity of Medicaid, the Agency conducted a review or audit of TCO's medical records to verify that claims paid by Medicaid during the period from October 28, 2000 to October 25, 2002 (the "Audit Period") had not exceeded authorized amounts. During the Audit Period, TCO had submitted 30,193 claims for services rendered to 3,148 patients (or recipients), on which Medicaid had paid a total of $1,593,881.86. Rather than examine the records of all 3,148 recipients served, the Agency selected a sample of 30 patients, whose records were reviewed first by a nurse consultant, and then by a physician "peer reviewer." TCO had submitted 260 claims during the Audit Period in connection with the 30 patients in the sample population. Medicaid had paid a total of $13,582.78 on these claims. The Agency's reviewers determined that, for various reasons, TCO had received a total of $9,740.10 in reimbursement of claims in the sample for services not covered by Medicaid, in whole or in part. Having discovered this "empirical overpayment" of $9,740.10, the Agency employed a statistical formula to ascertain the "probable total overpayment" that TCO had received from Medicaid in connection with the 30,193 claims presented during the Audit Period.1 (TCO does not dispute the methodology that AHCA used in determining the probable total overpayment based on the empirical overpayment associated with the sample population. The parties agreed at hearing that if the undersigned were to find that the empirical overpayment should be adjusted, then the Agency——not the undersigned——would recalculate the probable total overpayment using the same statistical formula.) The statistical analysis revealed a probable total overpayment of $1,048,242.62. This is the amount that AHCA seeks to recoup from TCO. TCO's resistance to the Agency's proposed action proceeds along two main fronts. One involves systemic or global challenges to the audit as a whole, the aim being to land a knockout blow that would preclude that Agency from recouping any amount. The other entails fact-specific disputes about the reimbursement of individual claims in the sample, the goal being to reduce the empirical overpayment——and thereby reduce the probable total overpayment.2 The Systemic Challenges TCO's systemic challenges to the audit are largely, if not exclusively, legal in nature. Indeed, the relevant facts are not in dispute. The factual bases (including the pertinent statutory and regulatory language) for TCO's arguments are set forth below. 1. Florida Administrative Code Rule 59G-1.010(22) provides as follows: (22) "Audit" means: an examination of "records for audit" supporting amounts reported in the annual cost report or in order to determine the correctness and propriety of the report; or an analysis of "records for audit" supporting a provider's claim activity for a recipient's services during a year or less of claims activity in order to determine whether Medicaid payments are or were due and the amounts thereof, with claim activity for each separate year constituting a separate audit. The term "audit" also comprehends discussions and interviews related to said examination or analysis. Also see "records for audit."[3] (Emphasis added.) TCO asserts that the foregoing definition of the term "audit" limits AHCA to reviewing periods of no greater than one year at a time, per provider, when investigating possible fraud, abuse, or overpayment as part of its Medicaid oversight responsibility. Because the Audit Period is approximately two years, TCO argues that the audit should be deemed void.4 2. Section 409.9131(5)(a), Florida Statutes, requires that the Agency, in making a determination of overpayment to a physician, must, among other things, "make every effort to consider the physician's patient case mix, including, but not limited to, patient age and whether individual patients are clients of the Children's Medical Services Network." Many of TCO's patients were clients of the Children's Medical Services Network ("CMS"), a fact that, TCO contends, the Agency's reviewers failed adequately to take into account. Though the evidence on this issue is limited, the undersigned agrees with TCO——and finds——that, in general, AHCA's reviewers placed little weight on whether a particular patient participated in CMS. The Agency did, however, consider TCO's overall "case mix" and factors relevant thereto. The undersigned determines, as a matter of fact, that the Agency put forth a reasonable effort under the circumstances to "consider [TCO's] patient case mix" in accordance with the statute. The undersigned further determines that, in any event, "case mix" considerations are not dispositive of the disputed reimbursement issues at hand. 3. Section 409.913(5), Florida Statutes, provides that all Medicaid providers are subject to having goods and services that are paid for by the Medicaid program reviewed by an appropriate peer-review organization designated by the agency. The written findings of the applicable peer- review organization are admissible in any court or administrative proceeding as evidence of medical necessity or the lack thereof. (Emphasis added.) Section 409.9131(5)(b), Florida Statutes, adds that "when the agency's preliminary analysis indicates that an evaluation of the medical necessity, appropriateness, and quality of care needs to be undertaken to determine a potential overpayment" to a physician, the Agency must refer the claims at issue for "peer review." The term "peer review" is defined, for purposes of Section 409.9131, as follows: "Peer review" means an evaluation of the professional practices of a Medicaid physician provider by a peer or peers in order to assess the medical necessity, appropriateness, and quality of care provided, as such care is compared to that customarily furnished by the physician's peers and to recognized health care standards, and, in cases involving determination of medical necessity, to determine whether the documentation in the physician's records is adequate. § 409.9131(2)(d), Fla. Stat. (emphasis added). TCO argues that Section 409.913(5) "clearly requires" the use of a peer-review organization (rather than an individual peer) when auditing "non-physician claims," and it contends that this "requirement" should be held applicable, as well, to the review of physician service claims pursuant to Section 409.9131(5). In this case, the peer review of physician service claims was performed, not by an organization, but by Dr. Larry Deeb, a Florida-licensed pediatrician. Thus, TCO urges that the audit be declared invalid in its entirety. 4. It is undisputed that approximately four years elapsed from the beginning of the Audit Period to the issuance, on November 30, 2004, of the Final Agency Audit Report, which latter gave TCO a clear point of entry to challenge the Agency's overpayment determination. TCO contends that this four-year "delay" was prejudicial to TCO's ability to defend against AHCA's recoupment effort. Thus, TCO argues that this proceeding should be deemed time-barred. 5. TCO asserts, and AHCA did not genuinely dispute, that the medical records provided to the Agency during the audit reveal a number of Medicaid compensable services for which TCO never submitted claims. TCO argues that if an investigation into possible Medicaid overpayments yields information demonstrating the existence of valid, yet unmade claims, then the Agency is under a legal duty either to pay those claims or set them off against any overpayment that might be found. The Fact-Specific Disputes In addition to challenging the validity of the audit as a whole, TCO disputes, in the alternative, the Agency's determinations regarding 13 specific claims; it also urges that several miscellaneous adjustments be made as well.5 These will be examined below. First, however, it is necessary to make some preliminary findings, to place the disputed claims in context. The disputed claims involve what are known as "evaluation and management services" ("E/M services") provided in the doctor's office or other outpatient setting to new or established patients. E/M services are billed to Medicaid using codes that reflect the intensity level of service provided. The codes are called "CPT codes"——"CPT" being short for Current Procedural Terminology. Medicaid reimburses providers for E/M services pursuant to fee schedules that specify the amount payable for each level of service according to the CPT codes. It is the provider's responsibility, in presenting a claim to Medicaid for payment, to determine the appropriate CPT code for the service provided. Medicaid generally pays claims upon receipt, without second-guessing the provider's judgment regarding the level of care. When the Agency conducts an investigation to determine possible overpayment to a provider, however, one thing it might review is whether the provider's claims were properly "coded"—— that is, whether the CPT codes on the bills accurately reflected the level of service provided to the patients, as documented in the medical records. If the Agency determines that the level of service provided was lower than that claimed, then it will "downcode" the claim to the proper level and seek to recoup from the provider, as an overpayment, the difference between what Medicaid paid on the claim as originally coded and what it would have paid on the claim as downcoded. In this case, each of the 13 disputed claim determinations involves a downcode with which TCO disagrees. The following CPT codes are relevant to the claims in dispute: NEW PATIENT 99201 Office and other outpatient visit for the evaluation and management of a new patient, which requires these three key components: ? a problem focused history;? a problem focused examination;and? straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are self limited or minor. Physicians typically spend 10 minutes face-to-face with the patient and/or family. 99202 Office and other outpatient visit for the evaluation and management of a new patient, which requires these three key components: ? an expanded problem focused history;? an expanded problem focused examination; and? straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are low to moderate severity. Physicians typically spend 20 minutes face-to-face with the patient and/or family. 99203 Office and other outpatient visit for the evaluation and management of a new patient, which requires these three key components:? a detailed history;? a detailed examination; and? medical decision making of low complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are of moderate severity. Physicians typically spend 30 minutes face-to-face with the patient and/or family. 99204 Office and other outpatient visit for the evaluation and management of a new patient, which requires these three key components: ? a comprehensive history;? a comprehensive examination; and? medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are low to moderate severity. Physicians typically spend 45 minutes face-to-face with the patient and/or family. 99205 Office and other outpatient visit for the evaluation and management of a new patient, which requires these three key components: ? a comprehensive history;? a comprehensive examination; and? medical decision making of high complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are moderate to high severity. Physicians typically spend 60 minutes face-to-face with the patient and/or family. ESTABLISHED PATIENT 99211 Office and other outpatient visit for the evaluation and management of an established patient, that may not require the presence of a physician. Usually the presenting problem(s) are minimal. Typically, 5 minutes are spent performing or supervising these services. 99212 Office and other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: ? a problem focused history;? a problem focused examination; and? straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are self limited or minor. Physicians typically spend 10 minutes face-to-face with the patient and/or family. 99213 Office and other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components:? an expanded problem focusedhistory;? an expanded problem focused examination; and? straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are low to moderate severity. Physicians typically spend 15 minutes face-to-face with the patient and/or family. 99214 Office and other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: ? a detailed history;? a detailed examination; and? medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are of moderate severity. Physicians typically spend 25 minutes face-to-face with the patient and/or family. 99215 Office and other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: ? a comprehensive history;? a comprehensive examination; and? medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are low to moderate severity. Physicians typically spend 40 minutes face-to-face with the patient and/or family. American Medical Association, Evaluation and Management (E/M) Services Guidelines at 9-10 (2001). Turning now to the 13 disputed claims, the following is a summary discussion of each, sorted by recipient and date of service. Recipient No. 2 Date of Service ("DOS") 03/05/01. Nurse Practitioner Beverly Armstrong saw this patient, then aged 10, on March 5, 2001, because he was experiencing nasal drainage and a cough. Ms. Armstrong diagnosed sinusitis and bronchitis and prescribed appropriate medications for those conditions. The child is profoundly developmentally delayed, which complicated the examination and medical decision-making process. TCO billed this visit to Medicaid under CPT Code 99215——the highest level of E/M services for an established patient——and was reimbursed $60.95. It is undisputed, however, that Medicaid does not permit an advanced registered nurse practitioner ("ARNP") to bill any visit at the 99215 level. (If a physician co-signs the medical record, then the claim can be properly submitted as a 99215 visit, but that did not happen on this claim or any other disputed claim here involving the services of an ARNP.) Thus, there is no dispute that this claim must be downcoded. The Agency contends that the claim properly should be reimbursed as a 99213 visit; TCO contends that 99214 is the correct level of service. It is concluded that this visit met the criteria for reimbursement at the 99214 level. The Medicaid fee for ARNP services in connection with a 99214-level visit was $32.82 in March 2001, which is $28.13 less than Medicaid paid on this claim. The Agency based its probable total overpayment determination on an alleged overcharge of $35.90. Thus, the empirical overpayment should be reduced by $7.77. DOS 05/16/02. This patient was seen by Dr. Barbara Chamberlain on May 16, 2005, because he was having difficulty sleeping and was waking up scared. TCO submitted the claim for this visit to Medicaid under CPT Code 99214 and was reimbursed the established fee for that level of service. During the instant audit, the Agency downcoded the visit to 99213, resulting in an alleged overpayment of $15.71 on the claim. At hearing, however, the Agency's counsel conceded that, in view of Dr. Deeb's deposition testimony, the claim had been properly coded as a 99214 visit. Therefore, the empirical overpayment should be reduced by $15.71. Recipient No. 13 DOS 11/01/00. This patient, aged 4, presented on November 1, 2000, with a cough and fever, and was seen by Nurse Armstrong, who diagnosed bronchitis and prescribed treatment therefor. TCO presented this claim to Medicaid as a 99215 visit, which was improper because ARNP services are not authorized for payment at such level, and was reimbursed $59.43. AHCA contends that the claim should be downcoded to 99213, giving rise to an alleged overpayment of $34.38. The undersigned determines, however, that 99214 is the proper code, based on the overall complexity of the case as reflected in the medical records. The appropriate reimbursement, therefore, is $31.85, resulting in an overpayment on this claim of $27.58. The empirical overpayment should, accordingly, be reduced by $6.80. DOS 04/27/01. The patient was seen by Nurse Armstrong on April 27, 2001, complaining of fever and a recent history of vomiting and diarrhea. He was diagnosed with a middle ear infection and allergic rhinitis. After the visit, on the night of April 27, a call was made on this patient's behalf to the on- call nurse to report an ongoing high fever; the patient was encouraged to go to the emergency room for treatment. TCO improperly billed this claim for nursing services as a 99215 visit and was paid $60.95. The undersigned is persuaded by Dr. Deeb's deposition testimony that the appropriate service level on this claim is 99213, as the Agency contends. When it calculated the probable total overpayment, however, the Agency assumed, incorrectly, that the fee for ARNP services on a 99213 claim in April 2001 was $25.05. In fact, such claims were reimbursed at the rate of $21.03 per visit. Thus, for this claim, the empirical overpayment should be increased by $4.02. DOS 04/30/01. The patient presented again on April 30, 2001, with a high fever and nasal congestion. He was seen by Nurse Armstrong, who ordered blood and urine tests and prescribed additional treatment. TCO billed the visit, improperly, as a 99215 and was paid $60.95. Based on the medical records, which document a high fever that was not responding as expected to treatment, the undersigned determines that 99214 is the proper code for this visit. The applicable fee for such a visit, at the time, was $32.82. Thus, the overpayment on this claim is $28.13, not $35.90 as AHCA alleged. The empirical overpayment should be reduced by $7.77. Recipient No. 17 Nurse Armstrong saw this three-year-old on November 29, 2000. The patient came in with redness and swelling of the eyelid. The ARNP referred the patient to an ophthalmologist. TCO submitted a claim to Medicaid, reporting the visit under CPT Code 99215, which was improper because, to repeat for emphasis, nursing services cannot be billed at this level——a point that TCO conceded at hearing. Medicaid paid TCO $59.43 for the visit. The Agency asserts, and the undersigned finds, that this claim should be reimbursed at the 99213 level. The key fact here is that the patient was referred to a specialist. While this was no doubt an appropriate disposition, deciding to make a routine referral to an eye doctor for evaluation of a possible eye infection or injury should be a relatively easy medical task. The fee for ARNP services on a 99213 claim was $20.80 in November 2000. In calculating the probable total overpayment, the Agency incorrectly assumed that the applicable fee was $25.05. Thus, the empirical overpayment should be increased by $4.25 to account for this claim, properly adjusted. Recipient No. 18 DOS 07/17/02. This patient, aged 5, was seen by Dr. Chamberlain on July 17, 2002, for treatment of a cough and low- grade fever. The doctor diagnosed pharyngitis and prescribed an antibiotic. TCO billed Medicaid for a 99215 visit and was reimbursed $63.37. The Agency contends that this claim should be downcoded to 99213. The undersigned agrees, because the medical record documents a routine visit involving a straightforward diagnosis and plan of treatment. Thus, there should be no change to the empirical overpayment on account of this claim. DOS 08/08/02. Dr. Chamberlain saw this patient on August 8, 2002, because he had a fever. The doctor again diagnosed pharyngitis and offered an antibiotic injection, which the patient's mother refused. Dr. Chamberlain spent additional time counseling the mother, but she continued to decline the recommended treatment, against medical advice. TCO presented a claim to Medicaid for a 99214 visit. The Agency urges that this visit be downcoded to 99213, creating an alleged overpayment of $15.71. The undersigned finds, however, that 99214 was the appropriate code for this claim, primarily because of the need for additional counseling as a result of the mother's refusal of treatment. Thus, the empirical overpayment should be reduced by $15.71 for this claim. Patient No. 19 DOS 05/17/02. Nurse Armstrong saw this medically complex three-year-old as a new patient on May 17, 2002. The medical record does not document the specific medical complaint that drove the visit, but states that the patient wanted a nebulizer machine. The nurse examined the patient in some detail and decided to stay the course charted by other providers, directing that the patient continue taking the same medications. TCO reported the visit to Medicaid as a 99205 claim and received $85.00. This was improper on its face because nursing services cannot be billed at this level. The Agency contends that the claim should be downcoded to 99203, and the undersigned agrees. Based on the evidence presented, it is found that the medical decision-making required for this visit should not have exceeded a low level of complexity, especially since no material changes were made to the preexisting treatment plan. The fee for ARNP services on a 99203 visit was $40.23 in May 2002, not $38.70 as shown in the Agency's work papers. Consequently, the empirical overpayment should be reduced by $1.53 to reflect the adjustment of this claim. DOS 06/05/02. Dr. Chamberlain saw the patient on June 5, 2002, because she was vomiting, sleeping too much, and experiencing a loss of appetite. The doctor ordered emergency blood work, which revealed that one of the medications that the patient was taking had reached a toxic level in her bloodstream. This was a potentially life-threatening situation that required prompt medical attention. TCO billed this visit at the 99215 level. AHCA argues that the claim should be downcoded to 99213, at which level an alleged overpayment of $30.81 would result. The undersigned agrees with TCO, however, that 99215 was the proper code under the circumstances. The empirical overpayment should be reduced by $30.81 for this claim. DOS 07/08/02. The patient was seen by Dr. Chamberlain on July 8, 2002, for a "pre-op" examination ahead of a scheduled surgery to repair a hernia. The visit was billed to Medicaid as a 99215 claim, and TCO received $63.37. In this proceeding, TCO has conceded that 99215 was excessive, but it presses for a downcode only to 99214. The Agency asserts that 99213 is the proper code for this claim. The undersigned is persuaded that this focused pre-op examination should not have required a level of care beyond 99213. In July 2002, the fee for a physician's services on a 99213 visit was $32.56. The overpayment on this claim therefore is $30.81. Because the Agency mistakenly recorded the overpayment as $37.32 in its work papers and used that figure in calculating the probable total overpayment, the empirical overpayment should be reduced by $6.51. DOS 07/25/02. On this day, the medical records show that the patient was seen by Nurse Armstrong for "labs only" and to have a form completed for school. TCO submitted a claim to Medicaid for a 99215 visit (which was facially improper) and was reimbursed $63.37. AHCA now seeks to deny the claim in its entirety based on the absence of a medical record. Yet, as TCO points out, there is a record of this visit. It reflects that minimal services were performed and no examination of the patient was conducted. Thus, the claim should be downcoded to 99211. For ARNP services at this level, Medicaid paid $10.37 at the relevant time. Thus, the empirical overpayment should be reduced by $10.37 to account for this claim. DOS 09/04/02. Nurse Armstrong saw the patient, who presented with a fever and cough, on September 4, 2002. This visit took place a couple of weeks after the patient's hernia had been surgically repaired. The nurse diagnosed pharyngitis or tonsillitis. TCO presented the claim to Medicaid, improperly, as a level 99215 visit and received $63.37. AHCA contends that the claim should be downcoded to 99213. This would have been the appropriate code, the undersigned believes, but for the fact that the child had recently undergone surgery, which added an element of complexity to the case. The undersigned finds that the proper code for this claim is 99214. At the time, Medicaid paid $34.52 for ARNP services on a 99214 claim. Thus, the overpayment on this claim is $28.85. Because AHCA based its determination of the probable total overpayment on an alleged overpayment of $37.32 on this claim, the empirical overpayment should be reduced by $8.47. Miscellaneous Adjustments TCO has identified a number of alleged errors in the Agency's work papers, which will be discussed below. Recipient No. 15, DOS 12/07/00. This claim for a doctor's services was coded 99664. Medicaid paid TCO $8.00 on the claim. As part of the audit, AHCA reduced the allowable fee to $6.40, because the services at issue were in fact performed by an ARNP. This created an alleged overpayment on the claim of $1.60. TCO does not dispute that an ARNP performed the services; it asserts that the applicable fee is more than $6.40. TCO is correct. The fee for ARNP services on a 99664 claim was, in December 2000, $8.57. Thus, the empirical overpayment should be reduced by $2.17 (0.57 + 1.60). Recipient No. 30, DOS 05/03/02. TCO billed Medicaid for a doctor's services at the 99203 level and was reimbursed $50.30. AHCA determined in the audit that an ARNP actually performed the services in question and reduced the allowable fee to $40.24, resulting in an alleged overpayment of $10.06. The applicable ARNP fee schedule shows an allowable fee of $40.23. Thus, the empirical overpayment should be increased by 0.01 to account for this claim. Recipient No. 18, DOS 08/09/02. TCO correctly notes that, contrary to the Agency's allegation, there is a medical record for this visit, which shows that the ARNP gave the patient a shot of antibiotic medicine. Thus, while the Agency properly determined that TCO's claim for a physician's services at level 99215 resulted in an overpayment, it should have downcoded the claim to 99211, rather than denied the claim in its entirety, and allowed reimbursement at the ARNP fee of $10.37. Accordingly, the empirical overpayment should be reduced by $10.37. Recipient No. 17, DOS 07/10/01. TCO has identified a typographical error in a one of the Agency's work papers, where the date of service for this claim incorrectly was recorded as July 10, 2000, instead of July 10, 2001. This error did not affect the overpayment calculations, however, and thus no adjustment to the empirical overpayment is required. Recipient No. 22, DOS 09/03/02. TCO alleges that the allowed fee of $48.27 "is wrong." According to the applicable fee schedule, however, this is indeed the correct figure. Therefore, no change in the Agency's calculations is warranted. Recipient No. 23, DOS 08/07/02. TCO points out that a work paper of the Agency fails to mention the allowed CPT Code for this claim. The omission had no effect on the Agency's overpayment calculations. Recipient No. 26, DOS 07/20/01. TCO notes a typographical error in a work paper that had no effect on the Agency's overpayment calculations. Recipient No. 26, DOS 03/13/01. TCO notes a typographical error in a work paper that had no effect on the Agency's overpayment calculations. Other Discrepancies In the course of reviewing the Agency's work papers and the medical records in evidence, the undersigned discovered several minor discrepancies that should be corrected in recalculating the probable total overpayment. Recipient No. 2. The total alleged overpayment for this patient, before making any of the adjustments described above, is $1,571.93, not $1,594.42, which latter figure was used by the Agency in determining the probable total overpayment. Therefore, the empirical overpayment should be reduced by $22.49. Recipient No. 5. The total alleged overpayment for this patient, before making any of the adjustments described above, is $27.63, not $26.38, which latter figure was used by the Agency in determining the probable total overpayment. Therefore, the empirical overpayment should be increased by $1.25. Recipient No. 15. The total alleged overpayment for this patient, before making any of the adjustments described above, is $367.35, not $372.44, which latter figure was used by the Agency in determining the probable total overpayment. Therefore, the empirical overpayment should be reduced by $5.09. Recipient No. 30. The total alleged overpayment for this patient, before making any of the adjustments described above, is $42.62, not $44.16, which latter figure was used by the Agency in determining the probable total overpayment. Therefore, the empirical overpayment should be reduced by $1.54. Summary The Agency based its determination of the probable total overpayment on an empirical overpayment of $9,740.10. In accordance with the foregoing findings, it is determined that this figure should be increased by a total of $9.53, and reduced by a total of $153.11, making a net empirical overpayment of $9,596.52. In other words, the undersigned finds that, of the $13,582.78 which TCO received from Medicaid for the 260 total claims submitted during the Audit Period in connection with medical services provided to the sample population of 30 patients, $9,596.52 constituted an overpayment. Thus, it is this figure——$9,596.52——that should be used in calculating the probable total overpayment arising from the 30,193 claims presented during the Audit Period, for which Medicaid paid TCO a grand total of $1,593,881.86.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency recalculate the probable total overpayment using the statistical formula previously employed but substituting $9,596.52 in place of $9,740.10 as the empirical overpayment, and enter a final order requiring TCO to repay the Agency the principal amount determined through such recalculation. DONE AND ENTERED this 3rd day of February, 2006, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of February, 2006.
Conclusions This cause came before the Agency for Health Care Administration for issuance of a Final Order. 1. On May 23, 2013, the Agency sent a letter to the Petitioner notifying the Petitioner that it owed an overpayment in the amount of $50,992.15 to the Agency based upon an adjustment in the Petitioner's overpayment rates (Exhibit A). On June 17, 2013, the Petitioner filed a Petition for Formal Hearing and the Agency Clerk referred the Petition for Formal Hearing to the Division of Administrative Hearings for further proceedings. On July 1, 2013, the Administrative Law Judge assigned to the case entered an Order Closing File and Relinquishing Jurisdiction based upon a Joint Motion to Relinquish Jurisdiction filed by the parties. On May 23, 2014, the Agency rescinded the overpayment letter (Exhibit B). The Agency’s rescission of the overpayment letter has rendered this matter moot. Filed August 14, 2014 9:30 AM Division of Administrative Hearings a tenE’ AGENCY CLERK P 3 3u Based on the foregoing, IT IS THEREFORE ORDERED AND ADJUDGED THAT: Respondent’s right to a hearing in this matter has been rendered moot and the Agency’s May 11, 2013 overpayment letter is rescinded. The parties shall govern themselves accordingly. DONE AND ORDERED this g day of Avnus® ; 2014 in Tallahassee, Leon County, Florida. AGENCY FOR HEALTH CARE ADMINISTRATION
The Issue The issues in this bid protest are whether, in making the decision to award Intervenor Prestige Health Choice, LLC ("Prestige"), a contract to provide Medicaid managed medical assistance services as a provider service network in Region 11 (covering Miami-Dade and Monroe Counties), Respondent Agency for Health Care Administration ("AHCA") acted contrary to a governing statute, rule, or solicitation specification; and, if so, whether such action was clearly erroneous, contrary to competition, arbitrary, or capricious. (In this protest, Petitioner Care Access PSN, LLC ("Care Access"), challenges AHCA's intended award to Prestige in Region 11, and only that award. Care Access does not seek to upset any other intended awards in Region 11 or in any other Region.)
Findings Of Fact On December 28, 2012, AHCA issued 11 separate invitations to negotiate, one for each region of Florida as established by the legislature in section 409.966, Florida Statutes. These invitations to negotiate solicited proposals from vendors seeking contracts to provide managed medical assistance services to Medicaid enrollees. The goal of these interrelated procurements was (and remains) to enable AHCA, as the agency responsible for administering the Medicaid program, to purchase medical goods and services for all Medicaid recipients throughout the entire state of Florida on a managed care basis instead of under a fee-for-service payment model. At issue in this case is Invitation to Negotiate No. 027-12/13 (the "ITN"), which sought proposals from eligible plans4/ to provide services to Medicaid enrollees in Region 11, which consists of Miami-Dade and Monroe Counties. In compliance with section 409.974(1)(k), Florida Statutes, the ITN stated that AHCA intended to enter into at least five contracts and up to ten contracts in Region 11, with at least one of those contracts being awarded to a provider service network ("PSN"), if a responsive bid from a responsible PSN were received. Fourteen plans responded to the ITN. Four of the bidders identified themselves as PSNs: Care Access; Prestige; Salubris PSN; and South Florida Community Care Network PSN. The other ten bidders were health maintenance organizations ("HMOs"). As described in the ITN, the evaluation phase of the selection process consisted of the following components: evaluation of mandatory criteria; (2) evaluation of financial stability; (3) review and scoring of comments from enrolled Medicaid providers regarding the vendor; (4) review and scoring of the vendor's past performance; and (5) evaluation and scoring of the technical responses. AHCA appointed 28 evaluators to evaluate and score the bids. At the completion of the evaluation phase, AHCA tabulated the evaluators' scores and ranked the 14 Region 11 bids from first to last. The HMOs occupied the first 10 places, followed by Prestige (No. 11), Care Access (No. 12), and the other two PSNs. Thereafter, in July 2013, AHCA invited the eight highest-ranked HMOs and the two highest-ranked PSNs (Prestige and Care Access) to participate in negotiations. AHCA held three negotiation sessions apiece with the ten vendors who advanced to this phase of the competition. Following these negotiations, AHCA presented the vendors with an offer of the contractual terms AHCA sought, including a composite capitation rate and a list of expanded benefits to be covered by the plans. Vendors were instructed to accept AHCA's proposed terms or make a counteroffer. On September 23, 2013, AHCA gave notice of its intent to award contracts in Region 11 to six plans, including Prestige, which was the only PSN to receive an intended award. AHCA later notified the public that four additional contracts would be awarded in Region 11, each to an HMO. With these announcements, which brought to ten the total number of intended awards, AHCA reached the maximum number of contracts it can offer in Region 11. Care Access was not selected for an intended award in Region 11. Care Access timely initiated the instant protest, seeking to have Prestige disqualified from the competition or, failing that, the proposed award to Prestige set aside for reasons independent of Prestige's alleged ineligibility. While Care Access protests the intended award on numerous grounds, the principal objective of this challenge is to establish that Prestige is not really a PSN, which if true would mean that AHCA's intended award is contrary to the mandate of section 409.974(1)(k) that at least one contract in Region 11 be let to a PSN. In this regard, Care Access contends that Prestige fails to meet the PSN provider control and financial interest requirements (about which more will be said) for two separate but related reasons, namely: (a) an HMO named Florida True Health ("FTH"), rather than a group of affiliated health care providers, effectively owns and controls Prestige; and (b) Prestige is not majority-owned (over 50%) by a group of affiliated health care providers. Care Access's position relating to FTH's alleged control of Prestige is based on the undisputed facts that FTH not only owns 40% of Prestige's shares, but also holds an option, which it can exercise at any time until December 31, 2020, to purchase the remaining 60%. Relying on the contractual instruments behind the complex transaction by which FTH purchased both its 40% stake in Prestige and the option to acquire the entire company, Care Access argues that FTH has already taken over Prestige through a "virtual merger," even though the option it holds has not yet been formally exercised. If this were the case, Prestige clearly would not be a provider- operated PSN, because FTH is not a health care provider. Concerning the requirement that a PSN be majority- owned by providers, Care Access asserts that affiliated health care providers, as a group, own less than 50% of Prestige because, even if FTH is merely a minority shareholder, one of the putative "provider owners"——Health Choice Network of Florida, Inc. ("HCNF")——is actually not a provider. There is no dispute that HCNF owns 13.333% of Prestige. There can be no dispute that if, in determining whether Prestige meets the PSN ownership requirement, HCNF's 13.333% interest were subtracted from the sum of Prestige's "provider ownership," Prestige would not be majority-owned by a group of health care providers (because, as everyone agrees, at least 40% of Prestige is owned by non-provider FTH)——and thus it would fail one of the tests for determining PSN status. Care Access's remaining protest grounds can be boiled down to three salient objections: (1) Prestige's bid deviated materially from the ITN specifications because the electronic version of the document Prestige submitted which identified its network providers had been saved in a file format not supported in Microsoft Excel, a popular spreadsheet application; Prestige improperly colluded with FTH, the HMO with which it has a business relationship; and (3) AHCA's decision to set a base price neutralized any competitive advantage for having the lowest bid, in violation of the statutory directive to achieve the "best value" for the state. As mentioned above, the ITN provides that "[a]t least one (1) award in this Region will be to a PSN provided a PSN submits a responsive reply and negotiates a rate acceptable to the Agency." The principal statutory definition of a PSN is set forth in section 409.912, Florida Statutes, which states as follows: (4) [For the purpose of purchasing goods and services for Medicaid recipients in the most cost-effective manner consistent with the delivery of quality medical care, the] agency may contract with: * * * (d)1. A provider service network, which may be reimbursed on a fee-for-service or prepaid basis. Prepaid provider service networks shall receive per-member, per-month payments. A provider service network that does not choose to be a prepaid plan shall receive fee-for-service rates with a shared savings settlement. The fee-for-service option shall be available to a provider service network only for the first 2 years of the plan's operation or until the contract year beginning September 1, 2014, whichever is later. * * * 4. A provider service network is a network established or organized and operated by a health care provider, or group of affiliated health care providers, including minority physician networks and emergency room diversion programs that meet the requirements of s. 409.91211, which provides a substantial proportion of the health care items and services under a contract directly through the provider or affiliated group of providers and may make arrangements with physicians or other health care professionals, health care institutions, or any combination of such individuals or institutions to assume all or part of the financial risk on a prospective basis for the provision of basic health services by the physicians, by other health professionals, or through the institutions. The health care providers must have a controlling interest in the governing body of the provider service network organization. (Emphasis added.)5/ Section 409.962(13) supplies another, slightly different definition of the term: "Provider service network" means an entity qualified pursuant to s. 409.912(4)(d) of which a controlling interest is owned by a health care provider, or group of affiliated providers, or a public agency or entity that delivers health services. Health care providers include Florida-licensed health care professionals or licensed health care facilities, federally qualified health care centers, and home health care agencies. The ITN required each bidder to include, with its submission, a signed Exhibit C-3 titled "Required Certifications and Statements." Item No. 8 of Exhibit C-3 required the bidder to certify that it was a type of plan eligible to respond to the ITN. Prestige certified its eligibility as a PSN by marking the following box: I hereby certify that my company currently operates as one (1) of the following: * * * ? Provider Service Network (PSN) qualified by Section 409.912(4)(d), Florida Statutes, which is majority owned (over 50%) by a health care provider, group of affiliated providers, public agency, or entity that delivers health services (Section 409.962(13), Florida Statutes), and possess a Florida Third Party Administrative License or a subcontract/letter of agreement with a Florida-licensed Third Party Administrator. In addition, the respondent shall complete Exhibit C-4, Disclosure of Ownership and Control Interest Statement (CMS 1513). (Emphasis added.) Prestige's certification was at least partially true. Prestige is a Florida limited liability company that was established in 2007 by a group of Florida-based, federally qualified health centers ("FQHC"s) and community mental health centers. First accepted by AHCA as a PSN in 2008, Prestige has provided services under continuous contract with AHCA ever since, with the most recent contract renewal effective October 1, 2013. The ITN, however, added a requirement that the statutes do not impose, i.e., that a network, to be a PSN, must be majority-owned (over 50%) by a provider or group of affiliated providers. Recall that the statutes, in contrast, mandate that a provider or group of affiliated providers have "a controlling interest" in both the entity and its governing body, which is not the same as owning a majority of its shares.6/ While owning more than 50% of a corporation is likely to ensure a controlling interest in the entity, having a controlling interest is not dependent upon or tantamount to majority ownership. As both AHCA and Prestige acknowledge in their respective proposed recommended orders, it is possible for a minority shareholder or group of affiliated shareholders whose combined ownership is less than 50% to have a controlling interest in a corporation.7/ It is possible, therefore, for an entity to satisfy the definitions of a PSN under sections 409.912(4) and 409.962(13) because a group of affiliated providers have a controlling interest in the network, and yet not be eligible for an award as a PSN pursuant to the ITN because the group of affiliated providers' combined ownership interests total less than 50%. As required by Item No. 8 of Exhibit C-3, Prestige submitted a fully executed Exhibit C-4, the form titled "Disclosure of Ownership and Control Interest Statement." This instrument——a form whose provenance is the Centers for Medicare and Medicaid Services——is commonly known as a "CMS 1513." In its CMS 1513, Prestige divided its shareholders into two categories: "Provider Owners" and "Other Owners." Within the category of Provider Owners, Prestige identified three subcategories: "Health Choice Network of Florida, Inc.-FQHC Controlled Network"; "FQHC Owners"; and "Other Provider Owners." The category of Other Owners, comprising non-providers, was not subdivided.8/ Under the respective subcategories of Provider Owners, Prestige named the shareholder or shareholders belonging to each subset; disclosed each shareholder's percentage of ownership; and provided a subtotal of the aggregate ownership interests within each subcategory. So, under the subcategory of Health Choice Network of Florida, Inc.-FQHC Controlled Network, one entity was identified, i.e., HCNF, whose 13.333% stake represented the subtotal of ownership for that subcategory. Under the subcategory of FQHC Owners, 17 separate entities were listed, whose respective interests added up to a subtotal of 21.139%. Under the subcategory of Other Provider Owners, Prestige enumerated 12 shareholders, some of whom are individuals, and others of which appear to be facilities or organizations. The subtotal of the Other Provider Owners' interests was shown to be 23.364%. For the whole category of Provider Owners, Prestige represented that the combined ownership interests——the sum of the several subtotals——amounted to 57.836%. In addition to the CMS 1513, PSN applicants needed to complete and submit a form titled "Managed Medical Assistance (MMA) Provider Service Network (PSN) Provider Ownership Interest and Disclosure Report," also known as Exhibit C-5. This exhibit contained the following directions: Directions: List each PSN respondent owner included on the completed CMS-1513, Disclosure of Ownership and Control Interest Statement in Column (1). Include direct and indirect owners. In Column 2, specify the percent of indirect and direct ownership of each owner in the PSN respondent (see Item III on the CMS-1513 Detailed Instructions for information on direct and indirect ownership interest). In Column (3), indicate if the owner is currently a Medicaid provider (Yes or No). Only MMA providers included in the legend below are considered providers for the purpose of meeting the MMA PSN ownership requirement pursuant to Section 409.962(13), Florida Statutes. If the answer to Column (3) is yes, complete Columns (4), (5) and (6); otherwise, leave these columns blank. If completing Column (5), preface the number with either "L" for License Number or "M" for Medicaid identification number. In Exhibit C-5's ownership disclosure table, a portion of which is reproduced below,9/ Prestige reported HCNF's ownership interest as follows: In answering "Yes" to the question of whether HCNF is a Medicaid provider, Prestige did not tell the truth. In reality, as the evidence persuasively demonstrates, at no time relevant to this case was HCNF a health care provider, much less an enrolled Medicaid provider. HCNF is a nonprofit corporation organized under chapter 617, Florida Statutes. As described in its bylaws, HCNF's purposes are as follows: [T]he Network's specific purposes shall be to operate and/or support clinical programs, to carry out certain community initiatives, and to perform certain management functions, including but not limited to, information systems and financial services, for the benefit of health centers as defined in Section 330 of the Public Health Service Act and similar community-based primary or behavioral health care organizations that serve medically underserved and uninsured populations . . . . Formed and governed by community medical and behavioral health centers, HCNF qualifies, under federal law, as a tax-exempt "501(c)(3) organization." Under its Articles of Incorporation, moreover, HCNF has chosen to be operated, at all times, "exclusively as a supporting organization within the meaning of Section 509(a)(3) of the [Internal Revenue] Code." As a section 509(a)(3) organization, HCNF is required to provide support services for the benefit of public agencies or private 501(c)(3) organizations. This it generally does for community mental health centers and FQHCs, which——unlike HCNF——directly provide health-care services. According to HCNF's CEO Kevin Kearns, whose testimony on this point is credited as truthful, HCNF is a "fiscal intermediary services organization" ("FISO"). As defined in section 641.316(2)(b), Florida Statutes, a FISO is: a person or entity that performs fiduciary or fiscal intermediary services to health care professionals who contract with health maintenance organizations other than a hospital licensed under chapter 395, an insurer licensed under chapter 624, a third- party administrator licensed under chapter 626, a prepaid limited health service organization licensed under chapter 636, a health maintenance organization licensed under this chapter, or a physician group practice as defined in s. 456.053(3)(h) which provides services under the scope of licenses of the members of the group practice. "Fiduciary or fiscal intermediary services" include: [receiving and collecting reimbursements] on behalf of health care professionals for services rendered, patient and provider accounting, financial reporting and auditing, receipts and collections management, compensation and reimbursement disbursement services, or other related fiduciary services pursuant to health care professional contracts with health maintenance organizations. § 641.316(2)(a), Fla. Stat. FISOs must register with the Florida Office of Insurance Regulation. § 641.316(6), Fla. Stat. HCNF is also a health center controlled network ("HCCN"). This term, as used by the Health Resources and Services Administration ("HRSA") of the U.S. Department of Health and Human Service, means:10/ group of safety net providers (a minimum of three collaborators/members) collaborating horizontally or vertically to improve access to care, enhance quality of care, and achieve cost efficiencies through the redesign of practices to integrate services, optimize patient outcomes, or negotiate managed care contracts on behalf of the participating members. As a FISO and an HCCN, HCNF does not provide health- care services. Rather, HCNF provides back-office services to its members, each of whom is either a behavioral health care center or FQHC and, thus, a health care provider.11/ The back- office services available to HCNF's members include financial services, information technology services, billing services, and centralized referral services. HCNF members pay annual dues for access to these services, and each of them pays additional fees to the corporation based upon the scope and volume of the services that HCNF renders to the individual member. In the abstract, HCNF's membership can reasonably be considered a "group of affiliated providers," for HCNF's members enjoy a mutually beneficial association under, and share a common interest in the continued operation of, the nonprofit corporation which is their jointly controlled service provider, i.e., HCNF. Prestige, however, identified HCNF as a "GP," thereby signifying that HCNF (as opposed to its collective membership) is a "group of affiliated providers," that is, one of the health care "provider types" listed in Exhibit C-5's ownership disclosure table. Given that HCNF is not any type of provider, the designation of HCNF as a GP was of debatable accuracy,12/ but Prestige had claimed HCNF as a GP owner in previous filings with AHCA (unrelated to this procurement), and AHCA had not objected, so there was at least some historical precedent for such a characterization of HCNF. In contrast, Prestige's statement in Exhibit C-5 that HCNF is a Medicaid provider was a material misrepresentation for which no persuasive justification has been made. While the evidence fails to establish that Prestige intended to deceive AHCA, it does show that AHCA relied on Prestige's representations, including this one, which it accepted at face value. As AHCA explains in its Proposed Recommended Order, "Nothing in the ITN required AHCA to look beyond Prestige's certifications and disclosures in Exhibits C-3, C-4 and C-5 in determining Prestige's status as PSN."13/ Thus, in making its decision to award Prestige the contract reserved for a PSN, AHCA did so in the mistaken belief that HCNF was a Medicaid provider, which in fact it is not. This is significant because if HCNF were a Medicaid provider, as AHCA thought, there would be no dispute over the treatment of HCNF's 13.333% interest in Prestige as "provider ownership" for the purpose of determining whether Prestige is majority-owned (over 50%) by a group of affiliated providers. As it is, there is no reason to consider non-provider HCNF's 13.333% interest for the purpose of meeting the PSN ownership requirement. For reasons that will be more fully explained below in the Conclusions of Law, the undersigned determines as a matter of ultimate fact that Prestige is not a PSN for the purposes of the ITN because: (a) HCNF is not a health care provider; (b) HCNF is not a "group of affiliated providers" as that term is used in sections 409.912(4) and 409.962(13) and in Item No. 8 of ITN Exhibit C-3, nor, as a non-provider, can it be a member of such a group; and (c) when HCNF's 13.333% ownership interest is excluded from consideration, as it must be, Prestige is not majority-owned (over 50%) by a group of affiliated providers, as required by Item No. 8 of ITN Exhibit C-3. Because Prestige is not a PSN for the purposes of the ITN, it is ineligible for the PSN award pursuant to the set- aside provided for in section 409.974(1)(k), Florida Statutes, which is what Prestige has tentatively won under AHCA's intended decision. AHCA's proposed action is, therefore, contrary to the plain and unambiguous language of the governing statutes and applicable ITN specifications. To the extent AHCA's proposed action is based upon interpretations of these statutes and specifications, such action is clearly erroneous. The determination, as a matter of ultimate fact, that Prestige fails to meet the ITN's majority-ownership test and, hence, is not a PSN for purposes of this procurement provides a sufficient basis, without more, for concluding that AHCA should not proceed with the intended award. This makes it unnecessary to decide whether FTH is either in exclusive control of Prestige or, alternatively, the sole legal and beneficial owner of Prestige's shares, as Care Access contends; accordingly——and because a thorough discussion of the dispute over the nature and extent of FTH's respective ownership and controlling interests might entail the disclosure of facts that Prestige considers confidential trade secrets——no further findings or conclusions on this issue will be made.14/ Although the merits of Care Access's remaining protest grounds need not be decided either, the undersigned will address them in abbreviated fashion. The Provider Network File. Each bidder was required to submit, as Exhibit E-3, a "Provider Network File" that contained a comprehensive listing of its proposed provider network. The ITN provided the following instructions for completing and submitting the Provider Network File: Respondents shall submit both a printed hard copy and electronic version of the Provider Network File saved to CD. The electronic version of the Provider Network File shall be an Excel spreadsheet, and should adhere to the data specifications outlined below. The Agency will evaluate the Provider Network File using a Provider Network Assessment Tool . . . . (Emphasis added.) Addendum 2 to the ITN warned bidders as follows: Respondents to the ITN shall utilize the Attachment E, Exhibits E-1 through E-5, as applicable. All respondents bidding on a Standard MMA Plan shall complete the following Exhibits to Attachment E: Exhibit E-1, Standard Submission Requirements and Evaluation Criteria; Exhibit E-2, Standard Quality Measurement Tool; and Exhibit E-3, Provider Network File. Failure to use the formats provided by the Agency or failure to properly complete any Exhibit may result in a reduction of the score (to include an award of zero (0) points for the submission.) (Emphasis added.) Neither Care Access nor any other vendor challenged this amendment to the ITN. Prestige submitted its digital Provider Network File in the Portable Document Format ("PDF"), which is not supported in Microsoft Excel. Therefore, the AHCA evaluators were unable to extract data from the electronic version of Prestige's Provider Network File and needed to review the printed hard copy instead——a less efficient method of performing the task of evaluating Prestige's network. Prestige's failure to submit the Provider Network File in the proper digital format did not give Prestige a competitive advantage over other bidders who strictly complied with the electronic filing requirements. A list of Prestige's providers was, after all, submitted (as required) in a printed hard copy and thus available for review. In addition, AHCA's evaluators deducted points from Prestige's score for the mistake of submitting an incompatible electronic file, a penalty which placed Prestige at a competitive disadvantage relative to compliant bidders. In giving Prestige zero points for evaluation criteria related to the Provider Network File, the evaluators took action consistent with the ITN's instructions. AHCA determined, as a matter of ultimate fact, that Prestige's submission of an electronic PDF document containing its provider list, rather than an Excel-compatible file, was a minor irregularity, not a material deviation. This determination, the undersigned finds, was not clearly erroneous. AHCA's decision to waive the minor irregularity is entitled to great deference and should be upheld unless it was arbitrary or capricious. The undersigned cannot say that waiving the technical deficiency was illogical, despotic, thoughtless, or otherwise an abuse of discretion. Therefore, the intended award should not be rescinded based upon Prestige's noncompliance with the electronic filing requirements. Collusion. The ITN contained three separate provisions prohibiting collusion and requiring the bidders to independently prepare their responses. In Attachment A, the ITN provided as follows: 9. Respondent's Representation and Authorization. In submitting a response, each respondent understands, represents, and acknowledges the following (if the respondent cannot so certify to any of following, the respondent shall submit with its response a written explanation of why it cannot do so). * * * The submission is made in good faith and not pursuant to any agreement or discussion with, or inducement from, any firm or person to submit a complementary or other noncompetitive response. * * * The respondent has made a diligent inquiry of its employees and agents responsible for preparing, approving, or submitting the response, and has been advised by each of them that he or she has not participated in any communication, consultation, discussion, agreement, collusion, act or other conduct inconsistent with any of the statements and representations made in the response. In Attachment C, the ITN provided these instructions for preparing a response: Independent Preparation of Response: A respondent shall not, directly or indirectly, collude, consult, communicate or agree with any other respondent as to any matter related to the response each is submitting. Additionally, a respondent shall not induce any other respondent to submit or not to submit a response. Finally, the ITN required bidders to sign a "Non- Collusion Certification," which provided as follows: I hereby certify that all persons, companies, or parties interested in the response as principals are named therein, that the response is made without collusion with any other person, persons, company, or parties submitting a response. In applying the foregoing anti-collusion provisions, consideration must be given to section 409.966(3)(b), Florida Statutes, which governs the instant procurement and provides as follows: An eligible plan must disclose any business relationship it has with any other eligible plan that responds to the invitation to negotiate. The agency may not select plans in the same region for the same managed care program that have a business relationship with each other. Failure to disclose any business relationship shall result in disqualification from participation in any region for the first full contract period after the discovery of the business relationship by the agency. For the purpose of this section, "business relationship" means an ownership or controlling interest, an affiliate or subsidiary relationship, a common parent, or any mutual interest in any limited partnership, limited liability partnership, limited liability company, or other entity or business association, including all wholly or partially owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such entities, business associations, or other enterprises, that exists for the purpose of making a profit. (Emphasis added.) It is not surprising that, in view of section 409.966(3)(b)——which practically requires potential bidders having a business relationship with each other to coordinate in some fashion so as to avoid an intra-regional competition that would be at best a zero-sum game between them——several vendors sought clarification of the anti-collusion provisions during the pre-bid question-and-answer process. Of interest are the following questions: 6. Can entities which have some common ownership, share common management or have Board of Directors that overlap, strategize and determine [through] communications and discussion which region under the SMMC ITN is appropriate for each such entity to respond to as a bidder without violating the prohibition against "inducement" set forth in the SMMC ITN? * * * 13. Does this section apply to respondents who are affiliates and who are preparing responses in different regions? * * * 23. How can entities which share some common ownership or are otherwise related in some manner AND who are responding to the SMMC ITN in separate and distinct regions collaborate, communicate, consult and strategize on each's respective response to the SMMC ITN for the applicable region without violating the requirement of "independent preparation of response" as set forth in the SMMC ITN? AHCA answered each of these questions with the same response: "Each Regional ITN is a separate procurement, the specifications of which apply to that region." This answer was made part of the ITN through Addendum 2. What AHCA meant by this, the evidence shows, is that the anti-collusion provisions were intended to apply only to bidders competing against each other within a particular region. While there might be other reasonable interpretations of the ITN's anti-collusion specifications, AHCA's is within the range of permissible interpretations and, thus, not clearly erroneous. Indeed, a stricter interpretation might have discouraged affiliated companies from competing.15/ FTH did not submit a bid in response to the ITN. Pursuant to AHCA's interpretation of the ITN's anti-collusion specifications——an interpretation which no one protested upon its publication in Addendum 2 to the ITN——Prestige and FTH were free to communicate with each other about one's bid in any region, such as Region 11, where the two would not be competing head-to-head. AHCA's proposed action should not be set aside based upon the objection that Prestige violated the ITN's anti- collusion provisions by communicating with FTH. Cost Proposals. Care Access objects to AHCA's refusal to allow a bidder to achieve an advantage over competitors by offering a lower price. The evidence shows that, after comparing and evaluating the price proposals submitted by each vendor for the region, AHCA developed a common base rate, which was presented to the bidders invited to participate in negotiations. This rate ($366.66) was higher than Care Access's initial offer ($317.46). During negotiations, Care Access acceded to AHCA's proposed rate, apparently because there was nothing to be gained by offering a lower price, as it had been willing to do. AHCA's establishment of a common base rate which a bidder willing to accept less was not allowed to beat for competitive advantage conformed to the answer AHCA had given in response to a pre-bid question, which had been published in Addendum 2 to the ITN. The question was: "Will the state consider plan specific reimbursement rates or will there be a common rate negotiated among the awarded plans within a region?" AHCA answered as follows: "The Agency intends to negotiate common base rates for each region." No potential bidder protested this response, which became part of the ITN. It is determined as a matter of ultimate fact that the procedure used by AHCA with respect to the common rate was not contrary to the terms of the ITN, but rather was consistent therewith. Consequently, AHCA's intended action should not be disturbed based upon Care Access's objection to use of a common base rate.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that AHCA enter a Final Order (a) rescinding the proposed award to Prestige on the ground that Prestige, being minority owned (under 50%) by a group of affiliated health care providers, is not a PSN for the purpose of this procurement; and (b) taking such further remedial action(s)——besides upsetting any other intended awards in any Region——as AHCA, in its discretion as the letting authority, deems necessary or appropriate in light of Prestige's ineligibility to receive the PSN contract in Region 11. DONE AND ENTERED this 2nd day of January, 2014, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings 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 2nd day of January, 2014.
The Issue The following are the issues presented: Whether Respondent, Leeland ER SVCS Partnership (“Leeland”), is liable to the Agency for Health Care Administration (“AHCA”) for Medicaid overpayments in the amount of $12,377.17, during the audit period of March 1, 2009, through August 31, 2011; Whether Leeland should be required to pay an administrative fine of $2,475.43, pursuant to Florida Administrative Code Rule 59G-9.070(7)(e); and Whether Leeland is liable to AHCA for the agency’s investigative, legal, and expert witness costs pursuant to section 409.913(23)(a), Florida Statutes.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following Findings of Fact are made: ACHA is designated as “the single state agency authorized to make payments for medical assistance and related services under Title XIX of the Social Security Act,” i.e., the “Medicaid program.” § 409.902(1), Fla. Stat. Among its duties as the Medicaid agency, AHCA is required to conduct audits of medical providers participating in the Medicaid program, and to “recover overpayments and impose sanctions as appropriate.” § 409.913, Fla. Stat. Section 409.913(1)(e) defines "overpayment" to include "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." The Medicaid provider agreement is a voluntary contract between AHCA and the provider. An enrolled Medicaid provider must comply fully with all state and federal laws pertaining to the Medicaid Program, including the Medicaid provider handbooks incorporated by reference into AHCA’s rules, as well as all federal, state, and local laws pertaining to licensure to receive payment from the Medicaid program. This case involves an AHCA Medicaid audit conducted of Leeland’s paid Medicaid claims as to the dates of service from March 1, 2009, through August 31, 2011, hereinafter referenced as the “audit period.” Leeland was randomly selected for audit and had no prior violations of Medicaid law. Therefore, any sanction imposed on Leeland in this proceeding would constitute a “first offense” under the operative rule discussed in the Conclusions of Law below. During the audit period, Leeland was an enrolled Medicaid provider and had a valid Medicaid provider agreement with AHCA. As an enrolled provider, Leeland was subject to all relevant federal and state statutes, rules, policy guidelines, and Medicaid handbooks incorporated by reference into rule. AHCA issued a PAR, dated June 20, 2013, alleging that Leeland was overpaid $200,349.16 for certain claims that in whole, or in part, were not covered by Medicaid. AHCA later issued a FAR, dated August 16, 2013, alleging that Leeland was overpaid $33,111.52 for certain claims that in whole, or in part, were not covered by Medicaid. The FAR further informed Leeland that AHCA intended to impose a fine of $6,622.30 (20% of the total overpayment) as a sanction for violation of rule 59G-9.070(7)(e) and to impose costs pursuant to section 409.913(23). Leeland received the FAR on August 23, 2013. Leeland timely filed a Petition for Formal Administrative Hearing on September 24, 2013. On October 9, 2013, Leeland tendered payment to AHCA in the amount of $33,111.52, as requested in the FAR, to be held in escrow pending the administrative hearing. The FAR set forth the basis for the overpayment determination as follows: 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. This determination was made by a peer consultant in accordance with Sections 409.913 and 409.9131, F.S. The difference between the amounts you were paid and the correct payment for the appropriate level of service is considered an overpayment. The FAR also stated that the overpayment calculation was based on a statistical formula by which a random sample of the claims submitted by Leeland was selected and extrapolated to the total number of claims in order to arrive at the amount of the total overpayment: A random sample of 63 recipients respecting whom you submitted 134 claims was reviewed. For those claims in the sample, which have dates of service from March 1, 2009, through August 31, 2011, an overpayment of $308.96 or $2.30567164 per claim, was found. Since you were paid for a total (population) of 26,060 claims for that period, the point estimate of the total overpayment is 26,060 x $2.30567164 = $60,085.80. There is a 50 percent probability that the overpayment to you is that amount or more. We used the following statistical formula for cluster sampling to calculate the amount due the Agency:[1/] All of the claims relating to a recipient represent a cluster. The values of overpayment and number of claims for each recipient in the sample are shown on the attachment entitled “Overpayment Calculation Using Cluster Sampling.” From this statistical formula, which is generally accepted for this purpose, we have calculated that the overpayment to you is $33,111.52 with a ninety-five percent (95%) probability that it is that amount or more. After issuance of the FAR, Leeland provided additional information and documentation to MPI, which conducted a peer review of the new material. AHCA subsequently reduced the alleged overpayments in the sample to $171.38. Overpayments were found on claims involving seven of the 63 recipients.2/ AHCA concluded that this overpayment amounted to 2.45 percent of the total payments of $6,987.99 made to Leeland for the claims in the sample. The overpayment amount of $171.38 was extrapolated to the entire population of claims using the formula set forth above. AHCA concluded that the total amount of overpayments to Leeland for all Medicaid recipients in the population was $12,377.17, with a 95 percent confidence level. This reduction in the alleged overpayment led AHCA to make a proportional reduction in the proposed fine, to $2,475.43. Leeland does not challenge the agency’s conclusion that the actual overpayment found in the sample amounted to $171.38. Leeland does challenge the method by which AHCA used that actual overpayment to extrapolate an overall overpayment amount of $12,377.17 for the entire body of Medicaid claims submitted by Leeland during the audit period. AHCA is required by statute to use an “accepted and valid statistical calculation” to determine Medicaid overpayments. ACHA submitted its audit report and work papers into evidence. To support the validity of the cluster sampling method used in this case, AHCA presented the testimony of Dr. Fred Huffer, a professor in the Statistics Department at Florida State University, as well as the AHCA employees who provided the data to which the formula was applied. Robi Olmstead, supervisor of MPI’s Practitioner Care Unit, testified that Leeland was randomly selected for audit. Once the selection was made, Ms. Olmstead assigned the case to an investigator. Her office applied a computerized claim sampling program to select the recipients and claims to be audited. The program pulled all claims for the provider during the audit period. Ms. Olmstead sorted the claims, selecting only those that were fee-for-service, then generated the “seed” and selected the cluster sample. Ms. Olmstead testified that the program tells her how many recipients should be reviewed to make a statistically valid sample. In Leeland’s case, the program stated that 62.6 recipients should be used, so the number was rounded up to 63. Lisa Robinson, the MPI investigator who handled the Leeland audit, testified that the claim sampling program selected the list of 63 recipients to be audited. Ms. Robinson sent a request for medical records to Leeland. Once Leeland submitted the records for the 63 recipients, Ms. Robinson reviewed the records. The claim sampling program generated a worksheet listing each billed claim for each recipient. Ms. Robinson attached the worksheets to the records and prepared them for the nurse reviewer. The nurse reviewer reviewed and organized the records for a peer review by a physician. After the physician reviewed and determined any disallowed amounts, the records were returned to Ms. Robinson, who entered the disallowed amounts into the claim sampling program to determine the amount of the overpayment. Ms. Olmstead testified that she has no statistical expertise and that she relied on Dr. Huffer to review and validate the results obtained by the claim sampling program. Ms. Robinson likewise claimed no statistical expertise or any real knowledge of how the claim sampling program works. Ms. Robinson simply enters data into the program and accepts the results it generates. Dr. Huffer, who has consulted with MPI since 2004, testified that when he received the overpayment calculation results, he first checked the calculations. Next, he constructed hypothetical populations based on MPI’s sample to test the confidence level of 95 percent asserted in the FAR. Dr. Huffer explained that a confidence level is a probability attached to the correctness of some statement or procedure. The 95 percent confidence level in this case means that if MPI runs its audit procedure repeatedly, the number that it states as the overpayment from a sample of the population will be less than the “true” overpayment in the overall recipient population 95 percent of the time. The “true” overpayment value remains unknown, but the simulations performed by Dr. Huffer lead to a “reasonably confident” conclusion that the assessed overpayment is an underestimate of that “true” value. Dr. Huffer stated that the simplest type of sampling scheme is a simple random sample, in which units are selected at random and audited. He noted that sometimes the units are naturally grouped into clusters, and much sampling effort can be saved by sampling the clusters of units rather than the units individually. In this case, AHCA was interested in auditing a population of claims, but the claims were naturally grouped by recipients. Therefore, to conserve resources, AHCA used single- stage cluster sampling, with each selected resident constituting a cluster of claims to be audited. Dr. Huffer noted the practical advantages of this method: [T]here’s a lot less effort in accessing the records of a smaller number of recipients, and also there’s a lot less effort in making decisions about medical necessity for a small number of recipients versus, say, a large number of recipients. So there’s a lot of savings in sampling effort by doing a cluster sampling based upon clusters, which are the recipients. Dr. Huffer testified that a sample size of 63 was valid, independent of the size of the population from which the sample was taken. He stated that “it is a well-known fact in statistics that it is the sample size which primarily governs the accuracy of the result, not the population size.” He noted, for instance, that a sample size of 35 could be validly used for a population of one million. Dr. Huffer explained that he constructed a hypothetical population that is “like a large scaled-up version of the sample.” He “cloned” every recipient and every claim for all recipients about 208 times to make a hypothetical population of approximately 13,000 recipients. From this population, he sampled 63 recipients at random and performed the same calculation that AHCA did on its sample. He performed the calculation procedure on two million samples of 63 recipients drawn from his hypothetical population. Dr. Huffer’s two million simulations yielded an empirical confidence level of 97.7 percent, meaning that “we’re even more confident in this case that the number we announce as the overpayment is less than the true overpayment . . . in the population.” Dr. Huffer explained the extrapolation of the sample to the population. By taking the $171.38 of total overpayments found in the 134 claims for the population of 63 residents in the sample, MPI derived an average overpayment per sample claim of $1.27.3/ There were 26,060 claims in the entire population. Multiplying the total number of claims by the $1.27 average overpayment yielded a “point estimate” of the total overpayment of a little more than $33,000. Dr. Huffer stated that while the overpayments in the population may be “in the neighborhood” of the point estimate, there is never an expectation that the point estimate will be exactly correct. Every random sample of recipients would yield a somewhat different total. Therefore, a standard error of the overpayment was introduced as an estimate of how far wrong the point estimate might be. The standard error in this case was $12,547.82. The true overpayment could be plus or minus some multiple of the standard error. Dr. Huffer testified that to reach the lower bound of the 95 percent confidence level, MPI subtracted about one and one-half times the standard error from the point estimate to arrive at an overpayment value of $12,377.17. Dr. Huffer concluded that there was “strong evidence” that the true overpayments exceeded $12,377.17, because that figure was an “intentional underestimate.” Counsel for Leeland questioned Dr. Huffer about the validity of the statistically derived overpayment, given that the actual overpayment drawn from the sample, $171.38, was so small compared to the total Medicaid payments for those recipients. Dr. Huffer testified that the 95 percent confidence rate is “totally unrelated” to the magnitude of the actual overpayments. To counter Dr. Huffer’s testimony on the irrelevancy of the size of the actual overpayment to the validity of the sampling method, counsel for Leeland presented a federal Medicare statute, 42 U.S.C. § 1395ddd(f)(3), which provides as follows, in relevant part: Limitation on use of extrapolation A medicare contractor may not use extrapolation to determine overpayment amounts to be recovered by recoupment, offset, or otherwise unless the Secretary determines that— there is a sustained or high level of payment error; or documented educational intervention has failed to correct the payment error . . . . Dr. Huffer responded that the federal statute does not imply that extrapolation is not allowed for statistical reasons. He believed that the reason for the Medicare law’s disallowance of extrapolation in smaller cases could be simply to forgive errors below a certain threshold. Counsel for Leeland offered another example, an “Open Letter to Health Care Providers” issued by the Office of Inspector General of the U.S. Department of Health and Human Services in 2001. The letter sets forth new claims review procedures, including a statement that if the net financial error rate in a discovery sample is below five percent, the provider is not required to perform any further audit work and only the actual identified overpayments must be refunded. Dr. Huffer pointed out that the letter, like the statute, does not question the statistical validity of extrapolation. “They do not give any statistical reason for saying that it would be wrong to proceed in this case. As far as I know, they’re just saying if you [have] a small error rate, we’ll forgive it.” Dr. Huffer agreed that there was not a “sustained or high level of payment error” in this case, but observed that this case was not being decided under the federal Medicare statute. Dr. Huffer opined that the sampling method used in this case was reasonable and comported with generally accepted statistical methods. His opinions and explanation were credible, were unrebutted, and are accepted. Leeland's attempt to undermine Dr. Huffer’s opinions through cross-examination was ineffective and lacked the support of contradictory expert testimony regarding generally accepted statistical methods. AHCA seeks to recover its investigative, legal, and expert witness costs pursuant to section 409.913(23)(a). AHCA has established its right to recover these costs. At the outset of the final hearing, the parties agreed that if AHCA prevailed in the case-in-chief, and was found to be entitled to costs, then this tribunal would retain jurisdiction for the limited purpose of allowing AHCA to document its costs in the manner provided by section 409.913(23)(b).
Recommendation Based on the foregoing, it is, therefore, RECOMMENDED that the Agency for Health Care Administration enter a final order requiring Leeland ER SVCS Partnership to repay the sum of $12,377.17 for overpayments on claims that did not comply with the requirements of Medicaid laws, rules, and provider handbooks, including interest. Jurisdiction is retained to determine the amount of costs and attorney's fees, if the parties are unable to agree to the amount, and either party may file a request for a hearing within 30 days after entry of the final order to determine the appropriate amounts. DONE AND ENTERED this 11th day of April, 2016, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of April, 2016.
The Issue The issues are whether Petitioner received a Medicaid overpayment for claims paid during the audit period, August 1, 1997, through August 25, 1999, and if so, what is the amount that Petitioner is obligated to reimburse to Respondent.
Findings Of Fact Respondent is the agency responsible for administering the Florida Medicaid Program. One of its duties is to recover Medicaid overpayments from physicians providing care to Medicaid recipients. Petitioner is a licensed psychiatrist and an authorized Medicaid provider. His Medicaid provider number is No. 048191200. Chapter Three of the Limitations Handbook describes the procedure codes for reimbursable Medicaid services that physicians may use in billing for services to eligible recipients. The procedure codes are Health Care Financing Administration Common Procedure Coding System (HCPCS), Levels 1-3. The procedure codes are based on the Physician's Current Procedural Terminology (CPT) book, published by the American Medical Association. The CPT book, includes HCPCS descriptive terms, numeric identifying codes, and modifiers for reporting services and procedures. The Limitations Handbook further provides that Medicaid reimburses physicians using specific CPT codes. The CPT codes are listed on Medicaid's physician fee schedule. The CPT book includes a section entitled Evaluation and Management (E/M) Services Guidelines. The E/M section classifies medical services into broad categories such as office visits, hospital visits, and consultations. The categories may have subcategories such as two types of office visits (new patient and established patient) and two types of hospital visits (initial and subsequent). The subcategories of E/M services are further classified into levels of E/M services that are identified by specific CPT codes. The classification is important because the nature of a physician's work varies by type of service, place of service, and the patient's status. According to the CPT book, the descriptors for the levels of E/M services recognize seven components, six of which are used in defining the levels of E/M services. They are history, examination, medical decision making, counseling, coordination of care, nature of presenting problem, and time. The most important components in selecting the appropriate level of E/M services are history, examination, and medical decision making. However, since 1992, the CPT book has included time as an explicit factor in selecting the most appropriate level of E/M services. At all times relevant here, Petitioner provided services to Medicaid patients pursuant to a valid Medicaid provider agreement. Therefore, Petitioner was subject to all statutes, rules and policy guidelines that govern Medicaid providers. The Medicaid provider agreement clearly gives a Medicaid provider the responsibility to maintain medical records sufficient to justify and disclose the extent of the goods and services rendered and billings made pursuant to Medicaid policy. This case involves Respondent's Medicaid audit of claims paid to Petitioner for Medicaid psychiatric services during the audit period August 1, 1997, through August 25, 1999 (the audit period). Petitioner provided these services to his Medicaid patients, which constituted approximately 85 to 90 percent of his practice, at his office and at hospitals in the Jacksonville, Florida, area. During the audit period, Petitioner billed Medicaid for services furnished under the following CPT codes and E/M levels of service: (a) 99215, office or other outpatient visit for the evaluation and management of an established patient; (b) 99223, initial hospital care per day for the evaluation and management of a patient; (c) 99232, subsequent hospital care per day for the evaluation and management of a patient; (d) 99233, subsequent hospital care per day for the evaluation and management of a patient; (e) 99238, hospital discharge day management; (f) 99254, initial inpatient consultation for a new or established patient; and (g) 90862, other psychiatric service or procedures, pharmacologic management. Except for CPT code 90862, the E/M levels of services billed by Petitioner require either two or all three of the key components as to history, examination, and medical decision- making. The CPT book assigns a typical amount of time that physicians spend with patients for each level of E/M service. The CPT book contains specific psychiatric CPT codes. CPT codes 90804-90815 relate to services provided in the office or other outpatient facility and involve one of two types of psychotherapy. CPT codes 90816-90829 relate to inpatient hospital, partial hospital, or residential care facility involving different types of psychotherapy. CPT codes 90862- 90899 relate to other psychiatric services or procedures. CPT code 90862 specifically includes pharmacologic or medication management; including prescription, use, and review of medication with no more than minimal medical psychotherapy. CPT code 90862 is the only psychiatric procedure code that Petitioner used in billing for the psychiatric services he provided. CPT code 90862 does not have specific requirements as to history, examination, and medical decision-making or a specified amount of time. Most of Petitioner's hospital patients were admitted to the hospital for psychiatric services through the emergency room. As part of the admission process, Petitioner performed psychiatric and physical examinations. However, testimony at hearing that Petitioner generally performed the psychiatric evaluations and the physical examinations on separate days is not persuasive. The greater weight of the evidence indicates that the hospital physical examinations were conducted as part of the routine admission process and appropriately included in claims for the patients' initial hospital care. Some of Petitioner's hospital patients had complicated conditions. Some patients required crisis intervention and/or lacked the ability to perform activities of daily living. The initial hospital care of new hospital patients required Petitioner to take an extensive medical and psychiatric history. Petitioner attended his hospital patients on a daily basis. However, there is no persuasive evidence that Petitioner routinely spent 20-25 minutes with his hospital patients for each subsequent daily visit until the day of discharge. Petitioner used a team approach when attending his hospital patients. On weekdays, the team consisted of Petitioner, a social worker, a music therapist, and the floor nurses. On weekends, Petitioner generally made his rounds with the floor nurses. Petitioner's use of the team approach to treat hospital patients did not change the level of service he provided in managing their medication. Petitioner did not document the time he spent with patients during hospital visits. However, his notations as to each of these visits indicate that, excluding admissions and discharges, the hospital visits routinely involved medication management. Petitioner's testimony that his treatment during subsequent hospital visits involved more than mere medication management is not persuasive. Petitioner also failed to document the time he spent with patients that he treated at his office. He did not present his appointment books as evidence to show the beginning and ending time of the appointments. Petitioner's notes regarding each office visit reflect a good bit of thought. However, without any notation as to time, the office progress notes are insufficient to determine whether Petitioner provided a level of service higher than medication management for established patients. Petitioner and his office manager agreed in advance that, unless Petitioner specified otherwise, every office visit for an established patient would be billed as if it required two of the following: a comprehensive history; a comprehensive examination; and a medical decision making of high complexity. With no documented time for each appointment, Petitioner's records do not reflect that he provided a level of service higher than medication management for the office visits of established patients. Petitioner's testimony to the contrary is not persuasive. Petitioner treated some patients at their place of residence in an adult congregate living facility (ACLF). Respondent does not pay for psychiatric services in such facilities. Instead of entirely denying the claims for ACLF patients, Respondent gave Petitioner credit for providing a lower level of service in a custodial care facility. Sometime in 1999, Respondent made a decision to audit Petitioner's paid claims for the period of time at issue here. After making that decision, Respondent randomly selected the names of 30 Medicaid patients that Petitioner had treated. The 30 patients had 282 paid claims that were included in the "cluster sample." Thereafter, Respondent's staff visited Petitioner's office, leaving a Medicaid provider questionnaire and the list of the 30 randomly selected patients. Respondent's staff requested copies of all medical records for the 30 patients for the audit period. Petitioner completed the Medicaid questionnaire and sent it to Respondent, together with all available medical records for the 30 patients. The medical records included Petitioner's progress notes for office visits. Petitioner did not send Respondent all of the relevant hospital records for inpatient visits. The original hospital records belonged to the hospitals where Petitioner provided inpatient services. Petitioner had not maintained copies of all of the hospital records even though Medicaid policy required him to keep records of all services for which he made Medicaid claims. When Respondent received Petitioner's records, one of Respondent's registered nurses, Claire Balbo, reviewed the records to determine whether Petitioner had provided documentation to support each paid claim. Ms. Balbo made handwritten notes on the records of claims that were not supported by documentation. Ms. Balbo reviewed the documentation in the records between February 10, 2000, and March 7, 2000. Next, one of Respondent's investigators, Art Williams, reviewed the records. Mr. Williams made his review on or about January 23, 2001. In some instances, Mr. Williams changed some of Petitioner's CPT codes from an inappropriate hospital inpatient or office visit procedure code to a psychiatric procedure code with a lower reimbursement rate. Additionally, Mr. Williams noted Petitioner's visits in ACLF's that, according to Medicaid policy, were not reimbursable. Finally, Mr. Williams noted that Petitioner occasionally made several claims on one line of the claim form contrary to Medicaid policy. Mr. Williams made these changes to the CPT codes based on applicable Medicaid policy. His review of the audit documents and patient records did not involve a determination as medical necessity or the appropriate level of service. A peer reviewer makes determinations as to medical necessity and the appropriate level of service for each paid claim in the random sample of 30 patients. Respondent then sent the records to Dr. Melody Agbunag, a psychiatrist who conducted a peer review of Petitioner's records. Dr. Agbunag's primary function was to determine whether the services that Petitioner provided were medically necessary and, if so, what the appropriate level of service was for each paid claim. Dr. Agbunag conducted the peer review between June 8, 2001, and August 29, 2001. She agreed with Respondent's staff regarding the adjustments to the procedure codes that corresponded with the level of service reflected in the medical records. When Dr. Agbunag returned the records to Respondent, Ms. Balbo calculated the monetary difference between the amount that Medicaid paid Petitioner for each claim and the amount that Medicaid should have paid based on Dr. Agbunag's review. The difference indicated that Respondent had overpaid Petitioner for claims that in whole or in part were not covered by Medicaid. Respondent sent Petitioner a Preliminary Agency Audit Report (PAAR) dated December 27, 2001. The PAAR stated that Petitioner had been overpaid $54,595.14. The PAAR stated that Petitioner could furnish additional information or documentation that might serve to reduce the overpayment. Petitioner responded to the PAAR in a letter dated February 28, 2001. According to the letter, Petitioner challenged the preliminary determinations in the PAAR and advised that he was waiting on additional patient records from a certain hospital. In a letter dated June 30, 2002, Petitioner advised Respondent that he generally spends 15-20 minutes with his hospital inpatients. The letter does not refer to any additional hospital records. Petitioner's office manager sent Respondent a letter dated August 1, 2002. The letter discusses every service that Petitioner provided to the 30 patients during the audit period. Some of these services were not included in the random "cluster sample" because Medicaid had not paid for them during the audit period. According to the August 1, 2002, letter, Petitioner's office manager attached some of the patient records that Petitioner had not previously provided to Respondent. The additional documentation related to multiple claims involving several of Petitioner's hospital and office patients. Sometime after receiving the additional documentation, Dr. Agbunag conducted another peer review. She did not change her prior determination regarding the level of service as to any paid claim. In 2003, Vicki Remick, Respondent's investigator, reviewed the audit, the patient records, and all correspondence. Her review included, but was not limited to, the determination of the appropriate CPT code and amount of reimbursement, taking into consideration Medicaid policy and Dr. Agbunag's findings regarding medical necessity and the level of care for each paid claim. On or about October 1, 2003, Respondent issued the Final Agency Audit Report (FAAR). The FAAR informed Petitioner that he had been overpaid $39,055.34 for Medicaid claims that, in whole or in part, were not covered by Medicaid. The FAAR included a request for Petitioner to pay that amount for the overpayment. The FAAR concluded, as to some patients, that Petitioner's documentation did not support the CPT codes that Petitioner used to bill and that Respondent used to pay for services. Thus, Respondent "down graded" the billing code to a lesser amount. As a result, the difference between the amount paid and the amount that should have been paid was an overpayment. The FAAR also stated that Petitioner billed and received payment for some undocumented services. In each such instance, Respondent considered the entire amount paid as an overpayment. The FAAR indicated that Petitioner billed Medicaid for some services at acute care hospital psychiatric units without documenting the medical records as to the appropriate CPT codes and medical illness diagnosis codes. Respondent adjusted the payments for these services to the appropriate psychiatric CPT codes. According to the FAAR, Petitioner billed and received payment for services which only allowed one unit of service per claim line. For this audit, Respondent allowed charges for the additional units of service where Petitioner's documentation for the additional dates of service supported the services allowed by the peer reviewer. The FAAR stated that Petitioner billed for psychiatric services at an ACLF or an assisted living facility. Medicaid normally does not pay for such services. However, in this case, Respondent adjusted the claims to a domiciliary or custodial care visit. Sometime after Petitioner received the FAAR, Petitioner sent Respondent some additional patients' medical records. Some of the records were duplicates of documents that Petitioner previously had furnished to Respondent. Other records were for services that may have been provided during the audit period but which were not a part of the random sample because Medicaid did not pay for them during relevant time frame. Respondent requested Dr. James R. Edgar to conduct a second peer review of Petitioner's correspondence and patient records to determine the appropriate level of service. Respondent provided Dr. Edgar with a copy of the patients' medical records, a copy of Respondent's worksheets, including Dr. Agbunag's notes, and the appropriate policy handbooks. Respondent requested Dr. Edgar to make changes in the level of service as he deemed appropriate. Dr. Edgar performed his review between July 25, 2004, and July 29, 2004, making an independent determination regarding issues of medical necessity and level of care. Initially, as to every disputed paid claim, Dr. Edgar agreed with Dr. Agbunag that Petitioner's patient records were insufficient to justify the procedure code and higher level of service claimed by Petitioner. Specifically, Dr. Edgar presented persuasive evidence that a number of paid claims, which Petitioner billed under CPT codes 99215, 99223, 99232, 99233, and 99238, were properly adjusted to CPT code 90862. Petitioner was not entitled to bill at a higher level of reimbursement because he failed to adequately document as to history, examination, medical decision-making, and time. Dr. Edgar agreed that, upon reconsideration, Petitioner's claim for Recipient 14, date of service September 7, 1998, billed under CPT code 99238, was appropriate. As to Recipient 1, date of service March 9, 1999, Petitioner was not entitled to bill for services using CPT code 99255, initial inpatient consultation for a new or established patient. CPT code 99222, initial hospital care, per day, for the E/M of a new or established patient, was more appropriate because Petitioner provided the consultation for one of his established patients. His services included a comprehensive history, a comprehensive examination, and medical decision making of moderate complexity. An independent analysis of the selection of the random sample, the statistical formula used by Respondent, and the statistical calculation used to determine the overpayment, confirms the conclusions in the FAAR. The greater weight of the evidence indicates that Respondent properly extrapolated the results from the sample to the total population. Out of a population of 222 recipients and a population of 2,123 claims, 30 recipients selected at random with 282 paid claims capture most of the characteristics of the total population. In this case, the statistical evidence indicates that 29 of the 30 recipients had overpayments. The odds that 29 out of 30 randomly selected recipients would have overpayments, if no overpayments existed, are greater than the odds of winning the Florida Lotto Quick Pick three weeks in a row. In fact, within a statistical certainly, the amount claimed in this cause based on the records of 30 recipients is lower than the reimbursement amount that Petitioner would owe if all records were reviewed. Respondent incurred costs during the investigation of this matter. The amount of those costs was not known at the time of the formal hearing.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent enter a final order finding that Petitioner owes Respondent for an overpayment in the amount of $39,055.34, less an adjustment for the September 7, 1998 claim for Recipient 14, plus interest. DONE AND ENTERED this 25th day of March, 2005, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 25th day of March, 2005. COPIES FURNISHED: Alan Levine, Secretary Agency for Health Care Administration Fort Knox Building III 2727 Mahan Drive, Suite 3116 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Know Building III 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 Debora E. Fridie, Esquire Agency for Health Care Administration Fort Knox Building III, Mail Station 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 John D. Buchanan, Jr., Esquire Henry, Buchanan, Hudson, Suber & Carter, P.A. 117 South Gadsden Street Post Office Box 1049 Tallahassee, Florida 32302
The Issue The issues are whether Petitioner has overpaid Respondent for medical services for which he has obtained reimbursement under the Medicaid program and, if so, by how much.
Findings Of Fact Respondent is a licensed physician engaged in the practice of medicine in Florida. From January through November 1997, Respondent worked a couple of hours each morning at the Summit Clinic in Miami before seeing patients at his own office. At the Summit Clinic, Respondent administered intravenous immunoglobulin (IVIG) to adult Medicaid patients who were infected with human immunodeficiency virus (HIV). Petitioner paid the Summit Clinic, which was using Respondent's Medicaid provider number, for these and other medical services. Petitioner now claims that these IVIG services were not medically necessary, and, pursuant to its "pay-and-chase" policy, Petitioner seeks repayment from Respondent. In general, the administration of IVIG transfers antibodies contained in globulin to protect the recipient from various infectious microorganisms. The United States Food and Drug Administration (FDA) has approved the marketing of IVIG for the treatment of persons with certain clinical conditions, such as idiopathic thrombocytopenic purpura, Kawasaki disease, and pediatric HIV infection. However, the FDA has not approved the marketing of IVIG for the treatment of adult HIV infection. The use of a drug to treat conditions for which the FDA has not issued its approval is known as an off-label use. Some off-label uses are medically effective and prevalent, but remain unapproved by the FDA because the drug manufacturer cannot feasibly conduct expensive clinical trials generally necessary to obtain FDA marketing approval. Despite the absence of such clinical trials, not all off-label uses are experimental. In the 20 years that IVIG has been commercially available in the United States, medical researchers and practitioners have uncovered evidence in support of important off-label uses of IVIG. For instance, a common and effective off-label use of IVIG is for the treatment of Guillain-Barré syndrome. According to the University HealthSystem Consortium, the FDA estimates that 50-70 percent of IVIG use is off-label, but as much as half of the off-label use finds little, if any, support by clinical studies. This case raises the question of the medical necessity of the off-label use of IVIG for the treatment of HIV-infected adults. Unlike adult-onset HIV infections, pediatric HIV infections result in systemic immune deficiencies because the children's immune systems never develop normally. In HIV- infected children, IVIG relieves the effects of these systemic immune deficiencies by preventing serious bacterial infections. For these reasons, the FDA has approved the use of IVIG for HIV- infected children. By letter dated July 31, 2001, Petitioner advised Respondent that it had reviewed various Medicaid claims submitted under his provider number. As relevant to this case, the July 31 letter disallows Medicaid reimbursement for the use of IVIG on HIV-infected adults. Stating that this use of IVIG is not "indicated" and is "investigational," the letter adds: "Medicaid policy prohibits payment for experimental procedures or non-FDA approved drugs and requires that all services rendered to Medicaid recipients be medically necessary." Chapter 1 of the Physician Coverage and Limitations Handbook (Handbook) states: "Medicaid reimburses for services that are determined medically necessary . . .. 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 Handbook also provides: "Medicaid does not reimburse for non-FDA approved medications. Medicaid does not reimburse procedures that are experimental or when non-FDA approved medications are included in the procedures." The Medicaid Provider Reimbursement Handbook (Reimbursement Handbook) defines "experimental or clinically unproven procedures" as: "Those newly developed procedures undergoing systematic investigation to establish their role in treatment or procedure that are not yet scientifically established to provide beneficial results for the condition for which they are being used." Although not directly applicable to the Medicaid program, Section 2049.4 of Chapter II, Part 3, Health Care Financing Administration Carriers Manual (HCFA Manual) states, in part: Use of the drug or biological must be safe and effective and otherwise reasonable and necessary. . . . Drugs or biologicals approved for marketing by the [FDA] are considered safe and effective for purposes of this requirement when used for indications specified on the labeling. Therefore, you may pay for the use of an FDA approved drug or biological if: It was injected on or after the date of the FDA's approval; It is reasonable and necessary for the individual patient; and All other applicable coverage requirements are met. * * * An unlabeled use of a drug is a use that is not included as an indication on the drug's label as approved by the FDA. FDA approved drugs used for indications other than what is indicated on the official label may be covered under Medicare if the carrier determines the use to be medically accepted, taking into consideration the major drug compendia, authoritative medical literature and/or accepted standards of medical practice. . . . Accordingly, the Florida Medicare Local Medical Review Policy manual recognizes the use of IVIG for pediatric HIV infections, but warns: "IVIG is not indicated for use in adult HIV patients " Except for the administration of IVIG, Respondent provided state-of-the-art services to HIV-infected adults. The present record contains scant medical evidence of the effectiveness of IVIG in treating HIV-infected adults. Against considerable evidence questioning the medical necessity of IVIG in treating HIV-infected adults, Respondent offered undocumented anecdotal evidence of successful use of IVIG among his adult patients and two synopses of undisclosed preliminary data suggesting effectiveness of IVIG in HIV-infected adults. Respondent did not effectively oppose Petitioner's explanation for the differences in IVIG's effectiveness in treating adults and children, nor did Respondent offer any rationale for his claim of IVIG's effectiveness in HIV-infected adults. On this record, Petitioner has demonstrated that the use of IVIG to treat HIV-infected adults is not effective and, thus, not medically necessary.
Recommendation It is RECOMMENDED that the Agency for Health Care Administration enter a final order ordering Respondent to reimburse the Medicaid program $74,100.04 in overpayments for services that were not medically necessary. DONE AND ENTERED this 19th day of April, 2002, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 19th day of April, 2002. COPIES FURNISHED: Virginia A. Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Anthony L. Conticello, Senior Attorney Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308 Louise T. Jeroslow Law Offices of Louise T. Jeroslow 6075 Sunset Drive, Suite 201 Miami, Florida 33143
Conclusions This cause came before the Agency for Health Care Administration for issuance of a Final Order. 1. On March 26, 2013, the Agency sent a letter to the Petitioner notifying the Petitioner that it owed an overpayment in the amount of $565,279.55 to the Agency based upon an adjustment in the Petitioner’s overpayment rates (Exhibit A). 2. On April 16, 2013, the Petitioner filed a Petition for Formal Hearing and the Agency Clerk referred the Petition for Formal Hearing to the Division of Administrative Hearings for further proceedings. 4. On May 13, 2013, the Administrative Law Judge assigned to the case entered an Order Closing File and Relinquishing Jurisdiction based upon a Joint Motion to Relinquish Jurisdiction filed by the parties. 5. On May 23, 2014, the Agency rescinded the overpayment letter (Exhibit B). 6. The Agency’s rescission of the overpayment letter has rendered this matter moot. Filed August 14, 2014 9:26 AM Division of Administrative Hearings Based on the foregoing, IT IS THEREFORE ORDERED AND ADJUDGED THAT: Respondent’s right to a hearing in this matter has been rendered moot and the Agency’s May 11, 2013 overpayment letter is rescinded. The parties shall govern themselves accordingly. DONE AND ORDERED this S day of Novurt , 2014 in Tallahassee, Leon County, Florida. K ELIZABETH DUDEK, SECRETARY AGENCY FOR HEALTH CARE ADMINISTRATION
