The Issue Whether the Petitioner was overpaid for Medicaid prescriptions. The Agency for Health Care Administration (AHCA, Agency or Respondent) asserts the Petitioner, Compscript, Inc., d/b/a Compscript (Petitioner or Compscript) failed to maintain proper records to support and document the Medicaid prescription claims paid by the Agency for the audit period. According to the Agency, the audit findings must be extrapolated to the universe of all claims for the audit period. If so, the Agency maintains the Petitioner should reimburse AHCA for a Medicaid overpayment in the amount of $216,974.07 (this is the “recoupment” amount). The Petitioner denies it was overpaid any amount, asserts it kept records in accordance with applicable laws and regulations governing pharmacy records, and maintains that the Agency may not apply the extrapolation accounting procedure in this case.
Findings Of Fact At all times material to the allegations of this case, the Petitioner was a licensed pharmacy authorized to do business in the State of Florida; its pharmacy license number is PH0016271. At all times material to the allegations of this case, the Petitioner was authorized to provide Medicaid prescriptions pursuant to a provider agreement with the Respondent. The Petitioner’s Medicaid provider number is 106629300. The terms of the provider agreement govern the contractual relationship between this provider and the Agency. The parties do not dispute that the provider agreement together with the pertinent laws or regulations controls the relationship between the provider and the Agency. The provider agreement pertinent to this case is a voluntary agreement between AHCA and the Petitioner. Pursuant to the provider agreement, the Petitioner was to “keep, maintain, and make available in a systematic and orderly manner all medical and Medicaid-related records as AHCA requires for a period of at least five (5) years.” In addition to the foregoing, a Medicaid provider must maintain a patient record for each recipient for whom new or refill prescriptions are dispensed. Any Medicaid providers not in compliance with the Medicaid documentation and record retention policies may be subject to the recoupment of Medicaid payments. A Medicaid provider must retain all medical, fiscal, professional, and business records on all services provided to a Medicaid recipient. The records may be kept on paper, magnetic material, film, or other media. However, in order to qualify for reimbursement, the records must be signed and dated at the time of service, or otherwise attested to as appropriate to the media. Rubber stamp signatures must be initialed. The records must be accessible, legible and comprehensive. Specific to the issues of this case, a Medicaid provider must also retain prescription records for five years. The Respondent is the state agency charged with the responsibility and authority to administer the Medicaid program in Florida. Pursuant to this authority AHCA conducts audits to assure compliance with the Medicaid provisions and provider agreements. These “integrity” audits are routinely performed and Medicaid providers are aware that they may be audited. At all times material to the allegations of this case, the Medicaid program in Florida was governed by a “pay and chase” procedure. Under this procedure, the Agency paid Medicaid claims submitted by Medicaid providers and then, after-the-fact, audited such providers for accuracy and quality control. These “integrity” audits are to assure that the provider maintains records to support the paid claims. In this case, the audit period is May 28, 1999 through July 18, 2000. The pertinent audit has been designated AHCA audit no. 01-0514-000-3/H/KNH and was initiated on October 23, 2000. The Petitioner does not dispute the Agency’s authority to perform audits such as the one at issue. The Petitioner maintains its records are sufficient to support the paid claims and that the Agency has unreasonably imposed its interpretation of the requirements. The Medicaid provider agreement that governs this case required that the Petitioner comply with all Medicaid handbooks in effect during the audit period. Essentially, this standard dictates the records that must be kept for quality control so that the after-the-fact audit can verify the integrity of the Medicaid claims that were paid by the Agency. During the audit period the Petitioner sold or dispensed drugs to Medicaid recipients. Equally undisputed is the fact that Medicaid claims were paid by the Agency during the audit period. Each claim reviewed and at issue in this cause was a paid Medicaid claim subject to the Petitioner’s provider agreement and the pertinent regulations. The Agency required that each and every claim submitted by the Petitioner during the audit period under the Medicaid program be filed electronically. Each claim submitted was filed electronically. Nevertheless, the Agency also required the Petitioner to retain records supporting the claim. Additionally, the Petitioner was to make such supporting records available to the Agency upon request. The Agency asked the Petitioner to present its records to support the claims for the audit period. The disclosure of the records proved difficult for this Medicaid provider because it does not operate in a conventional pharmacy setting. More specifically, it operates solely to serve a nursing home population. All of the patients whose prescriptions were filled were nursing home residents. Compscript maintains its manner of doing business is slightly different from the conventional pharmacy. Rather than the walk-in patient who presents a written prescription to be filled, this Petitioner receives its pharmacy orders by telephone or facsimile transmission from nursing homes. Typically, the staff at Compscript takes the call, writes down the pertinent information, enters the data into the pharmacy’s computer system, and the item is dispensed and routed to the nursing home via the delivery driver. All drugs are dispensed in sealed containers and are delivered with a manifest listing all the medications by name and patient. Given the volume of prescriptions being prepared and delivered, for the audit period at issue in this case, the Petitioner made 2-3 trips to the nursing home per day. Once the information for the prescription was entered into the Petitioner’s computer system, Compscript had little interest in maintaining the written telephone message or the facsimile sheet that generated the request. In some instances the Compscript employee did not make a written record of the prescription request. In those instances the employee entered the request directly into the Petitioner’s computer system and bypassed the written step altogether. The Compscript computer system tracks the initials of the pharmacist who entered the prescription information and cannot be altered without such alteration being tracked and noted. Since the pharmacy fills “over the counter” items, as well as controlled and non-controlled pharmacy products, the computer record denotes that information along with the patient information. When the Respondent’s audit agents went into the Compscript facility to audit the Medicaid claims, the Petitioner could not readily produce the written documentation to support the dispensed drugs. In fact, many of the records that verified the prescriptions dispensed were found on the nursing home records. The nursing home patient’s physician order sheet specified the item or items requested for the patient. This “physician order sheet” (POS) should theoretically always support the dispensing of the product from the Petitioner. In this case there were instances when the POS did not corroborate the claim. When the auditors from the Agency presented at Compscript, the Petitioner did not have the POS records to produce. Obviously, those records were maintained within the nursing home. Additionally, Compscript did not have the telephone notes or the facsimile transmission sheets to support items dispensed during the audit period. When the hearing in this cause proceeded it was also discovered that records that were generated daily by the Petitioner’s computer system that would have corroborated the claims (and which were allegedly maintained in storage) were not produced or available to support Medicaid claims submitted during the audit period. During the audit the Agency’s auditors requested records from a random sample of the claims submitted during the audit period. The results from that sample where then applied to the universe of claims for the audit period. When this mathematical calculation was performed the audit produced a Medicaid overpayment in the amount of $1,341,466.27. Afterwards, when the Petitioner was able to locate additional records to correspond to and support the prescriptions dispensed, the amount of overpayment was reduced to $217,715.28 (the amount set forth in the parties’ Pre-hearing Stipulation). At hearing, the Agency maintained that the amount of overpayment was $216,974.07 for which the Petitioner could produce no adequate documentation. At hearing, the Petitioner continued to dispute the procedure of applying the audit sample overpayment to the population of claims to mathematically compute the overpayment for the audit period. This “extrapolation” process was admitted into evidence and has been fully considered in the findings reached in this case. The Petitioner was required to maintain Medicaid- related records for a period of 5 years. Thus, for the audit period in this case, any record supporting the claims should have been maintained and made available for the Agency. Such records would have been within the five-year period. The Agency designates Medicaid compliance to its office of Medicaid Program Integrity. In turn, that office contracted with Heritage Information Systems, Inc. (Heritage) to perform and report pharmacy audits of the numerous pharmacy providers within the state. Auditors from Heritage were assigned the Compscript audit. At the time of the audit the Heritage auditors were not privy to any of the POS documents later produced in the case. Ken Yon is the Agency’s administrator who was responsible for managing the instant case and who worked with the Heritage auditors to assure the policies and practices of the Agency were met. In this case, the Heritage auditors presented at Compscript unannounced on October 23, 2000, and sought 250 randomly selected claims for review. By limiting the number of claims, the auditors were not required to sift through the records of 46,000+ claims (the approximate number of claims that the Petitioner submitted during the audit period). For the universe of 46,000+ claims, 250 randomly selected claims is a reasonable sample to audit. The adequacy of the sample number as well as the manner in which it was generated is supported by the weight of credible evidence presented in this matter. Also, the results of a sample of 250 from the universe of 46,000+ would be statistically valid if randomly chosen as they were in this case. In this regard the testimony of Dr. Mark Johnson, an expert in statistical sampling and analysis, has been deemed credible and persuasive as to the issues of the appropriateness of the sample (as to size and how it was generated), the use of the sample overpayment to calculate an overall payment, and the statistical trustworthiness of the amounts claimed in this cause. If anything, as Dr. Johnson asserted, the actual overpayment would be greater than the recoupment amount sought by the Agency. The Agency has used a statistical extrapolation method to compute overpayments for years. The statistical concept and process of applying a sample to a universe to mathematically compute an overpayment is not novel to this case. After the auditors completed their review of the records at the Compscript pharmacy, Kathryn Holland, a licensed pharmacist (who is also a consulting pharmacist) prepared the Respondent’s Final Agency Audit Report. Prior to completing the report, Ms. Holland received and reviewed the information provided by the Petitioner through the auditors. As a result of the review, a number of “can’t find” conclusions were reached. By “can’t find” the auditors and Ms. Holland meant that the original prescription or refill documentation could not be located for the paid Medicaid claim. These “can’t find” claims were reported to the Petitioner, who was given additional time to locate and produce documents to support the claims. In fact, the Agency continued to accept documentation for claims up through the time of hearing. Consequently, the amount sought for overpayment has been substantially reduced. Whether the Agency had the authority to accept documents outside the prescription records maintained by the pharmacy is not an issue. In fact, the Agency did reduce the overpayment amount when subsequent supporting documents were located. A second error in the documentation for the Petitioner’s prescriptions was noted as “no doctor’s address on the prescription.” That expression meant that pursuant to state and federal law the physician’s address is required for a controlled substance and when it was not provided the auditor deemed the documentation incomplete. Although the Petitioner maintained doctor addresses in its computer system, the records did not correspond to the specific prescriptions that were filled for the audited claims. In order to stand as a sufficient prescription form, a writing must be created contemporaneous to the order (phone requests that are transcribed are acceptable), must contain specific information (type of drug, strength, dose, patient, doctor, DEA number, refill, etc.), and it must be kept for the requisite time. It would be acceptable for the prescription to be computer generated so long as it was written contemporaneous to the order and preserved as required by law. In this case, at the conclusion of the audit, the Agency identified 194 discrepant claims within the random sample of 250. The vast majority of those discrepancies were noted as “can’t find.” Had the Agency not accepted other documentation to support the dispensing of the drugs, the calculated overpayment would have been $1,575,707.44. Applying a lower confidence limit of 95 percent to that amount generated the calculated overpayment of $1,341,466.27. The audit findings set forth in the Agency’s Final Agency Audit Report (dated April 6, 2001) is supported by the weight of credible evidence in this case. Nevertheless, the Agency did allow the provider here to supplement the documentation disclosed during the audit. And, to that end, the calculated overpayment was reduced to $216,974.07 (this amount is 95% of the calculated overpayment). In reality, the amount owed by this Petitioner for failure to maintain proper documentation for this audit would be greater than the recoupment amount sought by the Agency. Had the Agency held the Petitioner to a standard of “no prescription, no payment” standard arguably 194 of the 250 audited claims could have been disallowed. That is not the standard applied by the Agency. A “patient record” may include information regarding the patient’s prescription history. The terms “patient record” and “prescription” are not synonymous. For example, while a prescription would contain information such as patient's name, doctor, DEA number, doctor's address, dosage, drug, and whether it may be refilled, it would be expected that the “patient record” would contain additional information not typically found on a prescription. For instance, a “patient record” might contain a historical track of past medications or known patient allergies. In this case, the computer records or “patient records” maintained by the Petitioner did not retain the prescriptions in the format dictated by rule. An electronic imaging recording system may be used when the system captures, stores, and can reproduce the exact image of the prescription, including the reverse side of the prescription if necessary. The Petitioner’s system did not do that. An electronic system must be able to produce a daily hard-copy printout of all original prescriptions dispensed and refilled. If the Petitioner’s system could do that, it did not. An acceptable electronic system must generate the prescription contemporaneous to the dispensing order. The Petitioner’s system did not do that. The Agency has not alleged, and there is no evidence to suggest, fraud in the Petitioner’s failure to maintain its records. The Agency’s interpretation of the requirement that a prescription be reduced to writing is consistent with the rules and regulations in effect at the time of this audit. The last category of discrepant items was “UR” which stood for “unauthorized refills.” These were claims for refills on drugs for which the original prescription could not be located or documentation from the nursing home could not be found. Again, the Petitioner the maintained that within the nursing home setting a physician’s reorder for medications for the patient could be found on the POS. These refill requests were handled orally among the physician, the nursing home staff, and the pharmacy. Nevertheless, because they were not documented in writing the Agency disallowed this claims and included them among the discrepant list. If the Petitioner was able to produce a physician order to support the UR claims, it was removed from the recoupment list. In most instances, the Petitioner did not have the requisite paperwork to support the refill. Instead, the Petitioner relied on its computer records (again not kept in accordance with the applicable standards) to support the UR claims. The Agency has not claimed that the refills were not dispensed, merely that the paperwork to support the claim cannot be produced.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a Final Order that accepts an amended Final Agency Action Report to support an overpayment and recoupment against the Petitioner in the amount of $216,974.07. S DONE AND ENTERED this 6th day of October, 2005, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of October, 2005. COPIES FURNISHED: Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 William Roberts, Acting General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 L. William Porter, II, Esquire Agency for Health Care Administration Fort Knox Executive Center III 2727 Mahan Drive, Building 3, Mail Stop 3 Tallahassee, Florida 32308-5403 Kenneth W. Sukhia, Esquire Fowler, White, Boggs, Banker, P.A. 101 North Monroe Street, Suite 1090 Post Office Box 11240 Tallahassee, Florida 32302 Ralph E. Breitfeller, Esquire McGrath & Breitfeller, LLP 140 East Town Street, Suite 1070 Columbus, Ohio 43215
Findings Of Fact In November, 1987 a routine Medicaid audit was conducted on Petitioner's pharmacy by representatives of Respondent. The audit period was from January 1, 1987 to September 30, 1987. As a result of this audit, an overpayment in the amount of $43,708.05 was identified. Petitioner timely requested a hearing after receiving Respondent's notice of overpayment and imposition of administrative fine on or about March 14, 1988. A reaudit of Petitioner was performed by Jo Ann V. Padell, R. Ph., on May 26 and 27, 1988, on behalf of Respondent. Petitioner cooperated fully in this reaudit. After reviewing additional data, and making corrections in the initial calculations, the overpayment amount was identified to be either $6,079.34 or $32,683.31, depending upon varying assumptions used in the calculation. The overpayment amount relied upon, and pursued by Respondent at hearing is $32,683.31. Petitioner was informed by letter from Respondent dated June 15, 1988 that Respondent seeks the recoupment of the $32,683.31 overpayment, a $10,000 administrative fine and a three month suspension from the Medicaid program. Petitioner is under contract with Respondent to participate in the Medicaid program by providing prescription drugs to Medicaid patients, and receiving Medicaid reimbursement. It is located in a low socioeconomic neighborhood in Tampa, Florida, and most customers cannot afford medications unless paid for by the Medicaid program. Petitioner has participated in the Medicaid program for over ten years, and has not previously had any problems with Respondent's audits. David Cartaya is the owner and operator of Petitioner. He is a registered pharmacist, and has an excellent reputation in the community for truthfulness and veracity. Respondent's representative who conducted the reaudit in May, 1988, Jo Ann V. Padell, indicated in her report that she trusts Cartaya's sincerity and professionalism as a pharmacist and business owner. She also reported that it "seemed obvious that their (Petitioner's) business could substantiate their claims to Medicaid." In determining that Petitioner had been overpaid by the Medicaid program, Respondent followed a procedure which is not set forth by agency rule. Rather, the procedure used in this case had never been used before, and although this procedure is substantially set forth in a draft manual entitled "Florida Medicaid/PRO Pharmacy Audit Program," dated March, 1988, this manual has not been finally approved or adopted by Respondent. Additionally, an essential element of the audit procedure set forth in this draft manual, establishing a beginning and ending inventory of drugs available for dispensing, was not conducted by Respondent in this case. Therefore, there is no formally adopted rule or policy of Respondent which is applicable in this case and which sets forth the Medicaid audit procedure used in this case. The procedure in the draft manual was not followed in this case. Rather, the Respondent utilized incipient, non-rule policy, and then sought to explicate that policy at hearing. The audit policy followed by Respondent in this case is a four step process set forth in its letter to Petitioner dated March 14, 1988, as follows: We (Respondent) determined from your (Petitioner's) invoices and suppliers' statements the total number of units of the drug available to be dispensed to all customers during the audit period, and we multiplied that number by the fraction (proportion) of your business that is Medicaid to obtain the total number of units of the drug available to be dispensed to Medicaid recipients. We increased the number in (a) of the units of the drug available for Medicaid reci- pients by an additional one-fourth in case an unusually large proportion of that drug happens to be dispensed to Medicaid recipients. We multiplied the adjusted number found in (b) of the units available for Medicaid recipients by the unit price paid by Medicaid for that drug to determine the highest total dollar amount that Medicaid reasonably should have paid to you for that drug during the audit period based on your invoices from your suppliers. We subtracted the highest amount that Medi- caid reasonably should have paid you for the drug during the audit period found in (c) from the amount that Medicaid actually did pay you for the drug, and the result we must consider to be an overpayment, unless you can provide additional invoices showing that you had the drug available to be dispensed or unless you can provide documentation showing that an even larger proportion of that drug is, on the average over an extended period of time, dis- pensed to Medicaid recipients. Please bear in mind that we have already increased the proportion regarded to be available for Medi- caid recipients by one-fourth or 25 percent. The drugs audited were the 100 drugs for which the highest dollar amounts were paid to Petitioner by Medicaid during the audit period. Respondent's review was an attempt to determine if Petitioner had adequate inventory to cover the claims made. This audit policy has never been validated. Petitioner was the first pharmacy audited by Respondent using this procedure. Rather than it being an audit conducted in accordance with generally accepted accounting principles, the procedure followed results in an estimate of overpayments using a sample of drugs sold during the audit period. The sample consists of the 100 drugs for which Medicaid paid the highest dollar amounts to Petitioner. It is usual and customary for Respondent to rely on estimates based upon samples since this provides reasonable assurance that the estimates produced fairly represent the financial condition of the pharmacy under review. Sampling is also less onerous and time consuming for the pharmacy being audited. The use of the sample size identified in this case has never been validated. The beginning and ending inventories of the 100 drugs evaluated by Respondent in this case were not known by Respondent, and were not used in calculating what inventory was available during the audit period, although this is a mandatory step in Phase II of the audit process as stated in Respondent's draft manual which it relied upon at hearing as a statement of its incipient policy. The 25 percent by which a pharmacy's overall Medicaid percentage is to be increased, as provided at (b) of the incipient audit procedure set forth in Finding of Fact 7, was chosen arbitrarily, and Respondent presented no evidence which would form a reasonable basis for utilizing this figure. Respondent's own expert in accounting, Robert West, testified that he did not know how the Respondent came up with the 25 percent factor. It is well established that there are seasonal variations in the pharmacy business, especially in central and south Florida which have seasonal population increases. Seasonal variations in the volume and kinds of drugs dispensed result in variations in a pharmacy's inventory. Yet, according to Robert West, the audit procedure used in this case assumed that seasonal and inventory variations were immaterial, and did not account for such variations, other than through the arbitrary 25 percent factor. Additionally, the audit period itself only covered nine months, and therefore variations occurring in the remaining three months were not considered. Respondent utilized a strata sampling technique in conducting this audit, but this technique was never validated. The audited sample consisted of the strata of the top 100 drugs, by dollar amounts, dispensed at Petitioner. A more defensible sampling technique would have been a random sample of all prescriptions, according to Robert West, since this technique would have produced a more representative sample. The original audit of Petitioner was on November 16, 19, 20 and 27, 1987 by Patricia J. Vanderbeek of Professional Foundation for Health Care, Inc. (PFHC), representing Respondent. This original audit, termed a Phase I-Part B report, concluded: David's Pharmacy appears to be legitimate in their contractual agreement with Medicaid. PFHC does not recommend to proceed with Phase II Audit procedures. PFHC based this recommendation, in part, on the report of the certified public accounting firm of Copeland and Company, which concluded that no overpayment was indicated. Despite this recommendation, a Phase II audit was conducted, using the procedure set forth at Finding of Fact 7, above, and a report prepared in which the overpayment amount was initially identified as $43,708.05 The draft manual, upon which Respondent relies as a statement of its incipient policy, clearly requires the Phase I auditor to obtain authorization of the Medicaid Fraud and Abuse Section before proceeding with a Phase II review. A Phase II review can only be initiated at the request of the Phase I auditor, with the approval of the Medicaid Program Integrity Office. In this case, the Phase I audit resulted in the recommendation that Phase II not be conducted. Nothing in the record establishes that approval and authorization for the Phase II audit, or the Phase II reaudit conducted by Padell, as required by the draft manual on which Respondent relies, was ever sought or given. In the Phase II reaudit, Padell questioned Petitioner's owner and sole pharmacist, David Cartaya, about his estimate of the percentage of each of the top 100 drugs he dispensed to Medicaid patients, and she found his estimate to be credible. Utilizing Cartaya's percentages, the amount of the overpayment was calculated to be $6,079.34, which Padell felt was reasonably accurate. However, the estimate was also calculated without determining beginning and ending inventories. As a result of Padell's reaudit, 32 of the top 100 drugs were not shown to have been overpaid, but that 32 drugs were thereafter ignored in Respondent's calculation of the $32,683.31 overpayment which is the subject of this case. That is, Respondent estimated the overpayments on the remaining 68 days without crediting any amount of underpayments on these 32 drugs against the $32,683.31 overpayment. Beginning and ending inventories were also not calculated in arriving at this overpayment amount. Competent substantial evidence was not offered by Respondent to support its position that $32,683.31 has been overpaid to Petitioner, contrary to the reports and recommendations of its own representatives and consultants, Padell, PFHC and Copeland and Company. It has not been established that Petitioner overbilled Medicaid for medication patients did not receive. David Suhrweir, a representative of Respondent involved with post- payment review of Medicaid payments, testified at hearing and critiqued Padell's reaudit conclusion that the amount of overpayment was $6,079.34. He termed this calculation irrational since it results in the conclusion that the pharmaceutical needs of Medicaid patients are very different from the needs of non-Medicaid patients, which he found to be illogical. However, James E. Martinez, who was accepted as an expert in pharmacy, gave competent, credible testimony that Medicaid patients are more likely to obtain expensive brand-name drugs, and non-Medicaid patients are more likely to obtain the less expensive generic drugs. This is because persons without Medicaid coverage in the poor neighborhoods that use Petitioner for their pharmaceutical needs are more likely to request the less-expensive generic drugs than those persons with Medicaid coverage. Therefore, the utilization of drugs is skewed, and the procedure utilized by Respondent does not take this into account. The testimony of Suhrweir does not discredit Padell's calculation of the $6,079.34 overpayment, and does not establish a basis upon which the alleged $32,683.31 overpayment can be supported. It is common practice for pharmacies to exchange, or barter inventory, and such exchanges would not appear on any record of drugs purchased. There is no requirement that pharmacies account for non-controlled substance exchanges, or that they keep a level inventory of drugs. Since its March 14, 1988 letter, Respondent has been withholding payment of ten percent of Petitioner's Medicaid billings. Medicaid providers, such as Petitioner, are required to keep records and invoices to support Medicaid billings, and to provide them to Respondent upon request to facilitate audit procedures. Neither the auditor who performed the initial audit, or the reaudit found Petitioner's owner and operator, Cartaya, to be uncooperative, and in fact Padell was impressed with his truthfulness. There is no indication he withheld any information, or failed to produce requested information. None of Respondent's on-site auditors recommended pursuing the amount Respondent now contends was an overpayment.
Recommendation Based upon the foregoing, it is recommended that Respondent enter a Final Order dismissing this action against Respondent, refunding any funds withheld, plus appropriate interest as authorized by Section 409.335(3), Florida Statutes, and removing all other sanctions imposed upon Petitioner arising from the audit which is the subject of this case. DONE and ENTERED this 17th day of August, 1988, in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of August, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-1668 Rulings on Petitioner's Proposed Findings of Fact: Adopted in Finding of Fact 4. Adopted In Findings of Fact 1, 2. Adopted in Finding of Fact 7. Rejected as argument on the evidence rather than a proposed Finding of Fact. Adopted in Finding of Fact 2. Adopted in Finding of Fact 3. Adopted in Finding of Fact 7, but otherwise rejected as unnecessary. Adopted in Finding of Fact 9. Adopted in Finding of Fact. Adopted in Finding of Fact 16. 11.-12. Adopted in Finding of Fact 15. 13. Adopted in Finding of Fact 3, but otherwise rejected as irrelevant. 14.-15. Adopted in Findings of Fact 6 8. Adopted in Findings of Fact 6, 9, 10. Adopted in Findings of Fact 1, 3, 13, 15, 16, 18. Adopted in Findings of Fact 6, 7, 13. Adopted in Finding of Fact 13. Adopted in Findings of Fact 3, 13, 14 but otherwise rejected as irrelevant. Rejected as irrelevant. Adopted in Finding of Fact 12. Adopted in Findings of Fact 7, 8, 12. Rejected as unnecessary. Adopted in Finding of Fact 12. Adopted in Finding of Fact 11, but otherwise rejected as unnecessary. Adopted in Findings of Fact 9, 11, 18, 19 but otherwise rejected as cumulative and irrelevant. Adopted in Finding of Fact 4. Adopted in Finding of Fact 18, but otherwise rejected as argument rather than a proposed Finding of Fact. Adopted in Finding of Fact 15. Adopted in Finding of Fact 20. 32.-33. Rejected as a conclusion of law rather than a Finding of Fact. 34. Adopted in Findings of Fact 3, 21. 35.-36. Adopted in Finding of Fact 17. 37. Adopted in Findings of Fact 7-10, 12, 14. Rulings on Respondent's Proposed Findings of Fact. 1. Adopted in Finding of Fact 1. 2.-3. Adopted in Finding of Fact .2. 4.-9. Rejected as irrelevant and unnecessary. Adopted in part in Finding of Fact 3. Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 3. Adopted in Finding of Fact 3, but otherwise rejected as a conclusion of law. Adopted in Findings of Fact 7, 8. Adopted in Finding of Fact 7. Adopted in Findings of Fact 3, 14. Rejected as simply a summation of testimony rather than a proposed Finding of Fact. Adopted in Finding of Fact 8. Adopted in Finding of Fact 18. Rejected in Findings of Fact 3, 9, 19 and otherwise asirrelevant. 21.-23. Adopted in Finding of Fact 21. COPIES FURNISHED: William M. Furlow, Esquire 800 Barnett Bank Bldg. 315 South Calhoun Street Tallahassee, Florida 32301 M. Floy Mikell, Esquire 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 John Miller, Esquire Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power, HRS Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700
The Issue Whether Medicaid overpayments were made to Petitioner and, if so, what is the total amount of those overpayments. Whether Petitioner should be directed to submit to a "comprehensive follow-up review in six months."
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Petitioner Petitioner is owned by Yuval Levy, a Florida-licensed consultant pharmacist and registered pharmacist since 1990. Mr. Levy has served as Petitioner's president and chief executive officer since the "end of 1995." At all times material to the instant case, Petitioner has operated Colonial Drug (Pharmacy), a Florida-licensed closed system pharmacy located in Broward County, Florida. At all times material to the instant case, Petitioner acquired from pharmaceutical wholesalers licensed under Florida law all of the drugs dispensed through the Pharmacy. During the period from May 23, 1999, through February 23, 2001 (Audit Period), the Pharmacy filled approximately 180,000 prescriptions annually. A quarter of them (25 percent) were dispensed to Medicaid recipients. Petitioner's Participation in the Medicaid Program Petitioner was authorized during the Audit Period to provide pharmacy services to eligible Medicaid recipients in Florida. Petitioner provided such services pursuant to a Medicaid Provider Agreement (Provider Agreement). The Provider Agreement contained the following provisions, among others: The Provider agrees to participate in the Florida Medicaid program under the following terms and conditions: * * * Quality of Service. The provider agrees to provide medically necessary services or goods of not less than the scope and quality it provides to the general public. The provider agrees that services or goods billed to the Medicaid program must be medically necessary, of a quality comparable to those furnished by the provider's peers, and within the parameters permitted by the provider's license or certification. The provider further agrees to bill only for the services performed within the specialty or specialties designated in the provider application on file with the Agency. The services or goods must have been actually provided to eligible Medicaid recipients by the provider prior to submitting the claim. Compliance. The provider agrees to comply with all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, manuals, handbooks and Statements of Policy as they may be amended from time to time. Term and signatures. The parties agree that this is a voluntary agreement between the Agency and the provider, in which the provider agrees to furnish services or goods to Medicaid recipients. . . . Provider Responsibilities. The Medicaid provider shall: * * * (b) Keep and maintain in a systematic and orderly manner all medical and Medicaid related records as the Agency may require and as it determines necessary; make available for state and federal audits for five years, complete and accurate medical, business, and fiscal records that fully justify and disclose the extent of the goods and services rendered and billings made under the Medicaid. The provider agrees that only records made at the time the goods and services were provided will be admissible in evidence in any proceeding relating to the Medicaid program. * * * (d) Except as provided by law, the provider agrees to provide immediate access to authorized persons (included but not limited to state and federal employees, auditors and investigators) to all Medicaid-related information, which may be in the form of records, logs, documents, or computer files, and all other information pertaining to services or goods billed to the Medicaid program. This shall include access to all patient records and other provider information if the provider cannot easily separate records for Medicaid patients from other records. * * * (f) Within 90 days of receipt, refund any moneys received in error or in excess of the amount to which the provider is entitled from the Medicaid program. * * * (i) . . . . The provider shall be liable for all overpayments for any reason and pay interest at 12% per annum on any fine or repayment amount that remains unpaid 30 days from the date of any final order requiring payment to the Agency. * * * (l) If submitting claims to the Agency electronically, abide by the terms of the Standard Electronic Claims Submission Agreement. * * * Petitioner executed such a Standard Electronic Claims Submission Agreement (Submission Agreement), through which it expressed its understanding of and agreement to the following, among other things: * * * 3. Providers must correctly enter the claims data, monitor the data, and certify that the data entered is correct. * * * Providers must have on file the applicable source data to substantiate the claim submitted to the Medicaid program. Providers must allow the Agency or any of its designees . . . to review and copy all records, including source documents and data related to information entered through electronic claims submission. Providers must abide by all Federal and State statutes, rules, regulations, and manuals governing the Florida Medicaid program. Providers must sign and adhere to all conditions of the Medicaid Provider Agreement and be officially enrolled in the Medicaid program to participate in the electronic claims submission. Currently, and at all times material to the instant case, Petitioner "bill[ed] everything electronically." Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook Among the requirements with which Petitioner, in paragraph 3 of the Provider Agreement and in paragraph 7 of the Submission Agreement, agreed to comply were those set forth in the Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (PDSCLR Handbook). During the Audit Period, Chapter 2 of the PDSCLR Handbook contained substantially the following "record keeping requirements" (with the underlined language reflecting additions to these requirements made effective July 20, 20002): Record Keeping Requirements The provider must retain all medical, fiscal, professional and business records on all services provided to a Medicaid recipient. Records may be kept on paper, magnetic material, film, or other media. In order to qualify as a basis for reimbursement, the records must be signed and dated at the time of service, or otherwise attested to as appropriate to the media. Rubber stamp signatures must be initialed. The records must be accessible, legible and comprehensible. Record Retention Records must be retained for a period of at least five years from the date of service. Types of Records That Must be Retained The following types of records, as appropriate for the type of service provided, must be retained (the list is not all inclusive): Medicaid claim forms and any documents that are attached; Professional records, such as patient treatment plans and patient records; Prior and past authorization, and service authorization information; Prescription records; Business records, such as accounting ledgers, financial statements, purchase/acquisition records, invoices, inventory records, check registers, canceled checks, sales records, etc.; Tax records, including purchase documentation; Patient counseling documentation; and Provider enrollment documentation. Requirements for Prescription Records The pharmacy must maintain a patient record for each recipient for whom new or refill prescriptions are dispensed. The record may be electronic. The pharmacy's patient record system must provide for the immediate retrieval of the information necessary for the pharmacist to identify previously dispensed drugs when dispensing a new or refill prescription. The patient record must contain the following information: The recipient's first and last name, address, date of birth, and gender; A list of all prescriptions that were obtained by the recipient at the pharmacy during the 12 months immediately preceding the most recent service that includes: the name of the drug or device, prescription number, strength of the drug, the quantity, date received, and the prescriber's full name and state license number; Any known allergies, drug reactions, idiosyncrasies, chronic conditions or disease states of the patient, and the identity of any over-the-counter drugs or devices currently being used by the patient that may relate to prospective drug use review; Any related health information indicated by a licensed health care practitioner; and The pharmacist's comments, if any, relevant to the patient's drug therapy. Right to Review Records Authorized state and federal agencies and their authorized representatives may audit or examine a provider's records. This includes all records that AHCA finds necessary to determine whether Medicaid payments were or are due. This requirement applies to the provider's records and records for which the provider is the custodian. The provider must give authorized state and federal agencies and their authorized representatives access to all Medicaid patient records and to other information that cannot be separated from Medicaid-related records. The provider must send, at his or her expense, legible copies of all Medicaid- related information to the authorized state and federal agencies and their authorized representatives. Incomplete Records Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid payments. Medicaid payments for services that lack required documentation or appropriate signatures will be recouped.[3] Note: See Chapter 5 in this handbook for information on administrative sanctions and Medicaid payment recoupment. During the Audit Period, Chapter 5 of the PDSCLR Handbook contained the following provisions, among others: Provider Abuse Abuse Abuse means provider practices that are inconsistent with generally accepted business or medical practices and that result in an unnecessary cost to the Medicaid program or in reimbursement for goods or services that are not medically necessary or that fail to meet professionally recognized standards for health care. Financial Abuse Financial abuse means abuse resulting in overpayments to providers. Overpayment Overpayment includes any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claims, unacceptable practices, fraud, abuse, or mistake. * * * Incomplete or Missing Records Incomplete records are records that lack documentation that all requirements or conditions for service provision have been met. Medicaid may recoup payment for services or goods when the provider has incomplete records or cannot locate the records. Note: See Chapter 2 in this handbook for Medicaid record keeping and retention requirements. During the Audit Period, other portions of the PDSCLR Handbook contained requirements regarding the information that providers, in preparing a claim for reimbursement, had to include, while elsewhere in the handbook other billing requirements, as well as billing prohibitions, were discussed. Florida Administrative Code Rule Provisions Additional requirements with which Petitioner, in paragraph 3 of its Provider Agreement and in paragraph 7 of the Submission Agreement, agreed to comply included those contained in the following provisions of the Florida Administrative Code governing the practice of pharmacy: Florida Administrative Code Rule 64B16- 27.103 Only a Florida registered pharmacist or registered pharmacy intern acting under the direct personal supervision of a Florida registered pharmacist may, in the State of Florida, accept an oral prescription of any nature. Upon so accepting such oral prescription it must immediately be reduced to writing, and only a Florida registered pharmacist or registered pharmacy intern acting under the direct personal supervision of a Florida registered pharmacist may, in the State of Florida, prepare a copy of a prescription or read a prescription to any person for purposes of providing reference concerning treatment of the person or animal for whom the prescription was written, and when said copy is given a notation shall be made upon the prescription that a copy has been given, the date given, and to whom given. Florida Administrative Code Rule 64B16- 27.400 * * * (3) Only a Florida licensed pharmacist may make the final check of the completed prescription thereby assuming the complete responsibility for its preparation and accuracy. * * * Florida Administrative Code Rule 64B16- 28.140 (1) Requirements for records maintained in a data processing system. * * * Original prescriptions, including prescriptions received as provided for in Rule 64B16-28.130, F.A.C., Transmission of Prescription Orders, shall be reduced to a hard copy if not received in written form. All original prescriptions shall be retained for a period of not less than two years from date of last filling. To the extent authorized by 21 C.F.R. Section 1304.04, a pharmacy may, in lieu of retaining the actual original prescriptions, use an electronic imaging recordkeeping system, provided such system is capable of capturing, storing, and reproducing the exact image of the prescription, including the reverse side of the prescription if necessary, and that such image be retained for a period of no less than two years from the date of last filling. Original prescriptions shall be maintained in a two or three file system as specified in 21 C.F.R. 1304.04(h). * * * (3) Records of dispensing. Each time a prescription drug order is filled or refilled, a record of such dispensing shall be entered into the data processing system. The data processing system shall have the capacity to produce a daily hard-copy printout of all original prescriptions dispensed and refilled. This hard copy printout shall contain the following information: Unique identification number of the prescription; Date of dispensing; Patient name; Prescribing practitioner's name; Name and strength of the drug product actually dispensed, if generic name, the brand name or manufacturer of drug dispensed; Quantity dispensed; Initials or an identification code of the dispensing pharmacist; and If not immediately retrievable via CRT display, the following shall also be included on the hard-copy printout: Patient's address; Prescribing practitioner's address; Practitioner's DEA registration number, if the prescription drug order is for a controlled substance; Quantity prescribed, if different from the quantity dispensed; Date of issuance of the prescription drug order, if different from the date of dispensing; and Total number of refills dispensed to date for that prescription drug order. The daily hard-copy printout shall be produced within 72 hours of the date on which the prescription drug orders were dispensed and shall be maintained in a separate file at the pharmacy. Records of controlled substances shall be readily retrievable from records of non-controlled substances. Each individual pharmacist who dispenses or refills a prescription drug order shall verify that the data indicated on the daily hard-copy printout is correct, by dating and signing such document in the same manner as signing a check or legal document (e.g., J. H. Smith, or John H. Smith) within seven days from the date of dispensing. In lieu of producing the printout described in subparagraphs (b) and (c) of this section, the pharmacy shall maintain a log book in which each individual pharmacist using the data processing system shall sign a statement each day, attesting to the fact that the information entered into the data processing system that day has been reviewed by him or her and is correct as entered. Such log book shall be maintained at the pharmacy employing such a system for a period of two years after the date of dispensing provided, however, that the data processing system can produce the hard-copy printout on demand by an authorized agent of the Department of Health. If no printer is available on site, the hard-copy printout shall be available within 48 hours with a certification by the individual providing the printout, which states that the printout is true and correct as of the date of entry and such information has not been altered, amended or modified. The prescription department manager and the permit holder are responsible for the proper maintenance of such records and responsible that such data processing system can produce the records outlined in this section and that such system is in compliance with this subsection. Failure to provide the records set out in this section, either on site or within 48 hours for whatever reason, constitutes failure to keep and maintain records. In the event that a pharmacy which uses a data processing system experiences system downtime, the following is applicable: An auxiliary procedure shall ensure that refills are authorized by the original prescription drug order and that the maximum number of refills has not been exceeded or that authorization from the prescribing practitioner has been obtained prior to dispensing a refill; and All of the appropriate data shall be retained for on-line data entry as soon as the system is available for use again. * * * (5) Authorization of additional refills. Practitioner authorization for additional refills of a prescription drug order shall be noted as follows: On the daily hard-copy printout; or Via the CRT display. The Audit and Aftermath Commencing on April 16, 2001, Heritage Information Systems, Inc. (Heritage), on behalf of AHCA, conducted an audit of Petitioner's paid Medicaid claims for the period from May 23, 1999, through February 23, 2001.4 Petitioner had submitted 37,416 such claims (Audit Period Claims), for which it had received payments totaling $2,797,964.36. The purpose of the audit was to determine whether, and if so to what extent, Petitioner was overpaid for these Audit Period Claims. Prior to the audit, Heritage provided Pharmacy personnel a Notice to Medicaid Provider of Initiation of On-Site Audit, which read as follows: The Agency for Health Care Administration (Agency), under federal and state laws, has the responsibility to oversee the activities of Medicaid providers. This is to advise you that an on-site audit of your billings to the Medicaid program has been initiated. Audits are performed in order to determine if Medicaid billings conform to applicable laws, rules, and policies. The fact that an audit is performed carries with it no implication of any wrongdoing. Audits are conducted as part of the responsibility of Medicaid for ensuring the integrity of the program. Medicaid audits generally involve a review of provider medical, professional, financial, and business records as required to determine the propriety of billings. Attachment B is a summary of applicable laws and rules governing the access to required information. If additional information is desired, please notify the auditor named below. In conducting the audit, Heritage performed both a "prescription record review" and "purchase invoice analysis."5 For the "prescription record review," Heritage first selected a non-random, "judgmental sample" of 271 Audit Period Claims, for which Petitioner had received payments totaling $222,559.65. It then selected (from the remaining Audit Period Claims) a "random sample" of 250 claims,6 for which Petitioner had received payments totaling $18,250.05. Thereafter, Petitioner's records were examined to determine whether they contained documentation sufficient to support the claims in the "judgmental sample" and in the "random sample." Heritage's December 10, 2001, Final Report: In-Depth Audit (Final Heritage Report) contained an Executive Summary, which summarized what the audit had revealed to date. This Executive Summary read, in pertinent part, as follows: Heritage Information Systems, Inc. ("Heritage") conducted an in-depth audit of Colonial Drug ("Colonial") at the request of the Florida Agency for Health Care Administration ("AHCA"). The audit documented possible billing, policy and regulatory violations that resulted in apparent overpayments. The audit findings include the following: Auditors sampled 271 judgmental and 250 random prescription claims. A review of the judgmental sample documented $134,926.14 in overcharges. Findings from the random sample extrapolated to $1,568,499.62. The 95% one-sided lower confidence limit extrapolation is $1,189,026.15. Adding the judgmental sample findings to the 95% one- sided lower confidence limit for the extrapolated random sample findings totals $1,323,952.29. The discrepancies identified in the sample include the following: Pharmacy staff was unable to produce hard copy prescription records corresponding to 253 claims ("CF"). Fifteen (15) claims were billed for quantities greater than those ordered by the prescribers or dispensed to the patients ("OBQ"). Days supply amounts for nine (9) claims were billed incorrectly ("DS"). Nine (9) hard copy prescription records for controlled substances did not contain the prescribers' addresses ("NDAD"). Nine (9) hard copy prescriptions for controlled substances did not contain the prescribers' DEA numbers ("NDEA"). Seven (7) quantities were cut resulting in additional dispensing fees paid to the pharmacy ("CQ"). Seven (7) hard copy prescription records for controlled substances did not indicate the quantities of drug to be dispensed ("NQTY"). Two (2) prescription claims were billed for drugs that differed from those ordered by the prescriber (WDB"). * * * Heritage's audit documented apparent overcharges of $1,323,952.29. This figure represents a combination of non-extrapolated findings from the judgmental sample plus the 95% one-sided lower confidence limit for the extrapolated random sample findings. This report is submitted to AHCA for action deemed appropriate. Based on the information Heritage provided, AHCA preliminarily determined that Petitioner had been overpaid a total of $1,323,952.29 for the Audit Period Claims. By letter dated February 20, 2002, which it denominated its Provisional Agency Audit Report, AHCA advised Petitioner of this preliminary determination. AHCA's Provisional Agency Audit Report read, in pertinent part, as follows: An on-site audit of your pharmacy was initiated on April 16, 2001. The Florida Medicaid Program through the Agency for Health Care Administration has determined that you have been overpaid $1,323,952.29 in connection with claims submitted to Medicaid during the audit period(s). This conclusion is supported by the audit results. This review and the determination were made in accordance with the provisions of Chapter 409, Florida Statutes (F.S.), and Chapter 59G, Florida Administrative Code (F.A.C.). In applying for Medicaid reimbursement, providers are required to follow applicable statutes, rules, Medicaid provider handbooks, statements of Medicaid policy, and federal laws and regulations. Medicaid cannot properly pay for claims that do not meet Medicaid requirements. When a provider receives payment in violation of these provisions, those funds must be repaid. This is, however, a provisional finding and we encourage you to submit any additional information or documentation that you may have that you feel may serve to change the overpayment. REVIEW DETERMINATION The audit included a judgmental sample review of selected paid claims and a separate review of a statistical[ly] valid random sample taken from the remaining population of paid claims with dates of service during the audit period. The overpayment found in the random sample was extended to the population using generally accepted statistical formulas and methods. The audit period for this review was from May 23, 1999, through February 23, 2001. This review identified an overpayment of $1,323,952.29. Attached are the overpayment calculations, a summary of documented discrepancies, and an itemized listing of discrepancies noted in the review of the judgmental and random sample. * * * Accordingly, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $1,323,952.29. If you have documentation that you wish to submit that you feel would alter these findings, submit your written explanation and legible copies of the organized documentation to us within 30 days of receipt of this notice. . . . If you concur or accept these findings, please send your check in the amount of $1,323,952.29 for the identified overpayment . . . . If you have not submitted a written explanation and documentation or made payment within 30 days, we will send you notice regarding the agency's final determination. * * * Petitioner subsequently furnished additional documentation to AHCA. On or about May 30, 2002, AHCA sent this additional documentation to Heritage for "review, placement in [Heritage's] file, and action deemed appropriate." By letter dated November 15, 2002, AHCA informed Petitioner of its opportunity "to submit [any] further documentation" it wanted AHCA to consider. The letter read, in pertinent part, as follows: An audit of your pharmacy was initiated on April 16, 2001. The Florida Medicaid Program, through the Agency for Health Care Administration (Agency), issued a Provisional Agency Audit Report, dated February 20, 2002, and made a provisional overpayment determination. Subsequent to this determination, your pharmacy submitted additional documentation. However, the Agency extends to you an opportunity to submit further documentation that has not already been submitted that may change the overpayment. This review and determination were made in accordance with the provisions of Chapter 409, Florida Statutes (F.S.), and Chapter 59G, Florida Administrative Code (F.A.C.). In applying for Medicaid reimbursement, providers are required to follow the applicable statutes, rules, Medicaid provider handbooks, statements of Medicaid policy, and federal laws and regulations. Medicaid cannot properly pay for claims that do not meet Medicaid requirements. We encourage you to submit any additional information or documentation not already sent that you may have that you feel may serve to change the provisional overpayment. * * * Documentation standard for statistical audit review: Documents submitted after the completion of an audit may require an affidavit or other sworn statement, in addition to the documents, as a means to authenticate the documentation. Documentation that appears to be altered, or in any other way appears not to be authentic, will not serve to reduce the overpayment. Furthermore, additional documentation must clearly identify which discrepancy (claim) as set forth in the attached audit findings it purports to support. * * * Having reviewed the additional documentation that Petitioner had provided AHCA, Heritage prepared and submitted to AHCA an Addendum, dated May 13, 2003, to the Final Heritage Report it had previously submitted.7 The Addendum contained an Executive Summary, which stated the following, in pertinent part, regarding the "post audit review" conducted by Heritage: Post Audit Review/Revised Findings Post audit documentation from the pharmacy was forwarded to Heritage by AHCA and received on 1/3/03. Post audit documentation included copies of prescriptions and clinical records. The accepted documentation was incorporated into the audit findings and a revised overcharge amount was calculated. The revised judgmental sample review resulted in documented overcharges of $42,987.50. Revised findings from the random sample extrapolated to $701,790.88. The 95% one- sided lower confidence limit for this extrapolation is $484,189.15. Adding the judgmental sample findings to the 95% one- sided lower confidence limit of the random sample findings totals $527,176.65. Appended to the Addendum were, what Heritage referred to as, "discrepancy listings," accompanied by "edit sheets." The "discrepancy listings" specified those Audit Period Claims in the "judgmental sample" and in the "random sample" that were "discrepant" and, with respect to each such "discrepant" claim, identified, using the following "codes," the nature of the "discrepancy" from which the claim suffered and, in addition, set forth (in the "overcharges" column) the amount of any resulting overpayment: CF (Original hard copy prescription cannot be found on file during the audit)[8] CQ (A quantity less than that prescribed and less than that allowed, is billed and additional refills are dispensed resulting in undue dispensing fees)[9] DS (The days supply value submitted by the pharmacy is not consistent with the quantity and directions) DUP (Multiple claims for the same prescription fill are submitted and paid)[10] NDAD (The hard copy prescription does not include the prescriber's address)[11] NDEAC (The hard copy prescription does not contain a DEA number) NQTYC (The hard copy prescription does not indicate the quantity of drug to be dispensed) OBQ (Quantity paid exceeds the quantity authorized by the prescriber or dispensed to the recipient) UR (The number of refills billed and paid to the pharmacy exceeds the number authorized by the prescriber. Refills are dispensed without documented authorization from the prescriber) WDB (A pharmacy submits a claim for a medication that is different from the medication authorized to be dispensed to the patient)[12] WDBC (A pharmacy submits a claim for a medication that is different from the medication authorized to be dispensed to the patient, but with a showing of cause) WMDC (The claim for the prescription contains an incorrect prescriber license number, but the correct prescriber's name is documented in the pharmacy computer or is similar to the name of the prescriber billed)[13] WPB (The patient identified on a hard copy prescription is not the patient on the paid claim) These "discrepancy listings" are accurate as to all listed claims other than those denominated in Joint Exhibit 1 as "discrepant" claims 26 (August 9, 2000, fill), 52, 56, 61, 81, and 91. There were a total of 190 "discrepant" claims listed (including "discrepant" claims 26 (August 9, 2000, fill), 52, 56, 61, 81, and 91), some of which had "multiple discrepancies"14: 69 coded "CF"15 (with associated "overcharges" equal to the total amount paid for these claims); seven coded "CQ" (with associated "overcharges" equal to the undue "dispensing fees");16 11 coded "DS" (with no associated "overcharges"); four coded "DUP" (with associated "overcharges" equal to the total amount paid for these duplicate claims); nine coded "NDAD" (with no associated "overcharges"); 11 coded "NDEAC" (with associated "overcharges" equal to the "dispensing fees"); 8 coded "NQTYC" (with associated "overcharges" equal to the "dispensing fees"); 30 coded "OBQ" (with associated "overcharges" equal to the amount paid for the quantity in excess of that authorized); 16 coded "UR" (with associated "overcharges" equal to the total amount paid for these claims); one coded "WDB" (with an associated "overcharge" equal to the total amount paid for this claim); two coded "WDBC" (with associated "overcharges" equal to the "dispensing fees"); 59 coded "WMBC" (with associated overcharges " equal to the "dispensing fees"); and two coded "WPB" (with associated "overcharges" equal to the total amount paid for these claims). Of the 190 "discrepant" claims, 96 were in the "judgmental sample" and 94 were in the "random sample." On or about October 31, 2003, AHCA sent Petitioner a letter advising Petitioner of the status of AHCA's audit of the Audit Period Claims. The letter read, in pertinent part, as follows: The Agency for Health Care Administration, Office of Medicaid Program Integrity, with regard to the above-referenced audit, made a preliminary overpayment determination and sent a Preliminary Agency Audit Report to your attention. At this time, the Agency is temporarily placing this audit on hold, pending the outcome of litigation in an unrelated audit. Therefore, please maintain all of your Medicaid-related records and all documentation that supports the claims at issue in this matter until such time as this audit is finalized. Almost two years after having received Heritage's May 13, 2003, Addendum, AHCA prepared and sent to Petitioner its Final Agency Audit Report,17 which was dated April 8, 2005, and read, in pertinent part, as follows: The Agency for Health Care Administration, Office of Medicaid Integrity has completed the review of your Medicaid claims for the procedures specified below for dates of service during the period May 23, 1999, through February 23, 2001. A provisional agency audit report, dated February 20, 2002, was sent to you indicating that we had determined you were overpaid $1,323,952.29. Based upon a review of all documentation submitted, we have determined that you were overpaid $527,176.65 for services that in whole or in part are not covered by Medicaid. This report is not intended to imply any particular claim is or was covered. At a later date, the Agency may again review claims submitted during this period of time. Be advised that pursuant to Section 409.913(23)(a), Florida Statutes (F.S.), the Agency is entitled to recover all investigative, legal, and expert witness costs. Additionally pursuant to Section 409.913, F.S., this letter shall serve as notice of the following sanction(s): The provider is subject to a comprehensive follow-up review in six months. This review and the determinations of overpayment were made in accordance with the provisions of Section 409.913, F.S. In determining payment pursuant to Medicaid policy, the Medicaid program utilizes procedure codes, descriptions, policies, and the limitations and exclusions found in the Medicaid provider handbooks. In applying for Medicaid reimbursement, providers are required to follow the guidelines set forth in the applicable rules and Medicaid fee schedules, as promulgated in the Medicaid policy handbooks, billing bulletins, and the Medicaid provider agreement. Medicaid cannot pay for services that do not meet these guidelines. Below is a discussion of the particular guidelines related to our review of your claims and an explanation of why these claims do not meet Medicaid requirements. The audit work papers are attached, referencing the claims that were reviewed and found to be discrepant by this determination. REVIEW DETERMINATION(S) The audit included the review of a judgmental sample of selected claims and the review of a statistically valid random sample taken from the population of paid claims with dates of service during the audit period. The overpayment found in the random sample was extended to the population using generally accepted statistical formulas and methods. The audit period for this review was from May 23, 1999, through February 23, 2001. This review identified an overpayment of $527,176.65. Attached are the overpayment calculations, a summary of documented discrepancies, and an itemized listing of discrepancies noted in the review of the judgmental and the random sample[s]. * * * If you are not in bankruptcy and you concur with our findings, remit by check in the amount of $527,176.65. . . . * * * You have a right to request a formal or informal hearing pursuant to Section 120.569, F.S. . . . . [I]f a request for a hearing is made, the petition must be received by the Agency within twenty-one (21) days of receipt of this letter. . . . * * * As noted in the Preliminary Statement of this Recommended Order, Petitioner requested a "formal hearing," which ultimately was held on September 6 through 8, 2006. During the course of the hearing, AHCA made another downward revision in its total overpayment calculation (to $480,832.31), after determining that one "discrepant" claim in the "judgmental sample" ("discrepant" claim 26 (August 9, 2000, fill) previously coded "OBQ" should instead be coded "WMDC" (and that therefore the "overcharge" associated with this "discrepant" claim was $4.23, not $601.50), and further determining that five claims in the "random sample" ("discrepant" claims 52, 56, 61, 81, and 91) previously determined to be "discrepant" were in fact not "discrepant" (and that therefore Petitioner was not overpaid anything for these claims). Joint Exhibit 1 reflects this recalculation made by AHCA. The total amount that Petitioner was overpaid for the "discrepant" claims in the "judgmental sample" was $42,310.17. The total amount that Petitioner was overpaid for the 89 "discrepant" claims in the "random sample" was $4,339.32, or 17.36 dollars for each of the 250 claims in the sample. Extrapolating or projecting this result, in accordance with accepted statistical principles, to the entire universe of Audit Period Claims (which numbered 37,416) minus the 271 claims in the "judgmental sample" (a total of 37,145 claims), using a "95% one-sided lower confidence limit," yields an overpayment of $438,522.14. Adding this $438,522.14 overpayment to the $42,310.17 overpayment for the "discrepant" claims in the "judgmental sample" produces a total overpayment of $480,832.31 AHCA has made no additional revisions to its overpayment calculation in the instant case. It continues to maintain (and correctly so) that Petitioner received $480,832.31 in Medicaid overpayments for services claimed to have been provided during the Audit Period.18
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that AHCA enter a final order finding that Petitioner received $480,832.31 in Medicaid overpayments for paid claims covering the period from May 23, 1999, through February 23, 2001, and requiring Petitioner to repay this amount to AHCA; and that AHCA decline to order a "comprehensive follow- up review [of Petitioner] in six months." DONE AND ENTERED this 14th day of December, 2006, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of December, 2006.
