The Issue The issue for determination is whether Respondent must repay Petitioner an amount of up to $144,471.25 in alleged Medicaid overpayments, for paid claims covering the period from January 1, 2010, to December 31, 2012.
Findings Of Fact AHCA is the agency responsible for administering Medicaid in the state of Florida. VMC was, at all relevant times, an enrolled Medicaid provider authorized to receive reimbursement for covered goods and services rendered to Medicaid beneficiaries. Exercising its statutory authority to oversee the integrity of Medicaid, the Agency conducted a review of VMC's medical records to verify that claims paid by Medicaid during the period from January 1, 2010, to December 31, 2012 (the "Audit Period"), had not exceeded authorized amounts. During the Audit Period, VMC had submitted claims for 9,783 discrete billable goods or services ("BGOSs") rendered to 1,313 patients (or recipients), on which Medicaid had paid a total of $459,572.82. Rather than examine the records of all 1,313 recipients served, the Agency selected a sample of 35 patients, whose records were reviewed first by a nurse consultant, and then by a physician "peer reviewer." VMC had submitted claims for 302 BGOSs during the Audit Period in connection with the 35 patients in the sample population. Medicaid had paid a total of $13,909.94 on these claims. The Agency's reviewers determined that, for various reasons, VMC had received a total of $6,901.64 in reimbursement of claims in the sample for services not covered by Medicaid, in whole or in part. Having discovered this alleged "empirical overpayment" of $6,901.64, the Agency employed a statistical formula for cluster sampling——for purposes of which a "cluster" comprises all claims relating to an individual patient in the sample population——to ascertain the alleged "probable total overpayment" that VMC had received from Medicaid for the 9,783 BGOSs presented in the totality of claims submitted during the Audit Period.1/ The statistical analysis revealed a probable total overpayment of $179,660.46, with a 95 percent probability that the actual overpayment is equal to or greater than such amount. (As discussed below, VMC disputes the cluster sampling methodology that AHCA used in determining the probable total overpayment based on the empirical overpayment associated with the sample population.) Shortly before the final hearing, based on documents which VMC belatedly produced, the Agency revised its preliminary adjudication of certain claims associated with four of the patients in the sample population, resulting in a reduction of the alleged empirical overpayment to $5,976.00. AHCA's statistical formula extended this figure to VMC's entire patient population for the Audit Period, calculating a total probable overpayment of $144,471.25. VMC does not dispute every one of AHCA's preliminary adjudications. To begin, for five recipients (Patient Nos. 15, 17, 19, 21, and 28) AHCA found no overpayments. Thus, none of the claims presented for BGOSs furnished to these patients is in dispute. In many additional instances, VMC agrees not only with the Agency's determination that Medicaid paid too much for a particular BGOS (or "encounter" as VMC refers to an individual good or service for which a claim was submitted), but also with the amount of the alleged overpayment. As a result of these admissions, none of the claims presented for BGOSs furnished to Patient Nos. 2, 9, 11, 13, 16, 25, and 34 is in dispute. In some instances, VMC suggests that the empirical overpayment for a particular BGOS should be more than the amount that AHCA has alleged. The sum of these suggested additional overpayments ("SAOs") is $303.19. Owing to VMC's inculpatory suggestions of insufficiently aggressive recoupment, it is undisputed that all of the overpayments AHCA has alleged in connection with the claims submitted for the treatment of Patient Nos. 3, 10, 23, 24, 26, and 32 are, in fact, overpayments. In sum, out of 35 patients in the sample population, only 17 involve one or more disputed encounters, where the existence of an overpayment must be decided. As for the 18 patients listed in the two preceding paragraphs, all of the overpayments alleged in those clusters are accepted as such based on the evidence presented, including the Agency's work papers and VMC's admissions, leaving only the question of what to do about the SAOs. All told, VMC admits having received an empirical overpayment of at least $2,488.50. VMC contends, however, that it was underpaid a total of $27.76 in connection with two BGOSs provided to Patient No. 18. VMC asserts that this alleged underpayment offsets the admitted overpayment by an equal amount, so that, in VMC's eyes, the net admitted empirical overpayment (taking into account the SAOs totaling $303.19) is $2,763.93.2/ VMC disputes the Agency's determinations regarding 55 specific BGOSs. Of these, AHCA found in 48 instances that the particular service which VMC had provided was not medically necessary. These 48 determinations relate to ten separate diagnostic procedures. AHCA further found a single instance of incomplete documentation in connection with one of those same ten procedures, bringing to 49 the total number of disputed adjudications pertaining to ten different procedures. Four disputed Agency determinations relate to what are known as "evaluation and management services" ("E/M services") provided (a) in the doctor's office or other outpatient setting to new or established patients or (b) to patients in hospitals. E/M services are billed to Medicaid using codes that reflect the intensity level of service provided. The codes are called "CPT codes"——"CPT" being short for Current Procedural Terminology®, a registered trademark of the American Medical Association, which developed and keeps up-to-date this widely used system for reporting medical procedures and services. Medicaid reimburses providers for E/M services pursuant to fee schedules that specify the amount payable for each level of service according to the CPT codes. It is the provider's responsibility, in presenting a claim to Medicaid for payment, to determine the appropriate CPT code for the service provided. Medicaid generally pays claims upon receipt, without second-guessing the provider's judgment regarding the level of care. When the Agency conducts an investigation to determine possible overpayment to a provider, however, one thing it might review is whether the provider's claims were properly "coded"—— that is, whether the CPT codes on the bills accurately reflected the level of service provided to the patients, as documented in the medical records. If the Agency determines that the level of service provided was lower than that claimed, then it will "downcode" the claim to the proper level and seek to recoup from the provider, as an overpayment, the difference between what Medicaid paid on the claim as originally coded and what it would have paid on the claim as downcoded. In this case, four of the 55 disputed claim determinations involve a downcode. Collectively, these four disputed items total $13.55. In two instances involving Patient No. 18, VMC agrees with AHCA's determination that there was no overpayment for the BGOS in question, but it asserts that Medicaid paid too little on the claims, which could have been billed under higher paying codes. As mentioned above, these alleged underpayments ("UPs") total $27.76. The table below summarizes the disputed overpayments, sorted by disputed overpayment ("OP") amount per patient (largest to smallest): Pt. # Disputed OP (w/SAOs) Admitted OP (w/SAOs) Alleged OP Number of Disputed BGOSs Number of SAOs Amount of SAOs Number of alleged UPs Amount of Claimed UP 22 545.00 401.83 946.83 8 7 523.79 57.75 581.54 5 35 466.10 112.83 578.93 7 6 376.65 91.89 468.54 5 1 15.98 31 194.88 73.21 268.09 3 1 14.85 27 157.73 479.12 636.85 2 8 157.73 12.85 170.58 2 5 153.54 16.61 170.15 4 18 150.97 280.56 431.53 5 2 -27.76 4 106.29 38.85 145.14 1 33 105.44 182.80 288.24 2 14 89.94 120.37 210.31 1 1 20.60 20 84.39 264.56 348.95 6 11 168.79 12 51.09 0 51.09 1 30 47.53 0 47.53 1 29 35.46 50.99 86.45 1 1 15.98 1 4.77 0 4.77 1 Subtotal 3,251.30 2,184.22 5,435.52 55 15 236.20 2 -27.76 Pt. # Disputed OP (w/SAOs) Admitted OP (w/SAOs) Alleged OP Number of Disputed BGOSs Number of SAOs Amount of SAOs Number of alleged UPs Amount of Claimed UP 2 0 23.32 23.32 9 0 23.32 23.32 11 0 37.58 37.58 13 0 32.57 32.57 16 0 33.10 33.10 25 0 46.85 46.85 34 0 36.14 36.14 Subtotal 0 232.88 232.88 32 (1.50) 37.64 36.14 1 1.50 26 (2.00) 203.04 201.04 1 2.00 3 (15.56) 37.64 22.08 1 15.56 24 (15.97) 34.13 18.16 1 15.97 10 (15.98) 31.07 15.09 1 15.98 23 (15.98) 31.07 15.09 1 15.98 Subtotal (66.99) 374.59 307.60 6 66.99 15 n/a 0 17 n/a 0 19 n/a 0 21 n/a 0 28 n/a 0 TOTAL 3,184.31 2,791.69 5,976.00 55 21 303.19 2 -27.76 Before addressing the disputed BGOSs, two subjects will be resolved, to further refine the issues. First, the undersigned has decided that each of the 21 separate SAOs should be treated as no more or less than corroboration that the alleged overpayment is correct——not used as a basis for increasing the amount AHCA alleges is due. Thus, for example, if AHCA alleged that the overpayment for a particular encounter was $36.14 and VMC offered evidence that the overpayment for that encounter was actually $37.64, the undersigned will find that the undisputed overpayment is $36.14. As a result, nothing else needs to be decided in regard to any of the claims presented for BGOSs furnished to Patient Nos. 3, 10, 23, 24, 26, and 32. Second, the undersigned rejects VMC's assertion that the empirical overpayment should be reduced by a total of $27.76 because it provided BGOSs to Patient No. 18 for which it did not bill Medicaid enough.3/ This reduces the number of disputed encounters from 55 to 53. The table below summarizes the disputed overpayments after taking account of the foregoing determinations, sorted by disputed overpayment amount per patient (largest to smallest): Pt. # Disputed OP Admitted OP Alleged OP Number of Disputed BGOSs 22 545.00 401.83 946.83 8 7 523.79 57.75 581.54 5 35 466.10 112.83 578.93 7 6 392.63 75.91 468.54 5 20 253.18 95.77 348.95 6 31 209.73 58.36 268.09 3 27 157.73 479.12 636.85 2 8 157.73 12.85 170.58 2 5 153.54 16.61 170.15 4 18 150.97 280.56 431.53 3 14 110.54 99.77 210.31 1 4 106.29 38.85 145.14 1 33 105.44 182.80 288.24 2 29 51.44 35.01 86.45 1 12 51.09 0 51.09 1 30 47.53 0 47.53 1 1 4.77 0 4.77 1 Subtotal 3,487.50 1,948.02 5,435.52 53 2 0 23.32 23.32 0 3 0 22.08 22.08 0 9 0 23.32 23.32 0 10 0 15.09 15.09 0 11 0 37.58 37.58 0 13 0 32.57 32.57 0 16 0 33.10 33.10 0 23 0 15.09 15.09 0 24 0 18.16 18.16 0 25 0 46.85 46.85 0 Pt. # Disputed OP Admitted OP Alleged OP Number of Disputed BGOSs 26 0 201.04 201.04 0 32 0 36.14 36.14 0 34 0 36.14 36.14 0 Subtotal 0 540.48 540.48 0 15 n/a 0 n/a 17 n/a 0 n/a 19 n/a 0 n/a 21 n/a 0 n/a 28 n/a 0 n/a TOTAL 3,487.50 2,488.50 5,976.00 53 Each side presented opinion testimony regarding the compensability of the disputed BGOSs under Medicaid. On the question of medical necessity, AHCA's medical expert was Ronald Machado, M.D., upon whose testimony, together with the notations of the Agency's nurse reviewer appearing in the audit worksheets, AHCA relies in support of its overpayment allegations. VMC's medical expert was Dr. Michael Sterns, whose written opinions were presented through the report of L. Lamar Blount, a health-care consultant who, at VMC's request, conducted a shadow audit of the claims AHCA had examined. To assist in his review, Mr. Blount engaged the services of a coding specialist (Rae Freeman) and a statistician (Frank Collins) in addition to Dr. Sterns. The undersigned has considered all of the opinion testimony presented, together with the medical records and other evidence received. Each of the findings that follow is based upon a preponderance of the evidence which the undersigned deemed credible and persuasive, and each constitutes a rejection of other evidence to the extent of any conflict between the finding and such evidence. In determining whether a particular claim should be allowed or disallowed, the undersigned considered, as necessary, the relevant provisions of the pertinent statutes, rules, and Medicaid handbooks, the operative terms of which are identified in the Conclusions of Law following these Findings of Fact. The undersigned's determinations as to each of the disputed BGOSs are set forth below in summary fashion, using abbreviations where possible. This is consistent with the manner in which the parties' respective experts addressed the individual claims. The brevity of the discrete rulings is not a reflection of the attention that has been given each item, all of which were carefully and thoroughly examined. For analytical efficiency, the undersigned sorted the disputed claims by procedure, from highest to lowest overpayment subtotal. The claim-specific findings are presented below in that fashion. The descriptions of the procedures are adapted from the American Medical Association's Physician's Current Procedural Terminology® Handbook. Each disputed claim is identified by Patient Number – Encounter Number ("Pt. # - Enc. #"), using the recipient numbers assigned by AHCA. The Encounter Numbers correspond to the identically designated numbers in column C of Appendix D to Respondent's Exhibit JJ, which in turn match the claim numbers appearing in AHCA's "Listing of All Claims in Sample by recip name" worksheet, a 73- page document attached to the FAR, Petitioner's Exhibit 4. Ultrasound, retroperitoneal (e.g., renal, aorta, nodes), real time with image documentation, complete – CPT 76770. A complete ultrasound examination of the retroperitoneum consists of real time scans of the kidneys, abdominal aorta, common iliac artery origins, and inferior vena cava, including any demonstrated retroperitoneal abnormality. If the clinical history suggests urinary tract pathology, a complete evaluation of the kidneys and urinary bladder also comprises a complete retroperitoneal ultrasound. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 76770 5-15 NMN 52.00 MN established by diagnosis of microscopic hematuria. 0.00 6-2 NMN 53.44 78-year-old man presents with hematuria and nocturia plus a renal cyst. MN established to rule out BPH (enlarged prostate). 0.00 8-1 NMN 51.44 Patient reports pain and history of kidney stones during review of genitourinary ("GU") system plus low back pain. MN established to rule out recurrence of renal calculi. 0.00 18-12 NMN 51.44 Patient complains of flank pain, giving reason to rule out renal calculi. No evidence that a kidney, ureter, and bladder ("KUB") X-ray would have been cheaper, nor proof that renal US was outside generally accepted standards of medical practice. MN shown. 0.00 18-27 NMN 52.00 Patient continues to complain of unexplained right flank/abdominal pain. Diagnoses of hydronephrosis and renal colic. MN established. 0.00 Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 76770 20-8 NMN 51.44 Patient presents with complaint of dark- colored urine. Dysuria and hematuria noted. MN shown. 0.00 22-2 NMN 53.44 1/11/10 Patient experiencing unexplained hematuria. US revealed two kidney cysts. MN shown. 0.00 22-11 NMN 53.44 7/12/10 US to follow up on kidneys cysts. No documentation of symptoms or need for such close monitoring. NMN 53.44 22-16 NMN 53.44 11/10/10 Repeat US of kidney to monitor cysts. Excess of need for a benign condition. NMN 53.44 22-21 NMN 51.44 11/29/11 Patient presents with hematuria and history of kidney cysts. MN established in light of symptom and need to reexamine the cysts for possible enlargement. 0.00 27-17 NMN 53.44 No reason given for repeat study of kidney after apparently asymptomatic cyst found via renal US on 6/30/10. NMN 53.44 29-4 NMN 51.44 Contemporaneous urinalysis ("UA") found occult blood and renal epithelial cells, warranting study to rule out kidney disease. MN shown. 0.00 31-12 NMN 51.44 Patient in his early 70s complains of dysuria and abdominal pain. US not preceded by review of UA results and prostate exam. NMN 51.44 31-20 NMN 52.00 Progress notes do not provide grounds for this study. NMN 52.00 33-6 NMN 53.44 Patient presents with persistent hematuria notwithstanding treatment of UTI. MN shown. 0.00 33-11 NMN 52.00 Patient reports dysuria and renal colic. MN for US established by new symptoms. 0.00 35-2 NMN 51.44 Progress note reports patient complaint of nephrolithiasis plus hematuria per UA results. MN established. 0.00 35-26 NMN 50.00 Patient presents with undiagnosed hematuria plus absence of menstruation. MN shown. 0.00 Subtotal 938.72 263.76 Echocardiography, transthoracic, real-time with image documentation, complete, with spectral Doppler echocardiography, and with color flow Doppler echocardiography – CPT 93306. A standard echocardiogram is also known as a transthoracic echocardiogram ("TTE"). The echocardiography transducer (or probe) is placed on the chest wall of the patient, and images are taken through the chest wall. This noninvasive procedure allows for the assessment of the overall health of the patient's heart valves and degree of heart muscle contraction, which is an indicator of the ejection fraction. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 93306 4-3 NMN 106.29 Patient presents with heart murmur and/or rub. TTE ordered to assess left ventricular ejection fraction ("LVEF") and rule out valvular disease of heart, which was confirmed by finding of mitral valve disease. MN shown. 0.00 7-4 NMN 104.29 Patient presents with history of palpitations and chest pain and has a heart murmur on examination. MN for TTE shown. 0.00 8-2 NO DOC 106.29 Patient presents with murmur, palpitation, and chest pain, as documented in progress note. TTE ordered to rule out valvular disease. Echocardiogram Report is in the file. Documentation shown. 0.00 14-4 NMN 110.54 Teenage patient presents with recent history of seizure and loss of consciousness. TTE ordered to rule out mitral valve prolapse. MN shown. 0.00 27-14 NMN 104.29 85-year-old man reports dizziness and has murmur on examination. TTE ordered to rule out worsening of valvular disease and assess LVEF. MN shown. 0.00 31-10 NMN 106.29 Patient presents with heart murmur. TTE one year earlier found numerous abnormalities. TTE ordered to assess function and rule out worsening of condition. MN shown. 0.00 35-23 NMN 104.29 Patient presents with complaint of migraine. No cardiac symptoms. History of mitral valve prolapse indicated. NMN 104.29 Subtotal 742.28 104.29 Duplex scan of lower extremity arteries or arterial bypass grafts, complete bilateral study – CPT 93925. Duplex Doppler ultrasound uses standard ultrasound methods to produce an image of a blood vessel and the surrounding organs. A computer converts the Doppler sounds into a graph that provides information about the speed and direction of blood flow through the blood vessel being evaluated. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 93925 6-9 NMN 156.21 Patient presents with limb swelling, symptomatic varicose veins, chronic venous insufficiency, and peripheral edema. MN shown. 0.00 7-7 NMN 156.21 Patient presents with limb pain or swelling and symptomatic varicose veins. Diagnoses of peripheral artery disease and venous insufficiency. MN shown. 0.00 35-9 NMN 156.21 Patient presents with lower extremity swelling, chronic venous insufficiency, and peripheral edema; heart murmur noted on exam. MN shown. 0.00 Subtotal 468.63 0.00 Noninvasive physiologic studies of upper or lower extremity arteries, multiple levels or with provocative functional maneuvers, complete bilateral study (e.g., segmental blood pressure measurements, segmental Doppler waveform analysis, segmental volume plethysmography, segmental transcutaneous oxygen tension measurements, measurements with postural provocative tests, measurements with reactive hyperemia) – CPT 93923. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 93923 6-10 NMN 91.02 Patient presents with limb swelling, symptomatic varicose veins, chronic venous insufficiency, and peripheral edema. This study excessive in combination with lower extremity study of same date. NMN 91.02 7-8 NMN 91.02 Patient presents with limb pain or swelling and symptomatic varicose veins. Diagnoses of peripheral artery disease and venous insufficiency. This study excessive in combination with lower extremity study of same date. NMN 91.02 22-6 NMN 91.02 Patient presents with muscle pain in the left leg but progress note lacks support for this study to check blood flow. NMN 91.02 35-10 NMN 91.02 Patient presents with lower extremity swelling, chronic venous insufficiency, and peripheral edema; heart murmur noted on exam. This study excessive in combination with lower extremity study of same date. NMN 91.02 Subtotal 364.08 364.08 Duplex scan of extremity veins including responses to compression and other maneuvers, complete bilateral study – CPT 93970/93971. The CPT code 93970 is described as a "complete bilateral study." The CPT code 93971 states: "unilateral or limited study." The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 93970/93971 7-5 NMN 122.74 Patient presents with limb pain or swelling and symptomatic varicose veins. Diagnoses of peripheral artery disease and venous insufficiency. This study excessive in combination with lower extremity study of same date. NMN 122.74 22-7 NMN 122.74 Patient presents with muscle pain in the left leg but progress note lacks support for this study. NMN 122.74 22-27 (93971) NMN 70.20 Insufficient support in the progress notes for this study. NMN 70.20 Subtotal 315.68 315.68 Ultrasound, pelvic (nonobstetric), real time with image documentation; complete – CPT 76856. Pelvic ultrasound codes are used for both female and male anatomy. Elements of a complete female pelvic examination include a description and measurement of the uterus and adnexal structures, endometrium, bladder, and of any pelvic pathology (e.g., ovarian cysts, uterine leiomyomata, free pelvic fluid). Elements of a complete male pelvic examination include the evaluation and measurement (when applicable) of the urinary bladder, prostate and seminal vesicles to the extent they are visualized transabdominally, and any pelvic pathology (e.g., bladder tumor, enlarged prostate, free pelvic fluid, pelvic abscess). The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 76856 5-5 NMN 51.09 Patient is reported to have pelvic pain on 5/3/11 and referral to GYN is made. Pelvic pain again noted on 8/24/11. Study performed on 9/13/11 found uterine fibroid. MN established. 0.00 5-16 NMN 47.68 Excessive in light of retroperitoneal US of same date. NMN 47.68 6-4 NMN 51.09 78-year-old man presents with hematuria and nocturia plus a renal cyst. Excessive in light of retroperitoneal US of same date. NMN 51.09 12-2 NMN 51.09 Patient presents complaining of irregular periods, pelvic pain (non- radiating, pressure-like), nausea, and urinary changes for several weeks. MN for study shown. 0.00 20-9 NMN 51.09 Patient presents with complaint of dark-colored urine. Dysuria and hematuria noted. Excessive in light of retroperitoneal US of same date. NMN 51.09 Subtotal 252.04 149.86 Ultrasound, soft tissues of the head and neck (e.g., thyroid, parathyroid, parotid), real time with image documentation – CPT 76536. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 76536 7-3 NMN 49.53 Patient presents complaining of neck mass and swollen glands. MN shown. 0.00 18-10 NMN 47.53 Patient presents with complaints of memory loss and dizziness. Progress notes reflect presence of carotid bruits and possible neck swelling. Insufficient documentation of grounds for this study. NMN 47.53 20-4 NMN 49.53 Patient presents with swollen glands and physical exam reveals thyroid abnormality. MN established. 0.00 22-30 NMN 49.28 Insufficient documentation of grounds for the study; no mention of history or findings relating to thyroid issue. NMN 49.28 30-1 NMN 47.53 Patient presents with swollen glands and neck lumps, complaining of dizziness, and physical exam reveals thyroid abnormality. MN established. 0.00 Subtotal 243.40 96.81 Ultrasound, abdominal, real time with image documentation, limited (e.g., single organ, quadrant, follow-up) – CPT 76705. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 76705 6-3 NMN 40.87 78-year-old man presents with hematuria and nocturia plus a renal cyst. Excessive in light of retroperitoneal US of same date. NMN 40.87 20-7 NMN 42.87 Patient presents with complaint of dark-colored urine. Dysuria and hematuria noted. Excessive in light of retroperitoneal US of same date. NMN 42.87 Subtotal 83.74 83.74 Ultrasound, abdominal, real time with image documentation; complete – CPT 76700. A complete ultrasound examination of the abdomen consists of scans of the liver, gallbladder, common bile duct, pancreas, spleen, kidneys and the upper abdominal aorta and inferior vena cava including any demonstrated abdominal abnormality. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 76700 20-17 NMN 55.01 Patient presents with abdominal pain and abdominal mass related to an incisional hernia. This study was in excess of need in light of CT scan ordered same date. NMN 55.01 Subtotal 55.01 55.01 Electrocardiogram, routine EKG with at least 12 leads; with interpretation and report – CPT 93000. The undersigned makes the following findings of fact regarding VMC's claims for this BGOS: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 93000 35-25 NMN 10.37 Patient presents with heart murmur. TTE one year earlier found numerous abnormalities. This EKG excessive in combination with TTE ordered on same date to assess function and rule out worsening of condition. NMN 10.37 Subtotal 10.37 10.37 Office or other outpatient visit (established patient) – CPT 99213. This level of care is located in the middle of the coding spectrum for office visits with established patients. Usually the presenting problems are of low to moderate severity. The documentation for this encounter requires two out of three of the following: (1) expanded problem focused history; (2) expanded problem focused examination; and (3) low complexity medical decision making. Physicians typically spend 15 minutes face-to-face with the patient in connection with a 99213-level appointment. In contrast, 99212 is a CPT code for office or other outpatient visit for the evaluation and management of an established patient with a problem focused history and examination, and straightforward medical decision making. The documentation for this encounter requires two out of three of the following: problem focused history; (2) problem focused examination; and (3) straightforward medical decision making. Physicians typically spend ten minutes face-to-face with the patient in connection with a 99212-level appointment. The undersigned makes the following findings of fact regarding VMC's claims for office or other outpatient visits: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 99213 1-1 LL - 99212 4.77 Problem focused history and exam plus straightforward medical decision making. 99212 4.77 5-6 LL - 99212 2.77 Problem focused history and exam plus straightforward medical decision making. 99212 2.77 35-19 LL - 99212 2.77 Problem focused history and exam plus straightforward medical decision making. 99212 2.77 Subtotal 10.31 10.31 Initial Hospital Care – CPT 99223. The undersigned makes the following findings of fact regarding VMC's claim for a patient being admitted to the hospital: Pt.# - Enc.# AHCA Determination Disputed Overpayment ALJ Determination of Overpayment – CPT 99223 20-20 LL - 99221 3.24 Evidence supports 99221, not 99223 as billed. Applicable Fee Schedule (eff. Jan. 1, 2011) provides for payment of 49.12, not 52.36 as VMC urges. 3.24 Subtotal 3.24 3.24 The table below summarizes the foregoing findings, showing the per-patient overpayments (including both the adjudicated and admitted subtotals per patient, listed in separate columns), sorted from lowest to highest numbered patient: Pt. # ALJ Disallow Admitted OP Finding of OP 1 4.77 0 4.77 2 Undisputed 23.32 23.32 3 Undisputed 22.08 22.08 4 0 38.85 38.85 5 50.45 16.61 67.06 6 182.98 75.91 258.89 7 213.76 57.75 271.51 8 0 12.85 12.85 9 Undisputed 23.32 23.32 10 Undisputed 15.09 15.09 11 Undisputed 37.58 37.58 12 0 0 0 13 Undisputed 32.57 32.57 14 0 99.77 99.77 15 n/a n/a n/a 16 Undisputed 33.10 33.10 17 n/a n/a n/a 18 47.53 280.56 328.09 19 n/a n/a n/a 20 152.21 95.77 247.98 21 n/a n/a n/a 22 440.12 401.83 841.95 23 Undisputed 15.09 15.09 24 Undisputed 18.16 18.16 25 Undisputed 46.85 46.85 26 Undisputed 201.04 201.04 27 53.44 479.12 532.56 Pt. # ALJ Disallow Admitted OP Finding of OP 28 n/a n/a n/a 29 0 35.01 35.01 30 0 0 0 31 103.44 58.36 161.80 32 Undisputed 36.14 36.14 33 0 182.80 182.80 34 Undisputed 36.14 36.14 35 208.45 112.83 321.28 TOTAL 1,457.15 2,488.50 3,945.65 Thus, the undersigned finds that the entire empirical overpayment for the Audit Period is $3,945.65, an amount that comprises $1,457.15 as the sum of all adjudicated overpayments and $2,488.50 as the sum of all admitted overpayments. To be clear, each of the numbers in the "ALJ Disallow" column above is based on findings supported by a preponderance of the evidence. The figure of $1,457.15 is not supported, however, by clear and convincing evidence. The grand total of $3,945.65 is, more likely than not, the correct empirical overpayment for the claims in the sample population. The figure of $3,945.65 is not supported, however, by clear and convincing evidence. As mentioned above, AHCA determines the probable total overpayment based upon the empirical overpayment observed in the sample population, using a statistical formula for cluster sampling to extend the empirical data to the provider's entire patient population. AHCA is statutorily authorized to use generally accepted statistical methods in making a determination of overpayment to a provider, and to offer the results of such statistical methods as proof of overpayment.4/ The formula that AHCA uses is reproduced below: VMC contends that the statistical formula upon which AHCA has relied produces less accurate results than other methods that could have been used, and that AHCA made mistakes when it employed the formula in this case. The latter argument is rejected as contrary to the persuasive evidence, which shows that AHCA correctly performed the calculations required to implement the statistical formula for cluster sampling. As for the efficacy of the Agency's formula, the undersigned accepts that there are other statistical methodologies that AHCA could use, and that it would be possible to obtain a more accurate result using other methods. The Agency does not dispute this. But, according to AHCA's expert witness, Dr. Fred Huffer, a statistician whose testimony the undersigned credits with qualifications as explained below, increasing the accuracy of the statistical methodology most likely would result in a higher probable total overpayment because there is supposed to be only a five percent chance that the figure AHCA's formula produces is too high. The undersigned determines that the statistical formula for cluster sampling that AHCA uses is a generally accepted, valid, and reliable method of extending the overpayment observed in a sample population to the entire relevant population. That said, there is less to the relative persuasiveness of the number produced by the Agency's formula than meets the eye. The confidence level of 95 percent assumes that every numerical value going in to the formula is absolutely (not just probably) true. For some of the values, i.e., F, Bi, U, and N, this degree of confidence (namely, 100 percent) is justified. For others, i.e., Ai, it clearly is not. The total overpayment in the sample cluster is not an objective truth, such as the number of clusters in the random sample, or a mathematical constant such as pi. Rather, each alleged overpaid claim in the sample reflects a judgment by AHCA (or more precisely its medical reviewers) founded on findings of historical fact, legal conclusions, and determinations of ultimate fact. Indeed, each figure contributing to the total empirical overpayment numerically represents an ultimate factual determination based upon the application (and interpretation when necessary) of Medicaid rules to a limited body of evidence——mostly medical records——of past events. Of none (or very few) of those figures can it be said with 100 percent certainty that the number is absolutely (not just probably) true. No one involved in the decision making process is omniscient or infallible. As here, the provider may dispute some or all of AHCA's preliminary adjudications of the claims behind the total alleged overpayment in the sample cluster and demand a hearing, at which each (disputed) individual overpayment in the sample cluster must be proved by a preponderance of the evidence. The standard of proof being what it is, the Agency does not need to prove each of the disputed overpayments to an absolute certainty. To recoup an overpayment, it is sufficient for AHCA to show with a 51 percent probability that the amount alleged to have been overpaid for a given claim is, in fact, the amount overpaid. In the paragraphs above, the undersigned has set forth his findings regarding the disputed claims. Each individual finding of an overpayment reflects the undersigned's determination that the disallowed amount is, more likely than not, the correct adjudication of the disputed claim. There is, in the undersigned's estimation, approximately a 60 percent probability that the sum of all adjudicated overpayments ($1,457.15) is the correct figure, which satisfies the preponderance of evidence standard. In contrast, the undersigned estimates that there is approximately an 80 percent probability that the sum of all admitted overpayments ($2,488.50) is the correct figure, meaning that this portion of the empirical overpayment was established by clear and convincing evidence. This discussion of the undersigned's relative confidence in the overpayment findings made in this Recommended Order is meant to demonstrate that using the figure $3,945.65 as the value Ai in the Agency's formula for cluster sampling, while consistent with the standard of proof for an action to recoup an overpayment, nevertheless injects uncertainty into the equation, which logically must reduce the confidence level in the formula's outcome from 95 percent to something less than that.5/ Based on the instant record, the undersigned cannot quantify the probable accuracy of the formula's output, as applied to the facts found here. The bottom line is that although the undersigned finds AHCA's statistical formula to be a sufficiently reliable method of calculating, to the degree of certainty required under the preponderance of evidence standard of proof, the total probable overpayment to VMC, the formula's output (in this instance) does not satisfy the stricter clear and convincing standard.6/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that AHCA: Recalculate the probable total overpayment using the statistical formula for cluster sampling to extend the empirical overpayment of $3,945.65 in the sample population to the entire population during the Audit Period. Make a preliminary determination of the amount of costs that may be recovered from VMC, taking into consideration the financial resources, earning ability, and needs of VMC to the extent VMC demonstrates such factors. Remand the matter to DOAH for an evidentiary hearing on recovery of costs if necessary. Enter a final order directing VMC to repay the Agency the total probable overpayment as recalculated using the findings herein, plus statutory interest, for paid claims covering the period from January 1, 2010, to December 31, 2012; imposing an administrative fine against VMC in the amount of $5,000; and taxing recoverable costs, full payment of these monies to be due within 30 days after the rendition of the final order and payable on the Agency's instructions. DONE AND ENTERED this 10th day of April, 2015, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of April, 2015
The Issue Whether Petitioner is liable for overpayment of Medicaid claims for the period of January 1, 1997, through December 31, 1998, as stated in Respondent's Final Agency Audit dated March 10, 2000.
Findings Of Fact At all times material hereto, the Agency for Health Care Administration (Respondent) was the state agency charged with administration of the Medicaid program in the State of Florida pursuant to Section 409.907, Florida Statutes (1997). At all times material hereto, C. Dwight Groves, M.D. (Petitioner) was a licensed medical doctor in the State of Florida and was providing medical services to Medicaid recipients. Petitioner provided the medical services pursuant to a contract with Respondent. When first accepted as a Medicaid provider in June of 1995, Petitioner was assigned provider number 3777278-00 and was approved for providing and billing for physician services. The letter notifying Respondent that he was accepted as a Medicaid provider referenced an enclosed handbook which explained how the Medicaid program operates and how to bill Medicaid. At that time Petitioner practiced in Key West, Florida. In October of 1997, Petitioner notified Respondent of a change of address to Southern Group for Women in Lake City, Florida. According to the answers provided to a Medicaid Provider Questionnaire, Petitioner became affiliated with Southern Group for Women on October 16, 1997. Petitioner's medical practice was and is in the area of obstetrics and gynecology. Respondent's witness, Toni Steele, is employed by Respondent in its Medicaid program integrity division. During the audit period in question, she was a senior human services program specialist. Her job responsibility was to ensure that Medicaid providers in Florida adhered to Medicaid policy and rules. Medicaid program integrity uses several detection devices to audit Medicaid provider billing. One such device is what is referred to as a "one and a half report." This type of report will indicate when a provider "spikes" one and a half times his or her normal billings. During December of 1998, Ms. Steele noticed a "spike" in Petitioner's billings. Because of this spike, Medicaid program integrity, ordered an ad hoc sampling of his billings within a two-year billing period, January 1, 1997, through December 31, 1998. She reviewed the sample and, using the Medicaid Management Information System, was able to look at the actual dates of service and view the procedure code that was billed and paid by Medicaid. Ms. Steele then conducted an on-site visit to Petitioner's office. As is her usual practice, she took a tour of Petitioner's office looking at what types of lab equipment were there, the State of Florida license, and the number of medical personnel employed. During the on-site visit, Ms. Steele presented the office manager with a computer-generated list of patients and requested that the office manager provide the medical records of those patients on the list. The requested 31 files were provided to her within the requested time frame. Ms. Steele reviewed the patients' files received from Petitioner's office for the purpose of determining policy violations according to the Medicaid Physician Coverage and Limitations Handbook (Nov. 1997), the Advanced Registered Nurse Practitioner Coverage and Limitations Handbook (Nov. 1997), and the Medicaid Provider Reimbursement Handbook (Nov. 1996). The Medicaid Provider Reimbursement Handbook (Nov. 1996) provides in pertinent part: Introduction: Every facility, individual and group practice must submit an application and sign an agreement in order to provide Medicaid services. Note: See the Coverage and Limitations Handbook for specific enrollment requirements. Group Enrollment: When two or more Medicaid providers form a group practice, a group enrollment application must be filed with the Medicaid fiscal agent. * * * Renewal: A provider agreement is valid for the time period stated in the agreement and must be renewed by the provider by completing a new provider agreement and submitting it to the Medicaid fiscal agent 30 days prior to the expiration date of the existing agreement. The Physician Coverage and Limitations Handbook (Nov. 1997) provides in pertinent part: Other Licensed Health Care Practitioners: If a physician provider employs or contracts with a non-physician health care practitioner who can enroll as a Medicaid provider and that health care provider is treating Medicaid recipients, he or she must enroll as a Medicaid provider. Examples of non-physician health care practitioners who can enroll as Medicaid providers include but are not limited to: physician assistants, advanced registered nurse practitioners, registered nurse first assistants, physician therapists, etc. If the services rendered by a non-physician health care practitioner are billed with that practitioner as the treating provider, the services must be provided in accordance with the policies and limitations contained in that practitioner's program-specific Coverage and Limitations Handbook. * * * Physician Supervision: Delivery of all services must be done by or under the personal supervision of the physician. Personal supervision means the physician: . is in the building when the services are rendered, and . reviews, signs and dates the medical record within 24 hours of providing the service. The Advanced Registered Nurse Practitioner Coverage and Limitations Handbook (November 1997) provides in pertinent part: ARNP in a Physician Group: If an ARNP is employed by or contracts with a physician who can enroll as a Medicaid provider, the physician must enroll as a group provider and the ARNP must enroll as a treating provider within the group. If the services rendered by the ARNP are billed with the ARNP as the treating provider, the services must be provided in accordance with the policies and limitations contained in this handbook. According to answers provided on a Medicaid Provider Questionnaire completed in February of 1999, Anna Hall Kelley, ARNP, became affiliated with Southern Group for Women on October 16, 1997. The answers provided on the Questionnaire indicated that Petitioner and Nurse Kelley formed a partnership and practiced together at Southern Group for Women. Nurse Kelley did not testify at the hearing. In reviewing the requested medical records, Ms. Steele noted that some of the medical records were signed by Nurse Kelley, ARNP, indicating that Nurse Kelley, not Petitioner, performed the services. They were not countersigned by Petitioner. Nurse Kelly was not an enrolled Medicaid provider at the time the services were rendered as her provider number expired on May 31, 1997. Nurse Kelley signed a new enrollment application to be a Medicaid provider in October of 1999. Thus, she was not an enrolled provider from June 1, 1997, through the remainder of the audit period. Nurse Kelley saw patients and billed for those services under Petitioner's individual provider number. Neither Nurse Kelley nor Petitioner applied for a group Medicaid provider number during the audit period. Respondent sent a Preliminary Agency Audit Report to Petitioner on September 21, 1999, notifying him of a preliminary determination of a Medicaid overpayment in the amount of $71,261.92. Respondent sent a Final Agency Audit Report to Petitioner on March 10, 2000, notifying him that the Agency made a determination of a Medicaid overpayment in the amount of $55,829.04. Because of recalculations made by Respondent, the amount of reimbursement sought was reduced to $55,647.92. As a result of a stipulation of the parties prior to the hearing, the amount of reimbursement was further reduced to approximately $51,000. As to the statistical aspect of Respondent's audit, Respondent presented testimony of a statistical expert, Dr. Robert Peirce, who is employed by Respondent as an administrator in the Bureau of Program Integrity. Dr. Peirce's testimony is considered credible. Dr. Peirce developed the statistical methodology used in the statistical sampling of Dr. Groves' medical files. Dr. Peirce studied the methodology used by Respondent in this case, and concluded that the statistical procedures used in the audit of Petitioner were in accordance with customary statistical methodology. The statistical analysis of a Medicaid provider's billing begins with the selection of an audit period, which in Petitioner's case was calendar years 1997 and 1998. During that audit period, Petitioner submitted 3912 claims for Medicaid reimbursement. A random sample of recipients, 31 out of a possible 315, was selected by a computerized random sample generator from the claims submitted by Petitioner during the audit period. All of the claims in the sample were reviewed by an analyst, who determined whether any overpayment existed with respect to those claims. An overpayment totaling $5,130.99 was determined for the 302 claims of the 31 recipients in the sample. The amount of overpayment from the sample was extended to the population of the claims through a widely accepted statistical sampling formula. In extending the results of the 302 claims to the 3,912 claims, the total amount of overpayments was calculated as $55,647.92. The determination of that amount was made at the 95 percent confidence level, meaning that Respondent is confident that the overpayment is the amount that was calculated or more. There is a five percent probability that it might be less and a 95 percent chance that it would be more then the $55,647.92 that was calculated. The process used by Respondent is in accordance with customary statistical methodology. However, the result does not take into account the fact that the audit period began January 1, 1997, whereas Nurse Kelley did not begin to practice at Southern Women's Group until October 16, 1997, and, therefore, worked there only 14 and one-half months (or approximately 60%) of the audit period. Despite the stipulation of the parties that all issues other than the ARNP services had been resolved and that the amount in dispute was now approximately $51,000, no evidence was presented to indicate the exact amount remaining in dispute.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Agency for Health Care Administration enter a final order sustaining the Final Agency Audit Report in part, recalculating the amount of overpayment as indicated and consistent with this Recommended Order, and requiring Petitioner to repay overpayments in the amount determined by the recalculation. DONE AND ENTERED this 21st day of December, 2000, in Tallahassee, Leon County, Florida. BARBARA J. STAROS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of December, 2000.
The Issue The issue is whether Petitioner overpaid Respondent Medicaid funds, for which Section 409.913(10), Florida Statutes (2002), authorizes Petitioner to seek repayment from Respondent.
Findings Of Fact During 1998, Respondent was an authorized Medicaid provider, pursuant to Medicaid provider number 105425200, and was a party to a valid Medicaid Provider Agreement with Petitioner. Respondent filed claims with Petitioner for payment, under the Medicaid program, for the goods and services that are the subject of the audit described below, and Petitioner paid Respondent for these claims. The audit period in this case is 1998. During 1998, Respondent submitted to Petitioner 36,257 claims for nearly 5.5 million units of over one thousand types of drugs. These claims totaled $3,075,449.88, which Petitioner paid Respondent. On June 2, 1999, Petitioner sent a letter to Respondent informing it of a review of its pharmacy claims for 1998. The letter requests documentation of all purchases of 12 named drugs for 1998 and documentation of all credits for these drugs during the same period. The letter states that acceptable documentation includes itemized wholesaler sales history reports, itemized manufacturer sales history reports, itemized invoices, and credit return receipts. By letter dated June 5, 1999, Respondent provided the requested information. By letter dated June 23, 2000, Petitioner advised Respondent that it had examined the paid Medicaid claims for 1998 and the acquisition documentation that Respondent had provided in June 1999. The letter states: "You have failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid.” Thus, Petitioner made a "provisional" determination that it had overpaid Respondent $1,092,205.32. The letter invites Respondent to provide additional information to reduce the overpayment determination. The June 23 letter contains an Overpayment Attachment that lists ten of the twelve drugs for which Petitioner had sought documentation in its earlier letter. For each of these ten drugs, the Overpayment Attachment lists the generic code, number of units for which Medicaid paid, the total amount of Medicaid payments, the total units documented by Respondent to have been available during the relevant period, and the number of units for which Respondent provided no availability documentation. The Overpayment Attachment also calculates the amount of Medicaid payments attributable to the unavailable units and the total overpayment, which is $1,092,205.32. The overpayment calculations described in the preceding paragraph assume that all available units of the audited drugs were sold to Medicaid patients. The effect of this improbable scenario reduces the amount of the overpayment. The overpayment calculations attempt no extrapolation of overpayments on the over 10,000 other drugs for which Respondent received Medicaid payments during 1998. The effect of limiting the overpayment calculation to the ten listed drugs reduces the amount of the overpayment. However, the ten listed drugs are the drugs that generated the most Medicaid payments to Respondent and account for over one-third of the total Medicaid payments during the relevant period. Respondent provided additional information to Petitioner on August 30 and November 3, 2000. However, after examining the information, Petitioner advised Respondent, by letter dated April 8, 2002, that its final determination was that Respondent owed $1,096,489.77 due to its receipt of Medicaid overpayments. The overpayment increased by over $4000 due to the determination that Respondent's records documented 1000 fewer available units of two dosages of Risperdone than Petitioner had previously determined.
Recommendation It is RECOMMENDED that the Agency for Health Care Administration enter a final order directing Respondent to pay Petitioner $1,096,489.77, plus interest, to repay overpayments that it received from the Medicaid program for the sale of drugs in 1998. DONE AND ENTERED this 3rd day of November, 2003, in Tallahassee, Leon County, Florida. S 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 3rd day of November, 2003. COPIES FURNISHED: Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3116 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Grant P. Dearborn Assistant General Counsel Building 3, Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308-5407 Jose M. Herrera Jose M. Herrera, P.A. 1401 Ponce de Leon Boulevard Suite 200 Coral Gables, Florida 33134
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 Whether Emergency Rule 10CER92-4 should be invalidated because it constitutes an invalid exercise of delegated legislative authority.
Findings Of Fact The Medicaid program is a program authorized under Title XIX of the federal Social Security Act that provides for payments for medical items or services for eligible recipients. Section 409.901(7), Florida Statutes. Prior to July 1, 1993, the Medicaid program was administered by the Department of Health and Rehabilitative Services (HRS). Effective July 1, 1993, Section 20.42, Florida Statutes, 1992 Supplement, was amended by Chapter 93-129, Section 58, Laws of Florida, to give the Agency for Health Care Administration (AHCA) the responsibility for the Medicaid program. The Medicaid program provides for mandatory and optional services to eligible recipients. Prescribed drug services are optional Medicaid services. Medicaid services may be provided only when medically necessary, must be provided in accordance with state and federal law, and are subject to any limitation established by the general appropriations act or Chapter 216, Florida Statutes. Sections 409.905 and 409.906, Florida Statutes. Medical providers participating in the Medicaid program receive reimbursement from Medicaid. Section 409.908, Florida Statutes. States are given the option to charge Medicaid recipients copayments for services. 42 CFR Section 447.50. Certain categories of services and recipients are exempt from copayments. 42 CFR Section 447.53. Forty-five percent of the Medicaid program is funded by state funds and fifty-five percent is funded with federal "matching funds." In order to receive federal matching funds for its Medicaid program, the state must submit a plan describing the nature and scope of its Medicaid program and giving assurances that the program will be administered in accordance with Title XIX and applicable federal regulations. This plan is known as the State plan. Effective February 14, 1992, the Legislature enacted Chapter 92-5, Laws of Florida, which amended the appropriations Act for fiscal year 1991-92. Proviso language in Chapter 92-5 relating to Specific Appropriation 1035 for Medicaid prescribed medicine/drug provides: The Department of Health and Rehabilitative Services is directed to implement, beginning April 1, 1992, a co-payment program for Prescribed Medicine in order to implement spending reductions of at least $770,213 from general revenue and $929,661 from the Medical Care Trust Fund in Specific Appropriation 1035. The State plan was amended effective April 10, 1992, to require a copayment of $1.00 per prescription for pharmacy services provided to Medicaid recipients. Certain categories of services and recipients were exempted from the copayment requirement. Providers were prohibited from denying services to recipients who were unable to pay the copayment. Prior to April 10, 1992, copayments had not been required for prescribed drug services. HRS adopted Emergency Rule 10CER92-4, effective April 10, 1992. HRS published notice of the emergency rule in the Florida Administrative Weekly, Vol. 18, No. 16, April 17, 1992. In this notice under the section entitled "SPECIFIC REASONS FOR FINDING AN IMMEDIATE DANGER TO THE PUBLIC HEALTH, SAFETY OR WELFARE," it states in pertinent part: The 1992 Legislature reduced the prescribed drug services program FY 1991-1992 budget in Senate Bill 2408 which was signed by the Governor on February 14, 1992. This law requires the Medicaid program to implement a copayment requirement for prescription drugs by April 1992. . . . The emergency rule amended Rule 10C-7.042, Florida Administrative Code and required recipients to pay the pharmacy provider a $1.00 co-payment for each prescription or other prescribed drug service reimbursed by Medicaid. Certain categories of recipients and services were exempted from the copayment requirement. The pharmacy provider was required to request a copayment from non-exempt recipients. The pharmacy must determine a recipient's ability to pay the copayment based on the recipient's reply to the request for copayment, the recipient's past purchase history with that provider, and the recipient's recent purchase of non-essential items. A provider could not deny prescribed drug services to eligible recipients because of inability to pay the copayment. Although a recipient may not be able to pay the copayment, the recipient remains liable for the copayment. HRS began the rulemaking process to adopt the same amendments to Rule 10C-7.042 as a regular rule. Emergency Rule 10CER92-4 was challenged via a lawsuit in state court and was later removed to federal court. The proposed amendments to Rule 10C-7.042 were challenged in an administrative rule challenge, which was withdrawn and added to the lawsuit in federal court dealing with the challenge to the emergency rule. Chapter 92-293, Laws of Florida, the Appropriations Act for fiscal year beginning July 1, 1992 and ending June 30, 1993 contains the following proviso language relating to Medicaid prescribed drug services: Funds in Specific Appropriation 1019 are reduced by $18,581,894 from the General Revenue Fund, $3,281,004 from the Grants and Donations Trust Fund, $22,647,089 from the Medical Care Trust Fund, $2,632,000 from the Public Medical Assistance Trust Fund, and $58,013 from the Special Grants Trust Fund for the Department to implement a Medicaid comprehensive cost containment program. This program shall, at a minimum, incorporate: a prior authorization component; a co-payment program; an on site education program for providers prescribing the drugs; enhancements to the Department's ability to identify fraud and abuse; utilization of specific nursing home pharmacy consultants; and, shall implement new electronic technology to speed payments and capture third party liability information. By notice in the Florida Administrative Weekly, Rule 10CER92-4 has been continued pursuant to Section 120.54(9)(c), Florida Statutes. Chapter 93-184, Laws of Florida, the Appropriations Act for the fiscal year beginning July 1, 1993 and ending June 30, 1994, contains no language concerning reductions in the appropriations for Medicaid prescription medicine services and contains no language concerning copayments for recipients receiving Medicaid prescription medicine services. The amounts appropriated for the Medicaid prescription medicine services was at or below the amounts appropriated in Chapter 92-293 Laws of Florida. Chapter 93-129, Section 48, Laws of Florida, created section 409.9081, Florida Statutes, which requires Medicaid recipients to pay nominal copayments for hospital outpatient services and physician services effective July 1, 1993. Prior to the enactment of section 409.9081, Florida Statutes, a one dollar copayment had been required for Medicaid outpatient hospital and physician service. Effective July 1, 1993, the copayments were raised to two dollars. Current revenues generated by the copayments for the Medicaid prescribed drug services is approximately $12 million. Thus, the discontinuance of the copayment would result in a $12 million shortfall for the provision of Medicaid prescribed drug services, and a restriction on services to the extent necessary to account for the shortfall. The Social Services Estimating Conference (SSEC) is a statutorily created body established to develop official information relating to the social service system of the state for use in the state planning and budgeting system. Section 216.136(6), Florida Statutes. Section 216.134(1), Florida Statutes, provides in pertinent part: Unless otherwise provided by law or decided by unanimous agreement of the principals of the conference, all official information developed by the conference shall be based on the assumption that current law and current administrative practices will remain in effect throughout the period for which the official information is to be used. . . . The social services estimating conference for 1993-94 took into consideration the revenues from the copayments for the Medicaid prescribed drug services. Petitioner, Mildred Henry, resides in Jacksonville, Florida, and is disabled. She has received Medicaid since December, 1991. Her only income is Supplemental Income ("SSI") benefits of $434 per month. Ms. Henry suffers from many disabilities including chronic obstructive pulmonary disease, asthma, hypertension, severe and chronic urinary tract infections, and depression. Her physicians have prescribed a number of medications to address these conditions including Cardizem (for high blood pressure), Zantac (for ulcers), Cipro (for chronic urinary tract infections), Phenazopyridine (for bladder problems), Imipramine (for depression), Premarin (hormone), Thes-dur (for asthma), Brethine (for asthma), Ventalin (for asthma), Furosemide (for excess fluid), K-Dur (potassium), Propoxy N (for pain), Nizoral (for skin irritations), Darvoset (for pain), Tylenol 3 (for pain), and Halcion (for anxiety). She needs to refill most of these prescriptions each month. Copayments for all of Ms. Henry's prescription medications amount to $16.00. Ms. Henry's income is below the federal poverty level. She cannot afford to pay a copayment for all her medications. Petitioner has informed her pharmacy that she does not have the money to pay copayments. However, the pharmacy has refused to provide the medications without payment of the co-payments. As a result, Petitioner runs out of medications and delays getting her prescriptions refilled until she can pay the copayment.
The Issue The issue for determination is whether Petitioner received Medicaid overpayments and, if so, the total amount of the overpayments. Petitioner agreed at the onset of the hearing not to contest the findings of the Agency that Petitioner received Medicaid monies to which he was not entitled. Therefore, the issue remaining for determination is: Whether Respondent calculated the overpayment amount of $52,850.82 using a valid statistical formula and a valid sample of recipients and claims during the audit period of March 1, 2000, through March 1, 2002.
Findings Of Fact Based upon observation of the witnesses while testifying, the documentary materials received in evidence, official recognition granted, evidentiary rulings made, and the entire record compiled herein, the following relevant and material facts are established. The Agency is charged with administration of the Medicaid program in Florida pursuant to Sections 409.907 and 409.913, Florida Statutes (2003). Among its administrative duties, the Agency operates a program to oversee the activities of Florida Medicaid providers to ensure that fraudulent and abusive behavior and neglect occur to the minimum extent possible and to recover overpayments and impose sanctions as appropriate. "Overpayment" is 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." § 409.913(1)(d), Fla. Stat. (2000). The FAAR, covering the audit period of March 1, 2000, through March 1, 2002, together with the Agency's work papers, set out a Medicaid overpayment amount of $52,850.82 that the Agency seeks to recoup from Petitioner. Petitioner is a physician enrolled in the Medicaid program under provider number 0580091-00, who operated under his provider number during the audit period of March 1, 2000, through March 1, 2002, under the auspices of a standard Medicaid provider agreement. As a part of the Medicaid provider agreement, the provider agrees to comply with all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, and statements of policy. Petitioner participated in the Medicaid program during the FAAR period of March 1, 2000, through March 1, 2002, and received payment for the services that the Agency now questions and are the subject of the audit. During the above audit period, the applicable statutes, rules, and Medicaid handbooks required Petitioner to retain all medical, fiscal, professional, and business records on all services provided to a Medicaid recipient. Petitioner had to retain these records for at least five years from the date of services. The Florida Medicaid program prepares and furnishes handbooks to all enrolled Medicaid providers, including Petitioner. These handbooks set forth the Medicaid policies with regard to services rendered and billed by providers. Petitioner had a duty to make sure that each claim submitted was true and accurate and was for goods and services that were provided, by an enrolled Medicaid provider, in accordance with the requirements of Medicaid rules, handbooks, and policies, and in accordance with federal and state law. Medicaid providers who do not comply with the Medicaid documentation and record retention policies hereinabove may be subject to administrative sanctions and/or recoupment of Medicaid payments. Medicaid payments for services that lack required documentation and/or appropriate signatures will be recouped. Mr. Hector Tapining (Mr. Tapining) and Phyllis Stiver (Nurse Stiver), registered nurse consultant for Medicaid Program Integrity, conducted an on-site visit to Petitioner's office and requested records. From the files of Petitioner, Mr. Tapining generated a random list of 30 Medicaid recipients (the cluster sample) who had received services by Petitioner during the two- year audit period of March 1, 2000, through March 1, 2002. The Agency thereafter generated worksheets reflecting: (1) the total number of Medicaid recipients during the audit period; (2) total number of claims made by Petitioner, with dates of medical services provided; (3) the total amount of money paid Petitioner during the audit period; and (4) the analyst's worksheets representing his review of each recipient's claim(s) for the audit period. Additional Agency-generated worksheets reflected: (1) the total number of Medicaid recipients during the audit period; (2) the total number of claims of Petitioner, with dates of service; (3) the total amount of money paid to Petitioner during the audit period; and (4) the analyst's worksheets representing his review of each recipient's claim(s) for the audit period. Mr. Tapining provided the worksheets to Nurse Stiver for her review of compliance with Medicaid enrollment and documentation. Mr. Tapining provided the worksheets to E. Rawson Griffin, III, M.D. (Dr. Griffin), the medical records consultant, for his review and evaluation of appropriate billing codes. The formula used by the Agency is a valid statistical formula, the random sample used by the Agency was statistically significant, the cluster sample was random, and the algebraic formula and the statistical formula used by the Agency are valid formulas. Dr. Griffin, after review of 30 patient records, concluded that Petitioner engaged in a general pattern of over coding at the highest level of code (99205) for services rendered that appeared to be rather straight-forward and simple for the medical services rendered at the time of each visit. Over coding is the term employed when supporting documentation for medical billing does not support the billing code chosen and assigned by the provider. In his review, Dr. Griffin saw no middle codes (99213s and/or 99214s) billed by Petitioner. Dr. Griffin opined that it was extraordinary that Petitioner would see and service 30 patients on their first visits, who at that time presented a complaint necessitating a medical necessity level code 99205, the highest level of Medicaid service. Continuing, Dr. Griffin explained that over coding is entering in the patient's billing statement a code higher than the patient's medical complaint and the Patient's recorded medical necessity warranted for the visit or visits (1st, 2nd, 3rd, etc.) on the date those services were provided by Petitioner. In Dr. Griffin's opinion, Medicaid billing codes are to be determined by consideration of the following medical factors: (1) the patient's particular medical complaint and the degree of complexity of that complaint at the time of the initial visit, (2) the type of and the complexity of medical examinations and the tests necessarily required to be administered based upon the type and complexity of the initial complaint, and (3) the resulting interpretations of the tests and the examinations administered for treatment of the complaint. It is only after completion of the above analysis and documentation in the patient's medical records, would a code 22915 billing be appropriate. Dr. Griffin's analysis of the cluster sample of 30 Medicaid records of patients serviced by Petitioner resulted in his down coding Petitioner’s billing as shown below.2 I.D. Number Service Date Code Billed Adjustment B.K. 1 03-29-2000 215 (5) 214 B.K. 1 07-19-2000 214 213 1 08-17-2000 214 213 1 12-11-2000 215 214 1 02-22-2001 215 214 1 05-23-2001 214 213 1 06-24-2001 214 212 J.A.C. 4 No date 215 214 J.R. 5 10-02-2000 215 213 B.F. 6 07-25-2000 215 213 F.H. 8 04-10-2000 215 213 F.H. 8 05-04-2000 214 213 (2 visits) D.C. 9 01-23-2000 215 213 T.M. 10 06-07-2000 215 213 T.M. 10 06-28-2000 214 213 D.W. 13 01-12-2000 215 213 P.L. 14 01-10-2000 214 213 I.H. 15 12-18-2000 215 213 M.V. 17 04-10-2000 215 213 R.R. 21 04-17-2001 214 213 S.K. 25 11-20-2000 212 211 A.H. 26 12-19-2000 215 212 T.P. 27 02-20-2000 215 213 M.R. 28 11-14-2002 215 214 E.C. 29 04-28-2000 214 213 E.C. 07-03-2000 214 213 12-28-2000 214 212 01-02-2000 214 212 01-23-2000 214 212 02-06-2000 214 212 04-03-2000 214 212 (6 visits) R.S. 30 04-16-2001 215 213 Nurse Stiver reviewed the cluster sample of 30 Medicaid records of patients serviced by Petitioner for compliance with Medicaid policy(s) to ensure that services billed are the services for which Medicaid pays and are services that meet all aspects of the Medicaid policy(s) as specified in the Medicaid Handbook. Medicaid policy, regarding provider enrollment, requires (all) providers who services Medicaid patients to be (individually) enrolled in the Medicaid program as providers before providing service and billing Medicaid for those services. The Agency verifies the education, credentials, and criminal background of each enrollee to ensure the safety of Medicaid recipients. The individual provider enrollment is required as a condition precedent for providers to bill Medicaid for services and to be paid by Medicaid for those services. The enrollment requirement includes PAs and ARNPs. Nurse Stiver's review of Petitioner's documents sought to ascertain whether each provider who actually rendered services had executed a voluntary enrollment contract agreement between the Agency and that provider. In these contract agreements, the provider agrees to comply with all laws and rules pertaining to the Medicaid program when furnishing a service or goods to a Medicaid recipient, and the Agency agrees to pay a sum, determined by a fee schedule, payment methodology, or other manner, for the service or goods provided to the Medicaid recipient. The Medicaid Handbook requires separate and/or individual enrollment of each and every entity that provides Medicaid service(s) to Medicaid recipients. The mandatory enrollment includes a provider(s) who makes written entries on and/or signs Medicaid documents. Should the medical service provider and the provider documenting the Medicaid recipient's medical files and the provider billing Medicaid for services rendered be different providers, each provider must be individually enrolled in the Medicaid program. Within a chain of provider entities, the failure of one provider entity to be enrolled entitles the Agency to full recoupment of all Medicaid payments made to the enrolled Provider. Nurse Stiver applied the above analysis to the cluster sample of 30 Medicaid recipients' records recovered from Petitioner's files and to the Agency's worksheets. Nurse Stiver's review and her investigation revealed specific instances in which the paid billing claims evidenced that Petitioner's non-enrolled PAs and/or Petitioner's non-enrolled ARNP either provided the medical services or documented the medical services provided to the Medicaid recipients as shown below: Patient Service Date(s) Services and/or documentation 1. B.K. Serviced 9 times Signature-not enrolled 2. E.J. 08-14-01 Records written and signed by PA not enrolled and (not countersigned by Petitioner) 3. E.T. Serviced 4 times Services provided not entitled to Medicaid payment (unauthorized) J.A. (stipulation) Stipulation3 B.F. 11 visits-serviced Provider not enrolled M.R. 7 visits-serviced Provider not enrolled F.H. 11 visits-serviced Provider not enrolled through 12. Stipulations 13. D.W. 2 visits-serviced Provider not enrolled 14. through 17. Stipulations 18. L.A. 5 visits-serviced Provider not enrolled 19. and 20. Stipulations 21. R.R. 3 visits-serviced Provider not enrolled 22. and 23. Stipulations 24. L.S. 1 visit-serviced Provider not enrolled 25. S.K. 3 visits-serviced Provider not enrolled 26. through 28. Stipulations 29. E.C. 12 visits-serviced Provider not enrolled 30. Stipulation After the review and examination of the claims submitted within the cluster sample, Nurse Stiver concluded the above services billed to the Agency were not performed by Petitioner. She opined that either or both of Petitioner's employees, Justo Lugo and Phillip Nguyen (PAs) and/or Andrea McDonald (ARNP) provided or assisted in providing services. As non-enrolled providers in the Medicaid program, the PAs and the ARNP’s participation in providing services to Medicaid recipients and/or participation in assisting Petitioner in providing medical services and/or participation in Petitioner's billing Medicaid for medical services to Medicaid recipients violated Medicaid policy. Respondent established that the Medicaid program payments for services provided by an individual not enrolled as a provider in the Medicaid program are overpayments of which the Agency is entitled to full recoupment. After the reviews and the analysis by Nurse Stiver and Dr. Griffin, using the Agency's formula for calculating the extrapolated overpayments, the Agency determined overpayment in the amount of $64,453.74 to have occurred. Based upon these findings, the Agency issued a Preliminary Agency Audit Report (PAAR) letter setting out the overpayment amount of $64,453.74 and inviting Petitioner to submit additional documentation. Petitioner's additional documentation submittals were reviewed by the Agency. The post-PAAR review resulted in a reduction of overpayment to $52,850.82 as the total overpayment for all claims considered, and sought to be recovered from Petitioner by the Agency. The Agency's worksheets resulting in the $52,850.82 overpayment included: (1) the medical record review summary; (2) a spreadsheet setting out the names of the recipients, the dates of service, the procedure billed, the amount paid by the Agency, the amount allowed by the Agency, and the resulting overpayment; (3) the overpayment calculation using cluster sampling; (4) the patient worksheets, or claims; and (5) the procedure code summary of the claims in the universe, as defined in Section 409.913, Florida Statutes (2000). The formula used by the Agency is a valid statistical formula, the random sample used by the Agency was statistically significant, the cluster sample was random, and the algebraic formula and the statistical formula used by the Agency are valid formulas. The Agency's data and calculations were reviewed by Ian McKeague, Ph.D. (Dr. McKeague). He reproduced the calculations and concluded that $52,850.82 is the correct overpayment amount made by Medicaid to Petitioner. Petitioner produced neither written authority nor expert testimony contesting the validity of the statistical formula and Dr. McKeague's resulting calculation of overpayment. Nurse Stiver, with over 14 years employment with the Agency, worked with the Medicaid policies and handbooks. She worked with Mr. Tapining on the audit of Petitioner documents. Specifically, she reviewed Petitioner's records for compliance with Medicaid policy, to ensure that the services billed are the services Medicaid paid for and that those services met all aspects of Medicaid policy. Nurse Stiver's investigation and review revealed specific instances in which the paid claims show that the PAs and/or the ARNP, not Petitioner himself, provided the services to Medicaid patients. In each case where the Agency determined Petitioner was not entitled to payment, Nurse Stiver reviewed the medical records and determined that the ARNP or one of the PAs, who were not enrolled in the Medicaid program, actually rendered services to Medicaid recipients. Her determination was based upon her many years of nursing experience that the person rendering the services is the person who documents the services rendered. From her review, it appeared that the ARNP or a PA (not enrolled), not Petitioner, documented the service billed to and paid by Medicaid. Services rendered by an ARNP or a PA who is not enrolled as a provider in the Medicaid program cannot be compensated by the Medicaid program. Petitioner argued that he provided all Medicaid services billed to Medicaid and, on those rare occasions reviewed by Nurse Stiver, his employees (either the ARNP or the PAs), who by happenstance would be present in the treatment room, aided him by merely documenting services he himself rendered to the Medicaid patients. Petitioner presented an alternative argument that on other of those rare occasions reviewed by Nurse Stiver, his employees would be in the room when Petitioner actually provided services to Medicaid patients, and, while he was providing those services, he would simultaneously dictate to his employee who would transcribe his dictations on the Medicaid forms. Petitioner elected not to compel attendance by subpoena of his employees, even though the final hearing was continued to provide Petitioner an opportunity to do so. Petitioner's argument, that the proposed testimony by his employees would have been sufficient to challenge the Agency determination that Petitioner's billing was for services performed by a provider who was not enrolled in the Medicaid program, is without a foundation in fact and rejected. The Medicaid Provider Reimbursement Handbook provides, in part, that "Records must be retained for a period of at least five years from the date of service." The handbook goes on to provide in pertinent part: PAs must meet the general Medicaid provider enrollment that are contained in Chapter 2 of the Medicaid Provider Reimbursement Handbook, HFCA-1500 and Child Health Check- Up 221. In addition, PAs must follow the specific enrollment requirements that are listed in this section. * * * PAs must meet the provider requirements and qualification and their practice must be fully operational before they can be enrolled as Medicaid providers. * * * If a PA is employed by or contracts with a physician who can enroll as a Medicaid provider, the physician must enroll as a group provider and the PA must enroll as a treating provider within the group. * * * Services provided by a PA under the direct supervision of a physician may be billed using the physician's provider number instead of the PA's provider number. Direct physician supervision means the physician: (*) Is on the premises when the services are rendered, and (**) reviews, signs, and dates the medical record. * * * Medical records must state the necessity for and the extent of services provided. The following minimum requirements may vary according to the services rendered: * * * Note: See the service-specific Coverage and Limitations Handbook for record keeping requirements that are specific to a particular service. Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid Payments. Medicaid payments for services that lack required documentation or appropriate signatures will be recouped. Note: See Chapter 5 in this handbook for information on administrative sanctions and Medicaid payment recoupment. Petitioner, by signing a Medicaid provider agreement, agreed that all submissions for payment of claims for services will constitute a certification that the services were provided in accordance with local, state, and federal laws, as well as rules and regulations applicable to the Medicaid program, including the Medical Provider Handbooks issued by the Agency.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Agency for Health Care Administration, enter a final order requiring Petitioner, Mazhar G. Nawaz, M.D., to repay Respondent the principal amount of $52,850.82 plus interest as provided in Section 409.913, Florida Statutes (2002). DONE AND ENTERED this 19th day of February, 2004, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE 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 February, 2004.
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.
