In the case of Samuel Nigro, M.D. (April 30, 2001)

This group of cases is before the Medicare Appeals Council on an August 8, 1999 request for review. The appellant requested review of 41 individual decisions issued on June 24, 1999 pertaining to a post-payment review of claims processed from October 1, 1993 through January 31, 1996.⁽¹⁾ In those decisions, the Administrative Law Judge determined that the appellant had been overpaid by Medicare during the dates at issue for services provided to 411 Medicare beneficiaries who resided in nursing facilities. The overpayment was based on the specific findings of overpayment relating to a sample of 41 beneficiaries, the results of which were projected onto a frame of 411 beneficiaries.⁽²⁾

The Medicare Appeals Council grants the request for review pursuant to 20 CFR 404.967 and 404.970 because there is an error of law. The Council affirms the Administrative Law Judge's conclusions on the substantive issues raised in the cases but reduces the overpayment in accordance with the following discussion. (See 20 CFR 404.979 and the notices published in the Federal Register on December 13, 1995 (60 FR 64065) and May 12, 1997 (62 FR 25844, 25849).) This reduction is necessary because (1) claims files and medical records for several beneficiaries were missing when the cases were audited by the carrier or received by the Medicare Appeals Council; (2) these "missing beneficiaries" should have been dropped from the sample unless their medical records could be located and audited or their claims files could be reconstructed; and (3) the Administrative Law Judge decisions directed payment for many of the services denied by the carrier and the Fair Hearing Officer. Thus, we have calculated a new projected overpayment in the amount of $41,656.56.

Medicare is a health care financing program which pays for items and services which are broadly or specifically covered under sections 1812 and 1832 of the Social Security Act ("the Act") to Medicare-eligible beneficiaries. See also 42 C.F.R. 409.10 and 410.10. Section 1862(a)(1) of the Act provides that no payment may be made under Medicare for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Under section 1832(a)(2), Medicare Part B pays for certain physician services, including the type of services at issue here, provided that they are medically reasonable and necessary for the treatment of the beneficiary's condition.

Payment for physicians' services under Medicare Part B are made by certain insurance companies, called carriers, which enter into contracts with the federal Health Care Financing Administration (HCFA) to administer the program. Section 1842(a) of the Act. Carriers are given certain discretion to set guidelines for making payments on behalf of the program where statutes, regulations, or other guidelines implemented on a national basis do not give sufficient payment guidance for a particular matter. Carriers publish their Medicare provisions in policy manuals, newsletters, and other publications which are sent to, or are otherwise made available to, the physician and supplier community. The carriers have the responsibility to implement safeguards against the overutilization of services and to conduct periodic audits of physicians and suppliers. Section 1842(a)(2) of the Act.

In order to be paid, all Medicare services must be properly documented by the individual providing the services. The law specifies that no payment may be made to any provider of services or other person unless there has been furnished such information as may be necessary in order to determine the amounts due for rendered Medicare services. Section 1833(e) of the Act. The guidelines for documentation are developed and published by HCFA and by the individual carriers. One of HCFA's publications which is applicable on a national basis is the Medicare Carrier's Manual, a set of guidelines for payment determinations under Medicare Part B. Section 3307 of the Medicare Carrier's Manual states that it is often necessary for carriers to secure copies of medical records from providers in order to verify services for which payment has been requested.

Services provided under the Medicare program are reported using the HCFA Common Procedure Coding System (HCPCS), which is a collection of codes and descriptions that represent procedures, supplies, products and services of a medical nature which may be provided to individuals. It is updated annually and is based on the American Medical Association's (AMA) Current Procedural Terminology (CPT-4) coding system. The Medicare Carrier's Manual states that --

The two codes which the appellant billed and which are at issue here are defined in the HCPCS as follows:

The HCPCS definitions for these two codes did not change throughout the relevant period at issue in this case. To assist the reader, we have included with this decision an appendix listing these and other codes discussed in this case with the complete code descriptor from the HCPCS coding manual.

The carrier for the geographical area where the appellant provided each of the services at issue is Nationwide Mutual Insurance ("the carrier"). The carrier issued a number of bulletins and newsletters throughout the 1990s addressing the proper coding of psychiatric services and services provided in nursing facilities. In June 1993, the carrier issued a policy stating that code 90862 was to be used when a physician was managing the psychotropic medication of a patient with an organic disorder. The policy stated that it generally required 25-30 minutes of face-to-face contact or floor time on the part of the physician. A.C. Ex. 1. This policy was modified, effective June 1, 1995, to state that it was equivalent based on relative value units (the new unit of measurement for physician services) to 25-30 minutes of time. A.C. Ex. 2. The 1993 policy also stated, with regard to code 90862, that --

This documentation requirement was not changed with the policy revision effective on June 1, 1995.

The 1995 policy revision, however, also enumerated the following general principles:

(A) Psychiatric services covered by Medicare are reimbursable only when medically necessary.

(B) The degree of functional impairment should be a factor in determining frequency and duration of the therapeutic services. Frequency of services will be monitored. Claims submitted for an unusual frequency or duration of services which do not show a medical need may result in a delay in processing or denial of the services.

(C) The patient's medical record should substantiate the nature of the services billed: the medical necessity of the services, the medications prescribed, if appropriate, and the patient's response to treatment. This documentation must be available in the event of a pre- or post-payment utilization review.

At all times relevant to these cases, the appellant was a board-certified psychiatrist practicing adult, child, and adolescent psychiatry. Prior to the dates of service at issue, the appellant began providing services to Medicare patients in several nursing facilities. These patients had co-existing medical conditions, including conditions related to dementia. See generally Appellant's Brief, 5/20/99, and various correspondence with the carrier. The appellant asserted that the treatment he provided was pharmacological management designed to stabilize the beneficiaries so that the nursing facility staff and other physicians could treat the patients' other medical conditions, manage their disruptive behavior, and avoid psychiatric hospitalizations. The appellant generally visited each nursing facility beneficiary whom he was treating on a monthly basis, with some beneficiaries receiving more frequent visits. The appellant ordinarily billed Medicare with either code 90862 or code 99313 for each of his services provided to these patients.

By letter dated June 13, 1992, the carrier contacted the appellant with reference to utilization review of his practice and billing patterns. Ex. 4. The letter expressed concern with the appellant's frequent use of code 90862 for nursing home visits in comparison with the rate of use of that code by his peers, and stated that its purpose was to explain the proper use of that and other codes. The letter noted that the majority of the appellant's progress notes which were reviewed did not indicate any minimal psychiatric interaction but only referenced prescription checking. Based on the appellant's documentation, the carrier's consultants stated that the appellant's services more closely resembled code 90430 (minimal medical service in a nursing facility) and suggested that the appellant review the coding for evaluation and management services in the Physician's Current Procedural Terminology (CPT-4) book.

By letter dated August 20, 1992, the appellant responded to the carrier's letter. Ex. 6. The appellant asserted the following:

On September 10, 1992, the carrier replied to the appellant stating that it had determined from the appellant's August 20, 1992 response that the psychotherapy portion of code 90862 was being used but was not being documented. Ex. 5. The carrier's letter emphasized that (1) the purpose of the previous letter was to advise the appellant of the importance of documentation, (2) Medicare regulations require the existence of documentation to support all services billed to the program, and (3) the carrier hoped the letter had helped the appellant understand the proper use of procedure code 90862.

Following this correspondence with the carrier, the appellant continued using codes 90862 and 99313 for billing each of his visits to Medicare patients in nursing facilities. Beginning with services billed in 1995, the carrier started regularly denying payment on many of the services billed with code 90862. See A.C. Ex. 3. (These claims are not at issue here but provide a background for this decision.) Many of the denial notices for code 90862 stated that "[t]he visits were not paid because Medicare does not always pay for this many visits." Some of them also stated that --

Id. The carrier determined that all services coded 99313 were covered and partial allowances were issued for these services based on the Medicare fee schedule amounts. However, following carrier review, most of the visits coded 90862 which were originally denied remained denied. These denials were appealed to a Fair Hearing Officer. Upon review, the Fair Hearing Officer addressed the claims of 80 beneficiaries which were appealed in three separate decisions. The Fair Hearing Officer directed payment for most of the claims, though at a reduced level of payment based on a lower level code. Following, the Fair Hearing Officer decisions, $20,186.40 of the original $28,274.07 remained in controversy. On appeal, this disallowance was upheld by the Administrative Law Judge in 80 individual decisions issued on April 23 and 28, 1998 and again by the Medicare Appeals Council in a separate decision. As stated previously, these claims are not at issue here, but provide a background for the current cases.

Meanwhile, while the claims of the 80 beneficiaries discussed above were in the appeals and review process, by letter dated April 24, 1996 the carrier informed the appellant that his use of code 90862 remained excessive and that he would possibly be subject to a future audit of his claims. A.C. Ex. 4. The letter stated that the appellant's services were more equivalent to code 99331 (low complexity evaluation and management of an established domiciliary or rest home patient) than 90862. On June 3, 1996, the appellant responded to the carrier complaining that the "rules keep changing," but stating that he would begin billing using code 99331 where appropriate. A.C. Ex. 5.

By letter dated March 25, 1997, the carrier notified the appellant that it had performed a utilization review, in part, of his use of codes 90862 and 99313. Ex. 15. This included a comparison of the frequency rate (per 100 patients treated) with which he billed these codes compared with that of his peers in the same locality and specialty during a six-month period from April through September 1995. The results indicated the following:

The carrier's letter stated that the documentation was minimal and did not support the level of services billed, and the appellant's handwriting was difficult to read. In most cases, the carrier found, the visits coded 90862 and 99313 were for services to patients who had been on the same medication(s) for months and who were not exhibiting any unusual symptoms. The carrier's medical consultant stated that one visit every three to four months at the lowest code level for a nursing home evaluation and management visit (99311) was sufficient to monitor stable patients. The carrier's letter then discussed the Medicare policy manuals and the carrier's newsletters addressing the provision of psychiatric services and the documentation requirements which were in effect throughout the period of 1992 through 1996 and enclosed a copy of those provisions. Finally, the letter informed the appellant that, in the future, all of his claims for services coded 99313, as well as all of his claims for visits coded 99311, 99312, or 90862 in excess of one every three months, would have to be accompanied by progress notes in order to be considered for payment. Those progress notes should indicate the reason for the visit, the evaluation, and the plan of treatment.

The appellant responded to the carrier's findings on April 17, 1997. His 13-page letter responded, paragraph by paragraph, to the carrier's June 13, 1992, September 10, 1992, and March 25, 1997 letters. Ex. 16. In that letter, he made the following general points:

On October 14, 1997, tentative audit findings were sent to the appellant by the carrier, giving the appellant 14 days to respond. Ex. 20. Enclosed were documents disclosing the methodology of a statistical sampling procedure which was used in the audit. The medical records supporting the 177 claims of the 41 beneficiaries in the sample had been obtained from the nursing homes. The results of the sample, which found an average overpayment of $280.78 per beneficiary, were then projected onto a universe of 411 beneficiaries. The universe was defined as all Medicare beneficiaries who had assigned claims from the appellant processed from October 1, 1993 through January 31, 1996. The letter informed the appellant that an overpayment of $115,400.58 had occurred.

The appellant responded in letters dated October 18, 1997 and October 22, 1997. His October 18 letter responded specifically to the issues raised by the carrier with regard to his allegedly exceeding peer norms, insufficiently documenting his services, and improperly using code 99313, as well as his general response to these matters. Ex. 21. The appellant's October 22 letter contained his recollection of the conditions and treatments of the 41 patients who constituted the statistical sample. Ex. 22.

On October 28, 1997, a final audit letter was sent by the carrier. Ex. 23, at 1-4. The final letter requested repayment of the calculated overpayment of $115,400.58. The final audit focused on the use of codes 90862 and 99313 by the appellant, the frequency of visits to the beneficiaries, and the lack of adequate documentation to support those visits. The overpayments for the claims of the 41 individual beneficiaries were based on a determination that different codes should have been used, that some of the services were not documented or were documented illegibly, or that the services were provided too frequently without sufficient documentation of medical reasonableness and necessity.

In addition to the final audit letter, the carrier replied specifically to the appellant's October 18 and 22, 1997 letters on November 25, 1997. Ex. 25. The carrier cited previous communications it had had specifically with the appellant as well as with the provider community generally regarding documentation and coding of psychiatric services. The letter noted that the appellant had declined a prior offer to meet with the carrier medical director personally to discuss the requirements. The carrier's letter also verified that a check for the $115,400.58 overpayment had been received from the appellant. See also ex. 3 at 1.

On November 17, 1997, the appellant requested a hearing before a Fair Hearing Officer to dispute the alleged overpayment. Ex. 27, at 3. Prior to the hearing, the appellant requested and received from the carrier certain documents, including the Medicare Policy Manual, in response to a FOIA (Freedom of Information Act) request. See ex. 26. The hearing was conducted on January 21, 1998. Following the hearing, the appellant submitted additional exhibits. The Fair Hearing Officer's decision was issued on May 14, 1998. Ex. 28.

The Fair Hearing Officer concluded that the appellant billed for some services in which there was no documentation establishing that the services were provided; those services were considered to be an overpayment. If the documentation was illegible, payments for the services were likewise considered an overpayment. The Fair Hearing Officer examined each service where legible documentation was provided in order to determine whether the service was medical or pharmacological in nature: if it was pharmacological, it was allowed with code 90862; if it was medical, it was allowed with evaluation and management codes 99311 or 99312 (which actually resulted in a higher payment from Medicare than for code 90862).⁽³⁾ However, if the medical record reflected that a patient was stable, only one visit per 90 days was allowed. The Fair Hearing Officer cited to Medicare's definition of a stable patient contained in the Medicare Intermediary's Manual:

Ex. 28, p.11, citing Medicare Intermediary Manual, sec. 3118.1. Where it was evident that the patient's condition was not stable and he or she was on psychiatric medication, the services were considered medically reasonable and necessary and allowed at code 90862. The Fair Hearing Officer then considered each service in the sample of beneficiaries based on the above criteria, re-estimated the total overpayment in the universe of claims based on the newly-calculated overpayment for the 41 sampled claims, and reduced the overpayment to $88,508.85. Ex. 28, at 18-39.

The appellant filed a request for hearing with an Administrative Law Judge. Ex. 31, at 3. The appellant, through counsel, submitted an extensive brief raising several arguments with regard to the general issues involved, the denials of the individual claims, and the statistical sampling process and methodology. Ex. 55. On May 20, 1999, the Administrative Law Judge conducted an oral hearing with the appellant and on June 24, 1999 issued 41 similar decisions covering each beneficiary in the sample. The Administrative Law Judge specifically found that:

The Administrative Law Judge then discussed each visit of the beneficiary at issue in which an overpayment was found and whether payment for the visit should be allowed. The Administrative Law Judge affirmed each of the findings of coverage for particular visits made by the Fair Hearing Officer. In addition, the Administrative Law Judge ordered payment for some additional dates of services previously denied by the carrier and the Fair Hearing Officer. The Administrative Law Judge stated that the amount in controversy was $115,400.58 but directed the carrier to recalculate the overpayment in accordance with his findings.

we have sorted the appellant's objections to the audit on appeal into three general categories: (I) those related to the overarching issues on which the overpayment was based; (II) those related to the merits of the claims for services to the individual beneficiaries who make up the sample; and (III) those related to the statistical sampling methodology bases on which the overpayment was calculated.

We will take up each of the appellant's arguments as we discuss each of these matters.

The audit of the claims involved here was based on the carrier's concern with three interconnected issues: (A) whether the frequency of the services the appellant provided to his nursing home beneficiaries was reasonable (i.e., whether each individual service was medically reasonable and necessary) given the overall medical condition of each beneficiary as well as the beneficiary's specific needs on the dates of service in question; (B) whether the services were billed using the proper coding for the particular services rendered in each visit; and (C) whether the services were supported by proper documentation, which was both legible and sufficient in content, on which payment could properly be made for the level of service billed. If the services are not covered because some or all of them are found to be not medically reasonable and necessary, we must decide whether the services may be paid on the grounds that neither the beneficiary nor the appellant knew or could reasonably have been expected to know that the services would not be covered. Finally, since this case involves an overpayment, we must determine if the appellant was without fault within the meaning of section 1870 of the Social Security Act and whether the overpayment may be waived.

The appellant has asserted throughout the case that it is an error on the part of Medicare to limit his visits to nursing home patients to once every 90 days. See generally ex. 55, and appellant's various correspondence with the carrier. He insists that there is no authority for that limit in Medicare law, regulations or published guidelines and that carriers cannot unilaterally impose a binding 90-day limit if HCFA cannot do so without going through the required notice and comment rulemaking procedures. He asserted that Medicare could use a 90-day limit only as a guideline rather than a binding rule. He cited to several carrier manual and regulatory provisions in support of his argument that monthly visits are allowed by Medicare.⁽⁴⁾ Moreover, he argued, the nursing home administrators requested monthly visits, monthly visits were the "standard of care" at those facilities and monthly visits were necessary to keep patients from hospitalization. He stated that some patients are disruptive or uncontrollable, engaging in such actions as pulling out attached tubes or are seriously depressed; thus, it was an error for the Fair Hearing Officer to assume these patients were stable, given that most took one or more toxic medications and had multiple medical conditions. He defined "stable" as "capable of going home." He argued that Medicare's definition of "stable" did not provide for the highest practicable well-being of the patient, as required by the Medicare Carrier's Manual.

The appellant stated that the treating physician's opinion is entitled to extra weight, and the fact he greatly exceeded the frequency rate of nursing home visits of his peers is meaningless given the type of patients he treated. He stated that the carrier's June 13, 1992 and September 10, 1992 letters, which were based on a 1992 audit of his services, did not discuss any problems pertaining to the frequency of his visits, nor has the carrier cited any written source which informed the provider community of a 90-day frequency limit. He argued that the carrier's medical consultant's report of January 15, 1997 did not cite any authority for its standards and, regardless, contemplated the possibility of monthly visits even in stabilized patients where close monitoring was desirable. He complained that Medicare required a physician to provide good care to patients but then was not willing to pay the cost of that care, and implied that this was a violation of section 1801 of the Social Security Act which prohibits interference in the practice of medicine. He even suggested that Medicare should be willing to assume liability for all undesirable outcomes of patients because it was not willing to pay for adequate care.

With regard to coding, the appellant asserted that no proof was ever offered that he had not complied with the requirements of codes 90862 and 99313. He stated that the codes billed accurately reflected the amount of work he had to perform with each nursing home beneficiary on each visit, which included seeing the patient, questioning the attending floor nurses, and scanning charts for new orders of other physicians and/or changes in the beneficiary's condition. He emphasized that each patient had life threatening conditions and thus all decision-making on his part with regard to their medications and treatment were necessarily of high complexity. For this reason, the use of code 99313 (high complexity evaluation and management in a nursing home) rather than code 99311 (low complexity evaluation and management in a nursing home) was justified. He objected to the fact that the reviewers did not allow any of his services billed to code 99313 in the post-payment audit but downcoded each of those to 99312 or 99311. He noted that the 1992 audit had not disallowed any of his services billed at code 99313.

The appellant also objected to the carrier's use of code 90862 only in instances where a medication or dosage level or frequency was changed, stating that the "prescription, use and review" of medication did not indicate that a medication should have to be changed in order to bill that code. He stated that the carrier had not cited to any written source for that interpretation and that such an interpretation would provide incentives for physicians to change medications unnecessarily in order to receive a higher payment. He argued that it takes the same amount of effort to review medications when changes are not made as when they are made. He also stated that the carrier's suggested use of codes M0064 and 90430 in previous correspondence was inappropriate: code M0064 is limited to office-setting visits and code 90430 is limited to custodial care rather than sub-acute care patients. He stated that the June 13, 1992 and September 10, 1992 letters pertaining to the 1992 audit did not specifically instruct him to use code 90430 but implied that continued use of code 90862 was appropriate. Finally, he argued that the carrier's substitution of codes for the codes billed was without authority and violated section 4506 of the Medicare Carrier's Manual.

Finally, with regard to documentation, the appellant objected to the fact that while the Medicare Policy Manual required an evaluation of the entire medical record in determining the medical reasonableness and necessity of services, the carrier's revised policy effective June 1, 1995 based denials on the information contained in the progress notes. He stated that his progress notes often contained a stamped template (developed in response to the 1992 audit) with the conditions and treatment circled and with a brief note which explicitly or implicitly referred back to other parts of the medical record. He stated that no practitioner should be expected to rewrite all previous findings, and he noted that Medicare provisions refer to "supporting" documentation rather than "conclusive," "exhaustive," "inerrant" or "complete" documentation. With regard to both the completeness and legibility of his medical notations, he stated that other practitioners could read his writing and considered the extent of his documentation acceptable. The appellant introduced several letters obtained from nursing homes where he practices which complimented his services and stated that his documentation, though brief, was acceptable. He cited to section 7103.1 of the carrier's Medicare Policy Manual which holds physicians liable for undocumented services but states that the diagnostic code will ordinarily be sufficient for billing purposes. Finally, he complained that the statement in a HCFA publication that there had been no changes in the regulations pertaining to documentation were "ludicrous."

The problem with the appellant's argument with regard to the frequency of his services can be summed up in one sentence: Neither HCFA, nor the carrier, has ever limited the appellant to an absolute limit of one visit per nursing home patient every 90 days. The carrier has simply taken the position through its screening process that it will allow one visit per 90 days for pharmacological management of a nursing home patient as medically reasonable and necessary without further explanation. Ex. 19; A.C. Exs. 2 and 3; Ex. 15. It will allow more frequent visits, on a case-by-case basis, where a provider has documented (both legibly and in sufficient detail) the medical need for a further visit within a 90-day period. Thus, if patients begin exhibiting disturbing symptoms, reacting to the psychopharmacological medications, the beneficiary's family members complain about the effects of the medications on their family member, or there are other legitimate reasons for a psychiatrist to intervene in less than 90 days to respond to a particular need or situation, HCFA will reimburse a medically reasonable visit based on that need. This may mean, however, that the carrier will require the physician to provide documentation in addition to the HCPCS code for the additional services either before payment is made or, as here, during a post-payment audit. Regardless, the carrier's 90-day provision is, in fact, a guideline rather than a binding limit and, as an internal screening device, does not have to be made available in advance to providers since providers are required to be adequately documenting each service anyway.

A Fair Hearing Officer decision in the previous case with this appellant summarized the position of HCFA and the carrier as follows:

FHO Decision of June 6, 1997, at p.3 (A.C. Ex. 6). We find the position expressed above to be appropriate, and we conclude that the appellant did not adequately document the need for services in excess of the frequency allowed by the carrier's screens with regard to the services which were disallowed.

While we agree with the appellant that the carrier's June and September 1992 letters discussed mostly coding and documentation issues, the June letter clearly informed the beneficiary that his use of code 90862 exceeded the rate of his peers. Ex. 4. There may be times when a physician exceeds the rate of his or her peers yet the services are undoubtedly medically reasonable and necessary. There is no presumption in the Medicare laws or regulations that a physician who exceeds the rate of his peers in performing certain types of services is per se providing unnecessary services. However, there are often two predictable results in such instances: (1) the appellant will be audited by the carrier and must have adequate documentation to prove that each service was, in fact, medically reasonable and necessary, and (2) the appellant will be presumed to know that he is exceeding the local medical standards in his community (whether he is reasonably doing so or not). Both of these consequences are discussed in greater detail later in the sections on documentation and limitation of liability, respectively.

In any case, here the possibility of unnecessary services being provided was at least flagged for the appellant's attention in June 1992 when he was informed that his rate of services exceeded those of his peers. While the 1992 auditors did not address the frequency of services issue in any detail at that time, that fact does not prevent later auditors from raising the issue. There were many subsequent notices issued following the 1992 audit letters from the carrier which should have alerted the appellant to the problem of overly frequent, insufficiently-justified services. The carrier's newsletter, effective June 1, 1995 but published in April 1995 (prior to the performance of many of the services at issue in this case), informed all providers of psychiatric services that the frequency of services would be monitored and that claims which did not show a medical need could result in a denial of services. A.C. Ex. 2. Shortly thereafter, the appellant was individually informed (through the denials of payment on specific claims) that "the visits were not paid because Medicare does not always pay for this many visits." While this was perhaps inartfully worded, many of the notices clarified that the denials were based in part on a lack of documentation and that additional documentation would be reviewed if produced by the appellant.

Moreover, with regard to the specific practices of the appellant, the appellant was informed in the March 25, 1997 audit letter from the carrier that he billed for nursing home visits far more frequently than the rate of his peers. Ex. 15. While that letter was issued after the services at issue here were performed, it illustrates the degree of the excessive frequency with which the appellant billed for services provided to nursing facility patients. The figures show that the appellant billed for pharmacological management at approximately 3.7 times the rate of his peers (per 100 patients) and for detailed nursing home visits at approximately 44.5 times the rate of his peers over the six-month period studied. The appellant has attempted to justify these excessive visit rates by showing that the patients in one of the nursing homes where he visited have higher care needs and more serious conditions than the average patients in other nursing homes in Ohio and nationally. Ex. 35. While these statistics perhaps show a higher need for both skilled and custodial care needs in that particular nursing home, they do not per se show a higher need for psychiatric services and, in any event, would not show a justification for up to 44.5 times the number of visits of those of his peers. Nor do those figures address the conditions of the patients in the other three nursing homes where the appellant practiced. In any event, the carrier's medical expert evaluated the appellant's frequency of visits in relation to the documented conditions and needs of the particular nursing home patients and found that the appellant's frequency of visits was excessive and insufficiently justified. Ex. 17.

The appellant has gone to great lengths throughout these proceedings to focus on an alleged absolute limit of 90 days and to make HCFA appear as though it is rationing health care. The appellant appears to believe that because certain nursing home administrators and medical professionals requested that he visit each nursing facility beneficiary monthly, the Medicare program is obligated to pay for that number of visits regardless of the individual conditions or needs of the particular patients at the time of the visits. This is not a reasonable interpretation of the "treating physician" rule, which provides only that HCFA give a certain level of deference to the treating physician's opinion on the services which are provided. The appellant has cited extensively to HCFA guidelines and publications which contemplate the need of a nursing home patient to be seen by a physician at least monthly. However, none of these guidelines or publications suggest that a nursing home patient should be seen by a physician in a particular specialty on a monthly basis when the patient has not been exhibiting any recent problems relating to that area of specialty. HCFA's screening guidelines and requirement that a physician justify visits in excess of those screens through adequate documentation, as those requirements are implemented through its carriers, are a prudent and reasonable way of ensuring that an overutilization of services does not occur. This is a statutorily-mandated duty of the carriers by Congress and does not constitute interference with the practice of medicine.

With regard to the coding issue, the appellant's assertions suggest that he is proceeding under the assumption that it is the carrier's responsibility to prove that he did not perform certain services which would justify a particular billing code rather than his responsibility to prove that he did bill at the correct level. He is absolutely incorrect. The burden of proof is on the physician to show, through proper documentation, that he performed services at the level billed. That documentation must be legible and must show that the physician performed the extent of services which would justify a particular code and that those services were individually medically reasonable and necessary at the frequency billed. In this case, the appellant did not do so.

The HCPCS coding, as discussed in the carrier's newsletters and individual correspondence with the appellant, has fully explained that code 90862 contemplates services of 25-30 minutes and code 99313 contemplates services of approximately 35 minutes. A.C. Ex. 2 and HCPCS codes. However, there was insufficient documentation for any of the visits to indicate that the appellant spent approximately half an hour with the patient; thus, the Fair Hearing Officer reduced the visits to codes 99312 or 99311. This action was neither arbitrary and capricious, as alleged by the appellant, nor erroneous. There was no justification for the appellant to code every service with 90862 or 99313, which would imply much more extensive services were rendered to each patient than were documented. The appellant did not point to any evidence in the record that would support higher payments for particular services.

Likewise, there is no merit to the appellant's argument that all services to patients in nursing facilities are, by definition, complex and justify maximum coding levels. The HCPCS has three coding levels for evaluation and management services to nursing facility patients: 99313, which contemplates a complex and detailed visit of about 35 minutes of time; code 99312, which contemplates a more moderate visit of about 25 minutes of time; and code 99311, which contemplates a less intensive visit of about 15 minutes of time. Certainly, if HCFA considered all nursing facility visits to be complex, difficult, and time-consuming because of the nature of nursing home patients, the HCPCS coding system would not contain codes 99312 and 99311 for more minimal services. Moreover, these codes are based on the CPT codes developed by the American Medical Association which are used generally for billing services to private insurers. Thus, it was not erroneous for the Fair Hearing Officer to downcode to code 99311 many of the appellant's services billed at to code 90862.

While the carrier interpreted code 90862 as applying only where a medication or dosage level or frequency is changed, the Fair Hearing Officer allowed the claims based on code 90862 where it was evident the patient's condition was not stable and that he or she was on psychotropic medication. See ex. 28. In any event, the appellant could not have reasonably thought that he would be paid for the services provided here at the level indicated by code 90862. The code descriptors for the codes used by the carrier are clearly more appropriate for evaluation and management services provided to stable patients in nursing facilities. Code 90862 appears with codes used for psychiatric therapy, specifically somatotherapy. The descriptor indicates that it includes prescription, use, and review of medications, indicating something more than a brief visit to monitor the medication of a stable patient. We find that it is not erroneous for Medicare to allow a higher amount for a service when an event occurs that might cause the medication to be changed or adjusted than when one is merely monitoring the effect of an already prescribed medication on a stable patient. We do not think that denying payment at the code 90862 level here will provide incentives for physicians to make medication changes unnecessarily, as alleged by the appellant; physicians have a duty to do what is in the best interests of their patients and to bill accordingly.

Finally, with regard to the appellant's statements that the use of codes 90430 and M0064, as suggested by the carrier in various correspondence, are improper for nursing facility visits is not relevant here. The codes which the Fair Hearing Officer used (through adjustments in coding, in some cases) and the Administrative Law Judge upheld were codes 90862 and 99311, which can clearly be used in nursing facilities. Codes 90430 and M0064 were not used by the carrier, the Fair Hearing Officer, or the Administrative Law Judge in paying or denying payment for any services at issue in these cases. Nonetheless, carriers have the authority to adjust the codes utilized in particular instances to more appropriate codes for the services provided. While there may have been some inconsistencies in the carrier's communications with the supplier regarding proper coding, the bottom line is that all services which have been found to be medically reasonable and necessary and properly documented have been found covered, although payment may have been directed under a different code than billed.

Finally, we reach the issue of whether the appellant provided adequate documentation to justify the medical reasonableness and necessity of the services he billed. We conclude that he did not. The carrier, the Fair Hearing Officer, the carrier's medical consultant, and others who have read the appellant's written entries have found them to be, at best, difficult to read, and at worst, largely illegible. We have found that they simply cannot be deciphered, with perhaps the exception of occasional words. Like the carrier, we have no problem with a provider using stamped templates for convenience, speed, and legibility if those templates contain all of the information required by the carrier for documentation or are supplemented with legible, handwritten notes.

Despite the appellant's assertions that a physician's entries are intended to be read by other physicians and not by "non-medical reviewers," we note that most carrier reviewers have a background in a medical-related field and are often physicians or registered nurses. The carrier's medical reviewers, including its physician consultant, found the appellant's handwriting to be illegible. Thus, it is not determinative that a few nursing home physicians or administrators where the appellant practiced found his documentation to be adequate. See ex. 7. In any case, a physician may not legitimately argue that his handwriting should be permitted to be undecipherable even though others are relying on his notes to make life-or-death decisions or to determine what services were performed for payment purposes.

Moreover, the appellant's entries were inadequate in their level of detail to justify the level of services billed. The appellant's progress notes usually contained only a few words or a phrase, and certainly not the kind of detail that would be expected in order to document that approximately 30 minutes of services were performed. The appellant has made much of the alleged wording inconsistencies in various HCFA publications and carrier newsletters regarding whether sufficient documentation must be contained in the progress notes or whether it can exist elsewhere in the medical record as a whole. Again, this is an attempt by the appellant to throw the focus off the real issue. In the cases at hand, neither the carrier's reviewers nor the medical consultant were able to find sufficient documentation in the medical records presented to them to justify the level of services billed. In any case, if the appellant had contemporaneous medical records which he believed were not seen by the reviewers, he could have submitted them during the various levels of administrative appeals of this case. We are not aware of any actions on the part of any carrier reviewer, Fair Hearing Officer, Administrative Law Judge, or Medicare Appeals Council member to refuse to review any material documentation presented in this case.

The appellant has complained that the "rules keep changing" and that he was not informed by the carrier in its June 1992 audit letter of all of the problems with his billing practices which were later alleged. He also stated that it was ludicrous for HCFA to state that its documentation regulations had not changed throughout the period at issue. See ex. 44. However, the mere fact that the carrier did not identify and include all of the problems with appellant's billing practices in its June 1992 audit letter does not mean that appellant did not have sufficient notice that his practices were not in compliance with the applicable requirements. Just because a carrier notifies an individual or entity within its jurisdiction that a problem exists does not foreclose the carrier from later identifying other problems with that entity, of which the carrier may not have previously been aware.

Moreover, HCFA is correct that the documentation regulations did not change. The word "regulation" is a term of art in administrative law and refers, on the federal level, predominantly to the U.S. Code of Federal Regulations (C.F.R.). The C.F.R. sections governing Medicare are found in title 42, and are referred to throughout this decision as 42 C.F.R. (sec.#). The regulations at 42 C.F.R. � 424.5(a)(6), which pertain to the documentation of Medicare services, did not change throughout the period at issue. Medicare comprises an extremely large percentage of federal spending, and the carriers continually seek to ensure that the laws and regulations are followed, by providing more specific guidance about what type of documentation is needed to meet those requirements. They have the clear authority to do this, and individuals and entities which choose to provide services under Medicare do so with the understanding that they are responsible for reviewing the latest information and publications.

Based on the above discussion, we agree with the Administrative Law Judge decision that the appellant's documentation was illegible and was inadequate to justify the codes billed and the frequency of services performed. We conclude that the findings were based on substantial evidence in the record and the conclusions were not erroneous. We further find that the carrier, Fair Hearing Officer, and Administrative Law Judge have been more than fair to the appellant in paying for many of the appellant's services which were coded 99313 and 90862, albeit at a different payment level than billed, even though the documentation was largely illegible and thus could not be used to verify the need for the particular services. We might not have been so lenient.

D. Sections 1879(a) and 1870: Limitation of
Liability and Waiver of the Overpayment

Section 1879(a) of the Social Security Act provides, in part, that when items or services are found to be non-covered by Medicare on the ground that they are not medically reasonable and necessary, payment may nevertheless be made if neither the beneficiary nor the provider knew or could reasonably have been expected to know that the items or services would not be covered. The regulations state that a beneficiary will be found to know of the non-coverage if he or she has been either (1) informed in writing in advance that the services will likely not be covered by Medicare, or (2) notified in the past that similar services were not covered by Medicare. 42 C.F.R. 411.404. The regulations also state that a provider will be presumed to know of the non-coverage if he (1) has been informed by the peer review organization, intermediary, carrier, utilization review committee, or beneficiary's attending physician that the services are not covered by Medicare, (2) has notified the beneficiary that the services likely will not be covered by Medicare, or (3) has constructive knowledge through HCFA notices, bulletins, manuals, carrier notices, peer review organization screening criteria, national coverage determinations, or his or her knowledge of acceptable standards of practice by the local medical community. 42 C.F.R. 411.406. Section 7300.5 of the Medicare Carrier's Manual states that for purposes of section 1879(a) --

The limitation of liability provisions of section 1879(a) are applicable only where the non-coverage determination is based on a finding that certain services were not medically reasonable and necessary (as well as for a few other reasons not applicable here). Thus, if a carrier denies payment for services on the sole ground that the services were provided more frequently than was necessary, then the carrier has determined that the denied portion of the services were not medically reasonable and necessary and section 1879(a) should be applied. However, if a carrier denies payment for services on the ground that they were not properly documented, that may also constitute a denial based on a failure to meet certain technical requirements of the program as well as a finding based on medical reasonableness and necessity. However, regardless of whether section 1879(a) may be applied to all or only some of the denied or downcoded claims at issue here, we conclude that payment cannot be made for any additional services.

The record does not contain any evidence that any of the 41 beneficiaries were informed in advance in writing of the probable non-coverage of the services provided by the appellant or had received previous notices for similar services. Thus, we conclude that the beneficiaries neither knew nor could have reasonably been expected to know that the services at issue would not be covered, and we find that they are not liable for the cost of the services.

However, with regard to the appellant, we find that the appellant had constructive knowledge based on acceptable standards of practice in the medical community. Section 411.406(e)(3) states that a provider is on constructive notice and could have been expected to know services would be excluded from coverage based on his or her knowledge of what are considered acceptable standards of practice by the local medical community. Section 7300.5 states that when a physician renders services that significantly exceed the frequency with which they are rendered by the general medical community, it is reasonable to expect the physician or supplier to know that such a pattern deviates from the standard of practice. Here, the appellant's rate of providing services to nursing home patients well exceeded that of his peers. Moreover, the appellant was informed by the carrier as early as June 13, 1992 that his use of code 90862 exceeded that of his peers. Ex. 4. This notice was mailed to and received by the appellant prior to his provision of any of the services at issue in this case. While the appellant stated that he did not fully understand the significance of this finding, his general lack of concern expressed in various statements ("I am not surprised" and "I guess I am supposed to care") did not negate his need to address this situation. Ex. 6. The appellant received notice from the carrier stating that the overly-frequent provision of services to stable patients would be monitored and disallowed.

Moreover, the appellant was on notice from the June 1993 and April 1995 carrier newsletters that certain specific documentation would be required in order to bill code 90862. A.C. Exs. 1, 2. The appellant did not provide the required information in his documentation. For these reasons, we find that the appellant could have reasonably been expected to know that many of the services rendered at the rate he was providing them would be found to be not medically reasonable and necessary by the carrier and his liability may not be limited under section 1879(a).

For the same reasons, we find that the appellant was not without fault with regard to the overpayment. Thus, waiver of the overpayment may not be made under section 1870 of the Social Security Act which provides for waiver in certain circumstances where the appellant is without fault for the overpayment.

In light of the nature of the appellant's arguments on appeal, we do not need in this decision to individually discuss each service provided by the appellant to the sampled beneficiaries and determine whether the service should be denied or covered. Both the Fair Hearing Officer and the Administrative Law Judge before us have thoroughly done that, and their reasoning on why particular services should be paid or denied is not erroneous. There would be nothing gained by our restating those decisions yet again where the appellant has not raised any new objections before us with regard to the denial of payment for particular dates of service. For these reasons, we affirm the findings of the Administrative Law Judge with regard to the services provided to the individual beneficiaries without further discussion.

However, we have reviewed each of the decisions issued by the Administrative Law Judge on the sampled beneficiaries and the arguments raised by the appellant. We have determined that certain adjustments must be recognized and made before a new projection of the total overpayment amount, based on the original statistical sampling methodology, is calculated.

First, with regard to beneficiary number 30 (J.P.), the Administrative Law Judge dismissed this appeal on the ground that there had been no previous findings by the Fair Hearing Officer with regard to this beneficiary.⁽⁵⁾ The overpayment table and re-calculation made by the Fair Hearing Officer omitted this beneficiary completely from the sample list, thus making no findings on potential overpayments or underpayments on the services provided. See ex. 28, at 33. This is the beneficiary whom the appellant has argued was not a nursing home beneficiary and should not have been included in the original sample. For these reasons, we agree that this beneficiary should not have been included in the sample. Moreover, this beneficiary should not have been included in the frame onto which the sample results were projected, but the Fair Hearing Officer did not deduct claims for this beneficiary from the frame.

Second, with regard to beneficiaries number 19 (G.J.) and 20 (J.K.), the Medicare Appeals Council was never provided any claims files or medical records for these two beneficiaries. It appears that the payment records and claims files for the beneficiaries existed at the time of the Fair Hearing Officer's decision since the Fair Hearing Officer made individual findings on the services provided to them. However, their claims files were simply not in the two boxes of records we received with this case, which included the records of the other sampled beneficiaries. We cannot make any meaningful review of the findings on the services provided to these beneficiaries without the files, and the two beneficiaries may not be fairly included in the sample on which recalculation of the overpayment is based if the individual findings pertaining to the two beneficiaries cannot be substantiated.⁽⁶⁾ Thus, we have recalculated the overpayment dropping beneficiaries number 19 (G.J.) and 20 (J.K.) from the sample. However, they should remain in the frame onto which the results are projected since the appellant did not allege that these two beneficiaries were not nursing home patients.

Third, we have concluded that the inclusion of two additional beneficiaries in the sample may have been unfairly prejudicial to the appellant. The appellant complained that documentation was never found at the nursing homes for two beneficiaries but that full disallowances were taken on all services rendered to these beneficiaries. From the list of overpayment findings of the Fair Hearing Officer, we presume these beneficiaries were numbers 4 (C.B.) and 29 (H.M.) since they are the only two beneficiaries in the sample for whom all services were disallowed as "not documented." Ex. 28, at 19-20 and 32-33. The carrier reviewer's notes, which were included in the case materials we received but which were not previously entered into the record by the Administrative Law Judge, suggest that these missing records were probably the fault of the nursing home. A.C. Ex. 7. Generally, it is the responsibility of a physician or other supplier to maintain documentation of Medicare services provided. However, when medical services are provided in a nursing home, the medical records are maintained by and remain in the custody of the nursing home rather than the physician. For this reason, we are giving the appellant the benefit of the doubt and have recalculated the overpayment dropping these beneficiaries from the sample on which the overpayment is calculated.

Finally, we have chosen to exclude from the sample beneficiary 24 (M.L.) at the request of the appellant because the calculated overpayment for this one beneficiary is nearly 60% more than that of any other beneficiary properly included in the sample. Ex. 28, at 30-31. We do not find that such action is required given that there is no reason to believe that this one overpayment was improperly calculated or that there are not other beneficiaries in the frame which have similar overpayments. However, we will allow the amount of this overpayment to be recovered individually without being used to calculate the projected overpayment in the universe of claims in order to give the appellant the benefit of any doubt regarding the effect of this individual overpayment on the total overpayment projection.

With regard to the remaining 35 beneficiaries in the sample which are not addressed in the previous paragraphs, we have reviewed the findings of the Administrative Law Judge in each individual decision. While we have made no further changes in the services which he directed to be paid, we have recalculated the overpayment findings for each beneficiary based on his findings of coverage for additional services and have reduced the overpayments for the following beneficiaries:

(3) S.B.	70.14	(Formerly 251.62)
(7) J.C.	136.06	(Formerly 161.60)
(9) R.D.	106.83	(Formerly 276.01)
(12) A.G.	( 83.10)	(Formerly ( 18.10))
(13) T.G.	4.62	(Formerly 88.97)
(17) J.H.	194.37	(Formerly 262.49)
(18) V.H.	173.13	(Formerly 395.10)
(23) B.L.	117.30	(Formerly 142.84)
(25) C.L.	335.10	(Formerly 378.36)
(31) S.P.	344.52	(Formerly 367.94)
(37) E.S.	139.90	(Formerly 160.08)
(38) L.T.	391.72	(Formerly 476.27)
(40) H.W.	258.26	(Formerly 283.80)
(41) P.W.	89.21	(Formerly 152.90)

With regard to the following beneficiaries, the Administrative Law Judge made no changes to the findings of the Fair Hearing Officer and so the overpayments remain identical to those calculated by the Fair Hearing Officer, as follows:

(1) J.A.	341.22
(2) R.B.	64.89
(5) L.B.	37.39
(6) A.C.	71.75
(8) J.D.	209.96
(10) H.F.	213.38
(11) M.F.	20.19
(14) A.G.	(150.78)
(16) M.H.	265.43
(21) F.K.	243.52
(22) B.K.	62.57
(27) D.M.	( 12.22)
(28) B.M.	37.72
(32) V.P.	255.93
(33) B.R.	83.28
(34) C.R.	239.50
(35) R.R.	9.34
(36) H.S.	112.41
(39) F.T.	204.24

With regard to the following beneficiaries, while the Administrative Law Judge made no changes to the findings of the Fair Hearing Officer, we found minor calculation errors and have corrected them as follows:

We have found the above overpayment or underpayment determinations to be proper.

The appellant, through counsel, has raised several objections to the statistical sampling methodology which was used to determine the overpayment in this audit. Specifically, the appellant argued that the methodology was flawed because it used an insufficient sample size and was not based on a pilot study which would have determined a need for stratifying the sample or for excluding potential "outlier" cases. The appellant also objected that the sample included one beneficiary who was not a nursing home patient, two beneficiaries for whom documentation could not be found and audited, and at least one beneficiary who was an outlier case. Finally, the appellant objected that the auditors did not calculate and apply an estimate of sampling variability.

HCFA has published minimum guidelines for the use of statistical sampling in estimating overpayments to physicians in Medicare Part B cases. Those guidelines are printed beginning with section 7150 of the Medicare Carrier's Manual and in a Sampling Guidelines Appendix ("the appendix") to that section. The guidelines allow for the use of statistical sampling where an objective sample is possible and complete readjudication of each claim would be excessively costly or impracticable. Sec. 7152. The appendix states that the guidelines are to be used by carriers who do not have access to competent sampling guidance and are to serve as a minimum approach. Appendix sec. 1.1. The appendix has not been updated since it was published in 1975, although HCFA is currently in the process of developing and releasing new guidelines. The use of statistical sampling in estimating Medicare overpayments has been upheld repeatedly by the federal courts. E.g. Chaves Co. Home Health Service, Inc. v. Sullivan, 931 F.2d 914 (D.C.Cir. 1991); Mile High Therapy Centers v. Bowen, 735 F.Supp 984 (D.Colo. 1988); see also HCFA Ruling 86-1.

The statistical sampling guidelines require that when statistical sampling is used to estimate an overpayment, a written report on the sampling methodology and results be developed containing certain information. That information includes identification of the physician or supplier whose services are at issue, a narrative description of the overpayment situation, a report of contacts with the overpaid person or entity, the definition and nature of the sample design, the sample results, and a discussion of any non-sampling error factors. Sec. 7156. The appendix requires that an explicit physical listing of the frame be on file with the carrier, subject to review and audit. Sec. 4.2. The guidelines suggest, but do not require, the use of pilot studies to identify characteristics and a possible distribution of overpayments and to help determine whether elements should be clustered or classified into strata. Sec. 3.2. The guidelines recommend, but do not require, stratification where it is possible to group elements so that they are likely to be more nearly alike in regard to the amounts of possible overpayment than are the elements in the universe. Sec. 2.7. The guidelines recommend basic sample sizes depending on the number of elements in the frame to be sampled and the expected overpayment amount. The appendix discusses methods for randomly choosing the actual elements to be sampled. Secs. 5.1, 5.2, and 5.3. Finally, the appendix provides guidance and calculation formulae for estimating the overpayment which occurred as well as estimating sampling variability to determine whether the potential for sampling error falls within certain tolerance levels. Secs. 7.0 and 8.1.

The actual calculations made by the carrier of the original statistical sampling overpayment are somewhat moot at this point since significant changes were made by the Fair Hearing Officer and then again by the Administrative Law Judge as to which services should be paid. However, for purposes of discussion and in order to address sampling principles and the appellant's objections, we will first address the original statistical sampling overpayment calculation. See Ex. 23. We will then re-apply the statistical sampling methodology which was applied by the carrier, with certain explained modifications, to the new levels of payments directed by the Fair Hearing Officer, as modified again by the Administrative Law Judge and affirmed above.

In the original audit, the carrier randomly selected 41 beneficiaries from a frame of 411 who had had assigned claims for services provided by the appellant processed between certain dates. Ex. 20, at 3. The appellant objected to the size of the sample on the ground that it was significantly smaller than the size suggested by the appendix guidelines. According to sec. 5.2.1 of the appendix, a basic sample size for an unstratified random sample which is expected to result in an overpayment exceeding $25,000 is 400. When reduced by the finite correction factor provided for in section 5.2.2, which is applied because there are less than 4000 sampling units in the frame, the correct number of sample elements selected to comply with these guidelines would be 203.⁽⁷⁾

However, as stated previously, the guidelines and appendix provide only the minimum principles which must be observed in conducting a statistical sample. There is no requirement that the statistical sampling guidelines be followed step-by-step. The guidelines were established in 1975 and have not been finally updated since that time. While the basic principles of mathematics, probability, and statistics have not changed, the aggregate overpayment dollar figures are significantly out-of-date. Moreover, the Medicare Appeals Council is not bound by the Medicare Carrier's Manual. For these reasons, we do not follow or "enforce" the statistical sampling appendix guidelines to the letter in reviewing overpayment calculations. We do use the guidelines as one source of reliable guidance in analyzing the validity of statistical samples which are brought before the Medicare Appeals Council.

Because we are not bound by HCFA's sampling guidelines, we do not consider it error that the Administrative Law Judge did not use the suggested basic sample size of 400 reduced by the finite correction factor.⁽⁸⁾ Instead of following the absolute numbers provided in sections 5.1 and 5.2 of the appendix, we look at the sample design and the homogeneity of the elements in the frame in determining whether a statistically significant number of sample units have been drawn. There are no absolute rules on this. A statistician may rely on a smaller number of sample units if the elements in the frame are fairly uniform in total reimbursement amount and can be expected to be similar in overpayment amount. Likewise, if the sample design effectively uses stratification to group similar sizes or types of elements, a smaller sample size may also be reliable. However, if the sample combines dissimilar items and is not designed to compensate for extreme variations (and this is borne out by a large margin of variability, as discussed below), we are less likely to find the sampling to be reliable. Our decisions are based, in large part, on the opinions of the statistician consultants who have provided testimony or written reports in the cases and whether their input provides substantial evidence on which a conclusion can be reached.

However, as we stated earlier, we have recalculated the overpayment based on the carrier's sampling methodology but with certain necessary changes. The Fair Hearing Officer, Administrative Law Judge, and Medicare Appeals Council have collectively made significant changes to the size of the overpayment and the number of beneficiaries in the sample. These changes make a significant impact on the size of the projected overpayment.

We have made the following changes to the original sample in recalculating the overpayment, as discussed in a previous section: First, we have eliminated five beneficiaries from the sample because either (1) they were not nursing home patients (beneficiary 30 (J.P.)), (2) their records could not be reviewed by the auditors through no fault of the appellant (beneficiaries 4 (C.B.) and 29 (H.M.)), or (3) their medical records and claims files were never provided to the Medicare Appeals Council so that the appellant had no opportunity to challenge the claims through every level of appeal (beneficiaries 19 (G.J.) and 20 (J.K.)). We have eliminated one more beneficiary (beneficiary 24 (M.L.)) from the sample at the request of the appellant because the calculated overpayment for this beneficiary was unusually large. While we were not convinced that this beneficiary had to be excluded from the sample, we are directing that the overpayment for this one beneficiary be collected separately and not used in calculating the projected sampling overpayment.

While we are excluding all six of these beneficiaries from the sample, we are only excluding two beneficiaries -- numbers 30 (J.P.) and 24 (M.L.) -- from the frame onto which the results are projected. As stated previously, beneficiary 30 should not have been in the defined universe of nursing home beneficiaries whose claims were filed by the appellant within the relevant time period; beneficiary 30 was not a nursing home patient and should not have been included in either the sample or the frame. Beneficiary 24 should not have been included in the sample or the frame because we are calculating and recovering this overpayment separately; to include this beneficiary in the frame would result in a double recovery. However, the appellant has never disputed that the other four beneficiaries whom we have excluded from the sample for purposes of recalculation were nursing home beneficiaries whose claims were filed during the relevant time period. Thus, while it is not valid to include them in the sample because their records cannot be reviewed and challenged, it is fair to include them in the frame of beneficiaries onto whom the results of the sample is projected. For these reasons, the original frame is reduced from 411 to 409 beneficiaries and the sample size is reduced from 41 to 35 beneficiaries.

We have also recalculated the projected overpayment based on the reductions in the overpayments of particular beneficiaries based on the individual Administrative Law Judge decisions, which directed payment for certain services not previously paid by the carrier or Fair Hearing Officer. The amount of each benefi-ciary's recalculated overpayment is listed in part II of this decision, and we have recalculated the projected overpayment based on these updated figures.

When we recalculate the overpayment based on the exclusion from the sample of the six beneficiaries discussed above, we calculate an average overpayment of $140.60 per sample beneficiary (as opposed to the $215.35 found by the Fair Hearing Officer or the $280.78 found by the carrier.) When we multiply this by the frame of 409 beneficiaries, we calculate a projected likely overpayment of $57,505.40 (rather than the $88,805.85 found by the Fair Hearing Officer or the $115,400.58 found by the carrier.)

However, because we have reduced the sample size significantly (6 out of 41 beneficiaries equals an approximate 15% reduction), we must again determine the variability and whether it falls within certain tolerance limits. As stated previously, the original sample calculated by the carrier yielded a ratio of variability of 12.15%. However, when we reduce the sample size from 41 to 35 beneficiaries and the frame from 411 to 409 and recalculate the overpayments for each sampled beneficiary based on the Fair Hearing Officer's and Administrative Law Judge's findings, the ratio of variability increases to 14.35%. (All of these recalculations are provided in an appendix to this decision.) This noticeably exceeds the tolerance level of 6-12% for a ratio of variability contemplated in the statistical sampling guidelines or the 5-10% usually desired by statisticians. For this reason, we do not find this sample sufficiently reliable in order to collect the estimated overpayment of $57,505.40.

However, as stated previously, even with a wide margin of variability such as exists here, we are 95% certain that the total overpayment amount (if every claim were to be actually reviewed) would be at least $41,002.94, or the "lower confidence level." For this reason, we are reducing the overpayment to this level in order to give the appellant the benefit of the doubt from any sampling error which may have occurred. Medicare is also entitled to recover from the appellant the additional $653.62 overpayment for beneficiary 24 (M.L.) which we have added to the lower confidence level of $41,002.94.

For the reasons stated above, we have determined that the proper amount of the overpayment, taking into consideration the additional claims paid by the Fair Hearing Officer and the Administrative Law Judge and our adjustments to the statistical sampling, should be $41,656.56. The carrier is directed to refund to the appellant any amounts repaid for these claims in excess of $41,656.56 which have not been previously refunded.

1. The appellant, a registered psychiatrist, provided medical services to 410 beneficiaries in several nursing facilities for which bills were submitted to Medicare from October 1, 1993 through January 31, 1996.

2. The appellant billed most of the services he provided to nursing facility beneficiaries with HCPCS codes 90862 (pharmacological management) and 99313 (nursing facility - evaluation and management - complex).

4. The carrier subsequently performed a statistical sample of 41 beneficiaries and assessed an overpayment against the appellant of $115,400.58. The overpayment was assessed on the grounds that some of the services were not properly documented, were not found to be medically reasonable and necessary at the frequency provided, or were not properly coded to reflect the level of services provided.

5. Following a hearing before a carrier Fair Hearing Officer, the Fair Hearing Officer directed payment for some of the claims, re-calculated the overpayment, and reduced the overpayment to $88,508.85.

6. On appeal, the Administrative Law Judge found that certain additional services could be covered and directed that the carrier re-calculate the overpayment according to his findings.

7. The Administrative Law Judge's findings with respect to individual beneficiary claims are based on substantial evidence and are not erroneous.

8. The appellant generally billed for services in excess of the frequency allowed by the carrier's screens without providing sufficient documentation to justify the need for additional services.

9. The appellant frequently billed using codes which his documentation did not support.

10. The appellant did not properly document many of his services in that his documentation was illegible and/or insufficient.

11. The appellant did not rebut the carrier's findings with regard to the specific claims at issue, with the exception of those for which the Administrative Law Judge ordered payment.

12. No payment may be made under section 1879(a) for the services which were denied.

13. The overpayment may not be waived under the criteria of section 1870 of the Act.

14. Based on consideration of the additional services for which the Fair Hearing Officer and Administrative Law Judge directed payment, adjustments to and recalculation of the projected overpayment, and the addition of the individual overpayment of one beneficiary, the overpayment must be reduced.

M0064 Brief office visit for the sole purpose of monitoring or changing drug prescriptions used in the treatment of mental psychoneurotic and personality disorders

90430 (Eliminated effective 12/31/91) Rest Home (e.g. boarding home), domiciliary, or custodial care facility medical service, established patient; minimal service

90862 Pharmacological management, including prescription, use and review of medication with no more than minimal medical psychotherapy

99211 Office or other outpatient visit for the evaluation and management of an established patient, that 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. Examples: outpatient visit with 19-year-old male, established patient, for supervised drug screen. (Addiction medicine) Office visit with 12-year-old male, established patient, for cursory check of hematoma one day after venipuncture. (Internal medicine) Office visit with 31-year-old female, established patient, for return to work certificate. (Anesthesiology) Office visit for a 42-year-old established patient to read tuberculin test results. (Allergy & Immunology) Office visit for 14-year-old established patient to re-dress an abrasion. (Orthopaedic surgery) Office visit for a 45-year-old female, established patient, for a blood pressure check. (Obstetrics & gynecology) Office visit for a 23-year-old established patient for instruction in use of peak flow meter. (Allergy & Immunology) Office visit for prescription refill for a 35-year-old female, established patient with schizophrenia who is stable but has run out of neuroleptic and is scheduled to be seen in a week. (Psychiatry)

99311 Subsequent nursing facility care, per day, for the evaluation and management of a new or established patient, which requires at least two of these three components: a problem focused interval history; a problem focused examination; medical decision making that is straightforward or 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 patient is stable, recovering or improving. Physicians typically spend 15 minutes at the bedside and on the patient's facility floor or unit.

99312 Subsequent nursing facility care, per day, for the evaluation and management of a new or established patient, which requires at least two of these three components: an expanded problem focused interval history; an expanded problem focused 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 patient is responding inadequately to therapy or has developed a minor complication. Physicians typically spend 25 minutes at the bedside and on the patient's facility floor or unit.

99313 Subsequent nursing facility care, per day, for the evaluation and management of a new or established patient, which requires at least two of these three key components: a detailed interval history; a detailed examination; medical decision making of moderate to 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 patient has developed a significant complication or a significant new problem. Physicians typically spend 35 minutes at the bedside and on the patient's facility floor or unit.

99331 Domiciliary or rest home visit for the evaluation and management of an established patient, which requires at least two of these three components: a problem focused interval history; a problem focused examination; medical decision making that is straightforward or 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 patient is stable, recovering or improving.