The Issue Whether Medicaid overpayments were made to Petitioner and, if so, what is the total amount of those overpayments. Whether Petitioner should be directed to submit to a "comprehensive follow-up review in six months."
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findingss of fact are made to supplement the factual stipulations set forth in the parties' Joint Prehearing Stipulation4: Petitioner Petitioner is co-owned by two Florida-licensed pharmacists, Howard Berkowitz and Warren Blatt. Mr. Berkowitz and Mr. Blatt are cousins. Petitioner operates Colonial Cut-Rate Drugs, a licensed community pharmacy located at 6835 West 12th Avenue in Hialeah, Florida (Pharmacy). Mr. Berkowitz started the business in 1964. Four years later, in 1968, Mr. Blatt became a partner. The two have been partners since. Petitioner's Participation in the Medicaid Program During the period from January 1, 1999, through October 20, 2000, Petitioner was authorized to provide pharmacy services to eligible Medicaid recipients in Florida. Petitioner provided such services pursuant to a Medicaid Provider Agreement Mr. Berkowitz and Mr. Blatt had signed on behalf of Petitioner (Provider Agreement). The Provider Agreement contained the following provisions, among others: The Provider agrees to participate in the Florida Medicaid program under the following terms and conditions: * * * Quality of Service. . . . The services or goods must have been actually provided to eligible Medicaid recipients by the provider prior to submitting the claim. Compliance. The provider agrees to comply with all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, manuals, handbooks and Statements of Policy as they may be amended from time to time. Term and signatures. The parties agree that this is a voluntary agreement between the Agency and the provider, in which the provider agrees to furnish services or goods to Medicaid recipients. . . . Provider Responsibilities. The Medicaid provider shall: * * * (b) Keep and maintain in a systematic and orderly manner all medical and Medicaid related records as the Agency may require and as it determines necessary; make available for state and federal audits for five years, complete and accurate medical, business, and fiscal records that fully justify and disclose the extent of the goods and services rendered and billings made under the Medicaid. The provider agrees that only records made at the time the goods and services were provided will be admissible in evidence in any proceeding relating to the Medicaid program. * * * (d) Except as provided by law, the provider agrees to provide immediate access to authorized persons (included but not limited to state and federal employees, auditors and investigators) to all Medicaid-related information, which may be in the form of records, logs, documents, or computer files, and all other information pertaining to services or goods billed to the Medicaid program. This shall include access to all patient records and other provider information if the provider cannot easily separate records for Medicaid patients from other records. * * * (f) Within 90 days of receipt, refund any moneys received in error or in excess of the amount to which the provider is entitled from the Medicaid program. * * * Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook Among the requirements with which Petitioner, in paragraph 3 of the Provider Agreement, agreed to comply were those set forth in the Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (PDSCLR Handbook). At all times material to the instant case, Chapter 2 of the PDSCLR Handbook contained substantially the following "record keeping requirements": 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. The records must be accessible, legible and comprehensible. Record Retention Records must be retained for a period of at least five years from the date of service. Types of Records That Must be Retained The following types of records, as appropriate for the type of service provided, must be retained (the list is not all inclusive): Medicaid claim forms and any documents that are attached; Professional records, such as patient treatment plans and patient records; Prior and past authorization, and service authorization information; Prescription records; Business records, such as accounting ledgers, financial statements, purchase/acquisition records, invoices, inventory records, check registers, canceled checks, sales records, etc.; Tax records, including purchase documentation; Patient counseling documentation; and Provider enrollment documentation. Requirements for Prescription Records The pharmacy must maintain a patient record for each recipient for whom new or refill prescriptions are dispensed. The record may be electronic. The pharmacy's patient record system must provide for the immediate retrieval of the information necessary for the pharmacist to identify previously dispensed drugs when dispensing a new or refill prescription. The patient record must contain the following information: The recipient's first and last name, address, date of birth, and gender; A list of all prescriptions that were obtained by the recipient at the pharmacy during the 12 months immediately preceding the most recent service that includes: the name of the drug or device, prescription number, strength of the drug, the quantity, date received, and the prescriber's full name and state license number. Any known allergies, drug reactions, idiosyncrasies, chronic conditions or disease states of the patient, and the identity of any over-the-counter drugs or devices currently being used by the patient that may relate to prospective drug use review; Any related health information indicated by a licensed health care practitioner; and The pharmacist's comments, if any, relevant to the patient's drug therapy. Right to Review Records Authorized state and federal agencies and their authorized representatives may audit or examine a provider's records. This includes all records that AHCA finds necessary to determine whether Medicaid payments were or are due. This requirement applies to the provider's records and records for which the provider is the custodian.[5] Incomplete Records Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid payments. Medicaid payments for services that lack required documentation or appropriate signatures will be recouped.[6] Note: See Chapter 5 in this handbook for information on administrative sanctions and Medicaid payment recoupment. At all times material to the instant case, Chapter 5 of the PDSCLR Handbook contained the following provisions, among others: Provider Abuse Abuse Abuse means provider practices that are inconsistent with generally accepted business or medical practices and that result in an unnecessary cost to the Medicaid program or in reimbursement for goods or services that are not medically necessary or that fail to meet professionally recognized standards for health care. Financial Abuse Financial abuse means abuse resulting in overpayments to providers. Overpayment Overpayment includes any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claims, unacceptable practices, fraud, abuse, or mistake. * * * Incomplete or Missing Records Incomplete records are records that lack documentation that all requirements or conditions for service provision have been met. Medicaid may recoup payment for services or goods when the provider has incomplete records or cannot locate the records. Note: See Chapter 2 in this handbook for Medicaid record keeping and retention requirements. At all times material to the instant case, Chapter 6 of the PDSCLR Handbook required that providers, in preparing a claim for reimbursement, enter on the claim form, among other things, "the prescriber's professional license number," the quantity dispensed, and "the estimated number of days that the prescription will last if it is consumed at the prescribed rate, based on the pharmacist's professional judgment and the prescription date." Florida Administrative Code Rule Provisions Additional requirements with which Petitioner, in paragraph 3 of its Provider Agreement, agreed to comply were those contained in the following provisions of the Florida Administrative Code governing the practice of pharmacy: Florida Administrative Code Rule 64B16- 27.103 Only a Florida registered pharmacist or registered pharmacy intern acting under the direct personal supervision of a Florida registered pharmacist may, in the State of Florida, accept an oral prescription of any nature. Upon so accepting such oral prescription it must immediately be reduced to writing, and only a Florida registered pharmacist or registered pharmacy intern acting under the direct personal supervision of a Florida registered pharmacist may, in the State of Florida, prepare a copy of a prescription or read a prescription to any person for purposes of providing reference concerning treatment of the person or animal for whom the prescription was written, and when said copy is given a notation shall be made upon the prescription that a copy has been given, the date given, and to whom given. Florida Administrative Code Rule 64B16- 27.400 * * * (3) Only a Florida licensed pharmacist may make the final check of the completed prescription thereby assuming the complete responsibility for its preparation and accuracy. Florida Administrative Code Rule 64B16- 28.140 (1) Requirements for records maintained in a data processing system. * * * Original prescriptions, including prescriptions received as provided for in Rule 64B16-28.130, F.A.C., Transmission of Prescription Orders, shall be reduced to a hard copy if not received in written form. All original prescriptions shall be retained for a period of not less than two years from date of last filling. To the extent authorized by 21 C.F.R. Section 1304.04, a pharmacy may, in lieu of retaining the actual original prescriptions, use an electronic imaging recordkeeping system, provided such system is capable of capturing, storing, and reproducing the exact image of the prescription, including the reverse side of the prescription if necessary, and that such image be retained for a period of no less than two years from the date of last filling. Original prescriptions shall be maintained in a two or three file system as specified in 21 C.F.R. 1304.04(h). * * * (3) Records of dispensing. Each time a prescription drug order is filled or refilled, a record of such dispensing shall be entered into the data processing system. The data processing system shall have the capacity to produce a daily hard-copy printout of all original prescriptions dispensed and refilled. This hard copy printout shall contain the following information: Unique identification number of the prescription; Date of dispensing; Patient name; Prescribing practitioner's name; Name and strength of the drug product actually dispensed, if generic name, the brand name or manufacturer of drug dispensed; Quantity dispensed; Initials or an identification code of the dispensing pharmacist; and If not immediately retrievable via CRT display, the following shall also be included on the hard-copy printout: Patient's address; Prescribing practitioner's address; Practitioner's DEA registration number, if the prescription drug order is for a controlled substance; Quantity prescribed, if different from the quantity dispensed; Date of issuance of the prescription drug order, if different from the date of dispensing; and Total number of refills dispensed to date for that prescription drug order. The daily hard-copy printout shall be produced within 72 hours of the date on which the prescription drug orders were dispensed and shall be maintained in a separate file at the pharmacy. Records of controlled substances shall be readily retrievable from records of non-controlled substances. Each individual pharmacist who dispenses or refills a prescription drug order shall verify that the data indicated on the daily hard-copy printout is correct, by dating and signing such document in the same manner as signing a check or legal document (e.g., J.H. Smith, or John H. Smith) within seven days from the date of dispensing. In lieu of producing the printout described in subparagraphs (b) and (c) of this section, the pharmacy shall maintain a log book in which each individual pharmacist using the data processing system shall sign a statement each day, attesting to the fact that the information entered into the data processing system that day has been reviewed by him or her and is correct as entered. Such log book shall be maintained at the pharmacy employing such a system for a period of two years after the date of dispensing provided, however, that the data processing system can produce the hard-copy printout on demand by an authorized agent of the Department of Health. If no printer is available on site, the hard-copy printout shall be available within 48 hours with a certification by the individual providing the printout, which states that the printout is true and correct as of the date of entry and such information has not been altered, amended or modified. The prescription department manager and the permit holder are responsible for the proper maintenance of such records and responsible that such data processing system can produce the records outlined in this section and that such system is in compliance with this subsection. Failure to provide the records set out in this section, either on site or within 48 hours for whatever reason, constitutes failure to keep and maintain records. In the event that a pharmacy which uses a data processing system experiences system downtime, the following is applicable: An auxiliary procedure shall ensure that refills are authorized by the original prescription drug order and that the maximum number of refills has not been exceeded or that authorization from the prescribing practitioner has been obtained prior to dispensing a refill; and All of the appropriate data shall be retained for on-line data entry as soon as the system is available for use again. * * * (5) Authorization of additional refills. Practitioner authorization for additional refills of a prescription drug order shall be noted as follows: On the daily hard-copy printout; or Via the CRT display. The Audit and Aftermath Commencing in December 2000, Heritage Information Systems, Inc. (Heritage), on behalf of AHCA, conducted an audit of Petitioner's paid Medicaid claims for the period from January 1, 1999, through October 20, 2000 (Audit Period).7 Petitioner had submitted 37,798 such claims (Audit Period Claims), for which it had received payments totaling $2,019,662.47. The purpose of the audit was to determine whether, and if so to what extent, Petitioner was overpaid for these Audit Period Claims. At the outset of the audit, Heritage's lead auditor, Rolando Veloso, provided Pharmacy personnel a Notice to Medicaid Provider of Initiation of On-Site Audit,8 which read as follows: The Agency for Health Care Administration (Agency), under federal and state laws, has the responsibility to oversee the activities of Medicaid providers. This is to advise you that an on-site audit of your billings to the Medicaid program has been initiated. Audits are performed in order to determine if Medicaid billings conform to applicable laws, rules, and policies. The fact that an audit is performed carries with it no implication of any wrongdoing. Audits are conducted as part of the responsibility of Medicaid for ensuring the integrity of the program. Medicaid audits generally involve a review of provider medical, professional, financial, and business records as required to determine the propriety of billings. Attachment B is a summary of applicable laws and rules governing the access to required information. If additional information is desired, please notify the auditor named below. In conducting the audit, Heritage performed both a "claims analysis" and a "purchase invoice analysis." For the "claims analysis," Heritage first selected a non-random, "judgmental sample" of 326 "high-dollar" Audit Period Claims, for which Petitioner had received payments totaling $175,838.54. It then selected (from the remaining Audit Period Claims) a "random sample" of 250 claims,9 for which Petitioner had received payments totaling $13,041.76. Thereafter, Petitioner's records were examined to determine whether they contained documentation sufficient to support the claims in the "judgmental sample" and in the "random sample." For the "purchase invoice analysis," Heritage selected the "top 20 drugs billed" for review. As Heritage explained in a May 15, 2001, Final Report it provided to AHCA, the purpose of the "purchase invoice analysis" was: to verify that the provider purchased selected drugs in quantities sufficient to account for the total number of units of each drug billed to Medicaid for the selected drugs over the same time period. The auditors compiled wholesaler and direct- account purchases for the selected drugs and calculated the number of units of each drug purchased during the audit period. Auditors then tabulated the number of units of each drug billed to Medicaid during the review period. Credits and returns were also considered in the tabulation. This model assumes that all drugs purchased were dispensed to Medicaid recipients. A prorated analysis was also performed. Auditors requested a "utilization report" (a standard report available from most pharmacy computers) from the pharmacy computer. The report states the total number of units of each drug allegedly dispensed by the pharmacy during the review period -- to all parties, not just Medicaid. Using this report, auditors were able to determine what percentage of the pharmacy's business (for each drug) Medicaid represents. This percentage was then applied to the pharmacy purchases for the corresponding drug. Since a portion of the purchases would have been dispensed to non-Medicaid patients, this proration allows a more realistic analysis than comparing Medicaid claims to all purchases. * * * In conducting the "purchase invoice analysis," the assumption was made that "the [Pharmacy's] shelf stock is going to remain equivalent month to month." During the audit, Mr. Veloso interviewed Mr. Blatt. As Mr. Veloso's "notes" of the interview indicate: Mr. Blatt stated to auditors that the pharmacy fills approximately 175 prescriptions daily. Of these, 60%-70% are for Medicaid prescriptions. He indicated that both he and Mr. Berkowitz own the pharmacy, and that Mr. Berkowitz has been the owner since 1964. Mr. Blatt was questioned regarding refill documentation. He indicated to auditors that he usually gives the prescriptions additional refills once he receives authorization from the physician. Mr. Blatt explained that he does not document refill authorizations routinely. He stated that instead, he automatically adds refills to existing prescriptions without generating a new prescription number or documenting the additional authorization electronically. Mr. Blatt indicated that he has been practicing pharmacy for a number of years and was unaware that refill authorizations must be documented. Auditors explained to Mr. Blatt that all claims must have a legitimate order to them. Mr. Blatt acknowledged the problem with refill authorizations and stated is was, "poor bookkeeping." Mr. Blatt continually questioned auditors about possible penalties for lack of refill documentation. Auditors explained that Medicaid would likely contact the pharmacy regarding any findings the auditors documented. Mr. Blatt stated at the conclusion of the audit, "if it's a fine for poor bookkeeping on the refills, I'll pay it." Heritage's May 15, 2001, Final Report to AHCA of the audit of the Pharmacy contained an Executive Summary, which summarized what the audit had revealed to date. This Executive Summary read as follows: Heritage Information Systems, Inc. ("Heritage") conducted an in-depth audit of Colonial Cut-Rate Drugs, Inc. ("Colonial") at the request of the Florida Agency for Health Care Administration ("AHCA"). The audit documented possible billing, policy and regulatory violations that resulted in apparent overpayments. The audit findings include the following: Auditors sampled 326 judgmental and 250 random prescription claims. A review of the judgmental sample documented $26,282.73 in overcharges. Findings from the random sample extrapolated to $243,699.90. The 95% one-sided lower confidence limit totals $177,658.67 in overcharges. Discrepancies documented in the sample include the following: The most common discrepancy documented was the Unauthorized Refill ("UR"). The pharmacy was unable to produce documentation of refill authorizations for 81 prescription refills. Pharmacy staff was unable to produce hard copy prescription records corresponding to ten (10) claims ("CF"). The pharmacy billed seven (7) claims for quantities greater than ordered by the prescriber and/or dispensed to the patient ("OBQ"). A comparison of paid Medicaid claims to the pharmacy's drug purchases yielded apparent purchase shortages totaling an estimated $24,848.68. A prorated purchase analysis yielded more significant overcharges totaling $82,263.46. Colonial's invoice records could not substantiate claims to Medicaid for this amount. Possible usual and customary pricing violations were identified. Medicaid paid more than other third party payers for the prescriptions reviewed by auditors. Heritage's audit documented apparent overcharges of $177,658.67. This figure represents the $26,283.73 in non- extrapolated findings from the judgmental sample, plus the 95% one-sided lower confidence limit of the extrapolated random sample ($151,375.94). This report is submitted to AHCA for action deemed appropriate. Based on the information Heritage provided, AHCA preliminarily determined that Petitioner had been overpaid a total of $177,658.67 for the Audit Period Claims. By letter dated January 25, 2002, which it denominated its Provisional Agency Audit Report, AHCA advised Petitioner of this preliminary determination. AHCA's Provisional Agency Audit Report read, in pertinent part, as follows: An on-site audit of your pharmacy was initiated on December 18, 2000. The Florida Medicaid Program through the Agency for Health Care Administration has determined that you have been overpaid $177,658.67 in connection with claims submitted to Medicaid during the audit period(s). This conclusion is supported by the audit results. This review and the determination were made in accordance with the provisions of Chapter 409, Florida Statutes (F.S.), and Chapter 59G, Florida Administrative Code (F.A.C.). In applying for Medicaid reimbursement, providers are required to follow applicable statutes, rules, Medicaid provider handbooks, statements of Medicaid policy, and federal laws and regulations. Medicaid cannot properly pay for claims that do not meet Medicaid requirements. When a provider receives payment in violation of these provisions, those funds must be repaid. This is, however, a provisional finding and we encourage you to submit any additional information or documentation that you may have that you feel may serve to change the overpayment. REVIEW DETERMINATION The audit included a judgmental sample review of selected paid claims and a separate review of a statistically valid random sample taken from the remaining population of paid claims with dates of service during the audit period. The overpayment found in the random sample was extended to the population using generally accepted statistical formulas and methods. The audit period for this review was from January 1, 1999, through October 20, 2000. This review identified an overpayment of $177,658.67. . . . The audit also included a comparison of your lawful documented product acquisitions with your paid Medicaid claims. The audit period for this review was from January 1, 1999, through October 20, 2000. The drug quantity paid for by Medicaid, in many instances, exceeded the quantity available to dispense to Medicaid recipients. This review identified an overpayment of $82,263.46. . . . Accordingly, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $177,658.67. If you have documentation that you wish to submit that you feel would alter these findings, submit your written explanation and legible copies of the organized documentation to us within 30 days of receipt of this notice. . . . If you concur or accept these findings, please send your check in the amount of $177,658.67 for this identified overpayment . . . . If you have not submitted a written explanation and documentation or made payment within 30 days, we will send you notice regarding the agency's final determination. * * * On January 29, 2002, Petitioner's attorney sent AHCA a letter, which read as follows: This is to let you know that I have been retained to represent Colonial Cut Rate Drugs and Warren Blatt with respect to the Medicaid audit. We are in the process of locating the misfiled prescriptions, and obtaining statements from the physicians that the questioned refills were, in fact, authorized. We will get that documentation to you as quickly as possible, but it will take more than 30 days since there are 81 claims that need to be verified. Thanks for your patience. In response this letter, AHCA granted Petitioner an extension of time to provide additional documentation. Petitioner provided AHCA with additional documentation in early May 2002. On or about May 15, 2002, AHCA sent this additional documentation to Heritage for "review, placement in [Heritage's] file, and action deemed appropriate." By letter dated November 8, 2002, AHCA informed Petitioner of its opportunity "to submit [any] further documentation" it wanted AHCA to consider. The letter read, in pertinent part, as follows: An audit of your pharmacy was initiated on December 18, 2000. The Florida Medicaid Program, through the Agency for Health Care Administration (Agency), issued a Provisional Agency Audit Report, dated January 25, 2002, and made a provisional overpayment determination. Subsequent to this determination, your pharmacy submitted additional documentation. However, the Agency extends to you an opportunity to submit further documentation that has not already been submitted that may change the overpayment. This review and determination were made in accordance with the provisions of Chapter 409, Florida Statutes (F.S.), and Chapter 59G, Florida Administrative Code (F.A.C.). In applying for Medicaid reimbursement, providers are required to follow the applicable statutes, rules, Medicaid provider handbooks, statements of Medicaid policy, and federal laws and regulations. Medicaid cannot properly pay for claims that do not meet Medicaid requirements. We encourage you to submit any additional information or documentation not already sent that you may have that you feel may serve to change the provisional overpayment. * * * Documentation standard for statistical audit review: Documents submitted after the completion of an audit may require an affidavit or other sworn statement, in addition to the documents, as a means to authenticate the documentation. Documentation that appears to be altered, or in any other way appears not to be authentic, will not serve to reduce the overpayment. Furthermore, additional documentation must clearly identify which discrepancy (claim) as set forth in the attached audit findings it purports to support. Documentation to be submitted: All documentation submitted will be considered even if it does not fall within one of the below categories. These are merely suggestions and are not stipulations that the suggested documentation will result in a reduction of the overpayment. It is recommended that you submit the best evidence of compliance with the Medicaid and Pharmacy laws, and that the documentation was on file at the time of the audit. Contemporaneous original hard-copy prescriptions found after the time of the audit (legible and complete copies of both front and back of prescription) Contemporaneous doctor/medical records specifically reflecting prescription ordered. Contemporaneous physician order. Contemporaneous approved MAR by physician or physician's agent. Contemporaneous dated print out of computer screen with DEA disclosed. Contemporaneous dated daily logs identifying the DEA number. Contemporaneous dated label identifying the DEA number. Dated one-year historical patient profile that includes drug name, quantity, directions for use, and/or strength. Written explanation and documentation to support rationale for different strengths or dosage forms dispensed. Written explanation and documentation to support that the physician's license number was incorrectly assigned to physician in computer system, or physician's name was incorrectly chosen from computer list with similar name, due to a data entry error. For the invoice review, additional proof of product acquisitions for the drugs listed in the invoice review. Any question you may have about this matter or any requests to submit further documentation should be directed to Kathryn N. Holland . . . . AHCA received no further documentation from Petitioner after sending this November 8, 2002, letter. After having reviewed the documentation that Petitioner had provided AHCA in early May 2002, Heritage prepared and submitted to AHCA an Addendum, dated February 27, 2003, to the Final Report it had previously submitted. The Addendum contained an Executive Summary, Revised Findings, and Conclusions, which read as follows: EXECUTIVE SUMMARY Colonial Cut-Rate Drugs, Inc. 6835 West 12th Avenue Hialeah, Florida 33014 Medicaid Provider Number: 101359900 Heritage Information Systems, Inc. ("Heritage") conducted an in-depth audit of Colonial Cut-Rate Drugs, Inc. ("Colonial") at the request of the Florida Agency for Health Care Administration ("AHCA"). The audit documented possible billing, policy and regulatory violations that resulted in apparent overpayments. An invoice analysis indicated that Colonial did not purchase sufficient quantities of seven [sic] drugs to substantiate claims billed to Medicaid. The apparent prorated purchase shortage was estimated to be $82,263.46. Auditors also reviewed a random sample of 250 claims and a judgmental sample of 326 claims. Record-keeping and regulatory violations were documented on 100 claims between the two samples. Based on the findings from the judgmental and the extrapolated (using a 95% one-sided lower confidence limit) random sample, Heritage's audit documented overcharges in the amount of $177,658.67. Post audit documentation from the pharmacy was forwarded to Heritage by AHCA and received on 5/21/02. Post audit documentation included copies of prescriptions, letters of explanation and photocopies of invoices. The accepted documentation was incorporated into the audit findings and a revised overcharge amount was calculated. The revised analysis by Heritage results in apparent overcharges of $137,431.56 based on the sum of the findings from the judgmental and the extrapolated findings (using a 95% one-sided lower confidence limit) from the random sample. REVISED FINDINGS Prescription Record Review Four prescription records submitted by Colonial as supplemental documentation were deemed acceptable, and resulted in the following changes: - Eight claims had Can't Find ("CF") discrepancies removed, however, based on the number of authorized refills, an Unauthorized Refill ("UR") was assessed on one claim. Invoice Audit Post audit documentation included photocopies of invoices dated prior to the invoice audit review period. Therefore, there were no changes to the invoice analysis.
Conclusions The additional documentation supplied by Colonial has been incorporated into the original audit findings, resulting in a reduction in overcharges to $137,431.56 based on the 95% one-sided lower confidence limit combined with findings of the judgmental sample. A copy of the revised audit findings and lists of the discrepant prescriptions [sic] is provided in Exhibit 1. The report is submitted to AHCA for action deemed appropriate. Appended to the Addendum were, what Heritage referred to as, "discrepancy listings." These "discrepancy listings" correctly specified those Audit Period Claims in the "judgmental sample" and in the "random sample" that were "discrepant" and, with respect to each such "discrepant" claim, accurately identified, using the following "codes," the nature of the "discrepancy" from which the claim suffered and, in addition, set forth (in the "overcharges" column) the correct amount of any resulting overpayment: CF (Original hard copy prescription cannot be found on file during the audit) DS (The days supply value submitted by the pharmacy is not consistent with the quantity and directions) OBQ (Quantity paid exceeds the quantity authorized by the prescriber or dispensed to the recipient) UR (The number of refills billed and paid to the pharmacy exceeds the number authorized by the prescriber. Refills are dispensed without documented authorization from the prescriber) WMDC (The claim for the prescription contains an incorrect prescriber license number, but the correct prescriber's name is documented in the pharmacy computer or is similar to the name of the prescriber billed) There were a total of 90 "discrepant" claims listed: two coded "CF" (with associated "overcharges" equal to the total amount paid for these claims); one coded "DS" (with no associated "overcharge"); four coded "OBQ" (with associated "overcharges" equal to the amount paid for the quantity in excess of that authorized); 82 coded "UR" (with associated "overcharges" equal to the total amount paid for these claims10); and one coded "WMBC" (with an associated "overcharge" equal to that portion of the payment denominated the "dispensing fee," which was $4.23). Of the 90 "discrepant claims, 67 were in the "judgmental sample" and 23 were in the "random sample." The total amount that Petitioner was overpaid for the discrepant claims in the "judgmental sample" was $25,088.30. The total amount that Petitioner was overpaid for the 23 "discrepant" claims in the "random sample" was $1,311.57, or 5.24628 dollars for each of the 250 claims in the sample. Extrapolating or projecting this result, in accordance with generally accepted statistical principles, to the entire universe of Audit Period Claims (which numbered 37,798) minus the 326 claims in the "judgmental sample" (a total of 37,472 claims), using a "95% one-sided lower confidence limit," yields an overpayment of $112,343.26.11 Adding this $112,343.26 overpayment to the $25,088.30 overpayment for the "discrepant" claims in the "judgmental sample" produces a total overpayment of $137,431.56. After having received Heritage's February 27, 2003, Addendum, AHCA prepared and sent to Petitioner its Final Agency Audit Report,12 which was dated March 19, 2003, and read, in pertinent part, as follows: Medicaid Integrity has completed the review of your Medicaid claims for dates of service during the period January 1, 1999, through October 20, 2000. A Provisional Agency Audit Report, dated January 25, 2002, was sent to you indicating that we had determined you were overpaid $177,658.67. Based upon a review of all documentation submitted, we have determined that you were overpaid $137,431.56 for services that in whole or in part are not covered by Medicaid. Pursuant to Section 409.913, Florida Statutes (F.S.), this letter shall serve as notice of the following sanction(s): The provider is subject to comprehensive follow-up review in six months. In determining the appropriateness of Medicaid payment pursuant to Medicaid policy, the Medicaid program utilizes procedure codes, descriptions, policies, limitations and requirements found in the Medicaid provider handbooks and Florida Statutes, Section 409.913. In applying for Medicaid reimbursement providers are required to follow the guidelines set forth in the applicable rules and Medicaid fee schedules, as promulgated in the Medicaid policy handbooks, billing bulletins, and the Medicaid provider agreement. Medicaid cannot pay for services that do not meet these guidelines. The following is our assessment of why certain claims paid to your provider number do not meet Medicaid requirements. The audit work papers detailing the claims affected by this assessment are attached. REVIEW DETERMINATION(S) The audit included the review of a judgmental sample of selected claims and a statistically valid random sample taken from the population of paid claims with dates of service during the audit period. The overpayment found in the random sample was extended to the population using generally accepted statistical formulas and methods. The audit period for this review was from January 1, 1999, through October 20, 2000. This review identified an overpayment of $137,431.56. Attached are the overpayment calculations, a summary of documented discrepancies, and an itemized listing of discrepancies noted in the review of the judgmental and random sample[s]. The audit also included a comparison of your lawful documented product acquisitions with your paid Medicaid claims. The audit period for this review was from January 1, 1999, through October 20, 2000. The drug quantity paid for by Medicaid, in many instances, exceeded the quantity available to dispense to Medicaid recipients. This review identified an overpayment of $82,263.46. Attached are the overpayment calculations. * * * If you are not in bankruptcy and you concur with our findings, remit by check in the amount of $137,431.56. . . . * * * You have a right to request a formal or informal hearing pursuant to Section 120.569, F.S. . . . . [I]f a request for a hearing is made, the petition must be received by the Agency within twenty-one (21) days of receipt of this letter. . . . * * * AHCA has made no additional revisions to its overpayment calculation in the instant case. It continues to maintain (and correctly so) that Petitioner received $137,431.56 in Medicaid overpayments for services claimed to have been provided during the Audit Period.13
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 $137,431.56 in Medicaid overpayments for paid claims covering the period from January 1, 1999, through October 20, 2000, and requiring Petitioner to repay this amount to AHCA; and that AHCA decline to order a "comprehensive follow- up review [of Petitioner] in six months." DONE AND ENTERED this 14th day of March, T2005, in allahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 2005.
