<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report December 11, 1998
AMERIPATH, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 000-22313 65-0642485
- ------------------------------------ ------------------------------- -------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
</TABLE>
7289 Garden Road, Suite 200
Riviera Beach, FL 33404
------------------------------------------------------------------------------
(Address, including zip code, of principal executive office)
(561) 845-1850
------------------------------------------------------------------------------
Registrant's telephone number, including area code
NOT APPLICABLE
------------------------------------------------------------------------------
(Former name, former address and fiscal year, if changed since last report)
<PAGE> 2
Item 5. OTHER EVENTS
On November 23, 1998, the Company announced that it had received a request for a
refund of $2.95 million from Medicare Program Safeguards ("MPS"). The Company
also stated that it disputes the findings and had requested an expedited
conference and hearing on the matter.
On December 10, 1998, the Company announced that in light of the additional
information provided, MPS has decided not to hold the company liable for the
alleged overpayment.
Copies of the Company's press releases regarding these matters and the related
letters from MPS are attached as Exhibits to this report and are incorporated
herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Letter from Medicare Program Safeguards Benefits Integrity,
dated November 10, 1998
99.2 Press Release, dated November 23, 1998.
99.3 Letter from Medicare Program Safeguards Benefits Integrity,
dated December 10, 1998
99.4 Press Release, dated December 10, 1998.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERIPATH, INC.
-------------------------------------------
(Registrant)
By: /s/ ROBERT P. WYNN
-------------------------------------------
Robert P. Wynn
Executive Vice President and
Chief Financial Officer
December 11, 1998
<PAGE> 4
EXHIBIT INDEX
Exhibits
99.1 Letter from Medicare Program Safeguards Benefits Integrity, dated
November 10, 1998
99.2 Press Release, dated November 23, 1998.
99.3 Letter from Medicare Program Safeguards Benefits Integrity, dated
December 10, 1998
99.4 Press Release, dated December 10, 1998.
<PAGE> 1
Exhibit 99.1
PROGRAM SAFEGUARDS MEDICARE (LOGO)
===============================================================================
BENEFITS INTEGRITY
532 Riverside Avenue * P.O. Box 2078
Jacksonville, FL 32231-0048
November 10, 1998 CERTIFIED MAIL
RETURN RECEIPT REQUESTED
AMERIPATH FLORIDA, INC.
6061 NE 14TH AVENUE NOV 18 1998
FT. LAUDERDALE FL 33345-7615
REFUND REQUEST
FCN # 9083141190100
RE: AMERIPATH FLORIDA, INC., L8328
Dear Provider:
An Operation Restore Trust Team comprised of representatives from the Health
Care Financing Administration (HCFA), Florida Medicaid, Agency for Health Care
Administration (AHCA) Survey and Certification, and our organization conducted
an onsite review of Ameripath Florida (L8328) (hereinafter referred to as
Ameripath) on April 3, 1997. In the course of that review, a statistically valid
random sample of services to 30 Medicare beneficiaries between January 1, 1996,
and December 31, 1996, was drawn. The records pertaining to services rendered to
the beneficiaries were requested from Ameripath, including test results and
order/requisition forms. Medical charts/records were requested from the ordering
physicians. A total of 155 services were reviewed by our staff to determine
whether payment for these services was appropriate.
During the review period, Ameripath was paid a total of $8,469,893.72 in
Medicare Funds. Upon completion of the Comprehensive Medical Review (CMR), we
determined that Ameripath was overpaid a total of $2,953,369.45 for 1996
services. This overpayment amounts to 35 percent of Ameripath's total Medicare
payments for the specified time period.
Attached you will find a copy of the CMR findings (Enclosure 1). The review
findings are detailed for each beneficiary and for all services. The basis or
reason for each denial is shown. Specific findings from our review include:
* A total of 83 services out of 155 total services were billed using procedure
code (88305) and 99 percent of the services reviewed were reduced to procedure
code (88304) which is the correct procedure for the service rendered.
* A total of 12 services were totally denied due to the lack of medical
documentation in the records.
Enclosure 2 details our, and HCFA's, attempts to obtain additional medical
documentation required to complete our comprehensive medical review from the
physicians who ordered test(s) for the sample beneficiaries.
We have been instructed by HCFA to notify Ameripath of this overpayment and its
intent to recoup it. Authority for this action is found at 42 CFR405.371(a)(2),
which states that Medicare payments may be recouped, in whole or in part, if we
or HCFA have determined that the provider has been overpaid.
<PAGE> 2
BASIS FOR RECOVERING MONIES:
We have determined that the Medicare Part B program overpaid Ameripath in the
amount of $2,953,369.45 and a refund for that overpayment is now requested. A
refund is being requested based on a sample of claims reviewed. The medical
review findings and a patient listing for each sample case is attached
(Enclosure 3) along with an itemization of the services at issue. If patients
have paid you more than the amount noted in "Patient Liability" column of the
attached document, please contact them to settle their account. The patient will
be notified of any refund due.
We are required to determine if you are liable for refunding this overpayment.
We make this decision based on Section 1870 of the Social Security Act. Under
this provision you are liable for accepting an overpayment if you could be
expected to know this overpayment existed. We find you liable because you
accepted the payment for services that were either not ordered by a physician,
not adequately documented, or not medically necessary. Therefore, you are liable
for refunding any identified overpayment.
Section 1833(e) of the Social Security Act places the burden on the provider to
furnish information as may be necessary to determine if payment is due and the
amount of payment. You are responsible for knowing that you must provide
documentation to support the services you bill to Medicare. You were also
notified of this requirement in the September/October 1992 MEDICARE PART B
UPDATE!. This article indicated that "[T]he provider is responsible for
maintaining and/or supplying any documentation that identifies the historical as
well as physical findings that would warrant reimbursement for services
rendered." You did not provide this information for numerous services. Because
you accepted payment for services that lacked evidence of medical necessity, you
are held liable for the overpayment and your liability is not limited by Section
1870 of the Social Security Act.
Section 1879 of the Social Security Act permits Medicare payments to be made on
behalf of a beneficiary to a physician/supplier who has accepted assignment for
certain services that would otherwise not be covered under Medicare, if neither
beneficiary nor the physician/supplier knew, or could have been expected to know
that the services were not covered. The services affected by this provision are
those 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.
After reviewing the issues we have determined that you knew, or could have been
expected to know, that these services were not covered or not medically
reasonable and necessary. Therefore, you are held liable for this overpayment.
Our records show that we published guidelines applicable to our findings in
issues September/October 1992, pg. 12; July/August 1995, pg. 8; March/April
1995, pg. 20; September/October 1995, pp. 8 and 28-29; October 1996 Special
Issue, pp. 24-36 and November/December 1996, pp. 6-8 and 21 of the MEDICARE PART
B UPDATE. Special Notice to Florida clinical laboratories dated September 1995.
Copies of these articles are attached to Enclosure 1.
<PAGE> 3
ESTIMATION OF 1997 OVERPAYMENT
Based upon our review of 1996 services, we believe that an overpayment likely
exists for 1997 as well. Therefore, in the near future we may be presenting a
request for records to Ameripath, in order to perform a limited review of a
sample of 1997 services. From this limited review, we will present Ameripath
with an option for a Settlement Agreement that, if accepted, would make further
review of 1997 claims unnecessary. You will be informed of further developments
on this point at a later date. An example of a settlement agreement which
describes the three consent settlement options you would have is shown as
Enclosure 4. If you have no interest in such a Settlement Agreement, please let
us know immediately.
HOW TO REMIT A REFUND
You may remit the entire amount for 1996 in one payment. Please make the check
payable to Medicare Part B and return a copy of this letter with the payment
to: MEDICARE PART B, FINANCIAL SERVICES, P.O. BOX 44141, JACKSONVILLE, FLORIDA
32231. If it would be inconvenient to refund this amount within 30 days, you
may wish to seek a private or commercial loan to satisfy this obligation. If
you are unable to comply with the above, we are authorized to consider
repayment in installments based on financial hardship.
If you do not refund the overpayment within 30 days from the date of this
letter, we will take the following steps:
o Interest will accrue at an annual rate of 13.50% on the outstanding balance.
In accordance with the provisions of Section 1833(j) of the Tax Equity and
Fiscal Responsibility Act and 42 CFR 405.376, Blue Cross and Blue shield of
Florida is required to charge interest on this account. You will not be
assessed any interest if payment is received within 30 days. After this 30
day period, interest will be assessed for the first 30-day period, and will
continue for each 30 day period or portion thereof for which no payment is
received.
o On DECEMBER 20, 1998, we will automatically begin to offset the overpayment
amount against any pending or future assigned claims. Offset payments will
be applied to the accrued interest first and then to the principal. If you
believe that offset should not be put into effect, submit a statement within
15 days of the date of this letter to the above address, giving the reasons
why you feel that this action should not be taken.
Please note that under Section 1128(b)(6) of the Social Security Act, a
physician or other entity who has furnished services or supplies which are
determined to substantially in excess of the needs of individuals or to be of a
quality which fails to meet professionally recognized standards of health care
may be excluded from the Medicare and other health care programs. This can be
applicable to services a physician provides or services that he orders but
which are provided by other individuals or entities including clinical
laboratory procedures.
<PAGE> 4
APPEAL RIGHTS
If you do not agree with the findings upon which the overpayment is based, you
may request a hearing. You must be contesting at least $100.00 in benefits to
qualify for a hearing. You may combine amounts denied on other claims you have
had reviewed to meet the $100.00 requirement. This includes re-opened reviews
if you received a revised decision. You must appeal each claim on time.
If you choose a hearing, the request must be submitted in writing. The hearing
will be held by a Hearing Officer. You may submit more information, to be
considered by the Hearing Officer, to support your claim. You may participate in
the hearing in person or send someone to represent you for the In-Person Hearing
proceedings. You do not have to appear in person. You may also have a Telephone
Hearing. This lets you and your witnesses testify, and it may be more
convenient. However, you do not have to testify. If you do choose to have an
In-Person Hearing, let us know who will attend.
Regardless of the kind of hearing you request, the Hearing Officer will first
decide the claim based on the evidence in the file instead of holding a
hearing. We call this an "On The Record" decision, and the Hearing Officer will
send you the decision. If you do not agree with this decision, and you had
asked for either a Telephone Hearing or an In-Person Hearing, we will provide
you with that hearing. It will be held by a new Hearing Officer. The "On the
Record" decision will have no effect on this Hearing.
If you decide to request a hearing, please submit your written request to:
MEDICARE HEARINGS
P.O. 45156
JACKSONVILLE, FLORIDA 32232-5156
If you do not file a request for a hearing within six(6) months, our refund
request will become final. YOU WILL NOT BE ABLE TO APPEAL THIS REFUND AT A
LATER TIME.
A request for a review or hearing will not prevent our actions to recoup the
overpayment. If the results of the appeal are in your favor, we will refund any
excess amount withheld through the recovery of monies refunded.
For copies of the applicable laws and regulations, please contact us at the
address above. If you have any questions concerning the recoupment of payment,
please let me know.
Carefully review all enclosed materials. Please take all necessary actions to
correct inappropriate practices described on the attachments. If the pattern of
practice is not corrected, the Carrier will take further action.
<PAGE> 5
If you have any questions concerning the:
o Medical Review Findings or Overpayment Calculation, please write to the:
MEDICARE PART B, FRAUD AREA, P.O. BOX 45087, JACKSONVILLE, FLORIDA 32231.
o Arrangements for repayment, requests for an extended repayment period,
interest or offset, please write to the Financial Services Area at: MEDICARE
PART B, FINANCIAL SERVICES AREA, P.O. BOX 44141, JACKSONVILLE, FLORIDA
32231.
Sincerely,
/s/ Karen A. Monson
Karen A. Monson, Director
Medicare Program Safeguards
Attachments
<PAGE> 1
Exhibit 99.2
[The AmeriPath, Inc. Logo]
Contact:
Robert P. Wynn Noonan/Russo Communications, Inc.
Executive Vice President & CFO 212-696-4455
AmeriPath, Inc. Heather Regan (media) ext. 241
561-845-1850 Meredith Milewicz (investors) ext. 228
E-mail: [email protected]
AMERIPATH RECEIVES REFUND REQUEST FROM MEDICARE
Riviera Beach, FL, November 23, 1998 - AmeriPath, Inc. (Nasdaq: PATH), a
physician practice management company focused on anatomic pathology services,
announced today that it has received a refund request in the amount of $2.95
million from Medicare Program Safeguards ("MPS"). The request follows an onsite
review, in April 1997, by federal and state agencies comprising an Operation
Restore Trust Team, of the Company's Medicare billing practices in 1996 at its
Ft. Lauderdale laboratory facility. The Company, which has conducted an internal
review of the billing procedures, records and services in question, vigorously
disputes MPS's findings and determination and has requested an expedited
conference and hearing on the matter.
According to MPS's letter, following a "comprehensive medical review", MPS
determined that the Company is liable for Medicare overpayments in the amount of
$2.95 million, and is seeking a refund or recoupment of this amount by December
10, 1998. MPS's determination is based on their finding that AmeriPath's Ft.
Lauderdale facility accepted payment for services that either were billed using
an improper procedure code or were not adequately documented. This determination
was made following a review of a random sample of the Company's services to 30
Medicare beneficiaries (and records, test results, other documents and services
in connection therewith), but without an opportunity for the Company to present
its case or be heard on the issues presented. MPS's letter also states that it
believes an overpayment for 1997 likely exists, and that a review of a sample of
1997 services may also be conducted.
Although the Company believes that MPS's determinations and the request for
reimbursement are without merit, there can be no assurance that this matter will
be resolved over the near term or that the ultimate outcome of this matter will
not have a material adverse effect on the Company's results of operations. MPS
has given notice of its intention, beginning December 20, 1998, to offset the
alleged overpayment (plus interest at 13.5%) against any pending or future
Medicare payments; if the Company prevails in its hearing and appeal of MPS's
determination, then any excess amounts withheld would be refunded to the
Company.
AmeriPath, Inc. is the nation's leading physician practice management company
focused on providing anatomic pathology services to physicians, hospitals,
national clinical laboratories and managed care organizations. The Company
presently operates in ten states and employs 226 pathologists who provide
medical services through outpatient pathology laboratories, hospital inpatient
laboratories and outpatient surgery centers. Additional information regarding
AmeriPath is available on the Internet at www.ameripath.com.
This release contains certain forward-looking statements regarding AmeriPath,
including its operations and prospects. Past performance is not necessarily
indicative of future results. In addition, AmeriPath's actual results could
differ materially from the results anticipated in these forward-looking
statements as a result of uncertainties, including risks relating to demand,
pricing, government regulation, payments and reimbursements, dependence upon
contracts and pathologists, acquisitions, integration of acquired practices, the
market for pathology services, competition, and other factors identified in
AmeriPath's filings with the Securities and Exchange Commission.
<PAGE> 1
KAREN A. MONSON
Director, Benefits Integrity
Program Safeguards
December 10, 1998
Exhibit 99.3
Jack Bierig, Esquire
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Dear Mr. Bierig:
After consideration of the additional information that you and others have
provided, and given that we believe this matter does not involve fraud or
intentional abuse, we have decided not to hold your client, AmeriPath Florida,
Inc., liable for refunding our previously assessed overpayment of $2,953,369.45.
We decided, under Section 1870 of the Social Security Act, not to hold AmeriPath
Florida, Inc., liable for the 83 services that were billed using 88305 versus
88304 due to the information that was submitted and obtained regarding the
potential differing interpretations on how to bill skin biopsies under these two
codes. Furthermore, since only twelve services other than those involving 88305
were totally denied due to lack of documentation, we will only ask for the
actual overpayment of $204.05 for those twelve services instead of using the
extrapolated overpayment methodology.
I am instructing the Financial Services Department to withdraw their overpayment
assessment, except for the actual overpayment of the twelve services not
involving the upcoding issue. If you do not choose to pay the assessed
overpayments associated with the twelve services by December 20, 1998, funds
will be recouped on that date. AmeriPath's Hearing request, which is already
pending, will be held as scheduled so that these twelve services may be
appealed.
As you know, I have requested that the CPT coding panel respond to our questions
regarding use of 88304 and 88305. When we receive their response we will issue
clarifying instructions through our normal publication process. Until those
instructions are issued, we will not take any action against AmeriPath and other
providers based upon the use of CPT Code 88305, in 1996 or thereafter, to bill
for skin biopsies other than cysts, tags, debridements, or plastic repairs.
Sincerely,
/s/ Karen A. Monson
------------------------
Karen A. Monson
Director
<PAGE> 1
Exhibit 99.4
[The AmeriPath, Inc. Logo]
Contact:
Robert P. Wynn Noonan/Russo Communications, Inc.
Executive Vice President & CFO 212-696-4455
AmeriPath, Inc. Heather Regan (media) ext. 241
561-845-1850 Meredith Milewicz (investors) ext. 228
E-mail: [email protected]
AMERIPATH PREVAILS ON MEDICARE REIMBURSEMENT ISSUE
Riviera Beach, Florida, December 10, 1998 - AmeriPath, Inc. (Nasdaq: PATH)
announced today that Medicare (Florida) Program Safeguards ("MPS") has advised
the Company that after consideration of the additional information provided by
the Company, it has determined "not to hold ... AmeriPath Florida Inc. liable
for refunding our previously assessed overpayment" of $2.95 million. Moreover,
MPS, in its letter to the Company, acknowledged that this matter did "not
involve fraud or intentional abuse" of the Medicare program.
As previously disclosed, following an onsite review in April 1997 by an
Operation Restore Trust Team of the Company's 1996 Medicare billing practices at
its Ft. Lauderdale laboratory facility, MPS determined that the Company was
liable for, and sought recoupment of, alleged $2.95 million in Medicare
overpayments. MPS's determination was based on their finding at that time that
the AmeriPath facility accepted payment for services that either were billed
using an improper procedure code (88305 vs. 88304) or were not adequately
documented.
Upon receiving the MPS overpayment determination, the Company mounted a vigorous
protest and defense, consistently taking the position that MPS's determination,
regarding improper CPT coding, was completely erroneous and inconsistent with
accepted CPT code assignment guidelines that have been in effect since 1992. As
support for its position, the Company provided MPS with reports of two
reputable, independent CPT coding experts, retained as consultants by the
Company's healthcare counsel. These experts independently concluded, based on
their review of the services reviewed by MPS, that all such services were
properly coded and properly billed by AmeriPath under CPT Code 88305, in
conformity with accepted CPT code assignment guidelines.
The only claim which MPS has determined to continue to pursue is related to an
alleged lack of documentation on 12 services, resulting in overpayments in the
total amount of $204.05. Although the Company believes that it can provide
adequate documentation supporting the billing for these clinical laboratory
services, the Company will pay the $204.05 in the interest of bringing closure
to this matter.
The MPS letter also states that it has requested an interpretation from the CPT
coding panel on the future use of CPT codes 88304 and 88305 by AmeriPath and all
other providers. MPS also acknowledged that no action will be taken for the
periods 1996 or thereafter. Once MPS receives information from the CPT coding
panel, they will issue clarifying instruction through their normal publication
process. AmeriPath believes that CPT coding panel will confirm the correctness
of AmeriPath's use of CPT code 88305 for skin biopsies.
- more -
<PAGE> 2
Separately, the Company announced that it will vigorously defend and seek
expeditious withdrawal or dismissal of the class action lawsuits that have been
filed against it. The Company has been served with summonses in what purport to
be five securities class action claims filed in the U. S. District Court for the
Southern District of Florida. The Company is aware that other similar lawsuits,
all arising as a result of the recent significant drop in the Company's stock
price (which in turn followed the Company's initial announcement regarding MPS's
$2.95 million overpayment determination), are being filed or pursued. Again, the
Company believes all such suits are without merit and will seek immediate
withdrawal or dismissal.
James C. New, AmeriPath's President and CEO, stated: "From the outset, we were
confident that we had a strong position in this matter, and were determined to
vigorously defend our rights. We are gratified that MPS has determined to drop
its refund request, and we can now move forward with `business as usual' in
managing and operating our business in the best interests of our stockholders,
employees and the physicians and patients whom we serve. Many people have stood
by us, and supported us, during this difficult time, and for that we are
extremely grateful. However, it is most unfortunate that the Company and our
management team's reputation and billing integrity were ever called into
question in the first place."
AmeriPath, Inc. is the nation's leading physician practice management company
focused on providing anatomic pathology services to physicians, patients,
hospitals, national clinical laboratories and managed care organizations. The
Company presently operates in ten states and employs 226 pathologists who
provide medical services through outpatient pathology laboratories, hospital
inpatient laboratories and outpatient surgery centers. Additional information
regarding AmeriPath is available on the Internet at www.ameripath.com.
THIS RELEASE CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS REGARDING AMERIPATH,
INCLUDING ITS OPERATIONS AND PROSPECTS. PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS. AMERIPATH'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THE RESULTS ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF
UNCERTAINTIES, INCLUDING RISKS RELATING TO DEMAND, PRICING, GOVERNMENT
REGULATION, PAYMENTS AND REIMBURSEMENTS, DEPENDENCE UPON CONTRACTS AND
PATHOLOGISTS, ACQUISITIONS, INTEGRATION OF ACQUIRED PRACTICES, THE MARKET FOR
PATHOLOGY SERVICES, COMPETITION, AND OTHER FACTORS IDENTIFIED IN AMERIPATH'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. IN ADDITION ANY CHANGE IN
APPLICABLE CPT CODING GUIDELINES, OR RELATED MEDICARE INSTRUCTIONS OR
INTERPRETATIONS, COULD ALSO HAVE A MATERIAL EFFECT ON THE COMPANY'S RESULTS OF
OPERATIONS."
