STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEBARY MANOR, LTD, and ) DELANO CONVALESCENT CENTER, INC., )

)

Petitioner, )

)

vs. )

) CASE NO. 84-4238

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice an Administrative Hearing was held before William R. Cave, Hearing Officer with the Division of Administrative Hearings on April 2, 1985 in Daytona Beach, Florida. The issue for determination is whether Debary Manor, Ltd. and Deland Convalescent Centers Inc. are entitled to an interim rate to increase their Medicaid reimbursement.

APPEARANCES

For Petitioner: John P. McCoy, Esquire

150 Magnolia Avenue Post Office Box 191

Daytona Beach, Florida 32015

For Respondent: Theodore E. Mack, Esquire

Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301

BACKGROUND

By Petitioners filed November 13, 1984, Debary Manor, Ltd. and Deland Convalescent Center, Inc., Petitioners, requested an Administrative Hearing to contest the denial by the Department of Health and Rehabilitative Services, Respondent, of their requests for an interim rate to increase their Medicaid reimbursement. Although only the request of Debary Manor, Ltd. was forwarded to Division of Administrative Hearings, the parties stipulated at hearing in this matter that Deland Convalescent Center, Inc. should be added as a party to these proceedings.

At the hearing Petitioners presented the testimony of Patricia S. Lane, Steven Robert Jones, and Fred A. Lane. Petitioners' Exhibits Nos. 1-4 were received into evidence.

Respondent presented the testimony of Francis E. Martin, Jr. and Carlton Dyke Snipes. Respondent's Exhibit No. 1 was received into evidence.

The parties submitted post hearing proposed findings of fact and conclusions of law pursuant to Section 120.57(1)(b)(4), Florida Statutes (Supp. 1984). A ruling on each proposed finding of fact had been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial or unnecessary.

FINDINGS OF FACT

1. Petitioners are licensed Florida nursing home facilities and at all times material hereto, were certified to and were participating in the Florida Medicaid Program. Said participation is subject to all State and Federal laws, regulations, standards and guidelines relating to Medicaid. For nursing homes, the pertinent guidelines relating to Medicaid reimbursement are found in The Florida Title XIX Long Term Care Reimbursement Plan (Gainesville Plan) which has been incorporated by reference as a rule. See Rule 10C-7.48(4)(a)5.a., Florida Administrative Code.

   
   

2. To arrive at a nursing home provider's reimbursement rate for the upcoming year, Respondent reviews the past years's cost report submitted by the provider and sets a prospective per diem rate. This prospective rate, based upon historical costs, is projected forward with the addition of an inflation factor. The provider is expected to stay within the budget of this prospective rate for the entire year.

   
   

3. Should a provider experience unforeseen costs related to patient care during the year, the provider may apply for an interim rate (usually an increase over the current prospective rate) prior to the filing of its next coat report. Interim rates are only allowed in certain circumstances as set forth in the Gainesville Plan.

   
   

4. During 1984, Petitioners experienced difficulty keeping employees due to competition from other facilities and unionization which had raised salaries at other facilities above those paid by Petitioners. In order to compete, Petitioners raised salaries for their employees and subsequently filed requests for interim rates with Respondent to cover the increased costs incurred. The requests were mailed by Petitioners on August 30, 1984 but were not received by Respondent until September 4, 1984.

   
   

5. Respondent by correspondence dated October 8, 1984, denied Petitioners requests for interim rates stating:

   
   

   "The Florida Title XIX Long-Term Care Reimbursement Plan, Section IV, Subsection K (2) states: `Interim rate changes reflecting increased costs occurring as a result of patient care or operating changes will be considered only if such changes were made to comply with existing State or Federal rules, laws, or standards, and if the change in cost to the provider is at least 5,O00 and would cause a change of 1.0 percent or more in the provider's current total per diem rate.'

   The interim rate request as submitted does not document that the increased costs were incurred for complying with existing State or Federal rules, laws, or standards."

   
   

   The Petitioners were also notified of their right to a hearing and, pursuant to Section 120.57,(1), Florida Statutes, this hearing was requested.

   
   

6. On April 1, 1983, a Florida Title XIX Long-Term Care Reimbursement Plan (Gainesville Plan) was implemented and was revised effective September 1, 1984.

   
   

7. Beginning in October 1, 1984, all aides hired by nursing home facilities had to be certified which required certain education and training. Those aides hired prior to October 1, 1984 had until October 1, 1986 to become certified. This was a requirement placed on the aides and not on the nursing home facilities.

   
   

8. Both the April 1, 1983 Gainesville Plan and the September 1, 1984 revised Gainesville plan provide for the use of postmark in submitting cost reports but neither plan provides for use of postmark in submitting an interim rate request. The policy of the Respondent was to consider the interim rate requests under the plan in effect on the date the request was received.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of, this proceeding.

   
   

10. Medicaid is a governmental health care program which provides to eligible needy persons, assistance in meeting the cost of medical care. The program is financed from County, State and Federal funds. In order to qualify for Federal funds, the State must comply with the Federal Social Security Act of 1935 as amended, and the rules and regulations of the United States Department of Health and Human Services, made in accord with the Act and subsequent court decisions. See: Rule 10C-7.30 Florida Administrative Code.

    
    

11. In Florida the Department of Health and Rehabilitative Services has been designated as Use state agency responsible for the administration of Medicaid funds under Title XIX of the Social Security Act. Pursuant to Chapter 409.266, Florida Statutes, (1983), Respondent may enter into such agreements with appropriate agents as may be necessary or needed to implement the provisions of Title XIX of the Social Security Act pertaining to medical assistance.

    
    

12. In providing nursing home care to eligible recipients, Respondent contracts with private nursing home providers who, in turn, agree to be reimbursed in accordance with Medicaid principles. In this case the relevant event principles relating to the request interim rates are found in the Florida Title XIX Long-Term Care Reimbursement Plan (Gainesville Plan).

    
    

13. One of the issues in the instant case was whether the Gainesville Plan effective prior to September 1, 1984, or the Gainesville Plan effective September 1, 1984 should control since Petitioners mailed their interim rate requests prior to September 1, 1984, but the requests were received and considered by Respondent September 4, 1984. This issue is of importance because

    amendments to the Gainesville Plan effective September 1, 1984 were designed to more effectively limit the reasons for which interim rates would be approved and Petitioner's requests were considered in accordance with the September 1, 1984 plan.

    
    

14. At the hearings Respondent presented testimony that it was Respondent's policy to consider interim rate requests in light of the plan in effect on the date the requests were received. This policy had been applied uniformly to all providers and there were no known exceptions to the policy. Although Petitioners disagreed with this policy and offered their own interpretation of the language and requirements of the plan, deference must be given to the agency interpretation which has been uniformly applied. See, Kearse v. Department of Health and Rehabilitative Services, 10 FL W 1021, (1 DCA FLA. 1985). Absent a specific requirement in the plan which would allow the postmark date to be controlling, the plan in effect on the date of receipt of the interim rate request must be used. For purposes of this hearing, therefore, only the language in the Gainesville Plan effective September 1, 1984 will control.

    
    

15. The pertinent portion of the September 1, 1984 Gainesville Plan is paragraph IV K (2) which states:

    
    

    Interim rate changes reflecting increased costs occurring as a result of patient care or operating changes will be considered only if such changes were made to comply with existing State or Federal rules, laws, or standards and if the change in cost to the provider is at least $5,O0O and would cause

    a change of 1.0 percent or more in the provider's current total per diem rate.

    
    

16. Petitioners urge that their request for an interim rate meets the requirements of this paragraph because a change in Florida Statutes required certification of nursing home aides. This argument must fail for two reasons. First, the requirement for certification was placed upon the aides and not on Petitioners. Costs of such certification were not borne by Petitioners, who were only indirectly affected by the requirement. It was clear from testimony that Petitioners had long been aware of this requirement and had been voluntarily training aides to meet specified standards. The standards had not directly caused the salary increase for aides. Second, the salary increases for the aides made up only a portion of the rate increase requested by Petitioners. Salary increases cited for the interim rate request were also given to other employees who were not affected by the certification standards.

    
    

17. The testimony revealed that the yearly inflation factor given the Petitioners in their prospective rates was meant to cover increases in wages. Petitioners, however, chose to pay minimum wages to their employees until they were forced to increase wages due to competition and unionization. Such a decision on the part of the Petitioners to spend the inflation factor over Use years on costs other than wages was a business decision on the part of the Petitioners. The decision to increase those wages during 1984 was also business related. As such, the additional costs did not meet the requirements for an interim rate request under the Gainesville Plan and Respondent had no authority to increase Petitioners' reimbursement through an interim rate.

RECOMMENDATION

Based upon the findings of facts and conclusions of law recited herein it is RECOMMENDED that the Respondent enter a Final Order denying the Petitioner interim rate increase.

Respectfully submitted and entered this 5th day of August, 1985, in Tallahassee, Leon County, Florida.

WILLIAM R. CAVE

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings 5th day of August, 1985.

COPIES FURNISHED:

Department of Health and Rehabilitation Services

1323 Winewood Boulevard

Tallahassee, Florida 32301

John P. McCoy Esquire Post Office Box 191

150 Magnolia Avenue

Daytona Beach, Florida 32015

David Pingree Secretary

1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 84-004238

Orders for Case No: 84-004238