03-003238MPI Compscript, Inc., D/B/A Compscript vs. Agency For Health Care Administration Status: Closed Recommended Order on Thursday, October 6, 2005.

Summary: Petitioner failed to maintain records in strict compliance with the rules governing retention of "prescriptions." Recommend that Respondent is entitled to recover the Medicaid overpayment.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COMPSCRIPT, INC., d/b/a )

COMPSCRIPT, )

)

Petitioner, )

)

vs. ) Case No. 03 - 3238MPI

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

_________________________________)

RECOMMENDED O RDER

Pursuant to notice a formal hearing was held in this case

on March 28, 29, and 30, 2005, in Tallahassee, Florida, before

J. D. Parrish, a designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Kenneth W. Sukhia, Esquire

Fowler, White, Boggs, Banker P.A.

101 North Monroe Street, Suite 1090

Post Office Box 11240

Tallahassee, Florida 32302

Ralph E. Breitfeller, Esquire

McGrath & Breitfeller, LLP

140 East Town Street, Suite 1070

Columbus, Ohio 43215

For Respondent: L. William Porter, II, Esquire

Karen Dexter, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Building 3

Mail Stop 3

Tallahassee, Florida 32308 - 5403

STATEMENT OF THE ISSUE

Whether the Petitioner was overpaid for Medicaid

prescriptions. The Agency for Health Care Administration

(AHCA, Agency or Respondent) asserts the Petitioner,

Compscript, Inc., d/b/a Compscript (Petitioner or Compscript)

failed to maintain proper records to supp ort and document the

Medicaid prescription claims paid by the Agency for the audit

period. According to the Agency, the audit findings must be

extrapolated to the universe of all claims for the audit

period. If so, the Agency maintains the Petitioner sho uld

reimburse AHCA for a Medicaid overpayment in the amount of

$216,974.07 (this is the “recoupment” amount). The Petitioner

denies it was overpaid any amount, asserts it kept records in

accordance with applicable laws and regulations governing

pharmacy r ecords, and maintains that the Agency may not apply

the extrapolation accounting procedure in this case.

PRELIMINARY STATEMENT

This case began in 2001. The Petitioner is a Medicaid

provider and in the regular course of doing business was

audited by the A gency regarding its Medicaid claims. The

audit period pertinent to the case is May 28, 1999 through

July 18, 2000. The audit was unannounced and was begun on

October 23, 2000. When the results of the audit were provided

to the Petitioner, Compscript tim ely challenged the alleged

Medicaid overpayment. That challenge was referred to the

Division of Administrative Hearings for formal proceedings on

May 21, 2001, and was assigned DOAH Case No. 01 - 1970. On July

16, 2001, the parties filed an Agreed Motion f or Remand and

Notice of Limited Withdrawal. By Order entered July 17, 2001,

DOAH Case No. 01 - 1970 was closed and jurisdiction in the

matter was relinquished to the Agency.

On September 10, 2003, the Agency filed an Agreed Motion

to Re - Open that represente d the parties had worked toward but

failed to reach a settlement of the case, that records were

unavailable for review that were necessary to resolve issues

in the cause, and that the parties wanted to be placed on a

litigation schedule so that the unresol ved issues could be

addressed through formal hearing. Accordingly, the matter was

re - opened as DOAH Case No. 03 - 3238MPI and was scheduled for

hearing for January 12 through 14, 2004.

In November 2003 the parties represented that the appeal

of another cas e [ Agency for Health Care Administration v.

Colonial Cut - Rate Drugs, Inc. , 878 So. 2d 479 (Fla. 1 st DCA

2004)] would impact the parties in the instant dispute such

that both sides were desirous of abating the matter until the

district court could enter its decision. Based upon the

representations of counsel at that time, the case was placed

in abeyance. The Colonial , supra , decision was entered at the

end of July 2004. Thereafter, the parties continued to debate

the implications of the appellate decision . In substance, the

Petitioner continued to maintain that calculations based upon

an extrapolation from the audit findings were inappropriate

whereas the Agency argued that the court’s ruling did not

change the unambiguous language of the statute as to th e use

of extrapolation in this case. On October 22, 2004, an Order

was entered to resolve outstanding procedural issues. By

virtue of that Order the parties were put on notice of the law

to be applied in the instant case. The October 22, 2004 Order

prov ided, in pertinent part:

5. . . .[T]he subject matter of these

cases (whether identified as DOAH Case No.

01 - 1970 or DOAH Case No. 03 - 3238MPI) has

been the alleged overpayment of Medicaid

claims paid by the Respondent to the

Petitioner.

6. The Final Ag ency Audit Report dated

April 6, 2001, covering the audit period

May 28, 1999 through July 18, 2000, claimed

that the Petitioner received a Medicaid

overpayment in the amount of $1,341,466.27.

7. The Petitioner disputed the overpayment

and has contested t he audit results.

8. In computing the alleged overpayment

amount the Respondent represented in its

audit report that:

The audit included a statistical

analysis of a random sampling,

with the results applied to the

random sample universe of claims

submitt ed during the audit

period. ... The actual

overpayment was calculated using

a procedure that has been proven

valid and is deemed admissible in

administrative and law courts as

evidence of the overpayment.

9. The parties have referred to the above -

descri bed accounting practice as

“extrapolation.”

10. The Petitioner opposes the use of

“extrapolation” to compute any alleged

Medicaid overpayment. The question of

whether the Respondent may use

“extrapolation” was the subject matter of

the Petitioner’s Motio n in Limine.

11. The Petitioner filed a Motion in

Limine on November 4, 2003, and alleged

that the Respondent could not use the

accounting practice because the Florida

Legislature had passed Section 465.188(e),

Florida Statutes (2003), that provided:

(e) A finding of an overpayment or

underpayment must be based on the actual

overpayment or underpayment and may not be

a projection based on the number of

patients served having a similar diagnosis

or on the number of similar orders or

refills for similar dru gs.

12. The parties disputed whether or not

the law cited was applicable to audits and

administrative cases pending before the

effective date of the statute. The

legislation was signed into law and became

effective July 11, 2003.

* * *

14. . . .In A HCA v. Colonial Cut - Rate

Drug , Case No. 1D03 - 4024, the court found

that Section 465.188, Florida Statutes

(2003) is procedural and remedial.

Accordingly, its provisions would be

applicable to the issues of this matter.

15. Based upon the foregoing, the

Petitioner renewed its Motion in Limine and

filed a Motion to Lift the Abeyance. Both

motions were granted in error.

16. At the time such motions were

reviewed, the undersigned was unaware of

the provisions of Section 465.188, Florida

Statutes (2004). T he statute as amended

during the 2004 session changed significant

provisions of the law.

17. Pertinent to this matter is subsection

(k) of the law that provides:

The audit criteria set forth in

this section applied only to

audits of claims submitted for

payment subsequent to July 11,

2003. Notwithstanding any other

provision in this section, the

agency conducting the audit shall

not use the accounting practice

of extrapolation in calculating

penalties for Medicaid audits.

18. The Respondent does not see k a

“penalty” in this case.

19. The words “penalty” and “overpayment”

are not synonymous.

* * *

ORDERED:

1. That the court has found the provisions

of the law to be procedural and remedial.

The unambiguous language of the statute

provides that it ap plies only to audits of

claims submitted for payment subsequent to

July 11, 2003. Accordingly the more

stringent audit standards set forth in

Section 465.188, Florida Statutes (2004) do

not apply to this cause.

2. The prohibition regarding the use of

ext rapolation does not apply to the

calculation of an overpayment.

Thereafter, the parties proceeded with discovery and the

case advanced to hearing. The Pre - Hearing Stipulation filed

by the parties on March 22, 2005, outlined the issues to be

tried, the f acts not disputed, the law not disputed, and the

witnesses and exhibits each side intended to offer at hearing.

The hearing in this matter was conducted over the course of

three days: March 28 through 30, 2005. The five - volume

transcript of the proceedin gs correctly chronicles the

witnesses’ testimony, the exhibits admitted into evidence, as

well as objections preserved for the record. The Petitioner

was granted a continuing objection to the use of extrapolation

to compute the alleged overpayment. All p arties acknowledged

that whether or not extrapolation could be utilized remained

an issue of law.

At the conclusion of the hearing, the parties were

granted additional time to file their Proposed Recommended

Orders. That time was subsequently extended fo ur times. The

parties were directed to file the Proposed Recommended Orders

no later than 5:00 p.m., August 22, 2005. Both proposed

orders have been considered in the preparation of this

Recommended Order. Also, pertinent stipulated facts set forth

in t he parties’ Pre - hearing Stipulation are incorporated

below.

FINDINGS OF FACT

1. At all times material to the allegations of this

case, the Petitioner was a licensed pharmacy authorized to do

business in the State of Florida; its pharmacy license number

is PH0016271.

2. At all times material to the allegations of this

case, the Petitioner was authorized to provide Medicaid

prescriptions pursuant to a provider agreement with the

Respondent. The Petitioner’s Medicaid provider number is

106629300. The terms of the provider agreement govern the

contractual relationship between this provider and the Agency.

The parties do not dispute that the provider agreement

together with the pertinent laws or regulations controls the

relationship between the provider and the Agency.

3. The provider agreement pertinent to this case is a

voluntary agreement between AHCA and the Petitioner. Pursuant

to the provider agreement, the Petitioner was to “keep,

maintain, and make available in a systematic and orderly

manner all me dical

and Medicaid - related records as AHCA requires for a period of

at least five (5) years.”

4. In addition to the foregoing, a Medicaid provider

must maintain a patient record for each recipient for whom new

or refill prescriptions are dispensed.

5. Any Medicaid providers not in compliance with the

Medicaid documentation and record retention policies may be

subject to the recoupment of Medicaid payments.

6. A Medicaid provider must retain all medical, fiscal,

professional, and business records on al l services provided to

a Medicaid recipient. The records may be kept on paper,

magnetic material, film, or other media. However, in order to

qualify for reimbursement, the records must be signed and

dated at the time of service, or otherwise attested to as

appropriate to the media. Rubber stamp signatures must be

initialed. The records must be accessible, legible and

comprehensive.

7. Specific to the issues of this case, a Medicaid

provider must also retain prescription records for five years.

8. Th e Respondent is the state agency charged with the

responsibility and authority to administer the Medicaid

program in Florida. Pursuant to this authority AHCA conducts

audits to assure compliance with the Medicaid provisions and

provider agreements. These “integrity” audits are routinely

performed and Medicaid providers are aware that they may be

audited.

9. At all times material to the allegations of this

case, the Medicaid program in Florida was governed by a “pay

and chase” procedure. Under this pro cedure, the Agency paid

Medicaid claims submitted by Medicaid providers and then,

after - the - fact, audited such providers for accuracy and

quality control. These “integrity” audits are to assure that

the provider maintains records to support the paid claim s. In

this case, the audit period is May 28, 1999 through July 18,

2000. The pertinent audit has been designated AHCA audit no.

01 - 0514 - 000 - 3/H/KNH and was initiated on October 23, 2000.

The Petitioner does not dispute the Agency’s authority to

perform audits such as the one at issue. The Petitioner

maintains its records are sufficient to support the paid

claims and that the Agency has unreasonably imposed its

interpretation of the requirements.

10. The Medicaid provider agreement that governs this

cas e required that the Petitioner comply with all Medicaid

handbooks in effect during the audit period. Essentially,

this standard dictates the records that must be kept for

quality control so that the after - the - fact audit can verify

the integrity of the Med icaid claims that were paid by the

Agency.

11. During the audit period the Petitioner sold or

dispensed drugs to Medicaid recipients. Equally undisputed is

the fact that Medicaid claims were paid by the Agency during

the audit period. Each claim revie wed and at issue in this

cause was a paid Medicaid claim subject to the Petitioner’s

provider agreement and the pertinent regulations.

12. The Agency required that each and every claim

submitted by the Petitioner during the audit period under the

Medicaid program be filed electronically. Each claim

submitted was filed electronically.

13. Nevertheless, the Agency also required the

Petitioner to retain records supporting the claim.

Additionally, the Petitioner was to make such supporting

records availab le to the Agency upon request.

14. The Agency asked the Petitioner to present its

records to support the claims for the audit period. The

disclosure of the records proved difficult for this Medicaid

provider because it does not operate in a conventiona l

pharmacy setting. More specifically, it operates solely to

serve a nursing home population. All of the patients whose

prescriptions were filled were nursing home residents.

15. Compscript maintains its manner of doing business is

slightly different fr om the conventional pharmacy. Rather

than the walk - in patient who presents a written prescription

to be filled, this Petitioner receives its pharmacy orders by

telephone or facsimile transmission from nursing homes.

Typically, the staff at Compscript tak es the call, writes down

the pertinent information, enters the data into the pharmacy’s

computer system, and the item is dispensed and routed to the

nursing home via the delivery driver. All drugs are dispensed

in sealed containers and are delivered with a manifest listing

all the medications by name and patient. Given the volume of

prescriptions being prepared and delivered, for the audit

period at issue in this case, the Petitioner made 2 - 3 trips to

the nursing home per day.

16. Once the information fo r the prescription was

entered into the Petitioner’s computer system, Compscript had

little interest in maintaining the written telephone message

or the facsimile sheet that generated the request. In some

instances the Compscript employee did not make a w ritten

record of the prescription request. In those instances the

employee entered the request directly into the Petitioner’s

computer system and bypassed the written step altogether. The

Compscript computer system tracks the initials of the

pharmacist w ho entered the prescription information and cannot

be altered without such alteration being tracked and noted.

Since the pharmacy fills “over the counter” items, as well as

controlled and non - controlled pharmacy products, the computer

record denotes that information along with the patient

information.

17. When the Respondent’s audit agents went into the

Compscript facility to audit the Medicaid claims, the

Petitioner could not readily produce the written documentation

to support the dispensed drugs. In fact, many of the records

that verified the prescriptions dispensed were found on the

nursing home records. The nursing home patient’s physician

order sheet specified the item or items requested for the

patient. This “physician order sheet” (POS) should

theoretically always support the dispensing of the product

from the Petitioner. In this case there were instances when

the POS did not corroborate the claim.

18. When the auditors from the Agency presented at

Compscript, the Petitioner did not have th e POS records to

produce. Obviously, those records were maintained within the

nursing home. Additionally, Compscript did not have the

telephone notes or the facsimile transmission sheets to

support items dispensed during the audit period. When the

heari ng in this cause proceeded it was also discovered that

records that were generated daily by the Petitioner’s computer

system that would have corroborated the claims (and which were

allegedly maintained in storage) were not produced or

available to support Medicaid claims submitted during the

audit period.

19. During the audit the Agency’s auditors requested

records from a random sample of the claims submitted during

the audit period. The results from that sample where then

applied to the universe of cla ims for the audit period. When

this mathematical calculation was performed the audit produced

a Medicaid overpayment in the amount of $1,341,466.27.

Afterwards, when the Petitioner was able to locate additional

records to correspond to and support the pr escriptions

dispensed, the amount of overpayment was reduced to

$217,715.28 (the amount set forth in the parties’ Pre - hearing

Stipulation).

20. At hearing, the Agency maintained that the amount of

overpayment was $216,974.07 for which the Petitioner could

produce no adequate documentation.

21. At hearing, the Petitioner continued to dispute the

procedure of applying the audit sample overpayment to the

population of claims to mathematically compute the overpayment

for the audit period. This “extrapo lation” process was

admitted into evidence and has been fully considered in the

findings reached in this case.

22. The Petitioner was required to maintain Medicaid -

related records for a period of 5 years. Thus, for the audit

period in this case, any reco rd supporting the claims should

have been maintained and made available for the Agency. Such

records would have been within the five - year period.

23. The Agency designates Medicaid compliance to its

office of Medicaid Program Integrity. In turn, that of fice

contracted with Heritage Information Systems, Inc. (Heritage)

to perform and report pharmacy audits of the numerous pharmacy

providers within the state. Auditors from Heritage were

assigned the Compscript audit. At the time of the audit the

Heritage auditors were not privy to any of the POS documents

later produced in the case.

24. Ken Yon is the Agency’s administrator who was

responsible for managing the instant case and who worked with

the Heritage auditors to assure the policies and practices of

the Agency were met. In this case, the Heritage auditors

presented at Compscript unannounced on October 23, 2000, and

sought 250 randomly selected claims for review. By limiting

the number of claims, the auditors were not required to sift

through the rec ords of 46,000 claims (the approximate number

of claims that the Petitioner submitted during the audit

period).

25. For the universe of 46,000 claims, 250 randomly

selected claims is a reasonable sample to audit. The adequacy

of the sample number as we ll as the manner in which it was

generated is supported by the weight of credible evidence

presented in this matter. Also, the results of a sample of

250 from the universe of 46,000 would be statistically valid

if randomly chosen as they were in this cas e. In this regard

the testimony of Dr. Mark Johnson, an expert in statistical

sampling and analysis, has been deemed credible and persuasive

as to the issues of the appropriateness of the sample (as to

size and how it was generated), the use of the sample

overpayment to calculate an overall payment, and the

statistical trustworthiness of the amounts claimed in this

cause. If anything, as Dr. Johnson asserted, the actual

overpayment would be greater than the recoupment amount sought

by the Agency.

26. The Agency has used a statistical extrapolation

method to compute overpayments for years. The statistical

concept and process of applying a sample to a universe to

mathematically compute an overpayment is not novel to this

case.

27. After the auditors compl eted their review of the

records at the Compscript pharmacy, Kathryn Holland, a

licensed pharmacist (who is also a consulting pharmacist)

prepared the Respondent’s Final Agency Audit Report. Prior to

completing the report, Ms. Holland received and reviewe d the

information provided by the Petitioner through the auditors.

As a result of the review, a number of “can’t find”

conclusions were reached. By “can’t find” the auditors and

Ms. Holland meant that the original prescription or refill

documentation cou ld not be located for the paid Medicaid

claim. These “can’t find” claims were reported to the

Petitioner, who was given additional time to locate and

produce documents to support the claims. In fact, the Agency

continued to accept documentation for claim s up through the

time of hearing. Consequently, the amount sought for

overpayment has been substantially reduced. Whether the

Agency had the authority to accept documents outside the

prescription records maintained by the pharmacy is not an

issue. In fa ct, the Agency did reduce the overpayment amount

when subsequent supporting documents were located.

28. A second error in the documentation for the

Petitioner’s prescriptions was noted as “no doctor’s address

on the prescription.” That expression meant t hat pursuant to

state and federal law the physician’s address is required for

a controlled substance and when it was not provided the

auditor deemed the documentation incomplete. Although the

Petitioner maintained doctor addresses in its computer system,

the records did not correspond to the specific prescriptions

that were filled for the audited claims.

29. In order to stand as a sufficient prescription form,

a writing must be created contemporaneous to the order (phone

requests that are transcribed a re acceptable), must contain

specific information (type of drug, strength, dose, patient,

doctor, DEA number, refill, etc.), and it must be kept for the

requisite time. It would be acceptable for the prescription

to be computer generated so long as it was written

contemporaneous to the order and preserved as required by law.

30. In this case, at the conclusion of the audit, the

Agency identified 194 discrepant claims within the random

sample of 250. The vast majority of those discrepancies were

noted as “can’t find.” Had the Agency not accepted other

documentation to support the dispensing of the drugs, the

calculated overpayment would have been $1,575,707.44.

Applying a lower confidence limit of 95 percent to that amount

generated the calculated overpa yment of $1,341,466.27. The

audit findings set forth in the Agency’s Final Agency Audit

Report (dated April 6, 2001) is supported by the weight of

credible evidence in this case.

31. Nevertheless, the Agency did allow the provider here

to supplement the documentation disclosed during the audit.

And, to that end, the calculated overpayment was reduced to

$216,974.07 (this amount is 95% of the calculated

overpayment). In reality, the amount owed by this Petitioner

for failure to maintain proper documentat ion for this audit

would be greater than the recoupment amount sought by the

Agency. Had the Agency held the Petitioner to a standard of

“no prescription, no payment” standard arguably 194 of the 250

audited claims could have been disallowed. That is not the

standard applied by the Agency.

32. A “patient record” may include information regarding

the patient’s prescription history. The terms “patient

record” and “prescription” are not synonymous. For example,

while a prescription would contain informa tion such as

patient's name, doctor, DEA number, doctor's address, dosage,

drug, and whether it may be refilled, it would be expected

that the “patient record” would contain additional information

not typically found on a prescription. For instance, a

“pa tient record” might contain a historical track of past

medications or known patient allergies.

33. In this case, the computer records or “patient

records” maintained by the Petitioner did not retain the

prescriptions in the format dictated by rule. An el ectronic

imaging recording system may be used when the system captures,

stores, and can reproduce the exact image of the prescription,

including the reverse side of the prescription if necessary.

The Petitioner’s system did not do that.

34. An electronic system must be able to produce a daily

hard - copy printout of all original prescriptions dispensed and

refilled. If the Petitioner’s system could do that, it did

not.

35. An acceptable electronic system must generate the

prescription contemporaneous to t he dispensing order. The

Petitioner’s system did not do that.

36. The Agency has not alleged, and there is no evidence

to suggest, fraud in the Petitioner’s failure to maintain its

records.

37. The Agency’s interpretation of the requirement that

a p rescription be reduced to writing is consistent with the

rules and regulations in effect at the time of this audit.

38. The last category of discrepant items was “UR” which

stood for “unauthorized refills.” These were claims for

refills on drugs for whic h the original prescription could not

be located or documentation from the nursing home could not be

found. Again, the Petitioner the maintained that within the

nursing home setting a physician’s reorder for medications for

the patient could be found on t he POS. These refill requests

were handled orally among the physician, the nursing home

staff, and the pharmacy. Nevertheless, because they were not

documented in writing the Agency disallowed this claims and

included them among the discrepant list.

39 . If the Petitioner was able to produce a physician

order to support the UR claims, it was removed from the

recoupment list. In most instances, the Petitioner did not

have the requisite paperwork to support the refill. Instead,

the Petitioner relied on its computer records (again not kept

in accordance with the applicable standards) to support the UR

claims. The Agency has not claimed that the refills were not

dispensed, merely that the paperwork to support the claim

cannot be produced.

CONCLUSIONS OF L AW

40. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of

these proceedings. § 120.57(1), Fla. Stat. (2005).

41. Pursuant to Section 409.902, Florida Statutes

(2000), the Respondent is responsible for administering the

Medicaid Program in Florida.

42. As the party asserting the overpayment, the

Respondent bears the burden of proof to establish the alleged

overpayment by a preponderance of the evidence. See

Southpointe Pharmacy v. Department of Healt h and

Rehabilitative Services , 596 So. 2d 106 (Fla. 1 st DCA 1992).

43. Section 409.913, Florida Statutes (2000), provides,

in pertinent part:

The agency shall operate a program to

oversee the activities of Florida Medicaid

recipients, and providers and their

representatives, to ensure that fraudulent

and abusive behavior and neglect of

recipients occur to the minimum extent

possible, and to recover overpayments and

impose sanctions as appropriate.

(1) For the purposes of this section, the

term:

* * *

(d) "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 claiming, unacceptable practices,

fraud, abuse, or mistake.

* * *

(7) When prese nting 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 feder al, state, and local

law.

(8) 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 furn ishing 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 respon sible 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.

* * *

(19) In making a determination of

overpayment to a provider, the agency must

use accepted and valid auditing,

accounting, analytical, statistical, or

peer - review methods, or combinations

thereof. Appropriate statistical methods

may include, but are not limited to,

sampling and extension to the population,

parametric and nonparametric statistics,

tests of hypotheses, and other generally

accepted statistical methods. Appropriate

analytical methods may include, but are not

limited to, reviews to determine variances

between the quantities of products that a

provider had on hand and available to be

purveyed to Medicaid recipients during the

review period and the quantities of the

same products paid fo r by the Medicaid

program for the same period, taking into

appropriate consideration sales of the same

products to non - Medicaid customers during

the same period. In meeting its burden of

proof in any administrative or court

proceeding, the agency may intr oduce the

results of such statistical methods as

evidence of overpayment.

(20) When making a determination that an

overpayment has occurred, the agency shall

prepare and issue an audit report to the

provider showing the calculation of

overpayments.

(21) The audit report, supported by agency

work papers, showing an overpayment to a

provider constitutes evidence of the

overpayment. A provider may not present or

elicit testimony, either on direct

examination or cross - examination in any

court or administra tive proceeding,

regarding the purchase or acquisition by

any means of drugs, goods, or supplies;

sales or divestment by any means of drugs,

goods, or supplies; or inventory of drugs,

goods, or supplies, unless such

acquisition, sales, divestment, or

inven tory is documented by written

invoices, written inventory records, or

other competent written documentary

evidence maintained in the normal course of

the provider's business.

44. Section 409.907, Florida Statutes (2000), provides,

in part:

The agency ma y make payments for medical

assistance and related services rendered to

Medicaid recipients only to an individual

or entity who has a provider agreement in

effect with the agency, who is performing

services or supplying goods in accordance

with federal, st ate, and local law, and who

agrees that no person shall, on the grounds

of handicap, race, color, or national

origin, or for any other reason, be

subjected to discrimination under any

program or activity for which the provider

receives payment from the age ncy.

* * *

(3) The provider agreement developed by

the agency, in addition to the requirements

specified in subsections (1) and (2), shall

require the provider to:

* * *

(b) Maintain in a systematic and

orderly manner all medical and Medicaid -

related records that the agency requires

and determines are relevant to the services

or goods being provided.

(c) Retain all medical and Medicaid -

related records for a period of 5 years to

satisfy all necessary inquiries by the

agency.

45. In this case the A gency seeks the overpayment based

upon an inadequate records keeping system utilized by the

Petitioner. The plain language of the statute directing a

provider to maintain in a “systematic and orderly manner” all

Medicaid records dictates that the Responde nt may demand

repayment regardless of the circumstances that produced the

payment. The Petitioner voluntarily participated in a program

that dictated the manner in which all records would be

maintained. Apart from the strict compliance with those

dictate s, the Petitioner is not entitled to payment for its

claim. See Colonnade Medical Center, Inc. v. Agency for

Health Care Administration , 847 So. 2d 540 (Fla. 4 th DCA

2003).

46. Section 409.906(20), Florida Statutes (2000),

authorized the Agency to pay fo r medications that were

prescribed for a recipient by a physician or other licensed

practitioner and that were dispensed to the recipient by a

licensed pharmacist in accordance with applicable state and

federal law. During the audit period the Agency paid the

Petitioner for all Medicaid claims at issue in this

proceeding. In effect, the Agency honored the claims

submitted. Now, after - the - fact, and through the audit

process, the Agency attempted to verify that those claims were

supported by the documentat ion required by law.

47. Section 465.015(2)(c), Florida Statutes (2000),

states that it is illegal to sell or dispense drugs without

first being furnished with a prescription. The term

“prescription” is defined in Section 465.03(14), Florida

Statutes (2 000). That section provides:

"Prescription" includes any order for drugs

or medicinal supplies written or

transmitted by any means of communication

by a duly licensed practitioner authorized

by the laws of the state to prescribe such

drugs or medicinal su pplies and intended to

be dispensed by a pharmacist. The term

also includes an orally transmitted order

by the lawfully designated agent of such

practitioner. The term also includes an

order written or transmitted by a

practitioner licensed to practice i n a

jurisdiction other than this state, but

only if the pharmacist called upon to

dispense such order determines, in the

exercise of her or his professional

judgment, that the order is valid and

necessary for the treatment of a chronic or

recurrent illness . The term "prescription"

also includes a pharmacist's order for a

product selected from the formulary created

pursuant to s. 465.186. Prescriptions may

be retained in written form or the

pharmacist may cause them to be recorded in

a data processing syst em, provided that

such order can be produced in printed form

upon lawful request.

48. From the foregoing it is apparent that a

prescription maintained in a data processing system must be

produced in printed form upon lawful request. In this case,

the Pe titioner’s computer system did not maintain the

prescriptions in that format. Nor were they printed upon

lawful request.

49. As to the discrepant claims in this cause (“can’t

find,” “UR,” or no doctor’s address), it is concluded the

Petitioner did not ma intain the requisite data processing

system to electronically retain the pertinent prescriptions.

The Petitioner’s system did not retain a prescription that had

been reduced to writing contemporaneous to the order.

50. The “overpayment” in this cause res ults from an

unacceptable practice not fraud, abuse, or mistake. The

unacceptable practice was Petitioner’s lack of documentation

to support the claims filed. All of the record - keeping

requirements were known or should have been known to

Petitioner, inas much as the Agency has always requested an

audit trail for Medicaid claims.

51. This audit and recoupment claim occurred prior to

July 11, 2003. Consequently, the auditing mandates set forth

in Section 465.188, Florida Statutes (2004) are not

applicable. See Colonial , supra . Additionally, since the

Agency is not seeking a “penalty” in this matter, the current

law does not prohibit the use of the accounting practice of

extrapolation. It is concluded that the calculation of an

overpayment using extrapola tion is not a penalty. See Bennett

v. Kentucky Department of Education , 470 U.S. 656, 662 - 63, 105

S. Ct. 1544, 1548 - 1549 (1985). In this case, the Agency is

merely attempting to collect monies paid to a provider who

cannot produce the documentation to su pport the paid claim.

In a technical sense, it is the recoupment of funds paid to a

provider who did not comply with the strict letter of its

agreement to maintain appropriate records. In complying with

its mandate from the federal government, AHCA is he ld to a

high standard and must assure that overpayments are recouped.

See 42 C.F.R. § 433.312(a)(2).

52. In this case, the audit report supports and

constitutes evidence of the overpayment claimed. See §

409.913(22), Fla Stat. (2004). The Petitioner ha s failed to

present substantial, credible evidence to rebut the

overpayment claimed. The Petitioner has not presented a

credible challenge to the use of extrapolation (as applied in

this case), nor its failure to provide documentation for the

discrepant c laims.

53. The Agency has met its burden of proof in this case

and has established by a preponderance of the evidence that

the Petitioner received overpayments in amount greater than

$216,974.07. Moreover, it is further concluded that the

Petitioner fa iled to comply with record - keeping requirements,

failed to produce adequate documentation to support the paid

discrepant claims, and failed to discredit the accounting

practices utilized by the Agency in this cause.

RECOMMENDATION

Based on the foregoing Fi ndings of Fact and Conclusions

of Law, it is RECOMMENDED that the Agency for Health Care

Administration enter a Final Order that accepts an amended

Final Agency Action Report to support an overpayment and

recoupment against the Petitioner in the amount of

$216,974.07.

DONE AND ENTERED this 6th day of October, 2005, in

Tallahassee, Leon County, Florida.

S

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(8 50) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 6th day of October, 2005.

COPIES FURNISHED :

Richard Shoop, Agency Clerk

Agency for Health Care Administra tion

2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

William Roberts, Acting General Counsel

Agency for Health Care Administration

Fort Knox Building, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308

L. William Porter, II, Esquire

Agency for Health Care Administration

Fort Knox Executive Center III

2727 Mahan Drive, Building 3, Mail Stop 3

Tallahassee, Florida 32308 - 5403

Kenneth W. Sukhia, Esquire

Fowler, White, Boggs, Banker, P.A.

101 North Monroe Street, Suite 1090

Post Office Box 11240

Tallahassee, Florida 32302

Ralph E. Breitfeller, Esquire

McGrath & Breitfeller, LLP

140 East Town Street, Suite 1070

Columbus, Ohio 43215

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any

exceptions to this Recommended Order should be filed with the

agency that will issue the Final Order in this case.