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
The Issue Whether Respondent, Florida Hospital Orlando (Respondent or FHO), was overpaid by Medicaid for care provided to patients in the amount of $34,644.10, as alleged by Petitioner, Agency for Health Care Administration (Petitioner or AHCA); or, as Respondent maintains, such care was medically necessary and supported by the record presented in this cause. Petitioner also maintains an administrative fine in the amount of $2,000.00 is warranted in this matter and that it is entitled to recover costs associated with the case in the sum of $7,635.27.
Findings Of Fact Petitioner is the state agency charged with the responsibility of monitoring the Medicaid Program in Florida. Centers for Medicare and Medicaid Services (CMS) is the federal agency which administers Medicare, Medicaid, and the State Children's Health Insurance Program. CMS initiated an audit of Respondent’s Medicaid claims and contracted with Booz Allen Hamilton (BAH), a Medicaid Integrity Contractor, to perform the audit. At all times material to the instant audit, Respondent was enrolled as a Medicaid provider, governed by a Medicaid Provider Agreement, and subject to all pertinent Medicaid rules and regulations related to the provision of Medicaid goods and services to Medicaid recipients/patients. Respondent was required to retain records documenting goods and services billed to the Medicaid program for a period of not less than five years. All of the disputed claims occurred within that five-year period. BAH requested medical records pertinent to the claims and FHO produced medical records in response to BAH’s audit. Respondent intended to produce all of its medical records as requested by BAH. Respondent's Medicaid Provider No. was 0010129001. All services provided to Medicaid patients are billed and identified by patient name, date of service, and provider. For purposes of confidentiality, the names of patients are redacted in audit proceedings. All goods and services billed to Medicaid must be medically necessary. If an audit determines that goods or services billed to Medicaid were, in fact, not medically necessary, Petitioner is entitled to recover monies paid as an overpayment claim against the Medicaid provider. The amount of the alleged overpayment is the subject of this proceeding. Before a Medicaid provider is authorized to bill Medicaid for medical goods and services rendered to a patient, several checks are considered. First, the patient must be Medicaid-eligible. There is no dispute that all recipients of care in this case were Medicaid-eligible patients. Second, before an inpatient stay is reimbursable, a Medicaid provider must seek prior authorization. To do so, at all times material to this case, AHCA enlisted the assistance of, and contracted with, KePro South (KePro) to perform utilization management for inpatient hospital services for Medicaid recipients. This meant the Medicaid provider contacted KePro by e-mail through a system known as "I-Exchange." In this case, FHO followed the protocol and requested prior approval for all of the claims at issue that required prior approval. All claims at issue were either approved by KePro or were exempt from the authorization requirement. Petitioner agrees that Respondent followed all of the protocols for approval of claims through the KePro system. Respondent agrees that all claims at issue as identified in the final audit report (FAR) were billed and paid. KePro approval does not mean goods and services billed to Medicaid are, in fact, medically necessary. All patient records for the claims at issue have been re-visited in the course of this case and have been thoroughly debated by doctors for both parties. In summary, AHCA's expert, Dr. Ferdinand Richards, opined that the records for the disputed claims do not support the "medical necessity" for the claims paid by Medicaid. In contrast, Dr. John Busowski and Dr. Ross Edmundson opined that the disputed claims were accurately billed and all care rendered was medically necessary. Medicaid has a "pay and chase" policy of paying Medicaid claims submitted by providers. Audits performed after-the-fact reconcile the amounts paid to providers with the amounts that were payable under the Medicaid guidelines, pertinent rules, and law. The Medicaid provider agreement executed between the parties governs the contractual relationship between FHO and AHCA. The parties do not dispute that the provider agreement, together with the pertinent laws or regulations, control the billing and reimbursement of the claims that remain at issue. The provider agreement pertinent to this case was voluntarily entered into by the parties. Although Respondent claims it could not negotiate the terms of the agreement, it is undisputed that Respondent agreed to be bound by the agreement. Respondent was not obligated to become a Medicaid provider. Any Medicaid provider whose billing is not in compliance with the Medicaid billing policies may be subject to the recoupment of Medicaid overpayments. Medicaid providers are aware that they may be audited. Audits are to assure that providers bill and receive payment in accordance with applicable rules and regulations. Respondent does not dispute Petitioner's authority to perform audits. If services rendered in this case were medically necessary, Petitioner does not dispute the amount billed as accurately reflecting the services. There is no question that Respondent provided the services identified in the disputed claims. For billing purposes, this case centers on three types of billing practices dictated by the medical circumstances of the patient. A Medicaid patient may be treated in an emergency room setting and once the presenting condition is addressed the stay may be considered outpatient, observation, or inpatient depending on the nature of the patient’s illness. Outpatient services may also be appropriate when a patient presents for a scheduled test or procedure. Observation services may be appropriate when additional time is needed to evaluate a patient’s condition. Inpatient care is dictated when the patient requires medical services or treatments because the severity of an illness or condition dictates an intensity of care that could not be provided at a less acute level. The levels of care at issue in this case are defined and specified in the Medicaid Hospital Services Coverage and Limitation Handbook and by Florida Administrative Code Rule. In this case, the disputed claims center on whether the claims were billed at the appropriate level of care. That is, if billed at the inpatient level should the claim have been billed as observation or outpatient? If billed as observation, should the claim have been billed as outpatient? Each disputed claim is listed and explained below. Each claim is described and evaluated based upon the medical documentation available to the treating physician at the time the services were rendered. The expert opinions of the parties’ witnesses have been fully considered and weighed in reaching the findings noted. The first five claims, identified as Adventist-FL-3006, 6, 7, 8, 9 and 11, concerned a three-year-old patient with Acute Lymphocytic Leukemia. The child required five separate intravenous chemotherapy treatments. The five claims ($1,503.04 per day) were billed at an inpatient rate. For each of the claims, the patient’s hospital stay was for less than 24 hours, the patient had no significant complications from the treatments, and was able to return home at the conclusion of the treatment. Based upon the weight of the persuasive evidence in this case, it is determined that these claims should have been billed as scheduled outpatient services. Petitioner is entitled to recoup the difference between the inpatient rate and an outpatient rate for these five claims. The amount of the overpayment is $7,515.20. Claim Adventist-FL-3006-21 concerned a 40-year-old morbidly obese female who went to the hospital emergency room (ER) on July 28, 2007. This patient complained of shortness of breath and chest pains. By history, it was known this patient had bipolar disorder, sarcoidosis, hypertension, and a record of being non-compliant with medications. A pulmonary function test was administered by ER staff and it was discovered the patient was at 50 percent of the expected function level. Although the initial admission to inpatient status was well documented, the record in this case is deficient, and the physicians who reviewed the record could not indicate why a four-day admission was required for this patient. Once the patient was provided a treatment for asthma (including IV steroids) and the evaluation for congestive heart failure proved negative, the patient should have been discharged. Based upon the weight of the persuasive evidence in this case, it is determined that this claim should be discounted to only two days of inpatient stay and not the four days billed. The exact amount of the overpayment for this claim cannot be determined from the evidence but is less than the $5,723.60 claimed by Petitioner. Claim Adventist-FL-3006-22, involved the same patient as described in paragraph 14. Less than two months after the visit described above, the patient returned to the ER with mild wheezing, and the patient was admitted for three days as an inpatient. Given the history of this patient, and the lack of significant change to the presenting symptoms, it is determined that the weight of the persuasive evidence would require this claim to be reduced to two days of observation, not inpatient services. This patient did not have a medical condition to justify a three-day stay. It may have been that the patient needed a place to stay, and her shortness of breath was a convenient excuse for her to seek medical attention; in any event, she did not have a medical condition of the acuity requiring a multi-day inpatient stay. Respondent does not turn patients away. Nevertheless, Medicaid does not provide for housing of patients who need care other than to meet medical needs. It is undoubted Respondent provided a meaningful service to this patient, but the level of medical care is not supported by the record in this case. AHCA is entitled to recover $2,717.52 for this claim. The next disputed claim, Adventist-FL-3006-30, concerned a 31-year-old male who went to the ER after having thrown-up blood. The patient reported a history of blood in his stools and gastro-esophageal reflux disease. Although the patient’s vital signs were normal, and there was no evidence of bleeding in the ER, the patient was admitted to the intensive care inpatient unit (ICU) and monitored. After a period of time in the ICU, it was noted that the patient’s hemodynamic was stable and he was moved to a “step down” inpatient room. The weight of the persuasive evidence would require this claim to be reduced to two days of observation services not the two days of inpatient billed. The record does not support any acuity requiring intensive care services. Moreover, the endoscopy resulted in normal findings. Had the endoscopy been performed on admission, the normal findings could have ruled out the need for inpatient services. In this case, the treating physician did not think the patient’s condition required an emergency endoscopy. Based upon that determination and the patient’s normal hemoglobin and hematocrit, it was unlikely the patient required more than observation. Giving Respondent the benefit of the doubt with regard to this claim, and assuming this patient required more care than observation to rule out a more acute illness, that determination could have easily been concluded within a one-day inpatient stay. AHCA accepts a two-day observation stay for this patient thereby reducing the overpayment to $2,716.18 for this claim. Adventist-FL-48 claim was a 44-year-old male who, while working on a ladder, touched a live electrical wire. This patient was taken by rescue squad to the ER and presented with atrial fibrillation. The patient was admitted to inpatient status, and it was recommended he be given a full cardiac work- up. At some point during his ER stay, and prior to the cardiac testing, the patient returned to a normal cardiac rhythm. Against the recommendation of medical staff, the patient left the hospital. Approximately three days later this patient returned to the ER and requested the cardiac testing he had declined on his prior visit. When he returned, the patient had a normal heart rhythm, had no other symptoms to suggest a cardiac irregularity, and had normal vital signs. Instead of billing the cardiac testing as outpatient services, the patient was admitted for inpatient status and given the full complement of cardiac tests to rule out any adverse cardiac condition resulting from the electrical shock. The weight of persuasive evidence supports that the testing should have been given with this patient in an outpatient status. There was no medical instability supporting a more acute setting for the testing that was done. The overpayment for this claim is $1,503.04. The patient described in Adventist-FL-78 claim was a 63-year-old female who went to the ER with stomach discomfort, nausea, and headache. It was feared the patient was in a cardiac-related condition as the patient had multiple risk factors including atrial fibrillation. By history, the patient had suffered a heart attack in the recent past, and the ER physician rightly admitted the patient for inpatient care to perform a cardiac work-up and to rule out any cardiac event. The inpatient stay was for a 24-hour period so that the testing could be concluded. The weight of persuasive evidence supports this stay. Respondent has shown the medical necessity for the treatment provided for this patient. Adventist-FL-96 claim concerned a patient with a significant bone marrow disorder similar to leukemia. The patient had had a bone marrow transplant. Upon admission to the hospital he suffered nausea, vomiting, and abdominal pain. He was admitted for a one-day inpatient stay and treated for dehydration. He was given a white blood count test and once stabilized was discharged (within 24 hours) with the recommendation that the patient return to his regular provider in Tampa. The weight of persuasive evidence supports this stay. Respondent has shown the medical necessity for the treatment provided for this patient. The patient in Adventist-FL-98 claim was a 45-year-old male with a history of Chronic Obstructive Pulmonary Disease (COPD), smoking, and alcohol abuse. The patient had a history of hospitalizations related to COPD and upon admission complained of shortness of breath. At the time of admission, the patient had normal vital signs, acceptable oxygen saturation levels, no wheezing, and a chest x-ray that showed no acute abnormalities. The weight of persuasive evidence supports the finding that a level of care of observation, and not inpatient, was the correct level Respondent should have billed for this patient. The patient had no medical acuity to support a one-day inpatient stay. AHCA is entitled to recover the overpayment in the amount of $1,358.09. AHCA no longer disputes Adventist-FL-154 claim. Consequently, the overpayment associated with the audit must be reduced by $3,856.68. It is determined Respondent accurately billed for this claim. Similarly, Respondent no longer disputes claims Adventist-FL-155-156. These claims should have been billed as observation, not inpatient stays. Accordingly, Petitioner is entitled to recover the overpayment associated with these claims in the amount of $2,672.98. The patient associated with Adventist-FL-180 claim was a 53-year-old female with a history of breast cancer and metastatic disease. On the date of her admission, she had had radiation therapy. She suffered nausea and vomiting and presented to the ER. She received an IV of fluids and IV Zofran, felt better, and left the hospital against medical advice. In total, the patient was in the hospital approximately three hours or less. The claim billed her admission as inpatient. This claim should have been billed as observation. Accordingly, the weight of persuasive evidence supports that an overpayment occurred with regard to this claim. Petitioner is entitled to recover the difference between inpatient and observation for this patient. The amount of the overpayment is unknown. With regard to Adventist-FL-230 claim, this patient was a 58-year-old male complaining of shortness of breath with a history of atrial fibrillation. The patient was admitted for a five-day inpatient admission. Respondent was paid for a four-day inpatient stay because that length of stay was approved by KePro. Petitioner disputes that an inpatient stay was required. The weight of persuasive evidence supports an inpatient stay of three days. The patient had stabilized, testing had been completed, and there was no significant medical basis for an inpatient stay beyond that point. The amount of the overpayment is unknown as the audit sought reimbursement at an observation rate. Although not entitled to the four days of inpatient as billed for this patient, Respondent has established it was entitled to a three- day inpatient compensation based upon the medical necessity established for this patient. Respondent, and other providers may adjust Medicaid billings after-the-fact to conform to medical necessity for any claim filed. In this case, Respondent did not review its claims once KePro approval had been secured. That is to say, if the KePro approval was documented, Respondent did not question the claim for medical necessity once treatment was given. Billings were adjusted to conform to KePro approval, but were not questioned or re-visited as to whether the appropriate level of acuity was documented. Petitioner asserts that Respondent failed to submit the complete medical records for Adventist-FL-98 claim until after the audit was issued. Respondent’s response that it provided all medical records timely to the auditor, BAH, is accepted. It is unlikely the records of one claim would have been omitted from the hundreds of pages of records given to the auditor. BAH conducted their audit over an extensive period of time. The Interim Audit Report was issued on October 4, 2010. The overpayment at that time was alleged to be $42,848.29. That amount was also noted in the FAR dated November 16, 2010. Concurrent with the FAR, Petitioner announced its intention to impose sanctions against FHO. The July 20, 2011, audit report reduced the overpayment to $38,790.68, but again claimed Petitioner was entitled to impose sanctions. The June 12, 2012, audit report further reduced the overpayment to $38,500.78. Subsequent to the hearing, Petitioner acknowledged that the overpayment should be reduced another $3,856.68 to $34,644.10. Petitioner incurred investigative and legal costs in connection with this case in the amount of $7,635.27. Respondent has not challenged the reasonableness of that amount. Petitioner seeks sanctions against Respondent in the amount of $2,000.00. Respondent submitted records to BAH for 285 claims that had to be reviewed. Of that total, only those claims addressed above remain at issue. Ninety-four percent of the claims reviewed/audited by BAH were resolved without dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a Final Order adjusting the recoupment for the Medicaid overpayment as indicated in the foregoing findings of fact, imposing a sanction in the amount of $500.00, and recovering its costs in the amount of $7,635.27. DONE AND ENTERED this 4th day of September, 2013, in Tallahassee, Leon County, Florida. S J. D. PARRISH 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 4th day of September, 2013. COPIES FURNISHED: John D. Buchanan, Jr., Esquire Henry, Buchanan, Hudson, Suber, and Carter, P.A. Post Office Drawer 14079 2508 Barrington Circle (32308) Tallahassee, Florida 32317-4079 David W. Nam, Esquire Agency for Health Care Administration Fort Knox Building 3, Mail Stop 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308
The Issue The issue for determination is whether Petitioner must reimburse Respondent for payments totaling $1,140,763.88 that Petitioner received from the Medicaid Program in compensation for the provision of prescription drugs between late-August and November of 1998. Respondent contends that Petitioner is not entitled to retain the payments in question because Petitioner allegedly has failed to demonstrate that it had available during the pertinent period a sufficient quantity of the prescription drugs in question.
Findings Of Fact The parties' Joint Stipulation of Facts and the evidence presented at final hearing established the facts that follow. The Parties The Agency for Health Care Administration (the “Agency”) is responsible for administering the Florida Medicaid Program. As one of its duties, the Agency must recover "overpayments . . . as appropriate," the term "overpayment" being statutorily defined to mean "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." See Section 409.913(1)(d), Florida Statutes. Palm Beach Pharmacy, Inc. (“PBPI”), d/b/a Eddie’s Drug (“Eddie’s”) was, at all times material hereto, a duly contracted Medicaid provider, having entered into a Medicaid Provider Agreement with the Agency and been assigned a Medicaid Provider Number: 106343000. Eddie’s is a Florida licensed pharmacy.1 As an enrolled Medicaid provider, Eddie’s is authorized to dispense drugs and supplies to Medicaid recipients. In return, Eddie’s has agreed to comply with all governing statutes, rules, and policies, including those policies set forth in the Florida Medicaid Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (the “Handbook”). The Agency, which prepared the Handbook and furnishes it to Medicaid providers, has incorporated the Handbook by reference into Rule 59G-4.250(2), Florida Administrative Code. PBPI, which owned and operated a number of pharmacies (including Eddie’s), maintained its corporate headquarters in West Palm Beach, Florida. Eddie’s was located in Miami, Florida. On July 1, 1998, PBPI acquired a drug store known as Jay’s Drugs (“Jay’s”). Jay’s was located in Miami, Florida, across the street from Eddie’s. Thus, before both stores came under common ownership, they had been competitors. This case arises out of the Agency's attempt to recover alleged overpayments on Medicaid claims for which Eddie’s was paid several years ago. The "audit period" that is the subject of the Agency's recoupment effort is April 1, 1998 to July 31, 1999, although the actual period in controversy is much shorter. From July 1, 1998, until the end of the audit period, PBPI owned and operated both Eddie’s and Jay’s. The Underlying Facts The transactions at the heart of this case occurred between late-August and November of 1998, during which period (the “Focal Period”) Medicaid reimbursed Eddie’s more than $1 million for prescription drugs including Neupogen and Epogen/Procrit (collectively, the “Drugs”). The Drugs are used to treat AIDS patients and persons infected with HIV. Prior to the Focal Period, Eddie’s had not dispensed $1 million worth of the Drugs——or any figure approaching that amount——in three or four months’ time. The reason for the dramatic spike in Eddie’s business is that Eddie’s was dispensing the Drugs to customers of Jay’s pursuant to an arrangement designed to manipulate PBPI’s contractual obligations to the former owner of Jay’s under the purchase and sale agreement by which PBPI had acquired Jay’s. Essentially, the arrangement was this. Jay’s was dispensing the Drugs to a large number (approximately 150) of Medicaid beneficiaries who were receiving treatment at a nearby clinic. Because the Drugs were administered to the patients via intravenous infusion, the clinic typically obtained the Drugs from Jay’s in bulk. To fill these prescriptions, Jay’s ordered the Drugs from a wholesale supplier, which usually delivered the Drugs to Jay’s the next day. At some point before the Focal Period, arrangements were made to have the clinic present its prescriptions for the Drugs to Eddie’s rather than Jay’s.2 The evidence does not show, exactly, how this was accomplished, but whatever the means, the clinic abruptly began bringing prescriptions for the Drugs to Eddie’s.3 This diversion of Jay’s’ business to Eddie’s was intended to deprive Jay’s of Medicaid reimbursements to which Jay’s’ former owner had access as a source of funds for paying down a note that PBPI had given for the purchase of Jay’s. By having Eddie’s dispense the Drugs and submit the Medicaid claims, Medicaid money flowed into Eddie’s’ bank account (rather than Jay’s’ bank account) and hence was not immediately available to the former owner of Jay’s to reduce PBPI’s debt. During the Focal Period, Eddie’s did not purchase the Drugs from a wholesaler but instead acquired them from Jay’s. The process by which this was accomplished involved a pharmacy technician named Wright, who was employed at Eddie’s, and a pharmacist named Shafor, who worked at Jay’s. Wright (at Eddie’s) accepted the prescriptions for the Drugs as the clinic brought them in Then, she called Shafor (at Jay’s) and told him the quantities needed to fill the prescriptions. Shafor ordered the Drugs from a wholesaler, which delivered them in bulk to Jay’s, usually the next day. Upon receiving the Drugs, Shafor personally delivered them to Wright, who, recall, was across the street at Eddie’s. Wright labeled and dispensed the Drugs. Eddie’s submitted a claim for the Drugs to Medicaid, and Medicaid paid Eddie’s. PBPI maintained separate accounting ledgers for Eddie’s and Jay’s, respectively. The company’s accountants recorded the subject transactions in these ledgers so that Jay’s——not Eddie’s——would “recognize” the sales of the Drugs. In a nutshell, this was done through “inter-company” transfers whereby all of the money that Eddie’s received from Medicaid for the Drugs was moved, on the books, into an account of Jay’s. In this way, any profit from the sales of the Drugs (the difference between the wholesale cost of the Drugs and the Medicaid reimbursement therefor, less overhead) was realized on Jay’s’ books.4 The Medicaid payments to Eddie’s that the Agency seeks to recoup were included in four remittance vouchers dated September 2, 1998; September 30, 1998; October 28, 1998; and November 25, 1998, respectively. The September 2 payment to Eddie’s totaled $287,205.52. Of this amount, $276,033.23 reimbursed Eddie’s for dispensing the Drugs. Eddie’s’ accounting ledger reflects that, as of September 30, 1998, the sum of $276,033.23 had been transferred from an account of Eddie’s to an account of Jay’s. The September 30 payment to Eddie’s totaled $439,175.77, of which $432,700.36 was paid in consideration of the Drugs. The October 28 Medicaid payment was $431,753.82, of which total the Drugs accounted for $424,202.76. Eddie’s’ accounting ledger reflects that, as of October 31, 1998, the sum of $870,929.59 (439,175.77 + 431,753.82) had been transferred from an account of Eddie’s to an account of Jay’s. The November 25 payment to Eddie’s totaled $407,088.00. Of this amount, $393,063.00 reimbursed Eddie’s for dispensing the Drugs. Eddie’s’ accounting ledger reflects that, as of November 30, 1998, the sum of $407,088.00 had been transferred from an account of Eddie’s to an account of Jay’s. The Agency’s Allegations On October 31, 2000, the Agency issued its Final Agency Audit Report (“Audit”) in which Eddie’s was alleged to have received $1,143,612.68 in overpayments relating to the Drugs. In the Audit, the Agency spelled out its theory of the case; indeed, the Audit is the only document in the record that does so. The Agency cited several statutory provisions. First, Section 409.913(7)(e), Florida Statutes, was referenced. This section states: When presenting a claim for payment under the Medicaid program, a provider has an affirmative duty to supervise the provision of, and be responsible for, goods and services claimed to have been provided, to supervise and be responsible for preparation and submission of the claim, and to present a claim that is true and accurate and that is for goods and services that: * * * (e) Are provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law. Section 409.913(7)(e), Florida Statutes. The Agency did not allege (or prove), however, that Eddie’s had violated Section 409.913(7)(e), Florida Statutes.5 Put another way, the Agency did not plead or prove lack of supervision, submission of a false claim, or that the Drugs were not provided in accordance with applicable law. Next, the Agency cited Section 409.913(8), Florida Statutes, which provides: A Medicaid provider shall retain medical, professional, financial, and business records pertaining to services and goods furnished to a Medicaid recipient and billed to Medicaid for a period of 5 years after the date of furnishing such services or goods. The agency may investigate, review, or analyze such records, which must be made available during normal business hours. However, 24-hour notice must be provided if patient treatment would be disrupted. The provider is responsible for furnishing to the agency, and keeping the agency informed of the location of, the provider's Medicaid- related records. The authority of the agency to obtain Medicaid-related records from a provider is neither curtailed nor limited during a period of litigation between the agency and the provider. The Agency further alleged, as fact, that Eddie’s had failed, upon request, “to submit invoices from [its] suppliers to substantiate the availability of drugs that [were] billed to Medicaid” and thus had not “fully substantiated such availability.” The Agency, however, did not invoke any of the available remedial provisions as authority to impose a sanction for this alleged failure to turn over Medicaid-related records. See, e.g., Sections 409.913(14)(b), (c), and (d), Florida Statutes. The Agency cited Section 409.913(10), Florida Statutes, which authorizes the Agency to “require repayment for inappropriate, medically unnecessary, or excessive goods or services from the person furnishing them, the person under whose supervision they were furnished, or the person causing them to be furnished.” There was no allegation (or proof), however, that the Drugs which Eddie’s had purported to dispense (i.e. the Drugs for which it had submitted Medicaid claims) were “inappropriate, medically unnecessary, or excessive.” Thus, Eddie’s was not alleged (or shown) to have violated Section 409.913(10), Florida Statutes. Finally, the Agency relied upon Section 409.913(14)(n), Florida Statutes, which is the basis of the Agency’s legal theory. This section provides: The agency may seek any remedy provided by law, including, but not limited to, the remedies provided in subsections (12) and (15) and s. 812.035, if: * * * (n) The provider fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods, or sufficient time in the case of services, to support the provider's billings to the Medicaid program[.] The Agency contended, additionally, that “[b]illing Medicaid for drugs that have not been demonstrated as available for dispensing is a violation of the Medicaid laws and regulations and has resulted in the finding that [Eddie’s] ha[s] been overpaid by the Medicaid program.” (Emphasis added). The Agency explained, “Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid.” Thus, the Agency’s theory of recovery is that Eddie’s must forfeit “overpayments” arising from its failure to demonstrate the availability, in inventory, of a sufficient quantity of the Drugs for which claims were submitted, as required by Section 409.913(14)(n), Florida Statutes. After the Audit was issued, the Agency accepted a handwritten note regarding the transfer of a small quantity of Drugs from Jay’s to Eddie’s as sufficient to demonstrate the availability of such amount. This resulted in a slight reduction of the amount of the alleged overpayment, to $1,140,763.88. The Separate Audit of Jay’s The Agency conducted a separate audit of Jay’s, concerning which some evidence was introduced at hearing. Without getting into unnecessary detail, the audit of Jay’s revealed that Jay’s had purchased, during and around the Focal Period, a quantity of the Drugs that exceeded the number of units that Jay’s had billed to Medicaid. It was Eddie’s theory that this “excess inventory” of Jay’s matched, more or less, the alleged inventory shortfall at Eddie’s, thereby corroborating the testimony concerning the transfer of these Drugs from Jay’s to Eddie’s for dispensation. At hearing, the parties sharply disputed whether, in fact, Jay’s had transferred the Drugs to Eddie’s. The Agency, of course, maintained that such transfers were not properly documented; Eddie’s argued that the documents and other evidence, including testimony about the transactions in question, adequately demonstrated that the transfers had, in fact, occurred. There was no dispute, however, that if it were found that such transfers had occurred, and if, further, the documents (and other evidence) pertaining to the inventory of Jay’s were accepted as proof of the quantities of Drugs so transferred, then all but $176,078.30 worth of the Drugs could be accounted for. Thus, as counsel for Eddie’s conceded at hearing, the Agency is entitled to recoup some sum of money. The question is whether that sum is $1,140,763.88 or $176,078.30. Ultimate Factual Determination Based on all of the evidence in the record, including the deposition testimony received through the parties’ joint stipulation, it is determined that, more likely than not, Eddie’s had available during the Focal Period a sufficient quantity of the Drugs to support all but $176,078.30 worth of the claims in dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Eddie’s to repay the Agency the principal amount of $176,078.30. DONE AND ENTERED this 12th day of March, 2002, in Tallahassee, Leon County, Florida. 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 12th day of March, 2002.
The Issue Whether, in making a preliminary decision to award a contract for the subject services, Respondent acted contrary to a governing statute, rule, policy, or project specification; and, if so, whether such misstep(s) was/were clearly erroneous, arbitrary or capricious, or contrary to competition. Also at issue is whether Petitioner’s response to the subject Request for Proposal (RFP) was responsive and whether Petitioner has standing to bring this proceeding.
Findings Of Fact Pursuant to Section 409.902, Florida Statutes,1 the Respondent is the state agency charged with the responsibility and authority to administer the Medicaid program in Florida. On February 20, 2007, Respondent issued the RFP to select a vendor for the Florida Medicaid HIV/AIDS Disease Management Program. Cathy McEachron, Director of Respondent’s Procurement Office, served as the Issuing Officer for the RFP. The RFP requests that vendors submit proposals to provide disease management (DM) services to Florida’s Medicaid patients suffering from HIV/AIDS outside of Broward and Duval Counties (where Medicaid reform has been enacted) as well as services under the Project AIDS Care Services (PAC services) throughout the state. DM involves registered nurses who assess a patient’s condition, develop a plan of care, and implement that plan to ensure that the patient receives the care he or she needs. There are two goals or reasons for having a DM program. First, a DM program helps to hold down costs because the enrollees in the program (HIV/AIDS patients) who follow a plan of care are less likely to require more costly treatment, such as hospitalization. Second, DM tends to improve the outcome for the patients being managed. By memorandum from Roberta Kelly of Respondent’s Bureau of Health Systems Development, Respondent explained why an invitation to bid was not being used for the subject procurement: The Agency [Respondent] has a solid and satisfactory history with its contracts for HIV/AIDS disease management. Program evaluations and outcome measurements have shown the services to be beneficial to the health and outcomes of Medicaid enrollees while helping to control the costs of medical care. Given past performance the Agency knows that vendor qualifications, experience, and quality of services are more important than price for the procurement of said services, therefore a Request for Proposals is the appropriate method for procurement. There was minimal confusion as to the term of the RFP. In one place, the RFP indicated that it was for a one-year term while in other parts of the RFP the reference was to a two-year term. That erroneous statement was corrected. Proposed vendors were clearly notified by an addendum that the term was for two years. The addendum superseded the erroneous statement that the RFP was for a one-year term. Following the receipt of proposals, the two responding vendors were e-mailed about a possible change Respondent was contemplating to the scope of the services. The inquiry was whether the contemplated change, if put into place, would change the response of either vendor. Respondent made no change to the RFP. The subject e-mail did not flaw the procurement process. The RFP was divided into three parts: a Transmittal Letter, a Technical Proposal, and a Cost Proposal. The scores for all three parts were combined for the evaluation. Two responses to the RFP were received. Petitioner filed a response, as did Intervenor. MANDATORY CRITERIA Attachment E of the RFP, entitled Evaluation Criteria, provides in paragraph E.1 the following: Responses to this solicitation will be evaluated against the mandatory criteria found in Part I, Mandatory Criteria. Responses failing to comply with all mandatory criteria will not be considered for further evaluation. The checklist for the Mandatory Criteria is set forth in Part I of Attachment E (page 3 of 11). Four items are listed on the checklist with Item Three having four subparts. Only Items Three and Four are relevant to this proceeding. Item Three includes as a mandatory criteria that the transmittal letter include a copy of the vendor’s current accreditation. Item Four asks whether the response included a three-page Cost Proposal, as required in Section C.38. These mandatory requirements will be discussed in more detail below. PETITIONER’S HISTORY Petitioner is a newly formed corporation. Its parent corporation, AIDS Healthcare Foundation, Inc. (AHF), is the incumbent provider of the services sought by the RFP pursuant to a contract with Respondent. There has been no issue with regard to the quality of care provided by AHF under that contract. AHF caused Petitioner to become incorporated because the RFP contained a provision that a direct pharmaceutical provider could not be considered for the contract. AHF is a direct pharmaceutical provider. Petitioner is not a direct pharmaceutical provider. Petitioner’s response to the RFP proposed to transfer the program (personnel, facilities, accreditation, and other assets) that AHF is currently utilizing to provide the services required by the RFP from AHF to Petitioner. Further, Petitioner’s financing is dependent on AHF. PETITIONER’S COST PROPOSAL Attachment J to the RFP is incorporated herein by reference. Pursuant to Attachment C.38C (Attachment C, page 22 of 23) under the heading: “Cost Proposal (Must be submitted on page provided as Attachment J.[2]),” the following appears: The respondent [the vendor submitting the proposal] shall submit a cost proposal, as outlined in Attachment J., with each technical response. The cost proposal shall be labeled and tabbed separately and shall include a proposed unit price for each specified PAC served, a per member - per month case management fee for DM Program enrollees, and a detailed budget. The annual cost for each year will be added together to arrive at a two-year total cost, which shall not exceed $9.95 million. FAILURE TO SUBMIT ATTACHMENT J, COST PROPOSAL, INCLULDING THE DETAILED BUDGET FORM, SHALL RESULT IN THE REJECTION OF A PROSPECTIVE VENDOR’S RESPONSE. On page 1 of Attachment J the vendors were instructed to complete and return three tables. Table 1, pertaining to costs for PAC services, and Table 2, pertaining to costs for DM services, are found on page 2 of Attachment J. Table 3, pertaining to the detailed budget, is found on page 3 of Attachment J. Table 1 required the vendor to propose a unit price for each PAC service included in the RFP, to calculate the total cost for each category of service, and to show the grand total for all categories of PAC services. Table 1 included three categories of services. For each category of service, Table 1 provided an anticipated enrollment figure that was to be used in calculating the total cost for each category of service and in calculating the grand total for the PAC services. The total cost for a category of service was to be determined by multiplying the unit price by the anticipated enrollment figure. For the category “PAC Assessments”, Table 1 provided the anticipated enrollment figure of 6,334. For the category “Re-Assessments”, Table 1 provided the anticipated enrollment figure of 6,334. For the category “Exception Request Processing”, Table 1 provided the anticipated enrollment figure of 4,000. Table 1 required the vendor to calculate the grand total of the proposed costs for the three categories of PAC services. Table 1 also contained the caveat that the grand total could not exceed the sum of $950,000. Petitioner inserted a proposed per unit cost for each category. For the category “PAC Assessments”, the unit cost was $100.00. For the category “Re-Assessment”, the unit cost was $70.00. For the category “Exception Request Processing”, the unit cost was $25.00. However, in calculating the total cost for each category of service and the grand total for the PAC services, Petitioner did not use the anticipated enrollment figure set forth in Table 1, but, instead, used a lower anticipated enrollment figure that does not appear anywhere in the RFP. Instead of using Respondent’s anticipated enrollment figures, Petitioner made its own estimate of those figures. For the category “PAC Assessments”, Petitioner used the anticipated enrollment figure of 5,278 (as opposed to Respondent’s figure of 6,334) and the unit price of $100.00. By using its lower anticipated enrollment figure, Petitioner calculated the sum of $527,800.00 as the total cost for this category of service. Had it used Respondent’s anticipated enrollment figure, the calculation would have been $633,400.00. For the category “Re-Assessments” Petitioner used the anticipated enrollment figure of 5,000 (as opposed to Respondent’s figure of 6,334) and the unit price of $70.00. By using its lower anticipated enrollment figure, Petitioner calculated the sum of $350,000.00 as the total cost for this category of service. Had it used Respondent’s anticipated enrollment figure, the calculation would have been $443,380.00. For the category “Exception Request Processing” Petitioner used the anticipated enrollment figure of 2,664 (as opposed to Respondent’s figure of 4,000) and the unit price of $25.00. By using its lower anticipated enrollment figure, Petitioner calculated the sum of $66,600.00 as the total cost for this category of service. Had it used Respondent’s anticipated enrollment figure, the calculation would have been $100,000.00. By using the lower anticipated enrollment figures, Petitioner was able to propose a higher per unit cost for each category of service and stay below the not to exceed figure of $950,000. Petitioner’s grand total for the PAC services, using its anticipated enrollment figures, equaled $944,400.00. Had Petitioner used the Respondent’s anticipated enrollment figures for each category of service, the grand total would have been $1,176,780.00, which exceeds the not to exceed figure of $950,000.00. Petitioner completed Table 2, pertaining to DM services as instructed. Table 2 contained the caveat that the grand total for DM services was not to exceed $9,000,000.00. The grand total of the proposed services as reflected by Table 2 was $8,999,965.00, which is below the not to exceed figure. However, if Petitioner had used the Respondent’s anticipated enrollment figures in calculating the grand total costs for the PAC services in completing Table 1, its proposed total costs for the PAC services ($1,176,780.00) and its proposed costs for the DM services ($8,999,965.00) would have totaled $10,176,745.00, which exceeds the do not exceed figure of $9,950,00.00, for all categories of services. Section 287.012(26), Florida Statutes, defines the term “responsive vendor” as being “. . . a vendor that has submitted a bid, proposal, or reply that conforms in all material respects to the solicitation.” The undersigned rejects the argument that Petitioner was free to use its own anticipated enrollment figures since it would not be able to collect more than the not to exceed figure of $950,000.00 for the PAC services regardless of the unit price and regardless of the number of enrollees. Petitioner’s use of the lower anticipated enrollment numbers enabled it to propose a higher unit cost than it could have proposed had it used Respondent’s anticipated enrollment figures, thereby providing Petitioner with an unfair competitive advantage. This higher unit cost would enable Petitioner to collect its funds more quickly during the term of the contract than it could have with a lower unit cost rate. The higher unit cost rate would also have resulted in Petitioner collecting more than it could have if the actual number of enrollees is less than the Respondent’s anticipated enrollment figure.3 Petitioner’s failure to use the Respondent’s anticipated enrollment figure in completing Table 1 of Attachment J is a major deviation from the solicitation document that renders Petitioner’s cost proposal non-responsive. Petitioner is a non-responsive bidder because the cost proposal is a mandatory item. After the deadline for the submission of responses, Ms. McEachron reviewed Petitioner’s response and Intervenor’s response to determine whether the responses met all mandatory criteria. Ms. McEachron determined that both responses met all mandatory criteria. Ms. McEachron testified at the formal hearing that she made a mistake in reviewing Petitioner’s cost proposal in that she did not notice that Petitioner had not used Respondent’s anticipated enrollment figures in completing Table 1 of Attachment J. Ms. McEachron testified, credibly, had she not made that mistake, she would have determined Petitioner’s response to be non-responsive and that Petitioner’s response would not have been submitted for further evaluation. PETITIONER’S LACK OF ACCREDITATION Attachment D, page 2 of the RFP requires that a vendor must be experienced in the delivery of HIV/AIDS services, accredited by a recognized entity such as URAC, JCAHO, or NCQA, and be a financially sound DM organization. As stated above, the Mandatory Criteria set forth in Attachment E, page 3 of 11, requires that a vendor’s transmittal letter include a copy of the vendor’s current accreditation. Petitioner did not include a copy of its accreditation in its transmittal letter. Instead, Petitioner inserted the following: AIDS Healthcare Foundation (AHF), the current holder of the Disease Management contract, operates that program with NCQA accreditation. As laid out in detail in the application, all of AHF’s Disease Management operations in Florida are being transferred to AHFDM [Petitioner], a wholly separate corporation from AHF. Under the rules set forth by the NCQA, the accreditation can be transferred within 30 days by applying for transfer to the NCQA. AHFDM [Petitioner] is in the process of making this transfer. The transfer will be accomplished by the anticipated July 1, 2007 contract start date. Respondent and Intervenor correctly argue that Petitioner’s failure to have accreditation prior to submitting its proposal is a deviation from the RFP specifications.4 While Ms. Stidman’s testified that AHF had agreed to this procedure, there was no documentary evidence to support her testimony. Petitioner’s failure to comply with this mandatory item rendered its response non-responsive. INTERVENOR’S 2004/2005 FINANCIAL STATEMENT Petitioner challenged the sufficiency of Intervenor’s response to the requirement of Attachment C, paragraph 38.B.2.c, (Attachment C, page 15 of 23) that each vendor responding to the RFP file “[a] copy of the vendor’s most recent financial statement or audit” (the financial requirement). In response to the financial requirement, Intervenor submitted an audited financial statement for the Intervenor and its subsidiaries for the calendar years 2004 and 2005. Because Intervenor’s subsidiaries were included, the audited financial statements were considered to be consolidated financial statements. The audited financial statement provided by Intervenor for those two years was the most recent audited financial statement available to Intervenor. Intervenor had more recent financial statements, but those financial statements were not audited. Ms. McEachron, as the agency procurement director, interpreted the financial requirement to require a vendor to provide its latest unaudited financial statement or its latest audited financial statement without regard to whether one statement was more recent than the other. Ms. McEachron testified that Intervenor complied with the financial requirement because it submitted its most recent audit despite the fact that the audit was for the years 2004/2005. Ms. McEachron’s interpretation is consistent with the plain reading of the provision. Ms. Newman evaluated Intervenor’s financial condition based on the information that had been provided to her by Intervenor. Ms. Newman testified that she was not concerned that the audited financial statement was for years 2004/2005. She further testified that audited financial statements are frequently required for the type evaluation at issue in this proceeding. Ms. Newman awarded Intervenor a rating of 2, which signified that its financial condition, based on the information available to her, was below average. Ms. Newman has, in other procurements, used a score of 2 or below to reflect her opinion that the bidder is “not financially stable.” There was no evidence as to the evaluation criteria for those other procurements. Ms. Newman testified that for the subject procurement, she did not evaluate Intervenor as being “not apparently financially stable” she evaluated its financial condition as below average.5 Mr. Law, who has considerable experience dealing with agency procurements, reviewed Intervenor’s 2004/2005 audited financial statement on behalf of Petitioner. Mr. Law opined that the audited financial statement demonstrated that Intervenor was not a responsible vendor, and explained his opinion. Mr. Law believed that Intervenor had insufficient working capital to perform the contract. He was concerned that Intervenor had a net profit of $29,732.00 in 2004 and a net loss of $273,213.00 for 2005. At the end of 2004, Intervenor had working capital of $512,000.00. At the end of 2005, Intervenor’s working capital had been reduced to approximately $265,000.00. Mr. Law opined that Intervenor would need $660,000.00 in upfront working capital to fund the contract in the first year.6 Mr. Mercer, who also has extensive experience, reviewed Intervenor’s 2004/2005 audited financial statement on behalf of Intervenor. Mr. Mercer opined that the financial statement Intervenor provided as part of its response to the RFP demonstrated that Intervenor was a responsible bidder, and explained the rationale for his opinion. Mr. Mercer testified to the following: Intervenor had a Current Ratio of 3.23 at the end of 2005, which showed a strong working capital relationship;[7] Intervenor needed working capital of $250,000.00 to fund the contract. It had working capital in the amount of $265,000.00 at the end of 2005;[8] Intervenor had a positive asset to debt ratio of .32; Intervenor was creditworthy based on its ratio of assets to liabilities, its amount of working capital, its positive ratio of assets to liabilities, and its history; Intervenor’s Defense Interval ratio of 25 days was average;[9] Intervenor’s Debt to Equity ratio of .46 was positive; Intervenor’s Collection Period of 19 days was positive;[10] Intervenor had the necessary capital to purchase needed equipment; Intervenor’s financial condition would benefit by the subject contract; and The appearance of Intervenor’s financial strength at the end of 2005 was diminished by the payment of discretionary bonuses to avoid taxation at the corporate and individual shareholder level. Both Mr. Law and Mr. Mercer agreed that Intervenor would need an infusion of start-up capital for the contract. Both agreed that most lenders would require more recent financial information than the 2004/2005 audited financial statement prior to lending money to Intervenor. Mr. Mercer opined that Intervenor would require approximately $150,000.00 in capital as opposed to Mr. Law’s opinion that $660,000.00 would be needed. Mr. Mercer testified that Intervenor was creditworthy based on its 2004/2005 financial statement. Mr. Law testified that further information would be required to make that determination. The undersigned has carefully considered the testimony of Ms. Newman, Mr. Law, and Mr. Mercer. The conflicting evidence is resolved by finding that Ms. Newman correctly evaluated Intervenor’s financial condition based on her review of the 2004/2005 audited financial statements. The 2004/2005 audited financial statement reflected that Intervenor’s financial condition is “below average.” The financial statement did not establish that Intervenor was a non-responsive bidder due to a lack of financial stability to complete the contract. IS INTERVENOR A RESPONSIBLE BIDDER? Section 287.012(24), Florida Statutes, defines the term “responsible vendor” as follows: (24) “Responsible vendor” means a vendor who has the capability in all respects to fully perform the contract requirements and the integrity and reliability that will assure good faith performance. Section 287.057(2)(b), Florida Statutes, requires that contracts be awarded to responsible vendors as follows: (b) The contract shall be awarded to the responsible and responsive vendor, whose proposal is determined in writing to be the most advantageous to the state, taking into consideration the price and the other criteria set forth in the request for proposals. The contract file shall contain documentation supporting the basis on which the award is made. Six subsidiaries were shown on the consolidated financial statement submitted by Intervenor. Each subsidiary was a limited liability company that Intervenor had established. Each subsidiary was established to provide DM services in a specific state pursuant to a subcontract between the subsidiary and a company named McKesson Health Solutions, LLC (McKesson). McKesson, in turn, had a contract with the specific state to provide DM in that state. During 2005, Intervenor controlled subsidiaries that had subcontracts with McKesson to provide DM services in each of the following states: Mississippi, Montana, New Hampshire, Texas, and Washington. The 2004/2005 audited financial statement demonstrated that in 2005, approximately 87 percent of the total revenues on a consolidated basis came from the five subsidiaries for the states mentioned above, and not from Intervenor. Intervenor’s reliance on these subsidiaries for income was heavy. For the year ending December 31, 2005, the consolidated financial statement reflected a negative net income of $273,000.00. For the year ending December 31, 2004, the consolidated financial statement reflected a small profit. The consolidated financial statement reflected a downturn between those two years. At the time Intervenor filed its response to the RFP, its contracts with McKesson had been terminated and each of its subsidiaries had been dissolved.11 Ms. Newman testified that it would be highly unlikely that the audited consolidated financial statement for the years 2004/2005 fairly represented the financial condition of Intervenor in 2007. Petitioner proved that Intervenor’s financial condition experienced substantial and material changes between the ending date of the audited financial statement and the date of Intervenor’s response to the RFP. Because of those changes, Respondent has relied on stale financial information. Respondent does not, without updated financial information, have sufficient information to determine whether Intervenor is a responsible vendor with the requisite financial stability to perform the subject contract.12 While Respondent acted within its discretion in allowing a vendor to use stale financial information as part of its evaluation process, it does not have such discretion in determining whether a vendor is a responsible vendor within the meaning of Section 287.012(24), Florida Statutes, as required by Section 287.057(2)(b), Florida Statutes. The statutory requirement that an agency deal only with responsible vendors cannot be waived by a vendor or ignored by an agency. Petitioner established that Respondent failed to ensure that Intervenor is a responsible vendor.13 The evidence established that but for the missing up- to-date financial information, Intervenor is a responsive bidder.14 THE EVALUATION For a procurement of the nature and dollar amount of this procurement, Respondent’s agency head is required by the provisions of Section 287.057(17)(a), Florida Statutes, to appoint: (a) At least three persons to evaluate proposals and replies who collectively have experience and knowledge in the program areas and service requirements for which commodities or contractual services are sought. By memo dated March 16, 2007, Thomas W. Arnold, Respondent’s Deputy Secretary for Medicaid, appointed the following to serve on the evaluation team for the subject procurement as follows: Brenda Jones-Garrett, Medical Health Care Program Analyst, Bureau of Medicaid Services, Division of Medicaid. Responsible for the Project AIDS Care Waiver service oversight. Ms. Garrett-Jones previously worked in AHCA’s division of Quality Management and had been working with HIV/AIDS prior to coming to the Agency. Talisa-Hardy, Clinical Program Manager, Bureau of Medicaid Pharmacy Services. Dr. Hardy has a doctorate in pharmacy and has been practicing for seven and a half years in several areas including HIV/AIDS. Vivian Booth, Nurse Consultant, Bureau of Medicaid Health Systems Development. While employed with AHCA, Ms. Booth provides RN consulting service and is the contract manager for the Minority Physician Network Program. She has served on the HIV/AIDS Title II Collaborative as the Agency representative for approximately one year, and participated in the on-site monitoring of the HIV/AIDS disease management program, Positive Health Care. Gayle McLaughlin, Nurse Consultant, Florida Department of Health, HIV/AIDS Bureau. Dr. McLaughlin has worked for seven years as a nurse consultant with the Bureau of HIV/AIDS. She functions as a primary clinical resource for public and private sector medical providers involved in HIV/AIDS care. She is also currently a member of HRSA Title II Collaborative which is a national initiative focused on improvement of the quality of HIV/AIDS care. Kay Newman, Senior Management Analyst, Office of the Deputy Secretary for Medicaid. Ms. Newman is a certified public accountant, who will evaluate the solvency of the respondents via review of their financial statements. Ms. Newman’s evaluation was limited to the financial evaluation. There was no contention that Ms. Newman lacked the qualifications and training to conduct her evaluation. As discussed above, Ms. McEachron reviewed the proposals to determine whether the vendor met all mandatory items and Ms. Newman evaluated the vendors’ financial statements. Paragraph E.2 provided instructions as to how each response was to be evaluated. The following point system was to be utilized: Points 0 The component was not addressed. The component contained significant deficiencies. The component is below average. The component is average. The component is above average. The component is excellent. Part II of Attachment E (page 4 of 11) set forth the areas of the proposal to be evaluated, gave the maximum raw score possible for each area, and provided a weight factor for each score. Each evaluator could award a maximum of 325 points for a proposal. The four evaluations would then be added for the final tally. The “Detailed Evaluation Criteria Components” are set forth in Attachment E, pages 5–11. Attachment D of the RFP discusses in detail the Scope of Services to be provided and the requirement that staffing levels be sufficient to complete all of the responsibilities outlined in the RFP. Each vendor is required to discuss its proposed staffing for the project and its service delivery approach. The RFP does not contain minimum staffing requirements. Paragraph 3 of the Detailed Evaluation Criteria Components (Attachment E, pages 5 and 6), under the heading Project Staffing, instructs the evaluators as to how they are to evaluate the portion of the vendor’s response that addresses its proposed staffing. Paragraph 4 of the Detailed Evaluation Criteria Components (Attachment E, pages 6 – 8) instructs the evaluators as to how they are to evaluate the portion of the vendor’s response that addresses its service delivery approach. There was no independent training of the evaluators. The evaluators were not provided materials outside of the RFP and the responses thereto. Each evaluator independently evaluated the responses. As instructed, no evaluator discussed her evaluations with the other evaluators. Petitioner presented the testimony of Ms. Garrett- Jones, Dr. Hardy, and Ms. Booth. Dr. McLaughlin was not called as a witness. The testimony of Ms. Jones-Garrett established her educational background and her experience. Ms. Jones-Garrett is the analyst in charge of the PAC services waiver for Respondent. One of the major components of the RFP was for the delivery of waiver for PAC services. Ms. Jones-Garrett has five and a-half years experience working in the public health department and an immunology/AIDS clinic in Orlando. During her time working there, she supervised an LPN, who was responsible for adherence to AIDS medication. She has knowledge of HIV care and regimens. She has a good understanding of the PAC services waiver and PAC waiver assessments. Based on her background and experience, the undersigned finds that she was qualified to sit as an evaluator.15 There was no evidence that she failed to follow the instructions given to her in performing her evaluation. Petitioner failed to establish that the evaluation process was flawed by the manner in which Ms. Jones-Garret performed her evaluation of the two responses. The testimony of Dr. Hardy established her educational background and her experience. Dr. Hardy has a Doctor of Pharmacy degree, is a licensed pharmacist, and has served as clinical pharmacy program manager for Respondent, where she oversees the delivery of medical and pharmaceutical services to Florida recipients suffering from co-morbid diseases. Dr. Hardy was previously employed by Florida State Hospital as a clinical pharmacist. While there, she dealt with patients, many of whom had HIV or AIDS. Their drugs, because of the clinical effects and drug interactions with psychotropic medications, were closely monitored. As a pharmacist, Dr. Hardy performed drug counseling for HIV/AIDS patients, drug utilization reviews, and other critical components involved in assisting in the management of an HIV/AIDS patient’s disease. Based on her background and experience, the undersigned finds that she was qualified to sit as an evaluator. There was no evidence that she failed to follow the instructions given to her in performing her evaluation. Petitioner failed to establish that the evaluation process was flawed by the manner in which Dr. Hardy performed her evaluation of the two responses. The testimony of Ms. Booth established her educational background and her experience. Ms. Booth has served as a contract manager for disease management projects, has been involved in assessing HIV/AIDS patients for medical care or disease management purposes. She has developed care plans for disease management programs requiring the coordination of physicians, therapists, nurses, and aides. She has significant experience supervising nurses and determining their staffing schedules. Ms. Booth is also a certified contract manager with training in procurement of disease management services. Based on her background and experience, the undersigned finds that she was qualified to sit as an evaluator. There was no evidence that she failed to follow the instructions given to her in performing her evaluation. Petitioner failed to establish that the evaluation process was flawed by the manner in which Ms. Booth performed her evaluation of the two responses. INTERVENOR’S STAFFING PROPOSAL Paragraph C.38.B of Attachment C of the RFP sets forth Technical Response requirements, beginning on page 14. Sub- paragraph 3 thereof (on page 15) pertains to Project Staffing and provides, in part, as follows: The respondent [vendor] shall demonstrate its capability by describing the qualifications and experience of its proposed staff, as stated in Attachment D, Section D.8. The description shall include, at a minimum: * * * d. The number, qualifications and credentials of the proposed RNs/LPNs, and how each area of the state will be served by the HIV/AIDS disease management program staff, number of staff for each area, the percentage of time to be devoted to this Program, information on the lead case manager (RN/LPN) in each geographic area, ability to be available 24 hours per day, seven (7) days per week, and where they will be located in Florida. Intervenor’s response to the RFP contained a detailed description in compliance with this requirement. The Detailed Evaluation Criteria Components, found beginning at page 5 of Attachment E, established that each evaluator could award a maximum of 45 points for the Project Staffing category. Since there were nine subparts to the category, each category, including the category pertaining to the nursing staff, could be awarded a maximum of five points. Each evaluator was to score Intervenor’s response to this category on the 0 to 5 scale set forth above. Ms. Stidman testified at length as to the deficiencies in Intervenor’s staffing plan for nurses. This testimony did not establish that Intervenor was a non-responsive bidder or that any evaluator failed to properly score this category. Intervenor was awarded a total of 14 points for this category from the four evaluators. THE FINAL TALLY Following the evaluation, Intervenor was awarded a total of 985 points. Petitioner was awarded 943 points. Petitioner failed to establish that the evaluation process was materially flawed. Petitioner failed to establish that it should have been awarded more points than Intervenor.
Recommendation Based on the foregoing findings of fact and conclusions of Law, it is RECOMMENDED that Respondent enter a final order that adopts the Findings of Fact and Conclusions of Law set forth herein. It is further recommended that Petitioner’s proposal be rejected because it is non-responsive. It is further recommended that Intervenor’s proposal be rejected because Respondent has insufficient information to determine whether it is a responsible vendor. DONE AND ENTERED this 6th day of September, 2007, in Tallahassee, Leon County, Florida. S CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of September, 2007.
The Issue Whether Petitioner, Agency for Health Care Administration (AHCA or Agency), is entitled to a recoupment of Medicaid funds paid to the Respondent, Florida Hospital Orlando (Respondent), that were overpayments for medical services rendered to undocumented aliens during the audit period.
Findings Of Fact The Parties AHCA is the state agency charged with the responsibility of monitoring and administering the Medicaid program within the State of Florida. AHCA conducts audits, as provided by law, to assure compliance with all pertinent state and federal regulations. As required, AHCA issues audit reports to document a Medicaid provider’s performance during a specified audit period. At all times material to this case, Respondent was a Medicaid provider who received payments for medical services rendered to the Medicaid patients identified in this Order. Respondent complied with all regulations and procedures to secure payment for medical services rendered to patients, including approval from AHCA’s fiscal agent. The fiscal agent is referred to, in this record, as KePro. It is undisputed that the medical services were provided to the patients. The Audit The audit period in this case is July 1, 2005, through December 31, 2005. It is undisputed that Respondent provided all of the medical services rendered to the patients described in this matter during that time frame. The payments for such care, however, were not completed until a time in 2008 that was less than three years from the issuance of the FAR. At all times material to this case, Medicaid providers were required to maintain financial records for a period not less than five years. All of the medical treatments were approved by KePro. All of the patients identified in the instant FAR were or are undocumented aliens. Medicaid allows a provider to render medical care to undocumented aliens only as provided by law. In this regard, only emergency medical care is covered for undocumented aliens. Medical care that may be entirely necessary or appropriate, but is not rendered as “emergency care” may not be reimbursed. The FAR seeks recoupment of Medicaid monies paid to Respondent for non-emergency care rendered to undocumented aliens. The Patients Patient 1 presented to Respondent’s emergency room on October 31, 2005, with a history of nausea, vomiting, and an elevated creatinine indicating renal failure. Patient 1 was 73 years old and reported abdominal pain through an interpreter. Additionally, Patient 1, who was on a cardiac medication, had an elevated potassium level and cardiac arrhythmia. Given Patient 1’s age and condition, it was medically necessary to admit the patient for cardiac monitoring and evaluation. At the time of admission, Patient 1 required emergency care. Renal failure and cardiac arrhythmia may indicate a life-threatening condition. Respondent’s treatment of Patient 1 continued and discovered an enlarged heart, chronic lung disease, along with renal concerns. Under Respondent’s care Patient 1 returned to a regular cardiac rhythm, was rehydrated, and potassium and creatinine levels returned to a normal range. On November 2, 2005, Patient 1’s vital signs were stabilized. Thereafter, Patient 1 remained in the hospital and was monitored until release on November 4, 2005. Patient 2 presented to Respondent’s emergency room on October 31, 2005. Outpatient services rendered for this patient had failed to alleviate an infection in the patient’s right hand. At 88 years of age, if left untreated Patient 2 was in danger of losing a finger if the swelling and infection were not contained. Given Patient 2’s history of diabetes, the concern for spread of the infection to other portions of the hand resulted in admission to the hospital for emergency care. Patient 2 was put on an IV-treatment and the finger was surgically addressed to drain and remove infectious areas. By November 2, 2005, the finger was clinically “looking good” and the antibiotic treatment had started to address the infection. Emergency care was no longer necessary to address the patient’s medical needs. Patient 2 remained in the hospital until November 4, 2005. Patient 3 was another 88-year-old who presented to Respondent with an extended history of diarrhea and abdominal pain. On December 25, 2005, Patient 3 was admitted with an elevated white blood cell count, a low potassium level, and dehydration. Given the patient’s age and circumstance, it was medically necessary to rehydrate Patient 3 with IV-fluids and to monitor renal sufficiency due to rising creatinine levels. After several gastro/intestinal examinations, antibiotic treatment, and elimination of the diarrhea, the patient was released on January 5, 2006. Patient 3 required emergency medical care for the entire stay due to the patient’s age and hydration issues. As the patient did not accept oral medication, the IV-treatments assured continued hydration, potassium improvement, and the administration of antibiotics. Without such care, Patient 3’s health would have deteriorated to a potentially life-threatening situation. On the patient’s day of discharge, Patient 3 was considered medically stable. Patient 4 was a nonverbal autistic child who was brought to Respondent on August 31, 2005. This patient was removed from an inappropriate home setting and taken into custody by the state to protect the child’s safety and health. When he presented at the emergency room, this patient did not have a medical condition that warranted admission to the hospital. The child was taken to the hospital for medical evaluation but only a “social” emergency existed. That is to say, the child had nowhere to go. Although, technically, in the state’s custody, a foster home appropriate for Patient 4’s challenges had to be found before placement could be made. It is undisputed that the child could not be discharged to the street; however, no emergency medical care was necessary for this patient. Patient 5 was admitted to Respondent on October 25, 2005, as a transfer patient from Glades Hospital. This patient was evacuated from Glades due to a hurricane. Patient 5 spoke only Creole, was 80 years of age, and had suffered a recent heart attack. Glades Hospital stabilized the patient sufficiently for transfer into Respondent’s cardiac care unit. Although Respondent sought to perform a cardiac catheterization for this patient in order to evaluate the patient’s heart function, Patient 5’s family refused consent. Respondent continued care for this patient with monitoring and medication, and Patient 5 remained stable. Respondent sought a family member to whom discharge could be made. A son was not located until days later. Patient 5 did not require emergency care while Respondent waited for a discharge disposition. Patient 6 was 67 years old with a long history of a disease called ulcerative colitis. When this patient presented at Respondent’s emergency room, September 3, 2005, there was gastro/intestinal bleeding, pain, and what was presumed to be diverticulitis. Given his inflammatory bowel disease, bleeding, and pain, Patient 6 had a medical emergency and had to be quickly treated to resolve the “acute flare” of this case. Respondent treated Patient 6 with IV-fluids, antibiotics, and medication to decrease inflammation. Patient 6 responded well to the treatment and, by September 4, 2005, was not in an emergent condition. Patient 6 remained in the hospital until September 5, 2005. Recoupment of Medicaid Overpayments Based upon the foregoing findings, and the persuasive weight of the evidence presented by the parties, it is determined: As to Patient 1, emergency medical care was not required for this patient subsequent to November 2, 2005; As to Patient 2, emergency medical care was not required for this patient subsequent to November 2, 2005; As to Patient 3, prior to discharge on January 5, 2006, the date upon which this patient was stabilized, all of Patient 3’s care was rendered as emergency medical care; As to Patient 4, none of this patient’s care was required as emergency medical care; As to Patient 5, emergency medical care was not required for this patient subsequent to October 27, 2005; and As to Patient 6, emergency medical care was not required for this patient subsequent to September 4, 2005. Since Respondent received Medicaid payments for the above-described patients after the patient no longer required emergency care, Petitioner is entitled to a recoupment of Medicaid payments.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a Final Order finding Respondent was overpaid in the amount of $24,055.51 (the full audit amount less the claim for Patient 3) together with costs for a total of $26,203.15. DONE AND ENTERED this 3rd day of May, 2012, in Tallahassee, Leon County, Florida. S J. D. PARRISH 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 3rd day of May, 2012. COPIES FURNISHED: John D. Buchanan, Jr., Esquire Henry, Buchanan, Hudson, Suber, and Carter, P.A. Post Office Drawer 14079 2508 Barrington Circle (32308) Tallahassee, Florida 32317-4079 Andrew T. Sheeran, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building 3, Mail Station 3 Tallahassee, Florida 32308 Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 William H. Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308
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 issues in this case are whether Petitioner received Medicaid overpayments, and, if so, what is the aggregate amount of the overpayments.
Findings Of Fact The Parties Respondent, the Agency for Health Care Administration, is the single state agency charged with administration of the Medicaid program in Florida under Section 409.907, Florida Statutes. Petitioner, The Doctor's Office, was a Florida corporation approved by the Agency to provide group Medicaid services. At all times relevant to this matter, Petitioner was owned entirely by non-physicians who employed salaried physicians to provide Medicaid services. Petitioner, at all times relevant to this matter, offered physician services to Medicaid beneficiaries pursuant to a contract with the Agency under provider number 371236P-00. Petitioner, pursuant to the specific terms in the contract with the Agency, agreed to abide by the Florida Administrative Code, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program, and Federal laws and regulations. Petitioner, pursuant to its contract with the Agency, agreed to only seek reimbursement from the Medicaid program for services that were "medically necessary" and "Medicaid compensable." The Audit In mid-1996, the Agency, pursuant to its statutory responsibility, advised Petitioner that it intended to audit Petitioner's paid Medicaid claims for the alleged medical services it provided between July 1, 1994 and June 30, 1996. In September 1996, the Agency conducted an initial audit site visit, and randomly selected 61 patient files for review. The complete patient files, provided by Petitioner, were reviewed by Sharon Dewey, a registered nurse consultant and Agency employee, as well as Dr. Solenberger, a physician consultant and Agency employee. In accordance with its procedure, the Agency determined that Petitioner had submitted a total of 580 claims for reimbursement relating to the 61 patient files and had received full payment from the Medicaid program for each claim. On March 3, 1997, the Agency issued a Preliminary Agency Audit Report (PAAR), and advised Petitioner that it had over-billed Medicaid and received an overpayment from the program. Shortly thereafter, the Agency auditors, Dr. Solenberger and Ms. Dewey, met with Frank Colavecchio, Petitioner's Corporate Representative, and discussed the Medicaid violations alleged in the review. During the meeting, the Agency requested Mr. Colavecchio to instruct Petitioner's staff physicians to review their records and provide a written rebuttal to the Agency's initial determinations. Within days, and prior to any further action, the Agency placed the audit on indefinite hold. The Agency decided to delay the audit until certain proposed legislation relating to peer review and the integrity of the Medicaid reimbursement program was enacted. Two years later, Section 409.9131, Florida Statutes, was enacted during the 1999 legislative session and became law. Shortly thereafter, in 1999, the Agency hired Dr. Larry Deeb, a board-certified, practicing pediatrician, to perform a peer review of Petitioner's practices and procedures. Dr. Deeb has performed similar medical records reviews for the Medicaid program since 1981 and possesses a thorough understanding of CPT coding and the EPSDT requirements. Dr. Deeb received the medical files provided by Petitioner, and reviewed each patient file in the random sample, including the medical services and Medicaid-related claim records. On November 11, 1999, Dr. Deeb completed his peer review of 564 of the 580 claims provided in the random sample and forwarded his findings to the Agency. Dr. Deeb advised the Agency that 16 reimbursement claims involved adult patients and he therefore did not review them. Utilizing Dr. Deebs findings, the Agency employed appropriate and valid auditing and statistical methods, and calculated the total Medicaid overpayment that Petitioner received during the two year audit period. On July 17, 2000, approximately four years after the original audit notification, the Agency issued its Final Agency Audit Report (FAAR). The Agency advised Petitioner that, based upon its review of the random sample of 61 patients for whom Petitioner submitted 580 claims for payment between 1994 and 1996, Petitioner received $875,261.03 in total overpayment from the Medicaid program during the audit period. Petitioner denied the overpayment and requested a formal administrative hearing. Following the initial commencement of the final hearing in this matter in December 2001, Dr. Deeb, again, reviewed the disputed claims and modified his opinion relating to 6 claims. Thereafter, the Agency recalculated the alleged overpayment and demanded Petitioner to pay $870,748.31. The Allegations The Agency alleges that specific claims submitted by Petitioner, which were paid by the Medicaid program, fail to comply with specific Medicaid requirements and therefore must be reimbursed. Since its inception, the Medicaid program has required providers to meet the Medicaid program's policies and procedures as set forth in federal, state, and local law. To qualify for payment, it is the provider's duty to ensure that all claims "[a]re provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with . . . state . . . law." Section 409.913(5)(e), Florida Statutes (1993). Medicaid manuals are available to all Providers. Petitioner, as a condition of providing Medicaid services pursuant to the Medicaid program, is bound by the requirements and restrictions specified in the manuals, and under the contract, is required to reimburse the Medicaid program for any paid claims found to be in violation of Medicaid policies and procedures. The evidence presented at hearing established that Petitioner frequently violated various Medicaid policies and procedures. First, Petitioner repeatedly failed to comply with Section 10.9 of the Medicaid Physician's Provider Handbook, (MPPH), and Sections 409.905(9), 409.913(5)(e), 409.913(7)(e), and 409.913(7)(f), (1993, 1994 Supp. 1995, and 1996), Florida Statutes, which require all medical services to be rendered by, or supervised by a physician, and attested to by the physician's signature. Medical records reflecting services for paid claims must be physician signature certified and dated, or the services are not defined as physician's services. In addition, Petitioner routinely failed to correctly document the provision of certain physician's assistant (P.A.) Medicaid services that require the personal supervision of a physician or osteopath. See Chapter 1 of the Physician Assistant Coverage and Limitations Handbook, March 1995, and Appendix D (Glossary) in the Medicaid Provider Reimbursement Handbook, HCFA-1500 (HCFA-1500). In addition, Petitioner failed to comply with Medicaid regulations that require an approved physician to be present in the facility when certain P.A. services are delivered and to attest to it by signature within twenty-four hours of service. See Section 11.1 of the MPPH, effective July 1994, and Sections 409.905, and 409.913 (1993, 1994 Supp., 1995, and 1996 Supp.), Florida Statutes. The evidence presented at hearing also demonstrates that Petitioner repeatedly violated specific record keeping requirements located in Section 10.9 of the MPPH, Sections 10.6 and 11.5 of the Medicaid EPSDT Provider Handbook (EPSDT), and Sections 409.913(5)(e), 409.913(7)(e), and 409.913(7)(f), (1993, 1994 Supp., 1995, and 1996), Florida Statutes. In addition, the Agency demonstrated that Petitioner occasionally failed to document support for the necessity of certain services or simply billed for services that were not medically necessary. As indicated, Medicaid policy limits a physician to bill only for services that are medically necessary and defines the circumstances and varying levels of care authorized. In fact, Section 11.1 of the MPPH, effective July 1994, provides in part: The physician services program pays for services performed by a licensed physician or osteopath within the scope of the practice of medicine or osteopathy as defined by state law . . . . The services in this program must be performed for medical necessity for diagnosis and treatment of an illness on an eligible Medicaid recipient. Delivery of all services in this handbook must be done by or under the personal supervision of a physician or osteopath . . . at any place of service . . . . Each service type listed has special policy requirements that apply specifically to it. These must be adhered to for payment. The manual further provides clear guidelines defining authorized services for reimbursement which Petitioner apparently overlooked. For example, the manual defines the four types of medical history exams that Medicaid providers may conduct, the nature of the problems presented, and the appropriate and authorized tests. The manual also identifies the varying degrees of medical decision-making complexity related to Medicaid services and provides instructions relating to the method of selecting the correct evaluation and management code for billing. Petitioner consistently violated coding restrictions. Moreover, the Medicaid policy manual also outlines the specific procedures and billing requirements necessary for seeking payment for medical services including the early periodic screening for diagnosis and treatment (EPSDT) services. Chapter 10 and 11 of the MPPH specifically state that services that do not include all listed components of the EPSDT are not defined as an EPSDT, and upon audit, the Agency re-calculated Petitioner's medical services at the appropriate procedure code. Stipulation Prior to the commencement of the hearing, the parties stipulated that certain paid claims were correctly determined by the Agency to be overpayments. Specifically, the parties agreed that portions of samples 1, 3, 14, 21, 28, 41, 46, 47, 51, 53, and 56 could not be claimed for reimbursement since lab services which are part of an office visit reimbursement and/or lab service fees performed by an independent outside lab are not permitted. In addition, the parties agreed that specific portions of samples 1, 13, 14, 27, 28, 33, 35, 43, 46, 47, 52, 53, and 55 could not be claimed since Modifier 26 billing, the professional component, is only appropriate when the service is rendered in a hospital and Petitioner's services were rendered in an office. Pediatric Sample With regard to the random sample of pediatric files, upon careful review, the evidence presented at hearing sufficiently demonstrates that Petitioner was overpaid the following amounts on the following paid claims for the following reasons: The prolonged physician's services billed to Medicaid were not documented as having been provided or medically necessary. Cluster Number Date of Service Procedure Code Billed and Paid Overpayment 1 1/18/1996 99354 $ 36.64 1 5/14/1996 99354 $ 36.64 13 9/25/1995 99354 $ 36.64 19 9/28/1994 99354 $ 39.50 21 12/18/1995 99354 $ 36.64 28 3/06/1995 99354 $ 36.64 42 6/04/1996 99354 $ 36.64 43 12/19/1994 99354 $ 36.64 47 9/28/1994 99354 $ 39.50 47 10/17/1995 99354 $ 36.64 51 4/05/1995 99354 $ 36.64 53 11/02/1995 99354 $ 36.64 56 5/01/1996 99354 $ 36.64 The level of care billed to and reimbursed by Medicaid at the 99215 office visit procedure code level was improper since the level of care provided was at the 99213 office visit procedure code level. Cluster Number Date of Service Overpayment 1 9/14/1995 $ 34.14 1 1/18/1996 $ 34.14 1 5/14/1996 $ 34.14 33 9/28/1994 $ 20.00 47 10/17/1995 $ 34.14 The level of care billed and paid at the 99215 office visit procedure code level was improper since the level of care that was provided was at the 99214 office visit procedure code level. Cluster Number Date of Service Overpayment 53 5/31/1995 $ 21.69 The level of care billed and paid at the 99205 office visit procedure code level was improper since the level of care that was provided was at the 99204 office visit procedure code level. Cluster Number Date of Service Overpayment 25 7/27/1994 $ 2.00 The level of care that was billed and paid at the 99205 office visit procedure code level was improper since the level of care that was provided was at the 99203 office visit procedure code level. Cluster Number Date of Service Overpayment 35 5/11/1995 $ 37.96 51 12/08/1994 $ 15.00 55 11/21/1995 $ 37.96 58 9/22/1995 $ 37.96 The level of care that was billed and paid at the 99215 office visit procedure code level was improper since the level of care that was provided was at the 99204 office visit procedure code level. Cluster Number Date of Service Overpayment 43 12/11/1994 ($ 3.00) credit The level of care that was billed and paid at the 99205 office visit procedure code level was improper since the medical services provided and documentation supported an EPSDT visit. Cluster Number Date of Service Overpayment 53 2/06/1995 $ 16.53 The required components of the EPSDT were not documented as being performed at the office visit that had been claimed and paid as an EPSDT and therefore, the difference between the EPSDT payment received and the value of the procedure code for the documented level of office visit that occurred (i.e., 99214, 99213, 99212, 99211, or 99203), is deemed an overpayment. Cluster Number Date of Service Level of Visit Overpayment 1 7/28/1995 99213 $ 39.82 3 6/28/1995 99213 $ 39.82 5 3/03/1995 99203 $ 21.43 6 7/07/1994 99213 $ 5.00 10 8/17/1995 99212 $ 43.82 12 1/31/1996 99204 $ 0.00 14 5/31/1995 99213 $ 39.82 18 10/04/1994 99213 $ 5.00 18 1/29/1996 99214 $ 27.37 20 8/25/1994 99213 $ 5.00 21 12/11/1995 99214 $ 27.37 29 8/17/1994 99212 $ 9.00 Cluster Number Date of Service Level of Visit Overpayment 29 9/06/1995 99213 $ 39.82 40 7/25/1994 99203 $ 0.00 41 5/06/1996 99214 $ 27.37 46 9/19/1994 99213 $ 5.00 46 10/19/1995 99213 $ 39.82 47 11/02/1994 99213 $ 5.00 51 9/07/1995 99213 $ 39.82 53 7/10/1995 99213 $ 39.82 53 1/19/1995 99213 $ 39.82 59 5/02/1996 99203 $ 43.39 Adult Samples At hearing, Petitioner disputed all of the Agency's findings relating to patients over the age of 21 and objected to Dr. Deeb, a pediatrician, performing any review of their files. While Dr. Deeb is not the appropriate peer to review adult patient files, the following adult claims did not require substantive peer review and resulted in overpayment due to the stated reason: There were not any medical records in existence to indicate that any medical services were performed. Cluster Number Date of Service Procedure Code Billed and Paid Overpayment 2 2/20/1995 99215 $ 53.00 2 7/11/1995 99215 $ 59.14 2 8/09/1995 99215 $ 57.14 2 9/07/1995 99213 $ 23.00 2 10/11/1995 99213 $ 23.00 2 1/02/1996 99213 $ 23.00 2 3/22/1996 73560/Rad.Ex. $ 16.36 2 4/01/1996 99215 $ 57.14 2 4/05/1996 99213 $ 23.00 2 4/23/1996 99213 $ 23.00 15 2/16/1996 99213 $ 23.00 15 2/19/1996 99215 $ 57.14 16 5/14/1996 Blood Count $ 8.00 Cluster Number Date of Service Procedure Code Billed and Paid Overpayment 16 5/14/1996 UA $ 3.00 16 5/14/1996 99215 $ 57.14 23 7/28/1994 99213 $ 23.00 23 5/09/1995 72069/26 Rad.Ex. $ 6.98 23 5/09/1995 72069/Rad.Ex. $ 17.45 23 10/20/1995 99213 $ 23.00 34 4/24/1996 99214 $ 35.45 57 11/17/1995 99215 $ 59.14 60 4/10/1996 99215 $ 57.14 61 5/22/1995 99213 $ 23.00 The medical records failed to contain the required physician's signature and date authenticating the fact that the services billed were performed by either P.A. Olsen or P.A. Avidon under physician supervision. The services provided by the non-physician employee were reviewed and down-coded by the Agency to the appropriate level physician's office visit code. Cluster Number Date of Service Proc. Code Pd./ P. Code Allowed Overpayment 2 6/30/1995 99215/99212 $ 36.14 2 7/20/1995 99215/99213 $ 34.14 2 7/28/1995 99215/99213 $ 34.14 2 9/05/1995 99215/99212 $ 36.14 8 4/17/1995 99205/99203 $ 35.96 17 3/27/1995 99205/99203 $ 35.96 23 5/09/1995 99215/99213 $ 32.14 23 6/09/1995 99215/99213 $ 32.14 34 4/23/1996 99205/99203 $ 35.96 The medical records failed to contain the required physician signature authenticating the fact that the services were provided by a physician. The services provided were reviewed and down-coded by the Agency to the appropriate level physician's office visit code. Procedure Code Cluster Number Date of Service Billed and Paid Overpayment 2 6/14/1995 99215/99211 $ 45.14 16 5/15/1996 99215/99211 $ 45.14 61 5/05/1995 99205/99204 $ 14.53 The provider improperly sought payment for lab services that were part of the office visit reimbursement and/or lab services performed by an independent outside lab. Cluster Number Date of Service Procedure Billed and Paid Overpayment 2 3/08/1996 UA $ 3.00 2 4/03/1996 UA $ 3.00 15 2/08/1996 UA $ 3.00 16 5/15/1996 Blood Count $ 8.50 16 5/15/1996 Blood Count $ 8.00 The provider improperly sought payment for Modifier 26 billings (professional component) which are only appropriate when the service is rendered in a hospital. Cluster Number Date of Service Procedure Billed and Paid Overpayment 2 2/17/1995 Radiologic exam $ 6.98 2 6/14/1995 Radiologic exam $ 7.20 8 4/17/1995 Tympanometry $ 9.00 16 5/13/1996 Radiologic exam $ 5.45 16 5/15/1996 Radiologic exam $ 6.98 In addition to the policy and procedural violations, Petitioner, in egregious violation of the Medicaid program, admittedly submitted Medicaid claims for the services of specialist physicians (such as an allergist, OB/GYN, podiatrist, psychologists, and ophthalmologists) not within its Provider group, collected Medicaid funds based on those claims, and reimbursed the respective specialist. While Petitioner's corporate representative, Mr. Colavecchio, was admittedly responsible for the coding and billing of the Medicaid services submitted for reimbursement, he was minimally aware of the Medicaid policy requirements and possessed limited working knowledge of CPT coding and EPSDT billing. In addition, Petitioner's employees, Dr. Keith Wintermeyer and Dr. Marcia Malcolm, were only moderately familiar with the CPT coding and EPSDT component requirements. They provided little input to Petitioner regarding CPT coding and the sufficiency of certain physician's services relating to EPSDT billing.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency re-calculate the overpayment consistent with the Findings of Fact, and include only those identified violations in the cluster samples of the adult patient files, and issue a Final Order requiring Petitioner to reimburse, within 60 days, the Agency for the Medicaid overpayments plus any interest that may accrue after entry of the Final Order. DONE AND ENTERED this 14th day of February, 2003, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 2003. COPIES FURNISHED: Susan Felker-Little, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308 Charles D. Jamieson, Esquire Ward, Damon & Posner, P.A. 4420 Beacon Circle West Palm Beach, Florida 33407 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3116 Tallahassee, Florida 32308
The Issue The issue for determination is whether Petitioner was overpaid by the Medicaid program as set forth in Petitioner's Final Agency Audit Report dated June 12, 2006 for the period January 1, 2002 through December 31, 2004.
Findings Of Fact AHCA audited certain of Dr. Negrette's Medicaid claims pertaining to services rendered between January 1, 2002 and December 31, 2004, hereinafter the audit period. Dr. Negrette was an authorized Medicaid provider during the audit period. During the audit period, Dr. Negrette had been issued Medicaid provider number 061422000. No dispute exists that, during the audit period, Dr. Negrette had a valid Medicaid Provider Agreement with AHCA. For services provided during the audit period, Dr. Negrette received in excess $79,523.70 in payments for services to Medicaid recipients. By a preliminary audit report dated August 25, 2005, AHCA notified Dr. Negrette that a preliminary determination was made that he was overpaid by the Medicaid program in the amount of $137,051.25. Subsequently, by a FAR dated June 12, 2006, AHCA notified Dr. Negrette that, after a review of all documentation submitted, it determined that he had been overpaid by the Medicaid program in the amount of $79,523.70, thus, reducing the amount of the overpayment. The FAR further provided how the overpayment was calculated using a sample of the claims submitted during the audit period, including the statistical formula for cluster sampling; and indicated that the statistical formula was generally accepted and that the statistical formula showed an overpayment in the amount of $79,523.70, with a 95 percent probability of correctness. Dr. Negrette agrees that the mathematical computation of the audit is correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order finding that Jesus Negrette, M.D., received overpayments from the Medicaid program in the amount of $79,523.70, during the audit period January 1, 2002 through December 31, 2004, and requiring Jesus Negrette, M.D., to repay the amount of overpayment. DONE AND ENTERED this 5th day of February, 2007, in Tallahassee, Leon County, Florida. S ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of February, 2007.
