STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LOWES NURSING AND CONVALESCENT ) CENTER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-0024

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above-styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Don W. Davis, on February 24, 1989 in Tallahassee, Florida. The following appearances were entered:

APPEARANCES

FOR PETITIONER: Paul Salver, Esquire

Joesph Geller, Esquire

5881 North West 151st Street, Suite 101 Miami Lakes, Florida 33014

FOR RESPONDENT: Carl Morstadt, Esquire

Richard Rogers, Esquire 1323 Winewood Boulevard Building One, Room 407

Tallahassee, Florida 32399-0700 BACKGROUND

This matter began when Respondent denied Petitioner's request for an interim increase in the rate of medicaid reimbursement received by Petitioner. Petitioner requested a formal administrative hearing and this proceeding ensued. At hearing, Petitioner presented testimony of two witnesses and nine evidentiary exhibits. Respondent presented testimony of three witnesses and 14 evidentiary exhibits. Proposed findings of fact submitted by Petitioner are addressed in the appendix to this recommended order. No proposed findings were timely submitted by Respondent and none had been received at the time of preparation of this recommended order.

Based upon all of the evidence, including the demeanor and candor of the witnesses who testified, the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner is a licensed Florida nursing home facility and at all times material to these proceedings was certified and participating in the Florida Medicaid Program. Pertinent guidelines relating to program reimbursement are set forth in the Florida Title XIX Long Term Care Reimbursement Plan (Gainesville Plan) which Respondent has incorporated by reference in Rule 10C- 7.48(4)(a)5.a., Florida Administrative Code.

   
   

2. The reimbursement rate of a nursing home provider is determined prospectively by Respondent for the upcoming year based upon a review of the provider's cost report submitted for the past year. Respondent determines a prospective per diem rate based upon historical costs and includes an inflation factor. The provider is expected to stay within the budget of this prospective rate. Interim rate increases are permitted by the guidelines in the Gainesville Plan when a provider experiences unforeseen increases in costs related to patient care during the year if those costs are necessary to comply with regulatory requirements. Specifically, Section IV. J-2, of the Gainesville Plan states in pertinent part:

   
   

   Interim rate changes reflecting increased costs occurring as a result of patient care or operating changes shall 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 $5000 and would cause a change of 1 percent or more in the provider's current total per diem rate.

   
   

3. From July 1, 1988 through December 31, 1988, Petitioner experienced a 15% increase in nursing labor costs, the largest single item in Petitioner'S patient care cost. Petitioner projects that this cost increase will continue to exist and possibly increase further after the conclusion of the present fiscal year ending June 30, 1989. Petitioner maintains such an increased expenditure is necessary to meet minimum staffing requirements for adequate patient care under the medicaid program, and that these costs were incurred in order to be in compliance with such program requirements. However, as established at hearing by testimony of Petitioner's Director of Finance, documentation in the form of payroll sheets and staffing sheets were not provided to document or support the correctness of Petitioner's assertion.

   
   

4. Respondent's annual Medicaid Quality Of Care Review, a monitoring survey which determines but does not enforce compliance with regulatory guidelines, for the period of May 17, 1988 through June 27, 1988, cited various nursing related and other deficiencies in Petitioner's overall nursing home operations. If left uncorrected, the deficiencies cited in Respondent's survey may have been referred for review by Respondent's licensure and certification personnel and, upon disclosure of continued existence of those deficiencies in an inspection by that office, subjected Petitioner's facility to penalties including fines, conditional licensure and possibly delicensure. Petitioner corrected the deficiencies, but provided no proof at hearing that correction of such deficiencies directly resulted in the costs upon which the request for an interim rate increase is based.

   
   

5. On or about July 21, 1988, Petitioner requested an interim rate increase from Respondent. On August 2, 1988, Respondent's representatives

   responded to Petitioner's request by requesting that Petitioner provide documentation of cited deficiencies by certification and licensure personnel showing that Petitioner's facility was out of compliance with program requirements. Respondent also requested Petitioner submit documentation of costs associated with resolving those deficiencies and that the documentation match specific costs with specific deficiency citings.

   
   

6. Petitioner responded to Respondent's request for further documentation on August 21, 1988, by providing Respondent with a copy of the summary of the Medicaid Quality Of Care Review, the monitoring survey, covering the period of May 17, 1988 through June 27, 1988. This document had been provided to Petitioner by Respondent on July 11, 1988. In addition, Petitioner submitted a statement of deficiencies and plan of correction issued by Respondent as a result of Respondent's October 7, 1987 annual licensure survey. Petitioner also provided a one page document which reflected cost increases in various aspects of Petitioner's operation, although none of the increased cost amounts were allocated in the document to bringing any specific deficiency in Petitioner's operation into compliance. Petitioner's cover letter asserted that the costs were "necessary costs as precribed [sic] to us by the Department of H.R.S. to meet necessary medicaid levels of care."

   
   

7. Deficiencies noted in the Medicaid Quality of Care Summary, provided to Petitioner by Respondent on July 11, 1988, dealt primarily with the failure of Petitioner's personnel to properly document administration of medication and treatment; to properly document tests and observations; and to insure that progress notes of nurses and physicians were kept current.

   
   

8. The deficiencies noted for correction in Respondent's October 7, 1987, licensure survey were mainly the result of the manner in which Petitioner's staff were performing certain tasks, although some deficiencies dealt with needed refurbishments to furniture and equipment. The deficiencies were corrected by Petitioner. It is found that the October 7, 1987 deficiency report and Petitioner's response to that report are not relevant to the cost period for which Petitioner requests a rate increase.

   
   

9. Respondent denied Petitioner's request for a rate increase in a letter to Petitioner dated October 6, 1988, and signed by Carlton D. Snipes, an administrator employed by Respondent. Snipes noted in the letter that the cited deficiencies did not support the outlay of additional funding requested by Petitioner and could be "corrected with existing resources or with minimal expenditures." Further, the letter stated:

   
   

   Since the interim rate provisions were implemented effective September 1, 1984, it has been the policy of this office that the compliance requirement referenced in the Plan is only satisfied by submitting a

   licensure and certification survey report detailing deficiencies. Additional documentation should also be submitted by the provider detailing specific expenditures necessary to correct related deficiencies.

   
   

10. At the final hearing, Mr. Snipes testified that he did not need additional information to determine that increased costs to Petitioner resulting from patient care or operating changes were at least $5000 and equalled a change of one percent or more in Petitioner's current per diem rate as required by the

    Gainesville Plan. However, Snipes furtier testified that consideration of a rate increase for Petitioner was stymied because Petitioner did not provide documentation connecting the increased expenditures to a compliance requirement. Petitioner did not provide documentation showing that specific costs were incurred to meet specific recommendations from a licensure survey deficiency report.

    
    

11. Upon further examination, testimony by Snipes also established that Respondent's policy of requiring documentation of a cited deficiency by an applicant for a rate increase has a historical basis. All previously granted interim rate increases were documented with such deficiency reports, although such a requirement would not be strictly adhered to in the face of an application containing information otherwise documenting noncompliance and demonstrating that the cost was required in order to comply with rules, statutes or regulations of the state or federal government governing the medicaid program. In the absence of such a deficiency report or provision of other detailed information by Petitioner sufficient to show that the increased costs were incurred to comply with state or federal rules, law or standards, Respondent's policy is to deny rate increase requests.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding, and the parties theretcr, pursuant to Subsection 120.57(1), Florida Statutes.

    
    

13. Respondent has been designated as the state agency responsible for administration of medicaid funds in Section 409.266, Florida Statutes.

    
    

14. Pursuant to Respondent's statutory authority, relevant principles relating to Petitioner's rate increase are set forth in Section IV. J-2, of the Florida Title XIX Long Term Care Reimbursement Plan which states in pertinent part:

    
    

    Interim rate changes reflecting increased costs occurring as a result of patient care or operating changes shall 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 $5000 and would cause a change of 1 percent or more in the provider's current total per diem rate.

    
    

15. Granting of an interim rate change is clearly tied to a requirement that the requested rate increase result from increased costs necessary "to comply" with existing regulations.

    
    

16. Respondent's policy that interim rate applicants first demonstrate or document an inability to comply by being cited in a deficiency report for noncompliance would be unreasonably restrictive if this were the only way an interim rate increase could be considered or obtained. However, the testimony of Carlton Snipes established that although all previously granted rate increases were documented with deficiency reports, such a requirement would not be strictly adhered to in the face of an application containing information otherwise documenting noncompliance and demonstrating that the cost was required

    in order to comply with rules, statutes or regulations of the state or federal government governing the medicaid program.

    
    

17. Petitioner' application sufficiently demonstrated increased costs, but failed to tie those costs to a showing that they were incurred in order to be in compliance with program requirements.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered denying the interim rate increase

requested by Petitioner.

DONE AND ENTERED this 2nd day of May, 1989, in Tallahassee, Leon County, Florida.

DON W. DAVIS

Hearing Officer

Division of Administrative Hearings The Desoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April, 1989.

APPENDIX

The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties.

Petitioner's Proposed Findings 1.-2. Addressed.

3. Addressed in part, rejected as to the language that expenditures were necessary to meet minimum medicaid standards as such an assertion is a conclusion of law unsupported by the weight of the evidence presented.

4.-7. Addressed.

8. Rejected as to mandatory result of the quality of care survey. Annual licensure survey rejected on relevancy grounds.

9.-11. Addressed.

1. Incorporated by reference.

2. Addressed.

COPIES FURNISHED:

Paul Salver, Esquire Joesph Geller, Esquire 5881 N.W. 151st St.

Suite 101'

Miami Lakes, Florida 33014

Carl Morstadt, Esquire Richard Rogers, Esquire 1323 Winewood Blvd.

Building One, Room 407 Tallahassee, Florida 32399-0700

Gregory L. Coler Secretary

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

John Miller, Esquire General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Sam Power Clerk

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Docket for Case No: 89-000024

Orders for Case No: 89-000024