Judges: WILLIAM C. SHERRILL
Agency: Agency for Health Care Administration
Latest Update: Sep. 17, 1985
Summary: Health Cost Containment Board (HCCB) has statutory authority to adjust net revenues per adjusted admissions on hospital budget if review triggered by Section 395.509(2)(a),(b), Florida Statutes.
85-2296.PDF.
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
AMERICAN MEDICAL INTERNATIONAL, ) INC., d/b/a PALMETTO GENERAL ) HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 85-2296H
)
STATE OF FLORIDA, HOSPITAL )
COST CONTAINMENT BOARD, )
)
Respondent, )
and )
)
CITIZENS OF THE STATE OF )
FLORIDA, )
)
Intervenor. )
) AMERICAN MEDICAL INTERNATIONAL, ) INC., and MEMORIAL HOSPITAL OF ) TAMPA, )
)
Petitioner, )
)
vs. ) CASE NO. 85-2297H
) STATE OF FLORIDA, HOSPITAL COST ) CONTAINMENT BOARD, )
)
Respondent, )
and )
)
CITIZENS OF THE STATE OF )
FLORIDA, )
)
Intervenor. )
)
AMERICAN MEDICAL INTERNATIONAL, ) INC., and SOUTHEASTERN MEDICAL ) CENTER, )
)
Petitioners, )
)
vs. ) CASE NO. 85-2465H
) STATE OF FLORIDA, HOSPITAL COST ) CONTAINMENT BOARD, )
)
Respondent. )
and )
)
CITIZENS OF THE STATE OF )
FLORIDA, )
)
Intervenor. )
)
RECOMMENDED ORDER
The final hearing in these consolidated cases was held
in
Tallahassee, Florida, on September 3, 1985. Appearing for the parties were:
APPEARANCES
For Petitioners: Ralph H. Haben, Esquire
Robert S. Cohen, Esquire Post Office Box 669 Tallahassee, Florida 32302
For Respondent: Curtis A. Billingsley, Esquire
Hospital Cost Containment Board Woodcrest Office Park
325 John Knox Road, Suite 101 Tallahassee, Florida 33203
For Intervenor: Kevin O'Donnell, Esquire
Peter Schwartz, Esquire Public Counsel
624 Crown Building
202 Blount Street Tallahassee, Florida 32301
Petitioners submitted two exhibits, and Respondent submitted one exhibit filed after the close of the hearing. There were no witnesses. There was no stipulation of fact. The parties agreed to submit these cases to the Hearing Officer for a recommended order on a single legal issue: does the Hospital Cost Containment Board have authority to amend or adjust a hospital's net revenue per adjusted admission when the budget of that hospital has triggered budget review pursuant to sections 395.509(2)(a) and (b), Fla. Stat. (1984).
FINDINGS OF FACT
The legal issue presented by agreement to the Hearing Officer for a recommended order is whether the Hospital Cost Containment Board has the authority to amend or adjust a hospital's net revenue per adjusted admission when the budget of the hospital has triggered budget review pursuant to sections 395.509(2)(a) and (b), Fla. Stat. (1984).
The petition in case number 85-2465H contains this legal issue with respect to a reduction of net revenue per adjusted admission of an additional $84. Neither of the petitions in case numbers 85-2296H and 85-2297H contain any allegations raising this legal issue.
At the final hearing, the parties stipulated that these three cases should be consolidated for the final hearing, and a single recommended order should be entered concerning the stipulated legal issue.
CONCLUSIONS OF LAW
Any finding of fact concerning the final order in DOAH case number 85-1666H would be irrelevant to the legal issue in this case. Section 395.509(11), Fla. Stat., by the above stipulation, is no longer an issue in any of these cases. The Hospital Cost Containment Board in case number 85-1666H refused to convert the penalty of the last sentence of that subsection to gross revenues because the statute expressly applies only to net revenues. Subsection
of section 395.509 is distinct from the normal budget review subsections (2), (5), and (6) of the same statute. Subsection (11) confers authority upon the Hospital Cost Containment Board separately from the authority contained
in subsections (2), (5), and (6), and the limitation of the penalty therein to net revenues is a consequence of subsection (11) being limited and self-contained.
The stipulation that these three cases should be consolidated for final hearing constitutes an agreement that there are common questions of law and fact to these three cases. Therefore, this stipulation results in effect in agreement that the same legal issue is involved in case numbers 85-2296H and 85- 2297H notwithstanding the lack of pleading of this issue in the petitions.
The "powers and duties" of the HCCB are explicitly conferred by title by section 395.504, Fla. Stat. (1984), which provides in subparagraph (2):
Shall approve, approve as amended by the board, or disapprove the budget of each hospital, including its projected expenditures and projected revenues. (E.S.)
Thus, the initial conferral of power does not distinguish between gross and net revenues, although these have been separately defined by sections 395.502(11), (17) and (23), Fla. Stat. (1984). Moreover, "budget" is also defined to include "revenues," without distinguishing between gross and net revenues. "Budget" is defined as ". . . the projections by the hospital, for a specified future time period, of expenditures and revenues, with supporting statistical indicators." Section 395.502(4), Fla. Stat. (1984) (E.S.).
The statute, therefore, confers upon the HCCB the power to disapprove "projected revenues" generally, which would include both gross and net revenues, and to disapprove a budget," which includes "projections . . of .
. . revenues," which again is not limited to either gross or net revenues. If limitations upon this general grant of power exist, those limitations must be found elsewhere in the statutes.
Section 395.509, Fla. Stat. (1984) establishes the authority and procedures for "review of hospital budgets." Subsection (1) of the statute reaffirms the general authority conferred by section 395.504(2), supra, to "disapprove the budget, including . . . projected
revenues." Subsection (1) provides in the first two sentences:
Each hospital shall file its budget with the board for approval. A hospital shall not exceed the projected expenditures or revenues in the budget as approved by the board. (E.S.)
Again, the "budget" which is filed for approval contains "projections . . . of . . . revenues." The definition of "budget" does not limit the concept of revenues to gross revenues, and the second sentence in section 395.504(2), quoted above, limiting the hospital to "revenues" approved by the board, does not limit the concept of "revenues" to gross revenues.
Subsection (2) of section 395.509, Fla. Stat. (1984), then sets up a procedure for determining when hospital budgets will be automatically approved, and when budgets will be subject to the power of the HCCB to disapprove a budget. Subsection (2) provides:
The projected budget filed by the hospital under s. 395.507(6) shall be approved by the board unless the board determines that:
The gross revenue of the hospital per adjusted admission equals or exceeds the upper 20th percentile value for gross revenue per adjusted admission as established 150 days prior to the next fiscal year of the hospital for its group as established under s. 395.507(2); or
The rate of increase of the hospital in gross revenue per adjusted admission between the budget projection, as required in
s. 395.507(6), and the most recent board- approved budget, which, for the first year, shall be the base year inflated for 1985 by the maximum allowable rate of increase as set forth in subsection (11), exceeds the maximum allowable rate of increase; and the gross revenue of the hospital per adjusted admission equals or exceeds the 50th percentile value for gross revenue per adjusted admission as established 150 days
prior to the next fiscal year of the hospital for its group as established under
s. 395.507(2).
Subparagraphs (a) and (b) of section 395.509(2) thus establish two criteria for identifying two groups of hospital budgets: those which are in the upper 20th percentile for gross revenue per adjusted admission, and those which exceed the maximum allowable rate of increase for gross revenue per adjusted admission. In the event that a hospital budget falls within either group, the next sentence in section 395.509(2) provides:
If the budget cannot be approved without further action by the board, the board may approve, or approve as amended, a budget with a rate of increase greater or lesser than the maximum allowable rate of increase pursuant to subsection (5). (E.S.)
Thus, hospital budgets which fall within either of the two groups above become subject to regulation by the Hospital Cost Containment Board pursuant to subsection (5) of section 395.509, Fla. Stat. (1984). This is confirmed by the first sentence of subsection (5), which provides: "If the budget of a hospital is not subject to automatic approval because of the provisions of paragraph (2)(a) or paragraph (2)(b). "
Subsection (5) confers upon the HCCB rather broad powers. It provides that if the budget of the hospital is not subject to automatic approval because one of the review screens has been broken:
. . . the board shall review the budget to determine whether the rate of increase contained in the budget is just, reasonable, and not excessive. The board shall disapprove any budget, or part thereof, as excessive that contains a rate of increase which is not necessary to maintain the existing level of services of the hospital or, if the hospital increases its existing level of services, any amount not necessary to accomplish that increase. (E.S.)
Subsection (5) continues by listing eleven criteria to be considered by the HCCB in "making such determination."
The power conferred by section 395.509(5), Fla. Stat., upon the HCCB is broad: the Board is empowered to disapprove a "budget" or any part of a "budget," and this power must include the power to disapprove revenues of any kind, whether gross or net, since the word "budget" is defined to include "projections . . . of . . . revenues."
The final section which confers upon the HCCB a broad power to disapprove any form of revenue is subsection
of section 395.509, Fla. Stat. (1984). This section confirms the authority conferred by subsection (5), for it states:
The board shall disapprove in its entirety, or disapprove in part, any budget, or any budget as amended by a hospital pursuant to subsection (3), that contains a rate of increase which the board finds, pursuant to subsection (5), to be unjust, unreasonable, or excessive. In disapproving or amending any portion of a budget, the board shall amend the budget and establish a rate of increase which is just, reasonable, and not excessive. (E.S.)
Thus, after disapproving a part of a budget, including any form of revenue, the Board must then amend the budget of the hospital to establish an approved "rate of increase" which is "just, reasonable, and not excessive."
In summary, if the budget of a hospital breaks one of the two review screens contained in section 395.509(2), Fla. Stat. (1984), the HCCB thereafter has the powers conferred by subsections (5) and (6) of that statute to amend the budget of the hospital (including amendment of gross or net revenues) to a rate that is "just, reasonable, and not excessive."
The Petitioners argue, however, that because paragraphs (a) and (b) of subsection 395.509(2), Fla. Stat. (1984), refer only to "gross revenue" that the HCCB consequently only has the authority to regulate the gross revenues of hospitals subject to its regulation. Petitioners argue that this result is plain from the
language of the statute, and does not require interpretation or statutory construction.
The argument is legally incorrect. Subsections
and (b) of section 395.509(2) do not confer regulatory authority, but merely provide criteria as a procedural matter to select and identify those hospital budgets which will be the subject of regulatory authority. The Legislature could have established any number of criteria, but it selected two statistical criteria based upon gross revenues per adjusted admission. Other than operating as a basis for selecting which hospital budgets will be regulated, the use of "gross revenues per adjusted admission" in these two paragraphs has no significance.
The power of regulation, and the nature of that power, is conferred by subsections (5) and (6) of the statute. In this regard, the statute is not ambiguous, and rules of construction are not needed.
The statute does, however, contain one explicit limitation upon the Board's powers, and that limitation appears to be operative with respect to the Petitioner in case number 85- 2465H. The Petitioner in case number 85- 2465H alleges in its petition that review of its budget was triggered only by the first review screen mentioned above. In paragraph 9 of its petition it alleges that its budgeted gross revenue per adjusted admission was in the upper 20th percentile, but that the rate of increase did not exceed the maximum allowable rate of increase, known as the "MARI." Under these circumstances, subsection (2) of section 395.509 provides:
However, for any hospital with a budget which is not approved without further action by the board due to the application of paragraph (a) [which is the 20th percentile screen and which does not exceed the maximum allowable rate of increase in paragraph (b), the board shall not reduce the budget for gross revenues per adjusted admission below either of the following, whichever is greater: the market basket index, plus 2 percent, or the median absolute dollar value increase in gross revenues per adjusted admission for all other hospitals in its group, as established under s. 395.507(2). (E.S.)
This limitation thus applies in its explicit terms only to gross revenues, and does not apply to any other portion of a budget. In other words, the clear intent of the Legislature in the foregoing passage is to place a limit upon the regulatory power of the Board with respect to gross revenues only in one circumstance. Pursuant to the general grant of power found in subsections
(5) and (6) of the same statute, the Board continues to have full power to disapprove net revenues and any other portion of a "budget" so long as the gross revenues limitation is satisfied.
The Petitioners argue that the above passage was intended by the Legislature to be the only grant of regulatory authority to the HCCB when a hospital's budget is above the 20th percentile but does not break the second screen, the MARI. This is not a construction of the above cited portion of the statute which would be expected as intended by the Legislature. It is not probable that the Legislature would have selected the top 20th percentile of hospital budgets as a place to substantially restrict the general powers conferred by subsections (5) and (6) of the same statute.
The more likely reason that the Legislature enacted the above limitations was to insure that even though a hospital's budget was in the top 20th percentile, the HCCB would not drastically alter the gross revenues of the hospital since the gross revenues per adjusted admission of the hospital had not exceeded the MARI.
In any event, the HCCB is required to give full effect to the precise words chosen by the Legislature. The Legislature requires the HCCB to exercise the powers conferred by subsection (5) and (6) when either or both review screens are broken. In the one instance where a hospital is in the upper 20th percentile, but does not exceed the MARI, the HCCB is limited by the language cited above when it alters the gross revenues per adjusted admission of the hospital's budget, and must give full effect to that limitation. Since the limitation is not explicitly a limitation upon the power of the HCCB to regulate net revenues (or any other portion of the budget for that matter) the HCCB should not venture beyond the explicit words of the statute to imply such a limitation.
RECOMMENDATION
For these reasons, it is recommended in the final order to be entered in these cases, that the Hospital Cost Containment Board conclude that it has statutory authority to alter or adjust the net revenues per adjusted admission of a hospital budget if that budget has triggered review pursuant to either of the criteria found in sections 395.509(2)(a) or (b), Fla. Stat. (1984).
DONE and ENTERED this 17th day of September, 1985, in Tallahassee, Florida.
Hearings
Hearings 1985.
WILLIAM C. SHERRILL, JR.
Hearing Officer
Division of Administrative
The Oakland Building 2009 Apalachee Parkway
Tallahassee, Florida 32301
(904)488-9675
FILED with the Clerk of the Division of Administrative
this 17th day of September,
COPIES FURNISHED:
Curtis Ashley Billingsley, Esquire Hospital Cost Containment Board Woodcrest Office Park
325 John Knox Road, Suite 101 Tallahassee, Florida 32303
Ralph H. Haben, Esquire Robert S. Cohen, Esquire Post Office Box 669 Tallahassee, Florida 32302
Jack Shreve, Esquire Kevin O'Donnell, Esquire The Public Counsel
624 Crown Building
202 Blount Street Tallahassee, Florida 32301
Mr. James J. Bracher, Executive Director
Hospital Cost Containment Board Woodcrest Office Park
325 John Knox Road Building L, Suite 101
Tallahassee, Florida 32303
Docket for Case No: 85-002296
Orders for Case No: 85-002296
| Issue Date |
Document |
Summary |
|
Sep. 26, 1985 |
Agency Final Order
|
|
|
Sep. 17, 1985 |
Recommended Order
|
Health Cost Containment Board (HCCB) has statutory authority to adjust net revenues per adjusted admissions on hospital budget if review triggered by Section 395.509(2)(a),(b), Florida Statutes.
|
