STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MILDRED HENRY, )

)

Petitioner, )

)

vs. ) CASE NO. 93-5311RE

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Susan B. Kirkland, held a formal hearing in the above-styled case on September 27, 1993, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Anne L. Swerlick

Cindy Huddleston

Florida Legal Services, Inc. 2121 Delta Boulevard

Tallahassee, Florida 32303

For Respondent: Julia P. Forrester

Agency for Health Care Administration 1317 Winewood Boulevard

Building Six, Room 234 Tallahassee, Florida 32399-0700

STATEMENT OF THE ISSUE

Whether Emergency Rule 10CER92-4 should be invalidated because it constitutes an invalid exercise of delegated legislative authority.

PRELIMINARY STATEMENT

On September 13, 1993, Petitioner, Mildred Henry, filed a Petition to Determine Invalidity of Medicaid Emergency Rule 10CER92-4. At the formal hearing, Petitioner's Exhibits A through H were entered into evidence.

Petitioner testified on her own behalf by telephone. Respondent's Exhibits A through C were entered into evidence. Respondent called two witnesses, Jerry F. Wells and Gary L. Crayton. The parties stipulated to the facts contained in paragraphs 20, 21, and 22 of Petitioner's Petition to Determine Invalidity of Medicaid Emergency Rule 10CER92-4. At the conclusion of the hearing, the parties were allowed until October 4, 1993, within which to file their proposed final orders. A transcript of the hearing was not filed. Proposed findings of fact and conclusions of law were filed on October 4, 1993. The parties' proposed findings of fact are addressed in the appendix to this order.

FINDINGS OF FACT

1. The Medicaid program is a program authorized under Title XIX of the federal Social Security Act that provides for payments for medical items or services for eligible recipients. Section 409.901(7), Florida Statutes. Prior to July 1, 1993, the Medicaid program was administered by the Department of Health and Rehabilitative Services (HRS). Effective July 1, 1993, Section 20.42, Florida Statutes, 1992 Supplement, was amended by Chapter 93-129, Section 58, Laws of Florida, to give the Agency for Health Care Administration (AHCA) the responsibility for the Medicaid program.

   
   

2. The Medicaid program provides for mandatory and optional services to eligible recipients. Prescribed drug services are optional Medicaid services. Medicaid services may be provided only when medically necessary, must be provided in accordance with state and federal law, and are subject to any limitation established by the general appropriations act or Chapter 216, Florida Statutes. Sections 409.905 and 409.906, Florida Statutes.

   
   

3. Medical providers participating in the Medicaid program receive reimbursement from Medicaid. Section 409.908, Florida Statutes. States are given the option to charge Medicaid recipients copayments for services. 42 CFR Section 447.50. Certain categories of services and recipients are exempt from copayments. 42 CFR Section 447.53.

   
   

4. Forty-five percent of the Medicaid program is funded by state funds and fifty-five percent is funded with federal "matching funds." In order to receive federal matching funds for its Medicaid program, the state must submit a plan describing the nature and scope of its Medicaid program and giving assurances that the program will be administered in accordance with Title XIX and applicable federal regulations. This plan is known as the State plan.

   
   

5. Effective February 14, 1992, the Legislature enacted Chapter 92-5, Laws of Florida, which amended the appropriations Act for fiscal year 1991-92. Proviso language in Chapter 92-5 relating to Specific Appropriation 1035 for Medicaid prescribed medicine/drug provides:

   
   

   The Department of Health and Rehabilitative Services is directed to implement, beginning April 1, 1992, a co-payment program for Prescribed Medicine in order to implement spending reductions of at least $770,213 from general revenue and $929,661 from the Medical Care Trust Fund in Specific Appropriation 1035.

   
   

6. The State plan was amended effective April 10, 1992, to require a copayment of $1.00 per prescription for pharmacy services provided to Medicaid recipients. Certain categories of services and recipients were exempted from the copayment requirement. Providers were prohibited from denying services to recipients who were unable to pay the copayment.

   
   

7. Prior to April 10, 1992, copayments had not been required for prescribed drug services.

8. HRS adopted Emergency Rule 10CER92-4, effective April 10, 1992. HRS published notice of the emergency rule in the Florida Administrative Weekly, Vol. 18, No. 16, April 17, 1992. In this notice under the section entitled "SPECIFIC REASONS FOR FINDING AN IMMEDIATE DANGER TO THE PUBLIC HEALTH, SAFETY OR WELFARE," it states in pertinent part:

   
   

   The 1992 Legislature reduced the prescribed drug services program FY 1991-1992 budget in Senate Bill 2408 which was signed by the Governor on February 14, 1992. This law requires the Medicaid program to implement a copayment requirement for prescription drugs by April 1992. . . .

   
   

9. The emergency rule amended Rule 10C-7.042, Florida Administrative Code and required recipients to pay the pharmacy provider a $1.00 co-payment for each prescription or other prescribed drug service reimbursed by Medicaid. Certain categories of recipients and services were exempted from the copayment requirement. The pharmacy provider was required to request a copayment from

   non-exempt recipients. The pharmacy must determine a recipient's ability to pay the copayment based on the recipient's reply to the request for copayment, the recipient's past purchase history with that provider, and the recipient's recent purchase of non-essential items. A provider could not deny prescribed drug services to eligible recipients because of inability to pay the copayment.

   Although a recipient may not be able to pay the copayment, the recipient remains liable for the copayment.

   
   

10. HRS began the rulemaking process to adopt the same amendments to Rule 10C-7.042 as a regular rule. Emergency Rule 10CER92-4 was challenged via a lawsuit in state court and was later removed to federal court. The proposed amendments to Rule 10C-7.042 were challenged in an administrative rule challenge, which was withdrawn and added to the lawsuit in federal court dealing with the challenge to the emergency rule.

    
    

11. Chapter 92-293, Laws of Florida, the Appropriations Act for fiscal year beginning July 1, 1992 and ending June 30, 1993 contains the following proviso language relating to Medicaid prescribed drug services:

    
    

    Funds in Specific Appropriation 1019 are reduced by $18,581,894 from the General Revenue Fund, $3,281,004 from the Grants and Donations Trust Fund, $22,647,089 from the Medical Care Trust Fund, $2,632,000 from the Public Medical Assistance Trust Fund, and

    $58,013 from the Special Grants Trust Fund for the Department to implement a Medicaid comprehensive cost containment program. This program shall, at a minimum, incorporate: a prior authorization component; a co-payment program; an on site education program for providers prescribing the drugs; enhancements to the Department's ability to identify fraud and abuse; utilization of specific nursing home pharmacy consultants; and, shall implement new electronic technology to speed payments and capture third party liability information.

12. By notice in the Florida Administrative Weekly, Rule 10CER92-4 has been continued pursuant to Section 120.54(9)(c), Florida Statutes.

    
    

13. Chapter 93-184, Laws of Florida, the Appropriations Act for the fiscal year beginning July 1, 1993 and ending June 30, 1994, contains no language concerning reductions in the appropriations for Medicaid prescription medicine services and contains no language concerning copayments for recipients receiving Medicaid prescription medicine services. The amounts appropriated for the Medicaid prescription medicine services was at or below the amounts appropriated in Chapter 92-293 Laws of Florida.

    
    

14. Chapter 93-129, Section 48, Laws of Florida, created section 409.9081, Florida Statutes, which requires Medicaid recipients to pay nominal copayments for hospital outpatient services and physician services effective July 1, 1993.

    
    

15. Prior to the enactment of section 409.9081, Florida Statutes, a one dollar copayment had been required for Medicaid outpatient hospital and physician service. Effective July 1, 1993, the copayments were raised to two dollars.

    
    

16. Current revenues generated by the copayments for the Medicaid prescribed drug services is approximately $12 million. Thus, the discontinuance of the copayment would result in a $12 million shortfall for the provision of Medicaid prescribed drug services, and a restriction on services to the extent necessary to account for the shortfall.

    
    

17. The Social Services Estimating Conference (SSEC) is a statutorily created body established to develop official information relating to the social service system of the state for use in the state planning and budgeting system. Section 216.136(6), Florida Statutes.

    
    

18. Section 216.134(1), Florida Statutes, provides in pertinent part:

    
    

    Unless otherwise provided by law or decided by unanimous agreement of the principals of the conference, all official information developed by the conference shall be based on the assumption that current law and current administrative practices will remain in effect throughout the period for which the official information is to be used. . . .

    
    

    The social services estimating conference for 1993-94 took into consideration the revenues from the copayments for the Medicaid prescribed drug services.

    
    

19. Petitioner, Mildred Henry, resides in Jacksonville, Florida, and is disabled. She has received Medicaid since December, 1991. Her only income is Supplemental Income ("SSI") benefits of $434 per month.

    
    

20. Ms. Henry suffers from many disabilities including chronic obstructive pulmonary disease, asthma, hypertension, severe and chronic urinary tract infections, and depression. Her physicians have prescribed a number of medications to address these conditions including Cardizem (for high blood pressure), Zantac (for ulcers), Cipro (for chronic urinary tract infections), Phenazopyridine (for bladder problems), Imipramine (for depression), Premarin (hormone), Thes-dur (for asthma), Brethine (for asthma), Ventalin (for asthma),

    Furosemide (for excess fluid), K-Dur (potassium), Propoxy N (for pain), Nizoral (for skin irritations), Darvoset (for pain), Tylenol 3 (for pain), and Halcion (for anxiety). She needs to refill most of these prescriptions each month.

    
    

21. Copayments for all of Ms. Henry's prescription medications amount to

    $16.00. Ms. Henry's income is below the federal poverty level. She cannot afford to pay a copayment for all her medications.

    
    

22. Petitioner has informed her pharmacy that she does not have the money to pay copayments. However, the pharmacy has refused to provide the medications without payment of the co-payments. As a result, Petitioner runs out of medications and delays getting her prescriptions refilled until she can pay the copayment.

    
    

    CONCLUSIONS OF LAW

    
    

23. The Division of Administrative Hearings has jurisdiction over the parties to and subject matter of this proceeding. Section 120.56, Florida Statutes. The evidence establishes that Petitioner is substantially affected by Emergency Rule 10CER92-4 and has standing to challenge the emergency rule.

    
    

24. Section 120.52(8), Florida Statutes, provides:

    
    

    1. "Invalid exercise of delegated legislative authority means action which goes beyond the powers and functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one or more of the following apply:

       1. The agency has materially failed to follow the applicable rulemaking procedures set forth in s. 120.54;

       2. The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(7);

       3. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(7);

       4. The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency; or

       5. The rule is arbitrary or capricious.

25. Emergency Rule 10CER92-4 provides: 10CER92-4 (10C-7.042) Prescribed Drug

    Services Subsections.

    (1) through (5) No change.

    1. Reimbursement methodology.

       1. Recipients are required to pay to the provider pharmacy a $1.00 co-payment for each prescription or other prescribed drug service reimbursed by Medicaid program, except for specific categories of recipients or services

          listed in this paragraph. The pharmacy provider must bill his usual and customary charge for the service to the Medicaid program, and the claims processing system will automatically deduct the co-payment from the calculated reimbursement total. A co- payment cannot be collected, and a co-payment will not be deducted from the total reimbursement formula, for the following recipients or services:

          1. Recipients who have not reached their twenty-first birthday.

          2. Recipients who reside in an institution.

          3. Recipients who are pregnant.

          4. Recipients who are enrolled in a Health Maintenance Organization.

          5. Any family-planning related services, contraceptives, and prenatal vitamins.

          6. An initial trial prescription or seven-day supply, if required.

          7. Emergency services provided in a hospital or other facility equipped to furnish emergency care.

    2. through (15) No change.

    1. Payment Acceptance

       1. Payment made by the Medicaid program for pharmacy services to the approved service limit shall be payment in full. No person or entity, except a third party liable source, shall be billed, in part or in full, for covered Medicaid services rendered and paid under the Medicaid program except for a $1.00 co-payment on each prescription or other prescribed drug service, where required.

       2. The provider shall request the co- payment amount from the recipient, if required by subsection (6). A provider must

          determine a recipient's ability to pay the co- payment amount based on the recipient's reply to the request for payment, the recipients's past purchase history with that provider, and the recipient's recent purchases of non- essential items.

       3. The provider may not deny prescription drug services to any eligible recipient because of the recipient's inability to pay the co-payment amount. A recipient's inability to pay the co-payment amount at the time prescription drugs are dispensed does not eliminate the recipient's liability for the co-payment charge.

       4. When a recipient's prescriptions exceed any of the service limitations listed in this section, and a Drug Exception Request

       is not approved, the recipient is responsible for payment for the additional prescriptions or other pharmacy services.

    2. through (18) No change.

    (19) This rule becomes effective April 10, 1992.

    
    

26. Rule 10CER92-4 cites Section 409.919, Florida Statutes as rulemaking authority. Section 409.919 provides: "The department shall adopt any rules necessary to comply with or administer ss. 409.901-409.920 and all rules necessary to comply with federal requirements."

    
    

27. Section 409.907, Florida Statutes, provides in pertinent part:

    
    

    (3) The provider agreement developed by the department, in addition to the requirements specified in subsections (1) and (2), shall require the provider to:

    * * *

    (j) Accept Medicaid payment as payment in full, and prohibit the provider from billing or collecting from the recipient or the recipient's responsible party any additional amount except, and only to the extent the department permits or requires, copayments, coinsurance, or deductibles to be paid by the recipient for the services or goods

    provided. The Medicaid payment-in-full policy does not apply to services or goods provided to a recipient if the services or goods are not covered by the Medicaid program. (Emphasis supplied.)

    
    

28. Section 409.913, Florida Statutes, provides in pertinent part:

    
    

    (5) When presenting a claim for payment under the Medicaid program, a provider has an affirmative duty . . . to present a claim that is true and accurate and that is for goods and services which:

    * * *

    (d) Have not been billed in whole or in part to a recipient or a recipient's responsible party, except for such copayments, coinsurance, or deductibles as may be authorized by the department. (Emphasis supplied.)

    
    

29. Prior to July 1, 1993, the broad grant of rulemaking authority provided in section 409.919 along with the references to copayments in sections 409.907 and 409.913, authorized HRS to promulgate rules requiring copayments for Medicaid prescribed drug services. This interpretation is further bolstered by the proviso language in Chapters 92-5 and 92-293, Laws of Florida, requiring HRS to develop copayment programs for the Medicaid prescribed drug program.

    However, the authority to require copayments for Medicaid prescribed drug services ended on July, 1, 1993, the effective date of section 409.908l, Florida Statutes

30. Section 409.9081, Florida Statutes, provides in pertinent part:

    
    

    (1) Effective July 1, 1993, the agency shall require, subject to federal regulations and limitations, each Medicaid recipient to pay at the time of service a nominal copayment for the following Medicaid services:

    1. Hospital outpatient services: up to

       $2 for each hospital outpatient visit.

    2. Physician services: up to $2 copayment for each visit with a physician licensed under chapter 458, chapter 459, chapter 460, chapter 461 or chapter 463.

    
    

31. A rule of statutory construction which is applicable to this case is the rule known as expressio unis est exclusio alterius. The rule is described in James v. Department of Corrections, 424 So. 2d 826, 827 (Fla. lst DCA 1983), as follows:

    
    

    Expressio unius est exclusio alterius is a general principle of statutory construction which states that the mention of one thing implies the exclusion of another. Thus, where a statute enumerates the things on which it is to operate, it is ordinarily construed as excluding from its operation all those not expressly mentioned.

    
    

32. By listing in section 409.9081 specific Medicaid services for which copayments are required, the Legislature prohibited ACHA from requiring copayments for a Medicaid service which was not listed. Thus, the Legislature authorized copayments for hospital outpatient services and physician services but did not authorize copayments for prescribed drug services.

    
    

33. Appropriations made in an appropriations act are only valid for the term of the pertinent fiscal year. See Chiles v. United Faculty of Fla., 615 So. 2d 671, 674 n.1 (Fla. 1993). Provisio language, to be valid, ". . . must directly and rationally relate to the purpose of the appropriation to which it applies." Dept. of Educ. v. Lewis, 416, So. 2d 455, 460 (Fla. 1982). Therefore, any authority granted by proviso language in an appropriations act must expire at the end of the pertinent fiscal year. The authorization for copayments for Medicaid prescribed drug services contained in proviso language in Chapter 92-5 was not valid beyond June 30, 1992. Likewise the proviso language in Chapter 92-293, Laws of Florida, authorizing copayments for Medicaid prescribed drug services was not effective past June 30, 1993.

    
    

34. The Legislature is presumed to know the current law when it enacts a statute. Collins Investment Co. v. Metropolitan Dade County, 164 So. 2d 806 (Fla. 1964). When Section 409.0981 was enacted it is presumed that the Legislature knew that the current requirement for copayment on certain Medicaid services had been implemented pursuant to proviso language in the 1992-1993 appropriations act, Chapter 92-293, Laws of Florida. Proviso language relating to Specific Appropriation 1005 mandated a $1 copayment for Medicaid funded emergency room visits for nonemergency medical services, and proviso language relating to Specific Appropriation 1016 mandated a $1 copayment for Medicaid

    physician office visits. Proviso language relating to Specific Appropriation 1019 directed HRS to set up a Medicaid comprehensive pharmacy cost containment program which was to include a copayment program. Thus, when the Legislature enacted Section 409.9081 and the 1993-1994 appropriations act, Chapter 93-184, it is presumed it knew that the authorization for copayments for Medicaid services funded by the 1992-1993 appropriations act would not be effective past June 30, 1993. If the Legislature had intended to authorize copayments for Medicaid hospital outpatient services, physician services and prescribed drug services, it could have listed all three types of services in Section 409.9081 or it could have included proviso language in the appropriations act authorizing the copayments rather than enacting substantive law. For whatever reason, the Legislature chose to authorize copayments for Medicaid services by substantive law which limited Medicaid copayments to outpatient hospital services and physician services.

    
    

35. Respondent argues that the fact that the Social Service Estimating Conference considered the copayments for Medicaid prescribed drug services in preparing its estimate for the 1993-1994 fiscal year indicates that the Legislature intended to continue the authorization of the copayments. This argument is without merit. There is no evidence in Chapter 93-184 that the Legislature authorized the continuation of the Medicaid copayments. However, the plain reading of section 409.9081 does indicate that the Legislature did not authorize copayments for Medicaid prescribed drug services.

    
    

36. Respondent argues that the mention of copayments in Sections 409.907 and 409.913, Florida Statutes, gives AHCA the authority to promulgate a rule requiring copayments for Medicaid prescribed drug services. While this argument had merit prior to the passage of section 409.9081, Florida Statutes, it fails to pass muster when section 409.9081 is included in the analysis. In Adams v. Culver, 111 So. 2d 665, 667 (Fla. 1959), the court stated:

    
    

    It is a well settled rule of statutory construction, however, that a special statute covering a particular subject matter is controlling over a general statutory provision covering the same and other subjects in general terms.

    
    

    Section 409.9081 is a special statute dealing with Medicaid copayments, and as such it takes precedence over the general statutory provisions in sections 409.907 and 409.913 dealing with provider reimbursement and copayments. When sections 409.907 and 409.913 are read in paria materia with section 409.9081, it becomes evident that the copayments now refer to the only copayments which are authorized in sections 409.901-409.20, Medicaid hospital outpatient services and physician services.

    
    

37. Emergency Rule 10CER92-4 became an invalid exercise of delegated legislative authority on July 1, 1993, because it enlarged, modified, and contravened section 409.9081 by requiring a copayment for Medicaid prescribed drug services.

On the basis of all of the foregoing Findings of Fact and Conclusions of Law, it is ORDERED:

That the Respondent's Emergency Rule 10CER92-4 is an invalid exercise of delegated legislative authority effective July 1, 1993.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 11th day of October, 1993.

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 11th day of October, 1993.

APPENDIX TO FINAL ORDER

The following are my specific rulings on all proposed findings of fact submitted by all parties.

Findings proposed by Petitioner:

Paragraphs 1,2,3,4: Accepted in substance. Paragraphs 5,6,7: Accepted in substance.

Paragraph 8: Third sentence is rejected as subordinate and unnecessary.

Remainder is accepted in substance.

Paragraph 9: Rejected as subordinate and unnecessary details. Paragraphs 10,11,12: Accepted in substance.

Paragraph 13: Accepted in substance. Paragraph 14: Accepted in substance. Paragraph 15: Accepted.

Paragraph 16: Rejected as a constituting a conclusion of law. Paragraph 17: Rejected as subordinate and unnecessary.

Paragraphs 18,19,20,21,22: Rejected as argument or conclusion of law. Paragraph 23: Accepted in substance.

Paragraphs24,25,26: Accepted. Paragraph 27: Accepted in substance.

Findings proposed by Respondent:

Paragraphs 1,2,3,4: Accepted in substance.

Paragraph 5: Rejected as not supported by persuasive, competent, substantial evidence.

Paragraph 6: Accepted.

Paragraph 7: Accepted in substance. Paragraph 8: Accepted in substance.

Paragraphs 9,10,11,12,13: Accepted in substance.

Paragraph 14: First sentence is accepted in substance. The second sentence is rejected as not supported by persuasive competent substantial evidence.

Paragraph 15: Accepted in substance. Paragraph 16: Accepted in substance. Paragraphs 17,18: Accepted in substance.

Paragraph 19: Rejected as it constitutes a conclusion of law.

Paragraph 20,21: Accepted in substance to the extent that the SSES considered the copayments in its 1993-94 estimating conference.

Paragraph 22: Rejected as constituting a conclusion of law.

Paragraph 23: Rejected as not supported by persuasive, competent substantial evidence.

Paragraph 24: Accepted in substance. Paragraphs 25,26,27: Accepted in substance.

COPIES FURNISHED:

Sam Power, Agency Clerk

Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Anne L. Swerlick, Esquire Cindy Huddleston, Esquire Florida Legal Services, Inc. 2121 Delta Boulevard

Tallahassee, Florida 32303

Julia P. Forrester, Esquire

Agency for Health Care Administration 1317 Winewood Boulevard

Building Six, Room 234 Tallahassee, Florida 32399-0700

Liz Cloud, Chief

Bureau of Administrative Code The Capitol, Room 1802 Tallahassee, Florida 32303

Carroll Webb, Executive Director Administrative Procedures Committee Holland Building, Room 120 Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate procedure. Such proceedings are commenced by filing one copy of a Notice of Appeal with the agency clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate district where the party resides. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 93-005311RE

Orders for Case No: 93-005311RE