The Issue Whether the Department of Health and Rehabilitative Services improperly determined the Petitioners' rate of Medicaid reimbursement for the period January 1, 1990, through June 30, 1990?
Findings Of Fact The Emergency Rule and the Permanent Rule have been determined to be valid in a Final Order entered simultaneously with this Recommended Order. The Department's action in freezing the Medicaid reimbursement rate of the Petitioners in these cases was taken pursuant to the Emergency Rule and the Permanent Rule.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order in these cases dismissing the Petitioners' amended petitions. DONE and ENTERED this 26 day of May, 1992, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of May, 1992. APPENDIX Case Numbers 91-4893, 91-4894, 91-4895, 91-4914, 91-4929, 91-5837 and 91-6191 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioners' Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1 and 4. 2 5-6. 3 13. 4 7. 5 3 and 13-14. 6 15. 7 17-19. 8 20. 9 21. 10 22. 11 23. 12 8. 13 12. 14 11. 15 24. 16 25-27. 17 28-29. 18 29. 19 30-32. 20 34-37. See 39. The last three sentences are not relevant. The determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 39. The last two sentences are not relevant. The determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 23 40-41. 24 43. 25 45. 26 46. 27 47. 28 48. The last two sentences are argument. 29 49. 30 42. 31 29 and 32. The weight of the evidence failed to prove the Department's motive for providing assurances to HCFA were anything other than to meet federal requirements. 32 28. 33 55. 34 34-35. See 59-60 and 63. The detailed findings of fact concerning the nature of the Department's inflationary analysis are not necessary. HCFA rejected this analysis and based its decision on other information provided by the Department. Additionally, the determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 35 See 60-63. 36 52-54. 37 54. 38 55 and hereby accepted. 39 59 and hereby accepted. 40 See 60-65. HCFA did not "reject" the Department's proposed plan amendment. 41 See 63. 42-43 See 60-66. 44-46, 50-54 Although the proposed findings of fact concerning what the Department told HCFA are generally correct, these proposed findings of fact are not relevant to this proceeding. As previously stated, the determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 47 Hereby accepted. 48-49 Hereby accepted except for the proposed findings that the Department "misled", "misrepresented" or provided "inaccurate and misleading information." The last sentence of proposed finding of fact 49 is not relevant. 55 67. 56 Hereby accepted. 57 Not relevant. 58 69. 59 70. 60 71. 61 50 and 73. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1. 2 4. 3 5. 4 6. 5 3 and 13-14. 6 15. 7 17-19. 8 20. 9 21. 10 22. 11 23. 12 8. 13 11. 14 24. 15 25-26. 16 Hereby accepted. 17 27 and 29-32. 18 34-37. 19 39-41. 20 41. 21 43. 22 33. 23 42. 24 52-53 and 58. 25 54. 26 55. 27 56. 28 57. 29 60-65. 30 67. 31 68. 32 69. 33 70. 34 71. 35 50 and 73. 36 72. 37 73. 38 Hereby accepted. COPIES FURNISHED: Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Slye General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Thomas C. Fox, Esquire Michael D. Smith, Esquire 1200 18th Street, N.W. Washington, D.C. 20036 Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302 W. David Watkins, Esquire Post Office Box 6507 Tallahassee, Florida 32314-6507 David Pius Medicaid Counsel Department of Health and Rehabilitative Services 1317 Winewood Boulevard Building 6, Room 230 Tallahassee, Florida 32399-0700
The Issue Whether Medicaid overpayments were made to Petitioner and, if so, what is the total amount of these overpayments.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the stipulations of fact set forth in the parties' March 5, 2002, Joint Prehearing Stipulation: Petitioner Petitioner was incorporated in 1989 by Mr. Taylor. It operated Choice Pharmacy, a pharmacy located at 9920 Northwest 27th Avenue in Miami, Florida, from around the time of its incorporation until approximately 1999. The Provider Agreement During the period from September 10, 1997, through August 31, 1998, Petitioner was authorized to provide pharmacy services and goods to eligible Medicaid recipients in Florida. Petitioner provided such services and goods pursuant to a Medicaid Provider Agreement Mr. Taylor had signed, on behalf of Petitioner, on February 21, 1997. The Provider Agreement contained the following provisions, among others: The Provider agrees to participate in the Florida Medicaid program under the following terms and conditions: * * * Quality of Service. . . . The services or goods must have been actually provided to eligible Medicaid recipients by the provider prior to submitting the claim. Compliance. The provider agrees to comply with all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, manuals, handbooks and Statements or Policy as they may be amended from time to time. Term and signatures. The parties agree that this is a voluntary agreement between the Agency and the provider, in which the provider agrees to furnish services or goods to Medicaid recipients. This provider agreement shall become effective the date the provider's Florida Medicaid Enrollment Application is received by the state or its fiscal agent. It shall remain in effect until July 1, 1999, unless otherwise terminated. . . . Provider Responsibilities. The Medicaid provider shall: * * * (b) Keep and maintain in a systematic and orderly manner all medical and Medicaid related records as the Agency may require and as it determines necessary; make available for state and federal audits for five years, complete and accurate medical, business, and fiscal records that fully justify and disclose the extent of the goods and services rendered and billings made under the Medicaid. The provider agrees that only records made at the time the goods and services were provided will be admissible in evidence in any proceeding relating to the Medicaid program. * * * (d) Except as provided by law, the provider agrees to provide immediate access to authorized persons (included but not limited to state and federal employees, auditors and investigators) to all Medicaid-related information, which may be in the form of records, logs, documents, or computer files, and all other information pertaining to services or goods billed to the Medicaid program. This shall include access to all patient records and other provider information if the provider cannot easily separate records for Medicaid patients from other records. . . . Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook, and the Medicaid Provider Reimbursement Handbook The Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case contained the following "record keeping " provisions, among others: The provider must retain all medical, fiscal, professional and business records on all services provided to a Medicaid recipient. Records may be kept on paper, magnetic material, film, or other media. In order to qualify as a basis for reimbursement, the records must be signed and dated at the time of service, or otherwise attested to as appropriate to the media. Rubber stamp signatures must be initialed. The records must be accessible, legible and comprehensible. Records must be retained for a period of at least five years from the date of service. The following types of records, as appropriate for the type of service provided, must be retained (the list is not all inclusive): . . . . Business records, such as accounting ledgers, financial statements, purchase/acquisition records, invoices, inventory records, check registers, canceled checks, sales records, etc.; Tax records, including purchase documentation; . . . . Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid payments. Medicaid payments for services that lack required documentation or appropriate signatures will be recouped. . . . The Medicaid Provider Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case contained similar provisions. The Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case further provided that "[r]eimbursement for prescribed drug services is based on the cost of the drug to the pharmacy plus a dispensing fee." The Audit and Aftermath In July of 1998, AHCA's Medicaid fiscal agent contractor (Unysis Corporation) conducted a "desk audit" of Medicaid claims submitted by Petitioner. Following the completion of the "desk audit," the matter was referred to AHCA's Office of Medicaid Program Integrity to conduct "a more in depth" audit (involving an examination of invoices and other documentation to determine whether Petitioner had available during the period under review sufficient quantities of goods to support its billings to the Medicaid program). The audit, which covered the period from September 10, 1997, through August 31, 1998 (Audit Period), was conducted by Kathryn Holland, with the assistance of an accounting firm retained by AHCA, Krause, Humphress, Pace & Wadsworth, CPA (Krause). Ms. Holland is a Florida-registered pharmacist who has been a senior pharmacist with AHCA for the past 12 years. She has no formal education or training in accounting, but does have 12 years of experience "doing the kind of audits" she conducted in the instant case. In an effort to obtain information needed for the audit, Krause requested that Petitioner fill out and return a Questionnaire for Medicaid Providers. The questionnaire was filled out and returned by Mr. Taylor, on behalf of Petitioner, on or about October 30, 1998. Mr. Taylor indicated on the questionnaire that, during the Audit Period, the "percentage of [Petitioner's] prescription business that [was] Medicaid" was approximately 90 percent. He further indicated on the questionnaire that Petitioner's "total dollar sales volume of prescription drugs" during the Audit Period was $5,732,028.84; Petitioner's "cost of prescription drugs sold during [the] Audit Period" was $5,220,200.27; Petitioner's "prescription drug inventory at cost, [at the] beginning of [the Audit] Period" was $180,721.00; and Petitioner's "prescription drug inventory at cost, [at the] end of [the Audit] Period" was $306,081.00. The questionnaire requested the name(s) of Petitioner's "major drug suppliers during the review period." All suppliers that "provided more than 10% of [Petitioner's] drug purchases" were to be listed. Mr. Taylor listed on the questionnaire the following "major drug suppliers": "McKesson Inc.," "Quality Medical," "Pharma Plus Wholesale Inc.," and "Quest Medical Supply." IV Pharmaceutical Wholesalers, Inc., was not among the "major drug suppliers" named by Mr. Taylor. According to the information provided on the questionnaire by Mr. Taylor, the purchases made by Petitioner from "McKesson Inc.," "Quality Medical," "Pharma Plus Wholesale Inc.," and "Quest Medical Supply" represented approximately 20 percent, 20 percent, 40 percent, and 10 percent, respectively, of Petitioner's "total [drug] purchases" during the Audit Period. By letter dated November 9, 1998, Krause requested Pharma Plus Wholesale, Inc. (Pharma Plus) to provide it "with a download of all transactions (all accounts) for the period September 1, 1997 through August 31, 1998," between Pharma Plus and Choice Pharmacy. Pharma Plus, in a letter dated January 18, 1999, provided the following response to Krause's request: [A]s per our conversation I am submitting this document to formally inform you and your office that Pharma Plus Wholesale, Inc. has never done any business with Choice Pharmacy (Legal Name: OKAN, Inc) 9920 N.W. 27th Avenue Miami, FL 33147.) By letter dated January 20, 1999, Ms. Holland requested McKesson Drug Company (McKesson) to provide her "with a download of all transactions for the period July 1, 1997, through August 31, 1998" between McKesson and Choice Pharmacy. On February 16, 1999, McKesson provided Ms. Holland with a "paper printout" containing the requested information. The material submitted by McKesson revealed that there were a considerable number of transactions between McKesson and Choice Pharmacy during the period in question. On April 2, 1999, Ms. Holland sent a letter to Mr. Taylor, which read, in part, as follows:: On or around July 16, 1998, an auditor from Unisys Corporation, the fiscal agent contractor for the Florida Medicaid program, conducted an audit of your pharmacy department. The audit is being reviewed by Medicaid Program Integrity. In order for us to complete our review, we are requesting and must receive the following: Documentation that identifies all purchases/acquisitions by Choice Pharmacy for the products listed on "Attachment A" for the period from July 1, 1997, through August 31, 1998. Documentation that identifies all credits/returns for the period stated above for the products listed on "Attachment A." . . . You have 30 days from the receipt of this letter to submit the requested information. . . . The "products" listed on "Attachment A" did not include "every single drug Petitioner had billed to Medicaid. Only the 50 "highest paid" drugs were listed on "Attachment A." Mr. Taylor responded to Ms. Holland's letter by providing her with, on May 13, 1999, a three-inch stack of documents reflecting transactions between Petitioner and "quite a few different [drug] wholesalers." Ms. Holland attempted (successfully in some instances and unsuccessfully in others) to contact wholesalers whose names appeared on the documentation provided by Mr. Taylor to obtain from them documentation regarding their transactions with Petitioner. After analyzing the documentation with which she had been provided by Petitioner and by the drug wholesalers she had been able to contact, and examining AHCA's records of the claims filed by Petitioner during the Audit Period, Ms. Holland determined that there was insufficient documentation to demonstrate that, during the Audit Period, Petitioner had available sufficient inventory to support $4,248,262.37 of its billings to the Medicaid program. By letter dated July 28, 1999, Ms. Holland advised Mr. Taylor of this "provisional finding." The letter read, in part, as follows: Medicaid Program Integrity has reviewed your paid Medicaid claims with dates of service from September 10, 1997, through August 31, 1998. We have also reviewed your product purchase/acquisition documentation received on May 13, 1999. Some of the purchase/acquisition documents that you furnished could not be substantiated by the distributor/wholesaler and were therefore not included in the review. You have failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid. Based on this review, we have made a provisional determination that you were overpaid $4,248,262.37 for claims that in whole or in part are not covered by Medicaid. The amount due for the overpayment is $4,248,262.37. This is, however, a provisional finding and we encourage you to submit any additional information or documentation that you may have that you feel may serve to change the overpayment. * * * Based on the above, we have reason to believe that you have been overpaid by the Medicaid program. The overpayment identified in the summary sheet attachment is with regard only to the 45 drugs listed and comprehends only the period audited, namely September 10, 1997, through August 31, 1998. A printout identifying all relevant claims involved in the overpayment and a copy of the drug purchase/acquisitions are attached. The overpayment calculation is based upon the assumption that all stock demonstrated as available during the audit period was exclusively dispensed to Medicaid recipients; this is undoubtedly not the case and the assumption serves to reduce the amount of the overpayment. Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid. Accordingly, as shown in the summary sheet attachment, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $4,248,262.37. If additional overpayments are found subsequently, you will be notified. * * * If you have any additional invoices or other relevant documentation that you wish to submit that you feel would alter these findings, please submit your written explanation and legible copies of the documentation to us immediately. . . . If you have not submitted documentation or made payment within 30 days, we will send you notice regarding the agency's final determination, taking into consideration any information or documentation that you submit within this time period. On August 16, 1999, Mr. Diamond, on behalf of Petitioner, telephonically requested a 21-day extension of time to submit additional documentation for Ms. Holland's consideration. By letter dated August 17, 1999, Ms. Holland advised Mr. Diamond that the requested extension of time had been granted. Mr. Diamond, on behalf of Petitioner, on September 14, 1999, provided Ms. Holland with an "additional package of documentation." Ms. Holland reviewed these documents. "Most everything in this package was a duplicate" of documents that Ms. Holland had already been provided by Mr. Taylor. The following day, Ms. Holland, by facsimile transmission, requested Mr. Diamond to provide her with cancelled checks evidencing Petitioner's payment of eight, specified invoices included in the "additional package of documentation" she had received from Mr. Diamond. Mr. Diamond provided Ms. Holland with five cancelled checks on October 8, 1999. Ms. Holland determined, in light of the additional documentation she had received following her "provisional finding" that Petitioner had been overpaid $4,248,262.37 by the Medicaid program, that the amount of that overpayment should be reduced by $764.67. She advised Mr. Taylor of this "final agency audit" determination, by letter dated October 27, 1999, which read, in part, as follows: Medicaid Program Integrity has completed a review of your paid Medicaid claims with dates of service from September 10, 1997, through August 31, 1998. We have also reviewed your product purchase/acquisition documentation received on May 13, 1999, September 14, 1999, and October 8, 1999. You have failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid. You are hereby notified that Okan, Inc. d/b/a Choice Pharmacy was overpaid $4,247,497.70 for claims that in whole or in part are not covered by Medicaid. The total amount due for the overpayment is $4,247,497.70. The above action and your right or appeal are discussed below. * * * We have required that you submit invoices from your suppliers to substantiate the availability of drugs that you billed to Medicaid. You have not fully substantiated such availability. Section 409.913(10), F.S., states in part that the Agency may require repayment for inappropriate, medically unnecessary, or excessive goods or services. Section 409.913(14)(n), F.S., states that "The agency may seek any remedy provided by law, including but not limited to, the remedies provided in subsection (12) and (15) and s. 812.035, if: * * * (n) The provider fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods, or sufficient time in the case of services, to support the provider's billings to the Medicaid program." Billing Medicaid for drugs that have not been demonstrated as available for dispensing is a violation of Medicaid laws and regulations and has resulted in the finding that you been overpaid by the Medicaid program. The overpayment identified in the summary sheet attachment is with regard only to the 45 drugs listed and comprehends only the period audited, namely September 10, 1997, through August 31, 1998. A printout identifying all relevant claims involved in the overpayment and a copy of the drug purchase/acquisition review are attached. The overpayment calculation is based upon the assumption that all stock demonstrated as available during the audit period was exclusively dispensed to Medicaid recipients; this is undoubtedly not the case and the assumption serves to reduce the amount of the calculated overpayment. All Medicaid payments sufficient to cover documented inventory have been assumed to be valid, and payments in excess of that amount are regarded to be invalid. Accordingly, as shown in the summary sheet attachment, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $4,247,497.70. If additional overpayments are found subsequently, you will be notified. * * * If you accept or concur with these finding, please send your check in the amount of $4,247,497.70, made payable to the Florida Agency for Health Care Administration, to: . . . . You have the right to request a formal or informal hearing pursuant to section 120.569, F.S. . . . [I]f a request for a hearing is made, the request or petition must be received within twenty-one (21) days of receipt of this letter. Failure to timely request a hearing shall be deemed a waiver of your right to a hearing. . . . Mr. Diamond, on behalf of Petitioner, filed with AHCA a Petition for Formal Hearing on December 7, 1999. The Petition for Formal Hearing was accompanied by 50 "invoices" purporting to reflect sales of prescription drugs (totaling approximately $4 million dollars) made by IV Pharmaceutical Wholesalers, Inc., to Choice Pharmacy during the Audit Period, as well as the following cover letter from Mr. Diamond to Ms. Holland: Consistent with our prior discussions regarding our above referenced client, you will find enclosed the final documentation from [IV] Pharmaceutical Wholesalers, Inc. As I indicated in our prior discussions it would appear at this time that our independent audit has concluded. Our accounting reveals, based on all invoices provided, our above referenced client has correctly accounted for all medications billed through Medicaid. I also enclose consistent with our prior discussion a copy of our request for a formal hearing in the event that you are not in agreement with our conclusions. In the event that you are satisfied with the conclusions, please advise Mr. John A. Owens, Chief, Medicaid Program Integrity, that we will withdraw our request for formal hearing. Prior to the submission of these "invoices," AHCA had not received any information (in the form of documentation or otherwise) indicating that Petitioner had purchased or otherwise acquired drugs from IV Pharmaceutical Wholesalers, Inc. Ms. Holland examined the "invoices." "They did not look like forms [she had] seen from this wholesaler before, and . . . after years of looking at invoices they just appeared not right" to her. On January 28, 2000, Ms. Holland sent the following letter to Mr. Diamond: Thank you for the documents received on December 7, 1999. As they were received after the Final Agency Action, the Agency will consider them as possible evidence for trial or hearing. Once the hearing date and discovery schedule are set, we will propound interrogatories and take depositions in conjunction with these documents. If you have any question, please contact Mr. L. William Porter, II, senior attorney . . . . Ms. Holland's suspicions regarding the genuineness of the IV Pharmaceutical Wholesalers, Inc., "invoices" submitted by Petitioner were correct. Petitioner had never purchased or otherwise acquired any drugs from IV Pharmaceutical Wholesalers, Inc. The "invoices" were fabricated. They were created by Mr. Pinkoff, for a fee ($800,000.18, which he was paid, in two installments, in November of 1999), at the request of Mr. Taylor and a Betty Bills. 13/ Mr. Pinkoff was told that the "invoices" were needed for an audit to "substantiate the purchases of [certain] product[s]." 14/ Mr. Pinkoff was subsequently charged with criminal wrongdoing for his participation in this fraudulent scheme and "voluntarily surrendered" to the authorities. 15/ The charges were filed after Mr. Pinkoff's place of business had been searched by law enforcement authorities on December 1, 1999, pursuant to a search warrant obtained by the Florida Attorney General's Medicaid Fraud Control Unit, which was conducting a criminal investigation of another matter unrelated to Choice Pharmacy. 16/ The computer that Mr. Pinkoff used to create the falsified "invoices" for Petitioner was seized during the search. Mr. Pinkoff entered into a Plea Agreement with the State of Florida in his criminal case. The Plea Agreement was filed in Leon County Circuit Court (Case No. 2000-4310) on November 8, 2000. Section II of the Plea Agreement contained the "Factual Predicate for this Plea Agreement." It provided as follows: The Defendant and the State agree that the following is the factual basis for the entry of plea in this matter, (hereafter "SUBJECT MATTER"): In June of 1999, the Defendant was approached by Louis A. Petrillo ("Petrillo"),[17/] who told the Defendant that Choice Pharmacy (Okan, Inc. d/b/a Choice Pharmacy ("Choice") and "Betty," an owner, needed certain invoices. Specifically, Choice and Betty needed to demonstrate that Choice had purchased a number of prescription drugs with a value of $4,000,000 dollars dating back to the period of 1997 through 1998. Choice was owned and operated by Raufu ("Ralph") Taylor and Betty (Last Name Unknown). The Defendant owned a 1/2 interest in IV Pharmaceuticals, Inc., a Florida corporation that was a licensed prescription drug wholesale company. IV Pharmaceuticals had not sold any prescription drugs to Choice in 1997 or at any other time. Petrillo knew this fact but asked the Defendant if he could produce invoices for a specific list of drugs; the understanding was that the invoices would be false. The Defendant told Petrillo, Betty and Ralph that he could create or otherwise produce invoices from IV Pharmaceutical[s] to give to Choice for prescription drugs that IV Pharmaceutical[s], Inc. had previously purchased from manufacturers or other licensed wholesalers. This was necessary in case IV Pharmaceutical[s] was asked to produce its records to substantiate the invoices from IV Pharmaceutical[s] to Choice. All of the drugs Betty and Ralph requested invoices for were oncology or HIV prescription drugs, largely Neup[o]g[e]n and Procrit. IV Pharmaceutical[s] had invoices to substantiate its own purchases of those drugs. A meeting was arranged by Petrillo. In attendance were the Defendant, Petrillo, Betty, and Ralph. After making introductions, Petrillo left the meeting.[18/] Before leaving, Petrillo told the Defendant that it was up to him whether or not to create the invoices. The Defendant discussed with Betty and Ralph what specific prescription drug invoices were required. Betty and Ralph provided the Defendant with a list of drugs, including dates of purchase and quantities. The Defendant believed that the invoices were to be used for some unlawful purpose, presumably involving AHCA, since the Defendant was familiar with the AHCA audit process and knew that AHCA required such invoices when conducting an audit. Betty and Ralph told the Defendant that the invoices were needed for drugs they had actually purchased but had no invoices for. The Defendant had at least one conversation with Petrillo related to the production following the meeting. Six months after the meeting, the Defendant drafted invoices under the IV Parmaceutical[s] name based upon the list provided by Betty and Ralph. The Defendant gave the invoices to Petrillo to give to Betty and Ralph. Each false invoice produced by Defendant was submitted to AHCA. The foregoing assertions of fact made in this section of the Plea Agreement are true and accurate. Section III of the Plea Agreement indicated that Pinkoff understood that "pursuant to this plea agreement his minimum potential exposure under the Sentencing Guidelines [was] 55.5 months of imprisonment" and "[h]is maximum potential exposure under the Sentencing Guidelines [was] the statutory maximum of thirty-five years in State Prison and a $25,000.00 fine." Section IV of the Plea Agreement set forth the "Defendant's Obligations." It read as follows: The Defendant agrees to plead Guilty to the following charges contained in the information filed in the above-styled criminal case: one count of "Racketeering activity" in violation of Florida Statutes, Section 895.03(3), a first degree felony; and one count of Medicaid Provider Fraud in violation of Florida Statutes, Section 409.920(2)(a), a third degree felony. The Defendant agrees to make himself accessible upon notice to receive and testify truthfully pursuant to any subpoena lawfully issued compelling such testimony pursuant to §914.04, Florida Statutes, However, by this AGREEMENT Defendant does not and shall not waive his Fifth Amendment privilege as to any statement or testimony except and only as to the specific facts set forth as the SUBJECT MATTER of this AGREEMENT; Defendant shall maintain his Fifth Amendment rights as to all other allegations of facts, including those facts related to the charges alleged in the Information not included in the factual predicate herein. The Defendant understands that if lawfully compelled to provide testimony, any perjury committed by him would constitute a violation of the ordinary terms and conditions of Defendant's community control and probation even if related to the charges alleged in the Information. Section V of the Pleas Agreement contained the "sentence the State will recommend," which was as follows: Seven (7) years of probation with the following special conditions: Defendant with will serve 24 months of community control under the terms and conditions set by the Department of Corrections. . . . Defendant shall pay a total of $3,475,000 to the State of Florida as compensation to the State of Florida for its losses, both known and unknown. Such reimbursement shall not be deemed or otherwise construed as a fine or similar penalty. . . . At the entry of this plea, Defendant agrees to provide the State of Florida with sufficient security to guarantee the payment of one million dollars ($1,000,000.00). This security shall be in the form of two Notes secured by two mortgages to be held by the State of two properties. The first property is located at 5721 Oakview Terrace, Hollywood, Florida. The Note on this property shall be in the amount of $400,000.00. The second property secured by a Note is located at 6001 North Ocean Drive, PHS, Hollywood, Florida [and the note on this property] shall be in the amount of $600,000.00.[19/] . . . Defendant shall pay a fine in the amount of $25,000.00 which is the Statutory maximum; Defendant shall be Adjudicated Guilty on all counts; Defendant shall be precluded from working or having a business interest in or receiving remuneration or payment of any kind from any health care related facility that receives any funds or participates in any way with the Medicare and/or Medicaid programs under Titles XVIII and XIX of the United States Code. However, this does not preclude the Defendant from receiving proceeds from the divestment of his interests or assets through the sale or transfer of said assets or interest to an entity that receives any funds or participates in any way with the Medicare and/or Medicaid programs of the United States. Defendant shall pay court costs; The monetary obligation under the AGREEMENT shall be paid over the course of probation and community control. However, the STATE and the Defendant agree that there is a value to the STATE in terms of economics and deterrence to receive swift and complete payment and the commitment of the Defendant to attempt to do so reflects his willingness to accept responsibility for his acts. Therefore, in the event that the Defendant pays $3,000,000.00 within 15 months of sentencing and has satisfied all other terms and conditions of community control and probation, the State agrees to the following: the community control portion of the defendant's sentence shall be reduced to 15 months; the term of probation shall be reduced to five (5) years; The STATE agrees to return to court for an Order reducing the total obligation by $500,000.00. Thus, the Defendant's total obligation under this Agreement would become Three Million dollars ($3,000,000.00). . . . The State has no objection to the entry of any Order by the court to permit travel outside of the United States for business purposes upon at least 2 weeks notice to the probation department and the permission of the defendant's probation officer. The Defendant understands that he may not travel outside the United States during the course of the community control portion of his sentence. Section VI was entitled "Withdrawal of Guilty Plea and Vacation of Sentence." It read as follows: In the event that the State files additional charges against the Defendant for matters currently under investigation, but not charged in the Information described in this AGREEMENT, the Defendant shall have the right and full entitlement to vacate the sentence imposed pursuant to this AGREEMENT and to withdraw his plea of guilty. The only condition to the Defendant's right and entitlement to vacate (as just described) shall be that the Defendant must not have breached this AGREEMENT prior to the additional charges being filed. If the Defendant does vacate and withdraw, all monies paid pursuant to this AGREEMENT shall be returned to the Defendant. The Plea Agreement also contained a "Waiver of Rights," which provided, in pertinent part, as follows: My entering into the AGREEMENT is not the result of force, threats, assurances or promises other than the promises contained in the attached agreement. I agree to the provision of this agreement as a voluntary act on my part, rather than at the discretion of or because of the recommendation of any other person, and I agree to be bound by its provisions. I agree that this written plea agreement contains all the terms and conditions of my plea and that promises made by anyone that are not contained within this written agreement are without force and effect and are null and void. . . . The Plea Agreement was signed by Mr. Pinkoff (on September 26, 2001), his attorneys (on September 26, 2001 and November 8, 2000), and the Special Counsel of Health Care Fraud Prosecution (on September 26, 2000). Mr. Pinkoff is currently under "house arrest" at his residence (which he owns) located at 5721 Oakview Terrace in Hollywood, Florida; however, he is allowed to leave his home to work at his office (which is also located in Florida). Mr. Pinkoff is still in the "pharmaceutical wholesaling" business. His business is licensed "out of Georgia." Mr. Pinkoff has paid approximately $200,000.00 of the amount that he owes the State of Florida pursuant to the terms of his Plea Agreement. He sold the 6001 North Ocean Drive property referenced in the Plea Agreement for $1.2 million. The state received approximately $192,000.00 of the proceeds from the sale Mr. Pinkoff is presently paying the state $1,000.00 a month.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that AHCA enter a final order finding that Petitioner received $4,247,497.70 in Medicaid overpayments for claims covering the period from September 10, 1997, through August 31, 1998, and requiring Petitioner to repay this amount to AHCA. DONE AND ENTERED this 3rd day of October, 2002, in Tallahassee, Leon County, Florida. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of October, 2002.
The Issue Whether Petitioner's Medicaid provider number should be cancelled for the reason stated in Respondent's October 1, 1995, letter to Petitioner?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner is a provider of community mental health services. It provides these services to residents of Palm Beach County and the surrounding areas. Some of the services it provides are unique to the area it serves. Petitioner provides services to Medicaid recipients pursuant to a Medicaid provider agreement dated September 6, 1994, paragraphs 8 and 9 of which provide as follows: The provider and the Department agree to abide by the Florida Administrative Code, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program and Federal laws and regulations. The agreement may be terminated upon thirty days written notice by either party. The Depart- ment may terminate this agreement in accordance with Chapter 120, Florida Statutes. Petitioner has attempted to enter into a contract with the Department of Health and Rehabilitative Services' Alcohol, Drug Abuse and Mental Health office (hereinafter referred to as "ADM"), but to date has been unable to do so because ADM has not had the money to fund such a contract.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered terminating Petitioner's provider agreement and cancelling its provider number on the grounds that it "does not have a contract with the [Department of Health and Rehabilitative Services] ADM [Alcohol, Drug Abuse and Mental Health] office." DONE and ENTERED this 26th day of February, 1996, at Tallahassee, Leon County, Florida. STUART M. LERNER, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SC 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 1996. COPIES FURNISHED: Darlene Silvernail, Esquire Forest Hill Counseling Center 2624 Forest Hill Boulevard West Palm Beach, Florida 33406 Gordon B. Scott, Esquire Agency for Health Care Administration 2727 Mahan Drive, Fort Knox Number 3 Tallahassee, Florida 32308-5403 Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Fort Knox Number 3 Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Fort Knox Number 3 Tallahassee, Florida 32308-5403
The Issue Whether the Respondents were overpaid by Medicaid for radiology and nuclear medicine services provided to Florida Medicaid patients. The Agency for Health Care Administration (AHCA, Agency or Petitioner) asserts that the Respondents, Lazaro Plasencia, M.D., and Ana M. Elosegui, M.D., billed Medicaid for procedures they did not perform in violation of Medicaid policy, the Florida Administrative Code, and Florida Statutes. The Respondents maintain that because of ambiguities in Medicaid policy regarding reimbursement protocols for the radiology services at issue, the Respondents mistakenly believed in good faith that under the applicable Medicaid regulations and guidelines, Medicaid would reimburse the "maximum" fee allowable under the relevant fee schedule. The Respondents acknowledge that the "professional component" of the radiology services at issue was provided by a third-party physician specialist. The Respondents further assert that they are entitled to, at the minimum, payment of the "technical component" of the medically necessary radiological services that they provided to Medicaid recipients. The Petitioner seeks reimbursement from Dr. Plasencia in the amount of $196,129.52 and $122,065.08 from Dr. Elosegui.
Findings Of Fact The Petitioner is the state agency charged with the responsibility of monitoring the Medicaid Program in Florida. At all times material to the allegations of DOAH Case No. 07-2195MPI, the Respondent, Dr. Plasencia, was a licensed medical doctor in good standing with the State of Florida, license #ME49315, and was also a Medicaid provider, #0448125-00. Similarly, at all times material to the allegations of DOAH Case No. 07-2462MPI, the Respondent, Dr. Elosegui, was a licensed medical doctor in good standing with the State of Florida, license #ME85963, and was also a Medicaid provider, #2654636-00. Drs. Elosegui and Plasencia practiced medicine together in a shared office space in Miami, Florida. The Respondents were not members of a "group practice." The Respondents were individual providers who billed Medicaid separately, using their individual Medicaid provider numbers. The doctors performed services for Medicaid recipients and submitted the charges for those services to Medicaid. Medicaid has a "pay and chase" policy of paying Medicaid claims as submitted by providers. Audits performed by the Agency then, after-the-fact, reconcile the amounts paid to providers with the amounts that were payable under the Medicaid guidelines and pertinent rules. If more is paid to the provider than allowable, a recoupment against the provider is sought. In these cases, the Respondents conducted (or supervised) various tests including "Radiological and Nuclear Medicine" services for Florida Medicaid patients in a shared office setting. The services at issue in these cases were billed under the CPT procedure codes of series 70000 and 90000. The Petitioner has not challenged any procedure at issue as not "medically necessary." Moreover, the Petitioner does not dispute that the Respondents performed or supervised the "technical component" of the universe of the radiological services at issue. The "professional component" for the universe of the radiological services at issue in this proceeding was outsourced to third-party physicians. The Respondents contracted with the outside third-party physicians for the "professional component" services to read and interprete the radiological product. These third party physicians were not Medicaid providers, nor were they part of a Medicaid group provider that included the Respondents. When billing for the radiological services, the Respondents billed Medicaid for both the "technical" and "professional" components using the "maximum" fee set forth in the Fee Schedule. The Respondents knew or should have known that they had not performed a global service as they never performed or supervised the "professional" component of the services billed. The Petitioner performed an audit of the radiological claims for Dr. Plasencia for the dates of service July 1, 2001 through December 31, 2005. On December 1, 2006, the Petitioner issued a Final Audit Report that concluded Dr. Plasencia had been overpaid $196,129.52. Additionally, the Petitioner sought an administrative fine against Dr. Plasencia in the amount of $1,000.00. Similarly, the Petitioner performed an audit of the radiological claims submitted by Dr. Elosegui for the dates of service October 11, 2002 through December 31, 2005. On December 1, 2006, the Petitioner issued a Final Audit Report that concluded Dr. Elosegui had been overpaid $122,065.08. The Petitioner also sought an administrative fine against Dr. Elosegui in the amount of $1,000.00. In January 2005, the Fee Schedule applicable to CPT 90000 procedure code services was revised. The Fee Schedule specified a reimbursement amount for the "technical" component of the radiological services in the CPT 90000 code set. Prior to that time, there had been no reimbursable amount for the "technical component" performed separately from the "professional component." The Medicaid provider agreements executed between the parties govern the contractual relationships between these providers and the Agency. The parties do not dispute that those provider agreements, together with the pertinent laws or regulations, control the billing and reimbursement claims that remain at issue. The amounts, if any, that were overpaid were related solely to the radiological services billed under a global or inclusive manner that included the "professional" component within the amount claimed to be owed by Medicaid. The provider agreements pertinent to these cases are voluntary agreements between AHCA and the Respondents. The Fee Schedule adopted by the Petitioner dictates the code and reimbursement amounts authorized to be billed pursuant to the provider agreement. The Respondents performed or supervised the "technical components" for the radiological services billed to Medicaid. The Respondents did not perform the "professional component." For all of the 70000 series billing codes the components can be split and the "technical component" can be identified and paid separately. For these billing codes, the Respondents were given (or paid for) the "technical component" of the 70000 codes. Similarly, for the 90000 billing codes, for the "technical component" portion where it was identifiable and allowable, the Petitioner gave the Respondents credit for that amount. The "technical component" for the 90000 billing codes was not identifiable or allowable prior to 2005. Prior to the amendment to the Fee Schedule the 90000 billing codes were presumed to be performed in a global manner; i.e. the "professional component" and the "technical component" were done together by the Medicaid provider submitting the claim. That was not the factual case in these audits. Respondents were not authorized to bill the 90000 codes in the global manner as they did not perform the "professional component" of the services rendered. Any Medicaid provider whose billing is not in compliance with the Medicaid billing policies may be subject to the recoupment of Medicaid payments. The Petitioner administers the Medicaid program in Florida. Pursuant to its 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. These “integrity” audits are to assure that the provider bill and receive payment in accordance with applicable rules and regulations. The Respondents do not dispute the Agency’s authority to perform audits such as the ones at issue.
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 of recoupment as set forth in the reports at issue. The final order should also impose an administrative fine against each Respondent in the amount of $1,000.00. DONE AND ENTERED this 1st day of April, 2008, 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 1st day of April, 2008. COPIES FURNISHED: Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Craig H. Smith, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Holly Benson, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Robert M. Penezic, Esquire Broad and Cassel Post Office Box 14010 Fort Lauderdale, Florida 33302-4010 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 Robert N. Nicholson, Esquire Broad and Cassel Post Office Box 14010 Fort Lauderdale, Florida 33302-4010
The Issue Whether Medicaid overpayments were made to Petitioner by the Agency for Health Care Administration ("AHCA") for services performed during the audit period of August 1, 2000, to August 1, 2002 (the "audit period"), and, if so, what is the total amount of these overpayments.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Parties Respondent, William O. Kabry, M.D., is a licensed physician in the State of Florida, having been issued license number 28394. During the audit period, Dr. Kabry's specialty area of practice was general or family practice, and his office was in Naples, Florida. Dr. Kabry is now retired. AHCA is the agency responsible for administering the Florida Medicaid Program. One of AHCA's duties is to recover Medicaid overpayments from physicians providing care to Medicaid recipients. §§ 409.901, 409.902, and 409.9131, Fla. Stat. (2006). The Provider Agreement During the audit period, Dr. Kabry was authorized to provide physician services to eligible Medicaid patients, pursuant to a valid, voluntary Medicaid provider contract agreement with AHCA, Medicaid Provider No. 065342000. The 1996 Provider Agreement, in effect at the time of the audit, contained the following provisions, among others: 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. * * * 5. 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 [sic]. 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 otherwise provided by law, the provider agrees to provide immediate access to authorized persons (including 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. Handbook Provisions Among the "manuals and handbooks" referenced in paragraph 3 of the Provider Agreement in effect during the audit period were the Medicaid Provider Reimbursement Handbook, HFCA- 1500 and Child Health Check-Up 221 ("Reimbursement Handbook") and the Physician Coverage and Limitations Handbook ("C&L Handbook"), with their periodic updates. The term "medically necessary" was defined in Appendix D of the Reimbursement Handbook as follows, in relevant part: Medically Necessary or Medical Necessity Means that the medical or allied care, goods, or services furnished or ordered must: Meet the following conditions: Be necessary to protect life, to prevent significant illness or significant disability, or to alleviate severe pain; Be individualized, specific, and consistent with symptoms or confirmed diagnosis of the illness or injury under treatment, and not in excess of the patient's needs; Be consistent with generally accepted professional medical standards as determined by the Medicaid program, and not experimental or investigational; Be reflective of the level of service that can be safely furnished, and for which no equally effective and more conservative or less costly treatment is available statewide; and Be furnished in a manner not primarily intended for the convenience of the recipient, the recipient's caretaker, or the provider. * * * The fact that a provider has prescribed, recommended, or approved medical or allied care does not, in and of itself, make such care, goods, or services medically necessary or a medically necessary service. The Reimbursement Handbook sets out record keeping requirements for Medicaid providers. Chapter 2 of the Reimbursement Handbook states in pertinent part that Record Keeping Requirement: 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. Record Retention: The records must be retained for a period of at least five (5) 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 appointment books, patient treatment plans and physician referrals; Medical, dental, optometric, hearing, and other patient records; Copies of sterilization and hysterectomy consents; Prior and post authorization, and service authorization information; Prescription records; Orders for laboratory tests and test results; X-ray, MRI, and CAT scan records; Business records, such as accounting ledgers, financial statements, invoices, inventory records and check registers; Tax records, including purchase documentation; Partnership records; Purchase documentation; Provider enrollment documentation; and Utilization review and continued stay approvals for psychiatric or substance abuse inpatient stays. Right to Review Records: Authorized state and federal agencies and their authorized representatives may audit or examine a provider’s or facility’s records. This examination includes all records that the agency finds necessary to determine whether Medicaid payment amounts 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. Requirements for Medical Records: Medicaid records must state the necessity for and the extent of services provided. The following minimum requirements may vary according to the service rendered: History; Physical assessment; Chief complaint on each visit; Diagnostic tests and results; Diagnosis; Treatment plan, including prescriptions; Medications, supplies, scheduling frequency for follow-up or other services; Progress reports, treatment rendered; The author of each (medical record) entry must be identified and must authenticate his or her entry by signature, written initials, or computer entry; Dates of service; and Referrals to other services. Note: See the service-specific Coverage and Limitations Handbook for record keeping requirements that are specific to a particular service. 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/or recoupment of Medicaid payments. Medicaid payments for services that lack required documentation and/or appropriate signatures will be recouped. Chapter 5 of the Reimbursement Handbook, titled "Medicaid Abuse and Fraud," defines "overpayment" and "incomplete or missing records" as follows: 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. Chapter 3 of the C&L Handbook sets forth procedure codes to be used by physicians in claiming reimbursement for services provided to Medicaid recipients. The origin of the procedural and diagnosis codes is as follows, in relevant part: The procedure codes listed in this chapter are Health Care Financing Administration Common Procedure Coding System (HCPCS) Levels 1, 2, and 3. These are based on the Physician's Current Procedural Terminology (CPT) book. The CPT includes HCPCS descriptive terms and numeric identifying codes and modifiers for reporting services and procedures. . . . The CPT book is a systematic listing and coding of procedures and services provided by physicians. Each procedure or service is identified with a five digit code. For purposes of this proceeding, the relevant section of the CPT book is "Evaluation and Management-- Office or Other Outpatient Services," which sets forth the codes used to report evaluation and management services provided in the physician's office or in an outpatient or other ambulatory facility. The CPT book sets forth instructions for selecting the proper level of Evaluation and Management ("E/M") service, as follows in relevant part: Review the Level of E/M Service Descriptors and Examples in the Selected Category or Subcategory The descriptors for the levels of E/M services recognize seven components, six of which are used in defining the levels of E/M services. These components are: history; examination; medical decision making; counseling; coordination of care; nature of presenting problem; and time. The first three of these components (i.e., history, examination, and medical decision making) should be considered the key components in selecting the level of E/M services. An exception to this rule is in the case of visits which consist predominantly of counseling or coordination of care (See numbered paragraph 3, page 7).[1] Determine the Extent of History Obtained The extent of the history is dependent upon clinical judgment and on the nature of the presenting problem(s). The levels of E/M services recognize four types of history that are defined as follows: Problem focused: chief complaint; brief history of present illness or problem. Expanded problem focused: chief complaint; brief history of present illness; problem pertinent system review. Detailed: chief complaint; extended history of present illness; problem pertinent system review extended to include a review of a limited number of additional systems; pertinent past, family, and/or social history directly related to the patient's problems. Comprehensive: chief complaint; extended history of present illness; review of systems which is directly related to the problem(s) identified in the history of the present illness plus a review of all additional body systems; complete past, family and social history. The comprehensive history obtained as part of the preventive medicine evaluation and management service is not problem-oriented and does not involve a chief complaint or present illness. It does, however, include a comprehensive system review and comprehensive or interval past, family and social history as well as a comprehensive assessment/history of pertinent risk factors. Determine the Extent of Examination Performed The extent of the examination performed is dependent on clinical judgment and on the nature of the presenting problem(s). The levels of E/M services recognize four types of examination that are defined as follows: Problem focused: a limited examination of the affected body area or organ system. Expanded problem focused: a limited examination of the affected body area or organ system and other symptomatic or related organ system(s). Detailed: an extended examination of the affected body area(s) and other symptomatic or related organ system(s). Comprehensive: a general multi-system examination or a complete examination of a single organ system. Note: The comprehensive examination performed as part of the preventive medicine evaluation and management service is multi- system, but its extent is based on age and risk factors identified. For the purposes of these CPT definitions, the following body areas are recognized: Head, including the face Neck Chest, including breasts and axilla Abdomen Genitalia, groin, buttocks Back Each extremity For the purposes of these CPT definitions, the following organ systems are recognized: Eyes Ears, Nose, Mouth and Throat Cardiovascular Respiratory Gastrointestinal Genitourinary Musculoskeletal Skin Neurologic Psychiatric Hematologic/Lymphatic/Immunologic Determine the Complexity of Medical Decision Making Medical decision making refers to the complexity of establishing a diagnosis and/or selecting a management option as measured by: the number of possible diagnoses and/or the number of management options that must be considered; the amount and/or complexity of medical records, diagnostic tests, and/or other information that must be obtained, reviewed and analyzed; and the risk of significant complications, morbidity and/or mortality, as well as comorbidities, associated with the patient's presenting problem(s), the diagnostic procedure(s) and/or the possible management options. Four types of medical decision making are recognized: straightforward; low complexity; moderate complexity; and high complexity. To qualify for a given type of decision making, two of the three elements in Table 2 below must be met or exceeded. Comorbidities/underlying diseases, in and of themselves, are not considered in selecting a level of E/M services unless their presence significantly increases the complexity of the medical decision making. The referenced Table 2, titled "Complexity of Medical Decision Making," sets forth guidelines for the four types of decision-making (straightforward, low complexity, moderate complexity, and high complexity) in terms of the relative number and/or complexity of three elements: number of diagnoses or management options (minimal, limited, multiple, or extensive), amount and/or complexity of data to be reviewed (minimal or none, limited, moderate, or extensive), and risk of complications and/or morbidity or mortality (minimal, low, moderate, or high). The "Office or Other Outpatient Services" section of the CPT book provides the codes for those services in terms of the guidelines set forth above. Five codes of increasing complexity are provided for new patients, and five counterpart codes are provided for established patients: New Patient 99201 Office or other outpatient visit for the evaluation and management of a new patient, which requires these three key components: a problem focused history; a problem focused examination; and straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are self- limited or minor. Physicians typically spend 10 minutes face-to-face with the patient and/or family. 99202 Office or other outpatient visit for the evaluation and management of a new patient which requires these three key components: an expanded problem focused history; an expanded problem focused examination; and straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are of low to moderate severity. Physicians typically spend 20 minutes face-to-face with the patient and/or family. 99203 Office or other outpatient visit for the evaluation and management of a new patient which requires these three key components: a detailed history; a detailed examination; and medical decision making of low complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are of moderate severity. Physicians typically spend 30 minutes face-to-face with the patient and/or family. 99204 Office or other outpatient visit for the evaluation and management of a new patient which requires these three key components: a comprehensive history; a comprehensive examination; and medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are of moderate to high severity. Physicians typically spend 45 minutes face-to-face with the patient and/or family. 99205 Office or other outpatient visit for the evaluation and management of a new patient which requires these three key components: a comprehensive history; a comprehensive examination; and medical decision making of high complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problems are of moderate to high severity. Physicians typically spend 60 minutes face-to-face with the patient and/or family. Established Patient 99211 Office or other outpatient visit for the evaluation and management of an established patient that may or may not require the presence of a physician. Usually, the presenting problem(s) are minimal. Typically, 5 minutes are spent performing or supervising these services. 99212 Office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: a problem focused history; a problem focused examination; straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are self- limited or minor. Physicians typically spend 10 minutes face-to-face with the patient and/or family. 99213 Office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: an expanded problem focused history; an expanded problem focused examination; medical decision making of low complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of low to moderate severity. Physicians typically spend 15 minutes face-to-face with the patient and/or family. 99214 Office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: a detailed history; a detailed examination; medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of moderate to high severity. Physicians typically spend 25 minutes face-to-face with the patient and/or family. 99215 Office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: a comprehensive history; a comprehensive examination; medical decision making of high complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of moderate to high severity. Physicians typically spend 40 minutes face-to-face with the patient and/or family. Medicaid reimburses physicians according to the level of complexity of the office visit. The more complex the visit (and hence the higher the CPT code number), the greater the level of reimbursement. The Audit During the audit period, Dr. Kabry submitted 3,109 Medicaid claims for services rendered to 760 patients, for which he received Medicaid payments of $195,708.93. Out of those 3,109 claims, 589 were billed at CPT code 99205 (the highest level for a new patient) and 2,332 were billed at CPT code 99215 (the highest level for an established patient). An additional 80 claims were billed at CPT code 99214, the second-highest level for an established patient. The audit was triggered by Dr. Kabry's unusually high percentage of claims billed at the highest levels of service in a family practice setting.2 In making a determination of overpayment, AHCA is not required to review each and every Medicaid claim submitted by a provider. Subsection 409.913(19), Florida Statutes (2002), permits the agency to employ "appropriate statistical methods," including "sampling and extension to the population," to make its determination. In this instance, AHCA randomly selected a "cluster sample" of 30 patients from the 760 Medicaid patients to whom Petitioner had provided services during the audit period and asked Petitioner to produce the medical records he had on file for these 30 patients. AHCA chose the cluster sample of 30 patients according to a statistical formula indicating a 95 percent probability that any overpayment amount would be at least the amount identified. By selecting the 95 percent confidence factor, AHCA attempted to ensure that any potential error in the audit would be resolved in favor of the audited physician. AHCA's statistical expert, Professor Fred Huffer, professor of statistics at Florida State University, validated the methodology used by AHCA. Professor Huffer reviewed AHCA's work and then conducted his own independent analysis that reproduced AHCA's results. Professor Huffer's testimony as to the reliability of AHCA's methodology is credited. Dr. Kabry had submitted a total of 135 claims for services rendered to the 30 patients in the cluster sample during the audit period. Dr. Kabry had been paid $8,396.46 for these 135 claims. Each of these claims was reviewed by AHCA to determine whether it was supported by information contained in the medical records produced by Petitioner in response to AHCA's request. AHCA retained the services of Dr. E. Rawson Griffin to review all the claims for the 30-patient cluster sample. Dr. Griffin is a physician who has been in active practice continuously for 25 years, is board-certified in family practice and geriatrics, and is licensed to practice medicine in Florida, Georgia, and Virginia. Dr. Griffin is qualified as an expert witness and physician peer reviewer consultant to review the claims in the audit for issues of medical necessity, appropriateness, quality of care, and coding issues as required by Section 409.9131, Florida Statutes (2002). Based upon the initial review by Dr. Griffin, AHCA issued the PAAR with a determination that Dr. Kabry had been overpaid $89,589.10 during the audit period. Dr. Kabry communicated with AHCA and sent additional records. Based upon the additional documentation sent and a second review by Dr. Griffin, the overpayment amount was reduced to $89,095.70. The FAAR issued by AHCA on October 25, 2004, stated as follows, in pertinent part: Based upon a review of all documentation submitted, we have determined that you were overpaid $89,095.70 for services that in whole or in part are not covered by Medicaid. Be advised that pursuant to Section 409.913(22)(a), F.S., the Agency is entitled to recover all investigative, legal, and expert witness costs. * * * The following is our assessment of why certain claims paid to your provider number do not meet Medicaid requirements. * * * Review Determination(s) Medicaid policy defines the varying levels of care and expertise required for the evaluation and management procedure codes for office and hospital visits. The documentation you provided supports a lower level of office or hospital visit than the one for which you billed and received payment. The difference between the amount you were paid and the correct payment for the appropriate level of service is considered an overpayment. The overpayment was calculated using a random sample of 30 recipients for whom you submitted 135 claims having dates of service from August 1, 2000 through August 1, 2002. The statistical calculation used the formula appropriate to this sample, which is the cluster sample calculation. Recipients are sampled and all the claims respecting a given recipient form a cluster. In his deposition, Dr. Griffin discussed his review of the records Dr. Kabry had provided regarding the 30 patients in the cluster sample. Dr. Griffin found that Dr. Kabry had almost exclusively billed the highest levels of CPT coding for outpatient services, i.e., 99205 for new patients and 99215 for established patients. Out of 135 claims, Dr. Kabry billed all 23 new patient visits at CPT code 99205, of which Dr. Griffin found only eight fully justified. Dr. Kabry billed 101 out of 108 existing patient visits at CPT code 99215, and the remaining seven at CPT code 99214. Dr. Griffin found that Dr. Kabry failed to document a level of service consistent with these codes. Dr. Griffin performed his own review of Dr. Kabry's medical records and noted his conclusions as to the level of CPT coding that could be supported by the record of each patient for each visit to Dr. Kabry's office. Dr. Griffin found that all 108 of the existing patient visits and 15 out of 23 new patient visits should have been billed at lower levels, based on the documentation provided by Dr. Kabry.3 Dr. Griffin's testimony is credited as to his review of Dr. Kabry's records. Margarete Johnson, AHCA's registered nursing consultant, performed the calculations by which Dr. Griffin's conclusions as to the proper coding were translated into dollar figures. These calculations were a simple function of addition and subtraction, using the relevant Medicaid reimbursement amounts for the various codes. Dr. Kabry had been reimbursed $8,396.46 for the claims related to the 30 patients in the cluster sample. Following Dr. Griffin's analysis, Ms. Johnson calculated that $4,080.09 of that amount constituted overpayments. Using the generally accepted, appropriate, and valid statistical formula described by Dr. Huffer, AHCA extended this result to the total population of 3,109 Medicaid claims that Dr. Kabry had submitted for services rendered during the audit period, and correctly calculated that Petitioner had been overpaid a total of $89,095.70. In his case-in-chief, Dr. Kabry offered two points. First, he contended that the amount of time he spent with each patient justified the higher codings. Both Dr. Kabry and his wife, who worked as an LPN and billing clerk for Dr. Kabry, credibly testified that their Medicaid patients were largely uneducated, spoke little or no English, and required lengthy counseling to make them understand the treatments for such endemic diseases as high blood pressure and diabetes. However, Dr. Kabry did not document in his medical records the amount of time spent with each patient, and thus may not employ time as a controlling factor in his Medicaid billings. See footnote 1, supra. Second, Dr. Kabry contended that AHCA came into his office on several occasions, reviewed selected files, and gave his office a clean bill of health as to its Medicaid practices. As evidence, Dr. Kabry submitted a letter dated December 13, 2000, from Fran Nieves, a Medicaid field office manager from Fort Myers. The letter thanked Dr. Kabry for his assistance and cooperation "with the Medipass chart reviews that were conducted on 12/12 . . . These efforts provide the program with the ability to confirm that services were provided in accordance with the Medipass program, assuring that Medipass members have the access and quality health care that has been guaranteed to them." In rebuttal, Margarete Johnson testified that Ms. Nieves, the Fort Myers field office manager, is not employed by MPI and does not have the authority of MPI employees to check for possible fraud and abuse and Medicaid overpayments. Ms. Johnson testified that Medipass has a separate mission from MPI. Among other duties, Medipass is responsible for training and furnishing information to providers, and for enrolling recipients in Medipass as a cost containing measure. Relevant provisions of the Reimbursement Handbook confirm that Medipass is a "primary, case-management program designed to assure Medicaid recipients access to medical care, decrease inappropriate service utilization, and control costs." Medipass is not charged with MPI's task of recovering provider overpayments and is certainly not authorized to approve a provider's CPT coding practices so as to immunize the provider from a subsequent audit by a peer reviewer, as suggested by Dr. Kabry. Dr. Kabry did not submit any written documentation or exhibits into evidence to rebut AHCA's final overpayment determination of $89,095.07. Dr. Kabry presented no expert testimony or evidence to rebut the expert testimony presented by Dr. Griffin and Dr. Huffer. On the strength of the evidence and testimony presented by AHCA, and in the absence of any evidence or testimony to the contrary, it is found that Petitioner received Medicaid overpayments in the amount of $89,095.07.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that AHCA enter a final order finding that Respondent received $89,095.07 in Medicaid overpayments for services rendered to his Medicaid patients from August 1, 2000, to August 1, 2002, and requiring him to repay this amount to the agency. DONE AND ENTERED this 5th day of March, 2007, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 2007.
The Issue The issues are whether Petitioner has overpaid Respondent for medical services for which he has obtained reimbursement under the Medicaid program and, if so, by how much.
Findings Of Fact Respondent is a licensed physician engaged in the practice of medicine in Florida. From January through November 1997, Respondent worked a couple of hours each morning at the Summit Clinic in Miami before seeing patients at his own office. At the Summit Clinic, Respondent administered intravenous immunoglobulin (IVIG) to adult Medicaid patients who were infected with human immunodeficiency virus (HIV). Petitioner paid the Summit Clinic, which was using Respondent's Medicaid provider number, for these and other medical services. Petitioner now claims that these IVIG services were not medically necessary, and, pursuant to its "pay-and-chase" policy, Petitioner seeks repayment from Respondent. In general, the administration of IVIG transfers antibodies contained in globulin to protect the recipient from various infectious microorganisms. The United States Food and Drug Administration (FDA) has approved the marketing of IVIG for the treatment of persons with certain clinical conditions, such as idiopathic thrombocytopenic purpura, Kawasaki disease, and pediatric HIV infection. However, the FDA has not approved the marketing of IVIG for the treatment of adult HIV infection. The use of a drug to treat conditions for which the FDA has not issued its approval is known as an off-label use. Some off-label uses are medically effective and prevalent, but remain unapproved by the FDA because the drug manufacturer cannot feasibly conduct expensive clinical trials generally necessary to obtain FDA marketing approval. Despite the absence of such clinical trials, not all off-label uses are experimental. In the 20 years that IVIG has been commercially available in the United States, medical researchers and practitioners have uncovered evidence in support of important off-label uses of IVIG. For instance, a common and effective off-label use of IVIG is for the treatment of Guillain-Barré syndrome. According to the University HealthSystem Consortium, the FDA estimates that 50-70 percent of IVIG use is off-label, but as much as half of the off-label use finds little, if any, support by clinical studies. This case raises the question of the medical necessity of the off-label use of IVIG for the treatment of HIV-infected adults. Unlike adult-onset HIV infections, pediatric HIV infections result in systemic immune deficiencies because the children's immune systems never develop normally. In HIV- infected children, IVIG relieves the effects of these systemic immune deficiencies by preventing serious bacterial infections. For these reasons, the FDA has approved the use of IVIG for HIV- infected children. By letter dated July 31, 2001, Petitioner advised Respondent that it had reviewed various Medicaid claims submitted under his provider number. As relevant to this case, the July 31 letter disallows Medicaid reimbursement for the use of IVIG on HIV-infected adults. Stating that this use of IVIG is not "indicated" and is "investigational," the letter adds: "Medicaid policy prohibits payment for experimental procedures or non-FDA approved drugs and requires that all services rendered to Medicaid recipients be medically necessary." Chapter 1 of the Physician Coverage and Limitations Handbook (Handbook) states: "Medicaid reimburses for services that are determined medically necessary . . .. In addition, the services must meet the following criteria: the services must be individualized, specific, consistent with symptoms or confirmed diagnosis of the illness or injury under treatment, and not in excess of the recipient's needs; the services cannot be experimental or investigational; the services must reflect the level of services that can be safely furnished, and for which no equally effective and more conservative or less costly treatment is available statewide; and the services must be furnished in a manner not primarily intended for the convenience of the recipient, the recipient's caretaker, or the provider. The Handbook also provides: "Medicaid does not reimburse for non-FDA approved medications. Medicaid does not reimburse procedures that are experimental or when non-FDA approved medications are included in the procedures." The Medicaid Provider Reimbursement Handbook (Reimbursement Handbook) defines "experimental or clinically unproven procedures" as: "Those newly developed procedures undergoing systematic investigation to establish their role in treatment or procedure that are not yet scientifically established to provide beneficial results for the condition for which they are being used." Although not directly applicable to the Medicaid program, Section 2049.4 of Chapter II, Part 3, Health Care Financing Administration Carriers Manual (HCFA Manual) states, in part: Use of the drug or biological must be safe and effective and otherwise reasonable and necessary. . . . Drugs or biologicals approved for marketing by the [FDA] are considered safe and effective for purposes of this requirement when used for indications specified on the labeling. Therefore, you may pay for the use of an FDA approved drug or biological if: It was injected on or after the date of the FDA's approval; It is reasonable and necessary for the individual patient; and All other applicable coverage requirements are met. * * * An unlabeled use of a drug is a use that is not included as an indication on the drug's label as approved by the FDA. FDA approved drugs used for indications other than what is indicated on the official label may be covered under Medicare if the carrier determines the use to be medically accepted, taking into consideration the major drug compendia, authoritative medical literature and/or accepted standards of medical practice. . . . Accordingly, the Florida Medicare Local Medical Review Policy manual recognizes the use of IVIG for pediatric HIV infections, but warns: "IVIG is not indicated for use in adult HIV patients " Except for the administration of IVIG, Respondent provided state-of-the-art services to HIV-infected adults. The present record contains scant medical evidence of the effectiveness of IVIG in treating HIV-infected adults. Against considerable evidence questioning the medical necessity of IVIG in treating HIV-infected adults, Respondent offered undocumented anecdotal evidence of successful use of IVIG among his adult patients and two synopses of undisclosed preliminary data suggesting effectiveness of IVIG in HIV-infected adults. Respondent did not effectively oppose Petitioner's explanation for the differences in IVIG's effectiveness in treating adults and children, nor did Respondent offer any rationale for his claim of IVIG's effectiveness in HIV-infected adults. On this record, Petitioner has demonstrated that the use of IVIG to treat HIV-infected adults is not effective and, thus, not medically necessary.
Recommendation It is RECOMMENDED that the Agency for Health Care Administration enter a final order ordering Respondent to reimburse the Medicaid program $74,100.04 in overpayments for services that were not medically necessary. DONE AND ENTERED this 19th day of April, 2002, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of April, 2002. COPIES FURNISHED: Virginia A. Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Anthony L. Conticello, Senior Attorney Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308 Louise T. Jeroslow Law Offices of Louise T. Jeroslow 6075 Sunset Drive, Suite 201 Miami, Florida 33143
The Issue The issue for determination in this case is whether the agency's interpretation of its Title XIX, ICF/MR Reimbursement Plan is a rule, and if so, whether it is an invalid rule.
Findings Of Fact Friendly Village of Brevard, Inc. d/b/a Washington Square (herein, Washington Square) is an intermediate care facility for the mentally retarded (ICF/MR), located at 2055 North U.S. 1, in Titusville, Florida. Friendly Village of Orange, Inc., d/b/a Lake View Court (herein, Lake View Court), is also an ICF/MR located at 920 W. Kennedy Boulevard, in Eatonville, Florida. Both facilities are operated by Developmental Services, Inc. Both are certified ICF/MR's participating in the Florida Medicaid Program. The Department of Health and Rehabilitative Services (HRS) is the state agency responsible for overseeing the ICF/MR Medicaid Program. Representatives of HRS and Florida's ICF/MR industry began negotiations on a new state Medicaid reimbursement plan in 1982 and 1983. The participants in the negotiations sought to remove certain cost limitations and to insure that individual facilities would receive fair reimbursement of their allowable costs. The negotiations resulted in the Title XIX ICF/MR Reimbursement Plan dated July 1, 1984 (the 1984 Plan). The 1984 Plan provides, in part, for the establishment of reimbursement rates for new ICF/MR's entering the Florida Medicaid program after January 1, 1983. Under the plan, a provider is required, prior to beginning operations, to prepare a budgeted costs report projecting what it expects to spend in allowable costs during the next year for care to its residents. HRS reviews these budgets and establishes a per diem rate, using the budgeted costs and the number of patients, arriving at a per patient, per day rate. Each month, as services are provided, the ICF/MR bills the state Medicaid program for the number of patient days times the per diem. During the period in question, cost settlement occurred at the conclusion of the budgeted period. The provider filed his cost report detailing what was actually spent in allowable costs, HRS compared that amount with the amount budgeted and settled with the provider. Washington Square entered the Florida Medicaid program on January 19, 1983; Lake View Court entered the program in February 1983. Both facilities filed cost reports for periods ending on February 29, 1984. Sometimes cost settlements occur quickly through a desk review. Other times, as here, audits are performed and settlement may occur much later. The audits of Washington Square and Lake View Court were conducted in 1985 for their initial cost reports ending February 1984. The audits were issued in April and May 1988. Those audits state that prior to July 1, 1984, the Florida Medicaid Program recognized only those interim rate settlements resulting in an overpayment. This is an interpretation of the 1984 Plan which Petitioners dispute and which, in this case, Petitioners contend is an invalid rule. ICF/MR Reimbursement plans prior to July 1, 1984, had one-way cost settlement, which meant that if the provider as overpaid, the funds had to be returned to HRS; if the facility as underpaid, it did not receive additional reimbursement. The 1984 ICF/MR Plan was changed to allow two-way cost settlement, thus allowing an underpaid provider to recover its approved costs. Petitioners claim that a proper interpretation of the 1984 Plan, especially when read with the 1985 Plan, is that two-way cost settlement is retroactive to January 1983, for new providers entering the program after January 1, 1983. HRS disagrees with that interpretation and this issue is the subject of the consolidated case, #88-2938. HRS' interpretation means that Petitioners will not be reimbursed for underpayments received during their first reporting period. The 1984 Plan was adopted as a rule by incorporation, in Rule 10C- 7.49(4)(a)2. Florida Administrative Code.
The Issue The issue for determination is whether Petitioner must reimburse Respondent for payments totaling $1,140,763.88 that Petitioner received from the Medicaid Program in compensation for the provision of prescription drugs between late-August and November of 1998. Respondent contends that Petitioner is not entitled to retain the payments in question because Petitioner allegedly has failed to demonstrate that it had available during the pertinent period a sufficient quantity of the prescription drugs in question.
Findings Of Fact The parties' Joint Stipulation of Facts and the evidence presented at final hearing established the facts that follow. The Parties The Agency for Health Care Administration (the “Agency”) is responsible for administering the Florida Medicaid Program. As one of its duties, the Agency must recover "overpayments . . . as appropriate," the term "overpayment" being statutorily defined to mean "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." See Section 409.913(1)(d), Florida Statutes. Palm Beach Pharmacy, Inc. (“PBPI”), d/b/a Eddie’s Drug (“Eddie’s”) was, at all times material hereto, a duly contracted Medicaid provider, having entered into a Medicaid Provider Agreement with the Agency and been assigned a Medicaid Provider Number: 106343000. Eddie’s is a Florida licensed pharmacy.1 As an enrolled Medicaid provider, Eddie’s is authorized to dispense drugs and supplies to Medicaid recipients. In return, Eddie’s has agreed to comply with all governing statutes, rules, and policies, including those policies set forth in the Florida Medicaid Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (the “Handbook”). The Agency, which prepared the Handbook and furnishes it to Medicaid providers, has incorporated the Handbook by reference into Rule 59G-4.250(2), Florida Administrative Code. PBPI, which owned and operated a number of pharmacies (including Eddie’s), maintained its corporate headquarters in West Palm Beach, Florida. Eddie’s was located in Miami, Florida. On July 1, 1998, PBPI acquired a drug store known as Jay’s Drugs (“Jay’s”). Jay’s was located in Miami, Florida, across the street from Eddie’s. Thus, before both stores came under common ownership, they had been competitors. This case arises out of the Agency's attempt to recover alleged overpayments on Medicaid claims for which Eddie’s was paid several years ago. The "audit period" that is the subject of the Agency's recoupment effort is April 1, 1998 to July 31, 1999, although the actual period in controversy is much shorter. From July 1, 1998, until the end of the audit period, PBPI owned and operated both Eddie’s and Jay’s. The Underlying Facts The transactions at the heart of this case occurred between late-August and November of 1998, during which period (the “Focal Period”) Medicaid reimbursed Eddie’s more than $1 million for prescription drugs including Neupogen and Epogen/Procrit (collectively, the “Drugs”). The Drugs are used to treat AIDS patients and persons infected with HIV. Prior to the Focal Period, Eddie’s had not dispensed $1 million worth of the Drugs——or any figure approaching that amount——in three or four months’ time. The reason for the dramatic spike in Eddie’s business is that Eddie’s was dispensing the Drugs to customers of Jay’s pursuant to an arrangement designed to manipulate PBPI’s contractual obligations to the former owner of Jay’s under the purchase and sale agreement by which PBPI had acquired Jay’s. Essentially, the arrangement was this. Jay’s was dispensing the Drugs to a large number (approximately 150) of Medicaid beneficiaries who were receiving treatment at a nearby clinic. Because the Drugs were administered to the patients via intravenous infusion, the clinic typically obtained the Drugs from Jay’s in bulk. To fill these prescriptions, Jay’s ordered the Drugs from a wholesale supplier, which usually delivered the Drugs to Jay’s the next day. At some point before the Focal Period, arrangements were made to have the clinic present its prescriptions for the Drugs to Eddie’s rather than Jay’s.2 The evidence does not show, exactly, how this was accomplished, but whatever the means, the clinic abruptly began bringing prescriptions for the Drugs to Eddie’s.3 This diversion of Jay’s’ business to Eddie’s was intended to deprive Jay’s of Medicaid reimbursements to which Jay’s’ former owner had access as a source of funds for paying down a note that PBPI had given for the purchase of Jay’s. By having Eddie’s dispense the Drugs and submit the Medicaid claims, Medicaid money flowed into Eddie’s’ bank account (rather than Jay’s’ bank account) and hence was not immediately available to the former owner of Jay’s to reduce PBPI’s debt. During the Focal Period, Eddie’s did not purchase the Drugs from a wholesaler but instead acquired them from Jay’s. The process by which this was accomplished involved a pharmacy technician named Wright, who was employed at Eddie’s, and a pharmacist named Shafor, who worked at Jay’s. Wright (at Eddie’s) accepted the prescriptions for the Drugs as the clinic brought them in Then, she called Shafor (at Jay’s) and told him the quantities needed to fill the prescriptions. Shafor ordered the Drugs from a wholesaler, which delivered them in bulk to Jay’s, usually the next day. Upon receiving the Drugs, Shafor personally delivered them to Wright, who, recall, was across the street at Eddie’s. Wright labeled and dispensed the Drugs. Eddie’s submitted a claim for the Drugs to Medicaid, and Medicaid paid Eddie’s. PBPI maintained separate accounting ledgers for Eddie’s and Jay’s, respectively. The company’s accountants recorded the subject transactions in these ledgers so that Jay’s——not Eddie’s——would “recognize” the sales of the Drugs. In a nutshell, this was done through “inter-company” transfers whereby all of the money that Eddie’s received from Medicaid for the Drugs was moved, on the books, into an account of Jay’s. In this way, any profit from the sales of the Drugs (the difference between the wholesale cost of the Drugs and the Medicaid reimbursement therefor, less overhead) was realized on Jay’s’ books.4 The Medicaid payments to Eddie’s that the Agency seeks to recoup were included in four remittance vouchers dated September 2, 1998; September 30, 1998; October 28, 1998; and November 25, 1998, respectively. The September 2 payment to Eddie’s totaled $287,205.52. Of this amount, $276,033.23 reimbursed Eddie’s for dispensing the Drugs. Eddie’s’ accounting ledger reflects that, as of September 30, 1998, the sum of $276,033.23 had been transferred from an account of Eddie’s to an account of Jay’s. The September 30 payment to Eddie’s totaled $439,175.77, of which $432,700.36 was paid in consideration of the Drugs. The October 28 Medicaid payment was $431,753.82, of which total the Drugs accounted for $424,202.76. Eddie’s’ accounting ledger reflects that, as of October 31, 1998, the sum of $870,929.59 (439,175.77 + 431,753.82) had been transferred from an account of Eddie’s to an account of Jay’s. The November 25 payment to Eddie’s totaled $407,088.00. Of this amount, $393,063.00 reimbursed Eddie’s for dispensing the Drugs. Eddie’s’ accounting ledger reflects that, as of November 30, 1998, the sum of $407,088.00 had been transferred from an account of Eddie’s to an account of Jay’s. The Agency’s Allegations On October 31, 2000, the Agency issued its Final Agency Audit Report (“Audit”) in which Eddie’s was alleged to have received $1,143,612.68 in overpayments relating to the Drugs. In the Audit, the Agency spelled out its theory of the case; indeed, the Audit is the only document in the record that does so. The Agency cited several statutory provisions. First, Section 409.913(7)(e), Florida Statutes, was referenced. This section states: When presenting a claim for payment under the Medicaid program, a provider has an affirmative duty to supervise the provision of, and be responsible for, goods and services claimed to have been provided, to supervise and be responsible for preparation and submission of the claim, and to present a claim that is true and accurate and that is for goods and services that: * * * (e) Are provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law. Section 409.913(7)(e), Florida Statutes. The Agency did not allege (or prove), however, that Eddie’s had violated Section 409.913(7)(e), Florida Statutes.5 Put another way, the Agency did not plead or prove lack of supervision, submission of a false claim, or that the Drugs were not provided in accordance with applicable law. Next, the Agency cited Section 409.913(8), Florida Statutes, which provides: A Medicaid provider shall retain medical, professional, financial, and business records pertaining to services and goods furnished to a Medicaid recipient and billed to Medicaid for a period of 5 years after the date of furnishing such services or goods. The agency may investigate, review, or analyze such records, which must be made available during normal business hours. However, 24-hour notice must be provided if patient treatment would be disrupted. The provider is responsible for furnishing to the agency, and keeping the agency informed of the location of, the provider's Medicaid- related records. The authority of the agency to obtain Medicaid-related records from a provider is neither curtailed nor limited during a period of litigation between the agency and the provider. The Agency further alleged, as fact, that Eddie’s had failed, upon request, “to submit invoices from [its] suppliers to substantiate the availability of drugs that [were] billed to Medicaid” and thus had not “fully substantiated such availability.” The Agency, however, did not invoke any of the available remedial provisions as authority to impose a sanction for this alleged failure to turn over Medicaid-related records. See, e.g., Sections 409.913(14)(b), (c), and (d), Florida Statutes. The Agency cited Section 409.913(10), Florida Statutes, which authorizes the Agency to “require repayment for inappropriate, medically unnecessary, or excessive goods or services from the person furnishing them, the person under whose supervision they were furnished, or the person causing them to be furnished.” There was no allegation (or proof), however, that the Drugs which Eddie’s had purported to dispense (i.e. the Drugs for which it had submitted Medicaid claims) were “inappropriate, medically unnecessary, or excessive.” Thus, Eddie’s was not alleged (or shown) to have violated Section 409.913(10), Florida Statutes. Finally, the Agency relied upon Section 409.913(14)(n), Florida Statutes, which is the basis of the Agency’s legal theory. This section provides: The agency may seek any remedy provided by law, including, but not limited to, the remedies provided in subsections (12) and (15) and s. 812.035, if: * * * (n) The provider fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods, or sufficient time in the case of services, to support the provider's billings to the Medicaid program[.] The Agency contended, additionally, that “[b]illing Medicaid for drugs that have not been demonstrated as available for dispensing is a violation of the Medicaid laws and regulations and has resulted in the finding that [Eddie’s] ha[s] been overpaid by the Medicaid program.” (Emphasis added). The Agency explained, “Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid.” Thus, the Agency’s theory of recovery is that Eddie’s must forfeit “overpayments” arising from its failure to demonstrate the availability, in inventory, of a sufficient quantity of the Drugs for which claims were submitted, as required by Section 409.913(14)(n), Florida Statutes. After the Audit was issued, the Agency accepted a handwritten note regarding the transfer of a small quantity of Drugs from Jay’s to Eddie’s as sufficient to demonstrate the availability of such amount. This resulted in a slight reduction of the amount of the alleged overpayment, to $1,140,763.88. The Separate Audit of Jay’s The Agency conducted a separate audit of Jay’s, concerning which some evidence was introduced at hearing. Without getting into unnecessary detail, the audit of Jay’s revealed that Jay’s had purchased, during and around the Focal Period, a quantity of the Drugs that exceeded the number of units that Jay’s had billed to Medicaid. It was Eddie’s theory that this “excess inventory” of Jay’s matched, more or less, the alleged inventory shortfall at Eddie’s, thereby corroborating the testimony concerning the transfer of these Drugs from Jay’s to Eddie’s for dispensation. At hearing, the parties sharply disputed whether, in fact, Jay’s had transferred the Drugs to Eddie’s. The Agency, of course, maintained that such transfers were not properly documented; Eddie’s argued that the documents and other evidence, including testimony about the transactions in question, adequately demonstrated that the transfers had, in fact, occurred. There was no dispute, however, that if it were found that such transfers had occurred, and if, further, the documents (and other evidence) pertaining to the inventory of Jay’s were accepted as proof of the quantities of Drugs so transferred, then all but $176,078.30 worth of the Drugs could be accounted for. Thus, as counsel for Eddie’s conceded at hearing, the Agency is entitled to recoup some sum of money. The question is whether that sum is $1,140,763.88 or $176,078.30. Ultimate Factual Determination Based on all of the evidence in the record, including the deposition testimony received through the parties’ joint stipulation, it is determined that, more likely than not, Eddie’s had available during the Focal Period a sufficient quantity of the Drugs to support all but $176,078.30 worth of the claims in dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Eddie’s to repay the Agency the principal amount of $176,078.30. DONE AND ENTERED this 12th day of March, 2002, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of March, 2002.
The Issue The issues in this case are whether Respondent applied the proper reimbursement principles to Petitioners' initial Medicaid rate setting, and whether elements of detrimental reliance exist so as to require Respondent to establish a particular initial rate for Petitioners' facilities.
Findings Of Fact There are nine Petitioners in this case. Each of them is a long-term health care facility (nursing home) operated under independent and separate legal entities, but, generally, under the umbrella of a single owner, Tzvi "Steve" Bogomilsky. The issues in this case are essentially the same for all nine Petitioners, but the specific monetary impact on each Petitioner may differ. For purposes of addressing the issues at final hearing, only one of the Petitioners, Madison Pointe Rehabilitation and Health Center (Madison Pointe), was discussed, but the pertinent facts are relevant to each of the other Petitioners as well. Each of the Petitioners has standing in this case. The Amended Petition for Formal Administrative Hearing filed by each Petitioner was timely and satisfied minimum requirements. In September 2008, Bogomilsky caused to be filed with AHCA a Change of Licensed Operator ("CHOP") application for Madison Pointe.1 The purpose of that application was to allow a new entity owned by Bogomilsky to become the authorized licensee of that facility. Part and parcel of the CHOP application was a Form 1332, PFA. The PFA sets forth projected revenues, expenses, costs and charges anticipated for the facility in its first year of operation by the new operator. The PFA also contained projected (or budgeted) balance sheets and a projected Medicaid cost report for the facility. AHCA is the state agency responsible for licensing nursing homes in this state. AHCA also is responsible for managing the federal Medicaid program within this state. Further, AHCA monitors nursing homes within the state for compliance with state and federal regulations, both operating and financial in nature. The AHCA Division of Health Quality Assurance, Bureau of Long-Term Care Services, Long-Term Care Unit ("Long-Term Care Unit") is responsible for reviewing and approving CHOP applications and issuance of an operating license to the new licensee. The AHCA Division of Health Quality Assurance, Bureau of Health Facility Regulation, Financial Analysis Unit ("Financial Analysis Unit") is responsible for reviewing the PFA contained in the CHOP application and determining an applicant's financial ability to operate a facility in accordance with the applicable statutes and rules. Neither the Long-Term Care Unit nor the Financial Analysis Unit is a part of the Florida Medicaid Program. Madison Pointe also chose to submit a Medicaid provider application to the Medicaid program fiscal agent to enroll as a Medicaid provider and to be eligible for Medicaid reimbursement. (Participation by nursing homes in the Medicaid program is voluntary.) The Medicaid provider application was reviewed by the Medicaid Program Analysis Office (MPA) which, pursuant to its normal practices, reviewed the application and set an interim per diem rate for reimbursement. Interim rate-setting is dependent upon legislative direction provided in the General Appropriations Act and also in the Title XIX Long-Term Care Reimbursement Plan (the Plan). The Plan is created by the federal Centers for Medicare and Medicaid Services (CMS). CMS (formerly known as the Health Care Financing Administration) is a federal agency within the Department of Health and Human Services. CMS is responsible for administering the Medicare and Medicaid programs, utilizing state agencies for assistance when appropriate. In its PFA filed with the Financial Analysis Unit, Madison Pointe proposed an interim Medicaid rate of $203.50 per patient day (ppd) as part of its budgeted revenues. The projected interim rate was based on Madison Pointe's expected occupancy rate, projected expenses, and allowable costs. The projected rate was higher than the previous owner's actual rate in large part based on Madison Pointe's anticipation of pending legislative action concerning Medicaid reimbursement issues. That is, Madison Pointe projected higher spending and allowable costs based on expected increases proposed in the upcoming legislative session. Legislative Changes to the Medicaid Reimbursement System During the 2007 Florida Legislative Session, the Legislature addressed the status of Medicaid reimbursement for long-term care facilities. During that session, the Legislature enacted the 2007 Appropriations Act, Chapter 2007-72, Laws of Florida. The industry proposed, and the Legislature seemed to accept, that it was necessary to rebase nursing homes in the Medicaid program. Rebasing is a method employed by the Agency periodically to calibrate the target rate system and adjust Medicaid rates (pursuant to the amount of funds allowed by the Legislature) to reflect more realistic allowable expenditures by providers. Rebasing had previously occurred in 1992 and 2002. The rebasing would result in a "step-up" in the Medicaid rate for providers. In response to a stated need for rebasing, the 2007 Legislature earmarked funds to address Medicaid reimbursement. The Legislature passed Senate Bill 2800, which included provisions for modifying the Plan as follows: To establish a target rate class ceiling floor equal to 90 percent of the cost- based class ceiling. To establish an individual provider- specific target floor equal to 75 percent of the cost-based class ceiling. To modify the inflation multiplier to equal 2.0 times inflation for the individual provider-specific target. (The inflation multiplier for the target rate class ceiling shall remain at 1.4 times inflation.) To modify the calculation of the change of ownership target to equal the previous provider's operating and indirect patient care cost per diem (excluding incentives), plus 50 percent of the difference between the previous providers' per diem (excluding incentives) and the effect class ceiling and use an inflation multiplier of 2.0 times inflation. The Plan was modified in accordance with this legislation with an effective date of July 1, 2007. Four relevant sentences from the modified Plan are relevant to this proceeding, to wit: For a new provider with no cost history resulting from a change of ownership or operator, where the previous provider participated in the Medicaid program, the interim operating and patient care per diems shall be the lesser of: the class reimbursement ceiling based on Section V of this Plan, the budgeted per diems approved by AHCA based on Section III of this Plan, or the previous providers' operating and patient care cost per diem (excluding incentives), plus 50% of the difference between the previous providers' per diem (excluding incentives) and the class ceiling. The above new provider ceilings, based on the district average per diem or the previous providers' per diem, shall apply to all new providers with a Medicaid certification effective on or after July 1, 1991. The new provider reimbursement limitation above, based on the district average per diem or the previous providers' per diem, which affects providers already in the Medicaid program, shall not apply to these same providers beginning with the rate semester in which the target reimbursement provision in Section V.B.16. of this plan does not apply. This new provider reimbursement limitation shall apply to new providers entering the Medicaid program, even if the new provider enters the program during a rate semester in which Section V.B.16 of this plan does not apply. [The above cited sentences will be referred to herein as Plan Sentence 1, Plan Sentence 2, etc.] Madison Pointe's Projected Medicaid Rate Relying on the proposed legislation, including the proposed rebasing and step-up in rate, Madison Pointe projected an interim Medicaid rate of $203.50 ppd for its initial year of operation. Madison Pointe's new projected rate assumed a rebasing by the Legislature to eliminate existing targets, thereby, allowing more reimbursable costs. Although no legislation had been passed at that time, Madison Pointe's consultants made calculations and projections as to how the rebasing would likely affect Petitioners. Those projections were the basis for the $203.50 ppd interim rate. The projected rate with limitations applied (i.e., if Madison Pointe did not anticipate rebasing or believe the Plan revisions applied) would have been $194.26. The PFA portion of Madison Pointe's CHOP application was submitted to AHCA containing the $203.50 ppd interim rate. The Financial Analysis Unit, as stated, is responsible for, inter alia, reviewing PFAs submitted as part of a CHOP application. In the present case, Ryan Fitch was the person within the Financial Analysis Unit assigned responsibility for reviewing Madison Pointe's PFA. Fitch testified that the purpose of his review was to determine whether the applicant had projected sufficient monetary resources to successfully operate the facility. This would include a contingency fund (equal to one month's anticipated expenses) available to the applicant and reasonable projections of cost and expenses versus anticipated revenues.2 Upon his initial review of the Madison Pointe PFA, Fitch determined that the projected Medicaid interim rate was considerably higher than the previous operator's actual rate. This raised a red flag and prompted Fitch to question the propriety of the proposed rate. In his omissions letter to the applicant, Fitch wrote (as the fourth bullet point of the letter), "The projected Medicaid rate appears to be high relative to the current per diem rate and the rate realized in 2006 cost reports (which includes ancillaries and is net of contractual adjustments). Please explain or revise the projections." In response to the omissions letter, Laura Wilson, a health care accountant working for Madison Pointe, sent Fitch an email on June 27, 2008. The subject line of the email says, "FW: Omissions Letter for 11 CHOW applications."3 Then the email addressed several items from the omissions letter, including a response to the fourth bullet point which says: Item #4 - Effective July 1, 2007, it is anticipated that AHCA will be rebasing Medicaid rates (the money made available through elimination of some of Medicaid's participation in covering Medicare Part A bad debts). Based on discussions with AHCA and the two Associations (FHCA & FAHSA), there is absolute confidence that this rebasing will occur. The rebasing is expected to increase the Medicaid rates at all of the facilities based on the current operator's spending levels. As there is no definitive methodology yet developed, the rebased rates in the projections have been calculated based on the historical methodologies that were used in the 2 most recent rebasings (1992 and 2002). The rates also include the reestablishment of the 50% step-up that is also anticipated to begin again. The rebasing will serve to increase reimbursement and cover costs which were previously limited by ceilings. As noted in Note 6 of the financials, if something occurs which prevents the rebasing, Management will be reducing expenditures to align them with the available reimbursement. It is clear Madison Pointe's projected Medicaid rate was based upon proposed legislative actions which would result in changes to the Plan. It is also clear that should those changes not occur, Madison Pointe was going to be able to address the shortfall by way of reduced expenditures. Each of those facts was relevant to the financial viability of Madison Pointe's proposed operations. Madison Pointe's financial condition was approved by Fitch based upon his review of the PFA and the responses to his questions. Madison Pointe became the new licensed operator of the facility. That is, the Long-Term Care Unit deemed the application to have met all requirements, including financial ability to operate, and issued a license to the applicant. Subsequently, MPA provided to Madison Pointe its interim Medicaid rate. MPA advised Madison Pointe that its rate would be $194.55 ppd, some $8.95 ppd less than Madison Pointe had projected in its PFA (but slightly more than Madison Pointe would have projected with the 50 percent limitation from Plan Sentence 1 in effect, i.e., $194.26). The PFA projected 25,135 annual Medicaid patient days, which multiplied by $8.95, would equate to a reduction in revenues of approximately $225,000 for the first year of operation.4 MPA assigned Madison Pointe's interim Medicaid rate by applying the provisions of the Plan as it existed as of the date Madison Pointe's new operating license was issued, i.e., September 1, 2007. Specifically, MPA limited Madison Pointe's per diem to 50 percent of the difference between the previous provider's per diem and the applicable ceilings, as dictated by the changes to the Plan. (See Plan Sentence 1 set forth above.) Madison Pointe's projected Medicaid rate in the PFA had not taken any such limitations into account because of Madison Pointe's interpretation of the Plan provisions. Specifically, that Plan Sentence 3 applies to Madison Pointe and, therefore, exempts Madison Pointe from the new provider limitation set forth in Plan Sentences 1 and 2. However, Madison Pointe was not "already in the Medicaid program" as of July 1, 2007, as called for in Plan Sentence 3. Rather, Madison Pointe's commencement date in the Medicaid program was September 1, 2007. Plan Sentence 1 is applicable to a "new provider with no cost history resulting from a change of ownership or operator, where the previous operator participated in the Medicaid program." Madison Pointe falls within that definition. Thus, Madison Pointe's interim operating and patient care per diems would be the lesser of: (1) The class reimbursement ceiling based on Section V of the Plan; (2) The budgeted per diems approved by AHCA based on Section III of the Plan; or (3) The previous provider's operating and patient care cost per diem (excluding incentives), plus 50 percent of the difference between the previous provider's per diem and the class ceiling. Based upon the language of Plan Sentence 1, MPA approved an interim operating and patient care per diem of $194.55 for Madison Pointe. Plan Sentence 2 is applicable to Madison Pointe, because it applies to all new providers with a Medicaid certification effective after July 1, 1991. Madison Pointe's certification was effective September 1, 2007. Plan Sentence 3 is the primary point of contention between the parties. AHCA correctly contends that Plan Sentence 3 is not applicable to Petitioner, because it addresses rebasing that occurred on July 1, 2007, i.e., prior to Madison Pointe coming into the Medicaid system. The language of Plan Sentence 3 is clear and unambiguous that it applies to "providers already in the Medicaid program." Plan Sentence 4 is applicable to Madison Pointe, which entered the system during a rate semester, in which no other provider had a new provider limitation because of the rebasing. Again, the language is unambiguous that "[t]his new provider reimbursement limitation shall apply to new providers entering the Medicaid program. . . ." Madison Pointe is a new provider entering the program. Detrimental Reliance and Estoppel Madison Pointe submitted its CHOP application to the Long-Term Care Unit of AHCA for approval. That office has the clear responsibility for reviewing and approving (or denying) CHOP applications for nursing homes. The Long-Term Care Unit requires, as part of the CHOP application, submission of the PFA which sets forth certain financial information used to determine whether the applicant has the financial resources to operate the nursing home for which it is applying. The Long-Term Care Unit has another office within AHCA, the Financial Analysis Unit, to review the PFA. The Financial Analysis Unit is found within the Bureau of Health Facility Regulation. That Bureau is responsible for certificates of need and other issues, but has no authority concerning the issuance, or not, of a nursing home license. Nor does the Financial Analysis Unit have any authority to set an interim Medicaid rate. Rather, the Financial Analysis Unit employs certain individuals who have the skills and training necessary to review financial documents and determine an applicant's financial ability to operate. A nursing home licensee must obtain Medicaid certification if it wishes to participate in the program. Madison Pointe applied for Medicaid certification, filing its application with a Medicaid intermediary which works for CMS. The issuance of a Medicaid certification is separate and distinct from the issuance of a license to operate. When Madison Pointe submitted its PFA for review, it was aware that an office other than the Long-Term Care Unit would be reviewing the PFA. Madison Pointe believed the two offices within AHCA would communicate with one another, however. But even if the offices communicated with one another, there is no evidence that the Financial Analysis Unit has authority to approve or disapprove a CHOP application. That unit's sole purpose is to review the PFA and make a finding regarding financial ability to operate. Likewise, MPA--which determines the interim Medicaid rate for a newly licensed operator--operates independently of the Long-Term Care Unit or the Financial Analysis Unit. While contained within the umbrella of AHCA, each office has separate and distinct duties and responsibilities. There is no competent evidence that an applicant for a nursing home license can rely upon its budgeted interim rate--as proposed by the applicant and approved as reasonable by MPA--as the ultimate interim rate set by the Medicaid Program Analysis Office. At no point in time did Fitch tell Madison Pointe that a rate of $203.50 ppd would be assigned. Rather, he said that the rate seemed high; Madison Pointe responded that it could "eliminate expenditures to align them with the available reimbursement." The interim rate proposed by the applicant is an estimate made upon its own determination of possible facts and anticipated operating experience. The interim rate assigned by MPA is calculated based on the applicant's projections as affected by provisions in the Plan. Furthermore, it is clear that Madison Pointe was on notice that its proposed interim rate seemed excessive. In response to that notice, Madison Pointe did not reduce the projected rate, but agreed that spending would be curtailed if a lower interim rate was assigned. There was, in short, no reliance by Madison Pointe on Fitch's approval of the PFA as a de facto approval of the proposed interim rate. MPA never made a representation to Madison Pointe as to the interim rate it would receive until after the license was approved. There was, therefore, no subsequent representation made to Madison Pointe that was contrary to a previous statement. The Financial Analysis Unit's approval of the PFA was done with a clear and unequivocal concern about the propriety of the rate as stated. The approval was finalized only after a representation by Madison Pointe that it would reduce expenditures if a lower rate was imposed. Thus, Madison Pointe did not change its position based on any representation made by AHCA.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Respondent, Agency for Health Care Administration, approving the Medicaid interim per diem rates established by AHCA and dismissing each of the Amended Petitions for Formal Administrative Hearing. DONE AND ENTERED this 23rd day of February, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of February, 2009.
