STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GOLFCREST NURSING HOME, )

)

Petitioner, )

)

vs. ) CASE NO. 93-0847

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Susan B. Kirkland, held a formal hearing in this case on February 22, 1994, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Alfred W. Clark, Esquire

117 Gadsden Street, Suite 201 Tallahassee, Florida 32301

For Respondent: Karel Baarslag, Esquire

Agency for Health Care Administration Room 234, 1317 Winewood Drive

Tallahassee, Florida 23299 STATEMENT OF THE ISSUES

Whether Petitioner is entitled to an interim rate increase under the Florida Title XIX Long-Term Care Medicaid Reimbursement Plan as a result of costs incurred to meet existing Federal and State requirements imposed upon nursing home facilities certified to participate in the Florida Medicaid Program.

PRELIMINARY STATEMENT

By letters dated June 15, 1992 and July 1, 1992, Respondent, Department of Health and Rehabilitative Services (HRS), advised Petitioner, Golfcrest Nursing Home (Golfcrest), that it was denying a part of Golfcrest's interim rate increase. On July 7, 1992, Golfcrest requested an administrative hearing. The case was referred to the Division of Administrative Hearings for assignment to a Hearing Officer on February 15, 1993. The case was originally assigned to Hearing Officer William Dorsey and was later transferred to Hearing Officer Susan B. Kirkland. The case was scheduled for final hearing on June 14 and 15, 1993. HRS requested that the final hearing be continued and it was rescheduled for October 14, 1993. Petitioner requested a continuance, and the case was rescheduled for final hearing on February 22, 1994.

At the final hearing Golfcrest called Joann Verbanic and David Trimble as witnesses. Petitioner's Exhibits 1-8 were admitted into evidence. HRS called Frank D. Hughes as its witness. Respondent's Exhibit 1 was admitted into evidence.

During the final hearing, Petitioner made an ore tenus motion to amend its petition to include costs which were not included in the original interim rate request. The motion was DENIED.

At the hearing the parties agreed to file proposed recommended orders within ten days of the filing of the transcript. The transcript was filed on March 10, 1994. On March 29, 1994, Golfcrest filed an Agreed Motion for Extension of Time, requesting that the time for filing the proposed recommended orders be extended to April 8, 1994. The motion was granted. The parties timely filed their proposed recommended orders. The parties' proposed findings of fact are addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Petitioner, Golfcrest Nursing Home (Golfcrest), is a properly licensed 67-bed nursing home located in Broward County, Florida.

   
   

2. Respondent, the Department of Health and Rehabilitative Services (HRS), was the state agency responsible for administration and implementation of the Florida Medicaid Program. Those responsibilities have been transferred to the Agency For Health Care Administration.

   
   

3. Golfcrest participates in the Florida Medicaid Program and provides inpatient nursing home services to Medicaid eligible persons.

   
   

4. Golfcrest is entitled to reimbursement in accordance with the Florida Title XIX Long-Term Care Reimbursement Plan (Plan) which has been adopted and incorporated by reference in Rule 10C-7.0482, Florida Administrative Code.

   
   

5. The Plan contains provisions which authorize a nursing home participating in the Medicaid Program to request an interim change in its Medicaid reimbursement rate when it incurs property related costs which would change its reimbursement rate by one percent (1 percent) or when it incurs costs resulting from patient care or operating changes made to comply with existing state regulations, and said costs are at least $5,000 or one percent (1 percent) of its reimbursement rate.

   
   

6. In 1980 Americare Corporation (Americare) purchased Golfcrest. In 1983 or 1984, Americare did some cosmetic renovations at Golfcrest. Portions of the facility are 45 years old.

   
   

7. Americare contracted with Diversicare Management Services to manage the operations of Golfcrest. In 1988-1989, Joann Verbanic, a regional vice- president for Diversicare Management Services, recommended to the Board of Directors of Americare that major renovations to the Golfcrest facility be done. On March 19, 1990, Americare sent a team to Golfcrest to survey the facility for needed renovations. Later a plan was presented to Americare's Board of Directors and permission was given to proceed with a major renovation.

8. In May of 1990 and July of 1991, HRS conducted its annual licensure surveys at Golfcrest. As a result, HRS identified several licensure deficiencies. Correction of these deficiencies was mandated by HRS. Failure to correct these deficiencies would have resulted in sanctions against Golfcrest's nursing home license, including administrative fines, a reduction in licensure rating, other civil penalties, and a reduction in Medicaid reimbursement.

   
   

9. In order to correct the licensure deficiencies, Golfcrest incurred substantial property costs and costs due to patient care and operating changes.

   
   

10. By letter dated January 6, 1992, Golfcrest submitted to HRS a request for an interim rate increase for patient care costs, operating costs, and property costs incurred or to be incurred to comply with existing state regulations and to correct identified licensure deficiencies. By letter dated April 14, 1992, Golfcrest provided additional information which had been requested by HRS. Golfcrest requested that the following costs be included in the calculation of its interim rate:

    
    

    Operating Costs Office Furniture	$ 896.45
    3 Laundry Carts	696.31
    Office Door	125.00
    Light Fixtures	1,067.30
    Laundry Table	482.00
    Structural Repairs	100.00
    Repairs for Boiler	390.00
    42 Overhead Lights	11,861.07
    Patient Care Costs 57 Hi-Lo Beds	19,301.40
    Blinds	5,145.02
    Dining Room Furniture	3,167.70
    Lobby Furniture	2,500.00
    Bedspreads	3,404.78
    Valances	3,472.05
    Cubicle Curtains, Tracks	9,579.51
    Activity Furniture	1,000.00
    Property Costs Bldg. Imp. Depreciation	16,356.00

    
    

11. HRS denied in part and granted in part, Golfcrest's interim rate request by letter dated June 15, 1992, as revised by letter dated July 1, 1992. HRS granted the patient care costs for the 57 Hi-Lo beds and for the cubicle curtain and tracks and the property costs for the building improvement depreciation.

    
    

12. In its proposed recommended order, Golfcrest withdrew its request for costs of the boiler leak, the lobby furniture, folding table for the laundry, and structural repairs.

    
    

13. Golfcrest incurred the costs for which the interim rate is requested.

14. Golfcrest requested that the purchase of office furniture be accepted as an allowable cost. Golfcrest did not specify what office furniture was purchased nor did it adequately relate such a purchase to a cited deficiency in either the 1990 or the 1991 survey. Additionally, Golfcrest did not establish that the cost of the office furniture was what a prudent and cost-conscious buyer would pay for office furniture.

    
    

15. In the 1990 survey report, Golfcrest was cited for having linen stored on dressers in residents' rooms. There was insufficient space to store the linen in the laundry area so Golfcrest purchased three laundry carts to store the linens in the hallways. The purchase of the laundry carts was necessary to correct the deficiency cited in the 1990 survey. However, no evidence was presented to establish that the amount paid for the laundry carts was what a prudent and cost-conscious buyer would pay for the item.

    
    

16. In the 1991 survey, Golfcrest was cited for having exit doors with screens missing and broken jalousie slats; therefore, it did not meet the requirement that the facility must provide housekeeping and maintenance services necessary to maintain an orderly and comfortable interior. Golfcrest relies on this cited deficiency to support its claim for the cost of replacing a new office door. Golfcrest's reliance is misplaced. The deficiency is the failure to perform ordinary maintenance services. The replacement of the office door is not necessary to comply with the cited licensure requirements. Golfcrest stated in its plan of correction that it would repair the cited doors by replacing the screens. Additionally, Golfcrest did not establish that the cost of the door was what a prudent and cost-conscious buyer would pay for the door.

    
    

17. Rule 10D-29.121(7)(d), Florida Administrative Code, required that renovations to restore a nonconforming building to its condition previous to deterioration must minimally meet standards for a new facility. The unrebutted testimony was that termites had damaged the wall studs and the walls had to be torn out and replaced. In order to meet the required NFPA standards and building code requirements for lumens and wiring, it was necessary to replace 42 overbed lights and 14 light fixtures for 3-bed wards. The purchase of this lighting was necessary to correct deficiencies that would result if the old lighting were retained after the renovations. However, no evidence was presented that would establish that the cost of the lighting fixtures was what a prudent and cost-conscious buyer would pay for the lighting.

    
    

18. In the 1990 survey report, Golfcrest was cited for having broken venetian blinds in rooms 6 and 33. Golfcrest stated in its plan of correction that "broken blinds are repaired/replaced as needed." Golfcrest requested that in its interim rate request that $5,145.02 be considered an allowable cost for the replacement of blinds. Although there was a deficiency noted concerning broken venetian blinds, Golfcrest did not establish that the cost for the blinds was what a prudent and cost-conscious buyer would pay for the blinds.

    
    

19. In the 1991 survey, Golfcrest was cited for not being adequately furnished in the dining areas and not having sufficient space to accommodate all activities. In order to provide more space in the dining areas, Golfcrest purchased ten collapsible dining tables which could be easily removed to provide more space for large group activities in the dining room. The purchase of the dining tables was necessary to correct the deficiency of inadequate space, however, Golfcrest did not establish that the cost of the dining tables did not exceed the level of what a prudent and cost-conscious buyer would pay for dining tables. Golfcrest purchased 67 dining room chairs. However, Golfcrest did not

    establish how the purchase of the dining room chairs corrected the cited deficiency and did not establish that the cost of the dining room chairs was what a prudent and cost-conscious buyer would pay for dining room chairs.

    
    

20. In the 1991 survey report, Golfcrest was cited for not providing clean beds. As an example of this deficiency, the survey listed torn blankets, threadbare sheets, pillow cases and towels and sunrotted sheets. Golfcrest purchased 104 bedspreads to replace all the bedspreads in the facility and to maintain an inventory of bedspreads to be used while bedspreads was being laundered. The purchase of the bedspreads were related to a cited deficiency, but Golfcrest did not establish that the cost of the bedspreads was what a prudent and cost-conscious buyer would pay for the bedspreads.

    
    

21. Golfcrest requested that the purchase of valances be considered an allowable cost in its interim rate request. In its proposed recommended order, Golfcrest relied on the deficiencies cited in the 1991 survey report relating to the life safety survey dealing with privacy curtains which did not have netting at the top for support of its request for the valances. Golfcrest did not establish that the valances purchased were part of the cited privacy curtains. Given the fact that Golfcrest's request for replacement of cubicle curtains and tracks, was a separate request from the valances, it is reasonable to infer that the valances did not relate to the licensure requirement relied upon by Golfcrest. Additionally, Golfcrest did not establish that the cost of the valances was what a prudent and cost-conscious buyer would pay for valances.

    
    

22. Golfcrest requested that the purchase of furniture for the activities area be considered an allowable cost in the calculation of its interim rate. Golfcrest did not establish what furniture was purchased for the activity area; thus, it did not establish how the purchase of the furniture was necessary to correct the deficiency that Golfcrest did not provide sufficient space and equipment and did not adequately furnish recreation and program areas to enable staff to provide residents with needed services as required. Additionally, Golfcrest did not establish that the cost of the furnishings for the activity room was what a prudent and cost-conscious buyer would pay for the furnishings.

    
    

23. In its January 6, 1992 letter requesting an interim rate request, Golfcrest used 22,676 patient days to calculate the per diem rate for property costs. This number was taken from the July 31, 1990 cost report. HRS used 23,010 patient days to calculate the per diem rate. This number was taken from the last cost report dated July 31, 1991 and is the appropriate number to use in calculating the interim rate.

    
    

24. The total per diem reimbursement rate for Golfcrest which was in effect at the time of the interim rate request was $71.2565.

    
    

25. The per diem reimbursement for the property component is not one percent or more of Golfcrest's total per diem reimbursement rate.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

27. The burden of proof, absent a statutory directive to the contrary, is on the party asserting the affirmative of the issue of the proceeding. Department of Transportation v. J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA

    1981) and Balino v. Department of Health and Rehabilitative Services, 348 So.2d

    349 (Fla. 1st DCA 1977). In this proceeding, it is Golfcrest that is seeking the affirmative: entitlement to an interim rate increase.

    
    

28. Section IV J of the Plan provides the following:

    
    

    1. The following provisions apply to interim changes in component reimbursement rates, other than through the routine semiannual rate setting process.

       1. Requests for rate adjustments to account for increases in property related costs due to capital additions, expansion, replacement, or repairs or for allowable lease cost increases shall not be considered

          in the interim between cost report submission, except for the addition of new beds or if the cost of the specified expansion, addition, replacement, allowable lease cost increase or repair would cause a change of 1 percent or

          more in the provider's total per diem reimburse- ment rate. For facilities being reimbursed under FRVS property-related costs shall not

          be considered in any interim rate request. Adjustments to FRVS rates for property-related costs shall be made only on January 1 and

          July 1 of each year per Section V.E.1j.

       2. 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 $5,000 and would cause a change of 1 percent or more in the provider's current total. . . .

       3. Interim rate requests resulting from 1. and 2. above must be submitted within 60 days

          after the costs are incurred, and shall be accompanied by a 12 month budget which reflects changes in services. . . . An interim reimbursement rate, if approved, shall be established for estimated additional costs retroactive to the time of the

          change in services or the time the costs were incurred, but not to exceed 60 days before the date HRS receives the interim rate request. The interim per diem rate shall reflect only the estimated additional costs, and the total reimbursement rate paid to the provider shall be the sum of the previously established perspective rates plus the interim rate. . . . Upon receipt of a valid interim rate request received after August 31, 1984, the HRS Office of Medicaid shall determine whether additional information is needed from the provider and request such information within 30 days.

          Upon receipt of the complete, legible additional information as requested, the HRS Office of Medicaid shall approve or disapprove the interim rate request within 60 days. If the HRS Office of Medicaid does

          not make such determination within the 60 days, the interim rate request shall be deemed approved.

       4. Interim Rate Settlement.

          Overpayment as a result of the difference between the approved budgeted interim rate and actual costs of the budgeted item shall be refunded to HRS. Underpayment as a result of the difference between the budgeted interim rate and actual costs shall be paid to the provider.

       5. Interim rates shall not be granted for fiscal periods that have ended.

          
          

29. In order for a cost to be considered in the calculation of an interim rate, the cost must be an allowable cost. Section III C of the Plan provides:

    
    

    Implicit in any definition of allowable costs is that those costs should not exceed what a

    prudent and cost-conscious buyer pays for a given service or item. If costs are determined by HRS utilizing the Title XVIII Principles of Reimburse- ment, HCFA-PUB.15-1, and this plan, to exceed the level that a prudent buyer would incur, then the excess costs shall not be reimbursable under the plan.

    
    

30. Golfcrest failed to establish that the operating costs and patient care costs in dispute were what a prudent and cost-conscious buyer would pay for such items. Thus, Golfcrest failed to establish that the costs were allowable costs.

    
    

31. Golfcrest failed to establish that the purchase of the office furniture, the office door, the dining room chairs, the valances, and the activity furniture were made to comply with existing state or federal rules, laws, or standards.

    
    

32. The Plan provides in Section VB5 that the per diems for the cost components are to be calculated by dividing the component's cost by the total number of Medicaid patient days from the latest cost report. The latest cost report at the time of the interim rate request was the cost report dated July 31, 1991, which showed 23,010 patient days. Thus, Golfcrest did not establish that HRS used the incorrect number of patient days in calculating the interim rate for Golfcrest.

    
    

33. Golfcrest did not establish that the property cost component per diem rate would cause a change of one percent or more in Golfcrest's total per diem reimbursement rate. Thus, Golfcrest is not entitled to an interim rate increase for property costs.

    
    

34. The interim rate adjustment to which Golfcrest is entitled is $1.2551.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Agency for Health Care

Administration as successor in interest for the Department of Health and

Rehabilitative Services determining the interim rate for Golfcrest to be

$1.2551.

DONE AND ENTERED this 3rd day of August, 1994, in Tallahassee, Leon County, Florida.

SUSAN B. KIRKLAND

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 3rd day of August, 1994.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-847

To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact

1. Paragraphs 1-6: Accepted.

2. Paragraph 7-9: Accepted in substance.

3. Paragraph 10: Rejected as unnecessary detail.

4. Paragraph 11-16: Accepted in substance.

5. Paragraphs 17-19: Rejected as subordinate to the facts actually found.

6. Paragraph 20: Accepted in substance.

7. Paragraph 21: Rejected as constituting a conclusion of law.

8. Paragraph 22: Accepted in substance. HRS had allowed the cost of the Hi-Lo beds, thus, those costs were not in dispute.

9. Paragraph 23: Accepted in substance as to the blinds but not as to the shades and shower curtains. The shades and shower curtains were not part of the interim rate request, thus whether they were necessary to correct a deficiency is not addressed in this Recommended Order.

10. Paragraph 24: Accepted in substance as it relates to the dining tables but not as to the dining chairs.

11. Paragraph 25: Accepted in substance.

12. Paragraph 26: Accepted in substance as it relates to the cubicle curtains and tracks but not as it relates to the valances. The cubicle curtains and tracks were allowed by HRS as a cost and thus was not in dispute.

13. Paragraphs 27-28: Accepted in substance.

14. Paragraph 29: Rejected as not supported by the greater weight of the evidence.

15. Paragraph 30: Accepted in substance.

16. Paragraph 31: Rejected as not supported by the greater weight of the evidence.

17. Paragraphs 32 and 33: Accepted in substance.

18. Paragraph 34: The first two sentences are accepted in substance. The third, fifth, sixth and seventh sentences are rejected as constituting conclusions

    of law. The fourth sentence is accepted.

19. Paragraphs 35-36: Rejected as not supported by the greater weight of the evidence.

20. Paragraph 37: The first sentence is accepted.

    The second sentence is rejected as not supported by the greater weight of the evidence.

21. Paragraph 38: Rejected as subordinate to the facts actually found.

22. Paragraph 39: With exception of the last sentence the paragraph is rejected as unnecessary detail. The last sentence is rejected as constituting a conclusion of law.

Respondent's Proposed Findings of Fact.

1. Paragraph 1: Accepted in substance.

2. Paragraphs 2-9: Accepted.

3. Paragraph 10-11: Accepted in substance.

4. Paragraph 12-22: Rejected as unnecessary detail.

5. Paragraphs 23-28: Accepted in substance except in paragraph 24 the reference to floor coverings should be to light fixtures.

6. Paragraph 29: Rejected as not supported by the greater weight of the evidence.

7. Paragraph 30: Accepted in substance.

8. Paragraph 31-33: Rejected as subordinate to the facts actually found.

9. Paragraph 34: Accepted in substance.

10. Paragraph 35: Rejected as subordinate to the facts actually found.

11. Paragraphs 36-39: Accepted in substance.

COPIES FURNISHED:

Alfred W. Clark, Esquire

117 South Gadsden, Suite 201 Tallahassee, Florida 32301

Karel Baarslag, Esquire HRS Medicaid Office 1317 Winewood Boulevard Building Six, Room 233

Tallahassee, Florida 32399-0700

R. S. Power, Agency Clerk

Agency for Health Care Administration Atrium Building, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Harold D. Lewis, Esquire

Agency For Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

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DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA

GOLFCREST NURSING HOME, NOT FINAL UNTIL TIME EXPIRES TO

FILE MOTION FOR REHEARING AND

Appellant, DISPOSITION THEREOF IF FILED.

v. CASE NO. 94-4077

DOAH CASE NO. 93-00847

STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION,

Appellee.

/ Opinion filed November 14, 1995.

An appeal from an order of the Agency for Health Care Administration. Alfred W. Clark, Tallahassee, for Appellant.

Karel Bearslag, Senior Attorney, Agency for Health Care Administration, Tallahassee, for Appellee.

SMITH, SENIOR JUDGE.

Golfcrest appeals an order of the State of Florida Agency for Health Care Administration ("AHCA") denying an interim Medicaid reimbursement rate increase. We reverse.

Golfcrest Nursing Home (Golfcrest) filed an application for interim rate increase based upon costs incurred to correct deficiencies noted during licensure surveys conducted by AHCA in 1990 and 1991. The AHCA denied the interim rate increase based upon its interpretation of the Florida Title XIX Long-Term Care Reimbursement Plan Medicaid (the Plan).

First, with respect to claimed capital costs, the AHCA interpreted the Plan to require utilization of the chronologically-most-recent cost report in calculating the threshold one (1 percent) per cent comparison formula for determining whether such capital costs warranted an interim rate increase. The most recent cost report was, in this case, different from the cost report from which the base rate was derived.

Second, with respect to patient costs, the AHCA interpreted the Plan to require the applicant to prove, as part of its prima facie case, that its claimed costs were consistent with what a reasonable and prudent buyer would pay. Because AHCA determined that Golfcrest failed to meet its burden of proof in this regard, the requested rate increase was denied.

Golfcrest is a properly licensed nursing home located in Broward County, Florida. Golfcrest participates in the Florida Medicaid Program and provides inpatient nursing home services to Medicaid-eligible persons. Pursuant to the program, Golfcrest is entitled to reimbursement in accordance with the Florida Title XIX Long-Term Care Reimbursement Plan (the "Plan"), which has been adopted and incorporated by reference in Rule 10C-7.0482, Florida Administrative Code.

The Appellee, AHCA, is the state agency responsible for administration and implementation of the Florida Medicaid Program.

In May of 1990 and July of 1991, the Department of Health and Rehabilitative Services (now AHCA) conducted its annual licensure surveys at Golfcrest. During those surveys, AHCA identified several licensure deficiencies, which it ordered Golfcrest to correct. Failure to correct the deficiencies would have resulted in sanctions against Golfcrest's nursing home license, including administrative fines, a reduction in licensure rating, other civil penalties, and a reduction in Medicaid reimbursement.

Thereafter, Golfcrest incurred certain property costs and costs due to patient care and operating changes which it attributes to correction of the licensure deficiencies. Accordingly, by letter dated 6 January 1992, Golfcrest submitted to AHCA a request for an interim rate increase for patient care costs, operating costs, and property costs incurred or to be incurred to comply with existing state regulations and to correct identified licensure deficiencies. 1/ After an exchange of correspondence, AHCA denied Golfcrest's interim rate request by letter dated 15 June 1992, as revised by letter dated 1 July 1992.

Golfcrest challenged the proposed agency action by filing its Petition for Formal Administrative Hearing on 28 February 1993. The matter was referred to the Division of Administrative Hearings, and a formal hearing was held on 22 February 1994. On 3 August 1994, the Hearing Officer entered her Recommended Order, recommending partial approval of the interim Medicaid reimbursement request.

In its final order, the AHCA adopted in substantial part the Hearing Officer's recommendations. First, it disapproved an interim rate increase related to property costs, on the ground that such costs did not meet the

threshold test of equalling at least one (1 percent) percent of Golfcrest's total applicable reimbursement rate.

On this point, the parties agree that, if the cost of renovations which Golfcrest incurred to correct licensure deficiencies caused a change of 1 percent or more in Golfcrest's existing total per diem reimbursement rate, Golfcrest would be entitled to an interim per diem rate increase. The parties also agree that, at the time of submission and review of Golfcrest's interim rate request, Golfcrest's existing total per diem reimbursement rate was

$71.2565. That was derived by dividing costs by the number of patient days from the applicable cost report period, which was, at that time, the July 31, 1990 Medicaid Cost Report. 2/ During that cost report period, Golfcrest experienced 22,676 patient days.

The AHCA further determined, and Golfcrest agrees, that Golfcrest was entitled to $16,356 in interim property costs for building improvement depreciation. The next step required by the interim rate regulations is to determine whether $16,356, calculated on a per diem basis, will increase Golfcrest's existing total reimbursement rate of $71.2565 by at least 1 percent (or .7126). If one divides $16,356 by 22,676 patient days, the result is $.7213 (or greater than 1 percent).

However, the AHCA interpreted the Plan to require it to divide the costs incurred by the number of patient days set forth in the 1991 Plan, or 23,010 patient days. The AHCA based its selection of 23,010 patient days on its interpretation of Section V.B. of the Plan, which provides, in pertinent part, that per diems are to be calculated "by dividing ... costs ... by patient days from the latest cost report." Using 23,010 patient days, the property costs incurred by Golfcrest equal $.7108 (or less than the threshold one (1 percent) per cent).

The AHCA erred in relying on the phrase "patient days from the latest cost report" to the exclusion of other relevant language in the Plan, most notably, the introductory paragraph to the interim rate-setting section (Section IV.J.) of the Plan. Section IV.J provides, in pertinent part, that "[r]equests for rate adjustments to account for increases in property related costs due to capital additions, expansion, replacement, or repairs or for allowable lease cost increases shall not be considered in the interim between cost report submission, except for the addition of new beds or if the cost of the specified expansion, addition, replacement, allowable lease cost increase or repair would cause a change of 1 percent or more in the provider's total per diem reimbursement rate." (Emphasis added).

From this language, it appears that the "latest cost report" would, under normal circumstances, be the basis for determining the applicable total reimbursement rate which is being sought to be revised "in the interim between cost report submission." In other words, under normal circumstances, the "latest cost report" and the cost report upon which the total per diem reimbursement rate would be based would be one and the same.

In this case, however, because of an agency-imposed "freeze" on rates, the "latest cost report" was not used to calculate the January 1, 1992 semester per diem reimbursement rate. The effect of the rate freeze was to carry forward the total Medicaid per diem reimbursement rate which was in effect on July 1, 1991. Thus, the July 1, 1991 rate for Golfcrest was based upon its July 31, 1990 year- end cost report.

A reasonable interpretation of the Plan compels the conclusion that the AHCA cannot, in imposing a "rate freeze", arbitrarily use one document as the "latest cost report" for purposes of calculating the total Medicaid per diem reimbursement (or "base") rate, then use another document as the "latest cost report" for purposes of calculating the interim rate comparison formula. Such a result would be both inconsistent, and inequitable in this case.

The AHCA next argues that there is substantial, competent evidence to support its denial of entitlement to an interim rate increase based upon the cost of certain non-property items incurred by Golfcrest to correct licensure deficiencies. The agency based its denial upon its determination that Golfcrest failed to meet its burden of proving that the cost of the items was an "allowable cost" which did not exceed "what a prudent and cost-conscious buyer would pay", citing Section III.C. of the plan.

It is well-settled that the appellate court will give deference to any interpretation by an agency that falls within the permissible range of statutory interpretations. Sunshine Jr. Stores Inc. v. State, Dep't of Environmental Regulation, 556 so.2d 1177 (Fla. 1st DCA 1990) ,review denied 564 So.2d 1085 (Fla. 1990) citing Dep't of Professional Reg., Bd. of Medical Examiners v.

Durrani, 455 So.2d 515, 517 (Fla. 1st DCA 1984); Dep't of Admin. v. Nelson, 424 So.2d 852, 858 (Fla. 1st DCA 1982); State Dep't of Health & Rehab. Servs. v.

Framat Realty, Inc., 407 So.2d 238, 241 (Fla. 1st DCA 1981). An agency's interpretation of its own rules and regulations is entitled to great weight, and shall not be overturned unless the interpretation is clearly erroneous. Orange Park Kennel Club, Inc. v. State, Dep't of Business & Professional Regulation, 644 So.2d 574 (Fla. 1st DCA 1994). This is true even if that interpretation is not the sole possible interpretation, the most logical interpretation, or even the most desirable interpretation. State, Bd. of Optometry v. Florida Soc'y of Ophthalmology, 538 So.2d 878, 885 (Fla. 1st DCA 1988)

As applied to this case, the AHCA has interpreted its definition of "allowable costs" as requiring the petitioner in an interim rate application to show, as part of its proof of entitlement to the increased rate, that its claimed costs do not exceed "what a prudent and cost-conscious buyer pays for a given service or item." Golfcrest has taken a view opposite to that of the agency, relying on the second sentence of Section III.C. of the Plan, which provides: "If costs are determined by HRS utilizing the Title XVIII principles of reimbursement, HIM-15, and this plan, to exceed the level that a prudent buyer would incur, then the excess costs will not be reimbursable under the plan."

Pursuant to Golfcrest's interpretation, in order to disallow the costs, the agency would have the burden of proving that the claimed costs exceeded the level that a prudent buyer would incur. This is contrary to the general rule of law that the burden of proof is on the party asserting the affirmative of an issue, in this case, entitlement to an interim rate increase. See Young v.

Dep't of Community Affairs, 625 So.2d 831 (Fla. 1993); McDonald v. Dep't of Professional Regulation, Bd. of Pilot Com'rs, 582 So.2d 660, 670 (Fla. 1st DCA 1991). Further, the buyer is in the best position to show the reasonableness of its proposed purchase price, reflected in any informal survey, or formal bid process, which a prudent buyer would be expected to perform.

The question before us is whether, given the nature of the controversy and the facts actually in dispute, Golfcrest carried the burden of proof to the extent required to make a prima facie case. See, Florida Dept. of Transp. v.

J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981)(evidence required to meet

competent substantial evidence test may differ in form and substantiality from one proceeding to another, depending on issues that are uncontroverted, as opposed to those that are contested). Here, the record shows that the AHCA proposed to approve two of the patient care items requested by Golfcrest, in the absence of any documentation showing that the costs were not excessive.

Furthermore, the only testimony on this point at the hearing was that of Golfcrest's expert in health care accounting and reimbursement. That expert testified regarding the meaning of "allowable costs", and opined that the subject costs were "allowable costs" within the meaning of Provider Manual HIM-

165 [the Federal Medicare guidelines, which provide guidance in assessing Medicaid reimbursement issues]. 3/

It is our opinion that Golfcrest, through the testimony of its expert, made a prima facie showing that its claimed patient care and operating cost items were "allowable costs". Having done so, the burden shifted to the AHCA to prove that such costs were not consistent with what a reasonable and prudent buyer would pay. Because Golfcrest's expert presented an uncontroverted opinion that the costs sought by Golfcrest were "allowable costs", the AHCA erred in denying an interim rate increase on the basis that Golfcrest had not met its initial burden of proof.

For the foregoing reasons, the order on appeal is REVERSED and REMANDED for entry of an order consistent with this opinion.

KAHN and DAVIS, JJ., CONCUR.

ENDNOTES

1/ The Florida Title XIX Long Term Care Reimbursement Plan (the "Plan") specifically authorizes the payment of an interim reimbursement rate for increases in property-related costs and increases in patient care and operating costs due to compliance with existing state regulations. The Plan also contains provisions which authorize a nursing home participating in the Medicaid Program to request an interim change in its Medicaid reimbursement rate when it incurs property-related costs which would change its reimbursement rate by one percent (1 percent), or when it incurs costs resulting from patient care or operating changes made to comply with existing state regulations and said costs are at least $5,000 or one percent (1 percent) of its total reimbursement rate. In applying for an interim rate increase based upon increases in property costs, a petitioner is not required to demonstrate that the costs were incurred to comply with existing state regulations.

2/ Because of an agency-imposed "freeze" on rates, Golfcrest's applicable per diem rate was based upon the 1990 cost report data. The effect of the "freeze" is not challenged on this appeal.

3/ The AHCA concurred in the Hearing Officer's ruling that Golfcrest could not rely upon its expert testimony to meet its burden of proof regarding the reasonableness of its claimed costs. It erred in characterizing the expert's testimony as a mere "conclusion of law", discrediting its value as a prima facie showing that the claimed costs were "allowable" (and thus, reasonable) as that term is used in the Medicaid reimbursement system.

Docket for Case No: 93-000847

Orders for Case No: 93-000847