STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA HOSPITAL - ORLANDO and ) FLORIDA HOSPITAL - ALTAMONTE SPRINGS, )

)

Petitioner, )

)

vs. ) CASE NO. 95-1573

) STATE OF FLORIDA, AGENCY FOR HEALTH ) CARE ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this proceeding before Daniel Manry, a duly designated Hearing Officer of the Division of Administrative Hearings, on September 14, 1995, in Orlando, Florida.

APPEARANCES

For Petitioner: John D. Buchanan, Jr., Esquire

117 South Gadsden Street

Post Office Drawer 1049-32302 Tallahassee, Florida 32302-1409

For Respondent: Karel Baarslag, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Ft. Knox Building Number 3 Tallahassee, Florida 32308-5403

STATEMENT OF THE ISSUE

The issue for determination in this proceeding is whether Respondent is entitled to a refund of $285,648.26 paid for Medicaid services that Petitioner provided during the respective hospitalizations of four psychiatric patients.

PRELIMINARY STATEMENT

On August 31, 1994, Respondent notified Petitioner that Respondent would seek a refund of Medicaid payments to: Florida Hospital-Orlando, in the amount of $420,604.33; and Florida Hospital-Altamonte Springs, in the amount of

$41,051.29. The parties resolved all issues except those pertaining to Medicaid payments of $285,648.26. Petitioner timely requested a formal hearing.

At the formal hearing, Petitioner presented the testimony of four witnesses and submitted seven exhibits for admission in evidence. Pursuant to the agreement of the parties, Petitioner filed the deposition testimony of three additional witnesses on October 6, 1995, as late filed exhibits.

Respondent presented the testimony of three witnesses and submitted nine exhibits for admission in evidence. Three of Respondent's exhibits consisted of deposition testimony. Pursuant to the agreement of the parties, the deposition testimony of a fourth witness was filed on September 22, 1995, as a late filed exhibit.

The identity of the witnesses and exhibits and the evidentiary rulings regarding each are set forth in the transcript of the formal hearing filed with the undersigned on October 2, 1995. The parties timely filed proposed recommended orders ("PROs") on November 1, 1995. Proposed findings of fact in the PROs are addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Petitioner operates two hospitals in the name of Florida Hospital. Each hospital is separately located. Both hospitals participate in the Florida Medicaid program in accordance with Chapter 409, Florida Statutes, 1/ and Florida Administrative Code Rule 59G. 2/

   
   

2. Respondent is the state agency responsible for administering the Florida Medicaid program. In order for the state to receive federal funds, federal statutes and regulations mandate that Respondent control the utilization of services subject to Medicaid payments. 3/

   
   

3. Respondent contracts with a professional review organization to control the utilization of psychiatric services subject to Medicaid payments. 4/ Keystone Peer Review Organization ("KEPRO") retrospectively reviews admissions and lengths of stay for psychiatric patients to determine whether alternative sources of payment exist and whether Medicaid services are medically necessary.

   
   

4. Respondent claims that alternative sources of payment existed for two of the four Medicaid recipients at issue in this proceeding. Respondent also claims that the inpatient services Petitioner provided to all four recipients were medically unnecessary. 5/

1. Alternative Sources Of Payment

   
   

   5. Medicaid is the payor of last resort. 6/ Irrespective of whether the services provided by Petitioner were medically necessary, Respondent is entitled to a refund if other sources of payment existed for those services. Alternative sources of payment are primary and prior to Medicaid payments ("alternative source(s) of payment").

   
   

2. Medically Necessary

   
   

   1. Respondent claims that the inpatient services Petitioner provided to all four recipients were medically unnecessary. The terms "medically necessary" or "medical necessity" are not defined by applicable state and federal law. 7/

      
      

   2. Medical necessity is determined by applying a two-prong test to the facts and circumstances surrounding each case. 8/ The first prong requires inpatient services during admission and treatment of Medicaid recipients to be consistent with appropriate medical care. 9/ The second prong of the test requires alternative placements to be considered in prescribing inpatient services. 10/

      1. First Prong: Appropriate Medical Care

         
         

   3. Services that alleviate a harmful medical condition are consistent with appropriate medical care. Services alleviate a harmful medical condition if they are reasonably calculated to prevent, diagnose, correct, cure, alleviate, or prevent the worsening of conditions in the recipient that endanger life, cause suffering or pain, result in illness or infirmity, threaten to cause or aggravate a handicap, or cause physical deformity or malfunction. 11/

      
      

   4. Services are consistent with appropriate medical care if they are provided to protect the patient's life, prevent significant illness or disability, or to alleviate severe pain. Services must be consistent with individualized treatment. They must be specific and consistent with symptoms or a confirmed diagnosis of the illness or injury under treatment. 12/

      
      

   5. Services are consistent with appropriate medical care if they do not exceed the patient's individual needs. Services may not be primarily intended for the convenience of the recipient or the provider. 13/

      
      

   6. KEPRO considers the intensity of service, the severity of illness, and discharge screens in determining medical necessity ("ISD criteria"). 14/ ISD criteria are subdivided into approximately 14 subgroups.

      
      

   7. ISD criteria represent a list of signs and symptoms and diagnostic and therapeutic services. They are general guidelines for determining the medical necessity of inpatient services.

      
      

   8. ISD criteria are not dispositive of medical necessity. ISD criteria are not binding on the treating physician. 15/

      
      

   9. The treating physician can override ISD criteria based on his or her clinical judgment concerning a particular Medicaid recipient. 16/ The clinical judgment to override ISD criteria must be consistent with appropriate medical care. 17/

      
      

   10. The four Medicaid recipients did not improve significantly within the time prescribed by ISD criteria. A patient that fails to make significant improvement in a timely manner does not satisfy ISD criteria for continued inpatient services.

       
       

       2.1(a) Matters Not At Issue

       
       

   11. Respondent does not challenge the admission of the four Medicaid recipients. 18/ Their admission to Florida Hospital satisfied applicable ISD criteria and was consistent with appropriate medical care.

       
       

   12. Respondent does not claim that inpatient services provided before the date each Medicaid recipient failed to satisfy ISD criteria for continued inpatient services were medically unnecessary ("initial treatment"). Initial treatment satisfied applicable ISD criteria and was consistent with appropriate medical care.

       
       

       2.1(b) Matters At Issue

       
       

   13. Respondent acknowledges that inpatient services provided after initial treatment of the four Medicaid recipients were consistent with appropriate

       medical care. 19/ When asked if Respondent challenged the level of services, the quality of care, or the appropriateness of care, Respondent stated:

       
       

       Oh, absolutely [not]. We're not saying that the care was either substandard or . . . rank overutilization . . . . We're not saying there was substandard care or [that] they

       . . . [tried] . . . to . . . game the system. We certainly don't believe that.

       
       

       Transcript at 172-173. 20/

       
       

       Respondent claims that inpatient services were medically unnecessary after initial treatment because the recipients no longer satisfied ISD criteria for continued inpatient services.

       
       

       1. Second Prong: Alternative Placement

       
       

   14. The second prong of the medical necessity test provides that inpatient services are medically unnecessary if, consistent with appropriate medical care, they could have been effectively furnished more economically either on an outpatient basis or in an inpatient facility of a different type. 21/ Thus, discharge to outpatient care or to an inpatient facility of a different type ("alternative") must be made in a manner that is consistent with appropriate medical care. 22/ In addition, an alternative must be available and suitable for the needs of the individual patient. 23/

       
       

   15. An alternative placement exists if several conjunctive requirements are satisfied. An alternative placement exists if inpatient services could have been: effectively furnished; more economically; in an available and suitable alternative; in a manner that is suitable for the needs of the individual patient and consistent with appropriate medical care ("alternative placement"). 24/

       
       

   16. The parties agree on two requirements of the alternative placement test. Inpatient services provided by Petitioner could have been provided more economically in an alternative setting. The parties also agree that relevant alternatives were facilities of a different type than Florida Hospital.

       
       

   17. The parties contest the remaining requirements of the alternative placement test. The contested issues are whether, prior to the respective dates of discharge, the inpatient services provided by Petitioner could have been: effectively furnished; in an available and suitable alternative; in a manner that was suitable for the needs of the individual patient; and in a manner consistent with appropriate medical care.

       
       

       2.2(a) Matters Not At Issue

       
       

   18. An alternative placement did not exist when Petitioner admitted the four Medicaid recipients to Florida Hospital. Respondent does not challenge Petitioner's admission of the four recipients.

       
       

   19. Petitioner used appropriate procedures and due diligence to determine if an alternative placement existed for each of the four Medicaid recipients. 25/ Respondent does not challenge the procedures and diligence used to determine whether an alternative placement existed. 26/

   20. An alternative placement did not exist for the four Medicaid recipients during their initial treatment. Respondent does not challenge the inpatient services provided by Petitioner while the recipients satisfied ISD criteria. 27/

       
       

       2.2(b) Matters At Issue

       
       

   21. As a threshold matter, Respondent asserts that it is not required to consider an alternative placement in determining medical necessity. Respondent argues that it can determine medical necessity solely by applying ISD criteria.

       
       

   22. Even if Respondent is required to consider an alternative placement, Respondent claims that it is not required to consider the availability or suitability of an alternative. If Respondent is required to consider availability and suitability, Respondent claims that a suitable alternative was available for all four Medicaid recipients on the respective dates that the recipients no longer satisfied ISD criteria. 28/

       
       

       2.2(c) A Difficult And Litigious Task

       
       

   23. The medical determination of the existence of an alternative placement is a difficult task and a risky one for physicians and hospitals in today's litigious society. 29/ It may be suitable for the patient's needs and consistent with appropriate medical care to discharge the patient to an alternative facility. However, an alternative may be unavailable when a patient no longer satisfies ISD criteria.

       
       

   24. Unavailability of suitable alternatives may be caused by a variety of factors. There may be a shortage of existing facilities. Existing facilities with available space may lack funding to accept new residents. Existing facilities may have the necessary funding but lack available space. Outpatient case loads may be so great that the delay between discharge and the delivery of outpatient services may effectively deny any timely and meaningful availability of outpatient care. In such cases, it may not be suitable for the patient's needs or consistent with appropriate medical care to discharge the patient without an available alternative.

       
       

   25. When a patient no longer satisfies ISD criteria, alternatives may be available, but available alternatives may not be suitable for the patient's individual needs. The services furnished by an available alternative may not be suitable for the needs of the patient. Conversely, an available alternative may offer suitable services but may not be capable of furnishing those services effectively. It may not be consistent with appropriate medical care to discharge the patient to an available alternative that is either unsuitable or ineffective; or to discharge the patient without an alternative.

       
       

   26. Even if an alternative is available, suitable, and effective, the condition of the patient may need to improve or stabilize before discharge to an alternative is suitable for the individual needs of the patient and consistent with appropriate medical care. Earlier discharge of such a patient may be inconsistent with appropriate medical care.

       
       

   27. A provider must determine whether to continue to furnish services during the interim required until the patient can be discharged to an alternative placement or can be discharged with no alternative placement ("interim services"). Interim services are medically necessary if prior

       discharge of a patient would either violate ISD criteria or be inconsistent with appropriate medical care. 30/

       
       

3. The Four Medicaid Recipients

   
   

   1. The identity of the patients for which Respondent seeks a refund, the dates of their hospitalization, the contested dates, and the amount of contested payments are set forth in the following table.

      
      

      Patient Dates Of Hosp. Contested Dates Contested Amount

      J.H.	08/24/92-10/29/92	09/25/92-10/29/92	$ 24,953.96
      N.S.	10/18/89-06/14/91	11/18/89-06/14/91	$232,831.16
      A.B.	10/04/91-11/04/91	10/12/91-11/04/91	$ 15,808.36
      B.W.	05/10/91-06/10/91	05/23/91-06/10/91	$ 12,054.78

      TOTAL $285,648.26

      
      

   2. Respondent claims that it is entitled to a refund of $257,785.12 because alternative sources of payment existed for the inpatient services provided to J.H. and N.S. after their initial treatment. Respondent does not allege that alternative sources of payment existed for J.H. and N.S. upon admission or during their initial treatment. Respondent does not claim that alternative sources of treatment existed for A.B. and B.W. at any time during their hospitalization.

      
      

   3. Respondent claims that it is entitled to a refund of $285,648.26 because the inpatient services Petitioner provided to all four recipients was medically unnecessary after their initial treatment. After their initial treatment, none of the four recipients satisfied ISD criteria for continued inpatient services.

      
      

   4. If Respondent is required to consider alternative placements in determining medical necessity, Respondent alleges that inpatient services Petitioner provided to J.H. and N.S. after their initial treatment could have been furnished more economically in an inpatient facility of a different type. Respondent asserts that inpatient services Petitioner provided to A.B. and B.W. after their initial treatment could have been furnished more economically on an outpatient basis.

   
   

4. J.H.

   
   

   1. J.H. was admitted to Florida Hospital's acute care unit on August 24, 1992. On October 29, 1992, Petitioner transferred J.H. to Daniel Memorial Residential Treatment Center in Jacksonville, Florida.

      
      

   2. Respondent does not seek a refund of Medicaid payments from August 24, 1992, through September 24, 1992. Respondent seeks a refund of payments made from September 25 through October 29, 1992.

      
      

      1. Alternative Source Of Payment

         
         

   3. No alternative source of payment existed for the inpatient services Petitioner provided to J.H. J.H. was involuntarily committed to the hospital on August 31, 1992, pursuant to the Baker Act. 31/

      
      

   4. Respondent does not allege that the Baker act provided an alternative source of payment prior to September 25, 1992. 32/ Respondent failed to show why the Baker Act did not provide an alternative source of payment prior to

      September 25, 1992, but did provide an alternative source of payment on September 25, 1992, and thereafter. 33/

      
      

      1. Medical Necessity

      
      

   5. Once J.H. was admitted to Florida Hospital on August 24, 1992, he did not make significant improvement after 30 days. He did not meet ISD criteria for continued inpatient services.

      
      

      4.2(a) Appropriate Medical Care

      
      

   6. ISD criteria were correctly overridden by the treating physician for

      J.H. Inpatient services Petitioner provided to J.H. after his initial treatment were consistent with appropriate medical care.

      
      

   7. Although J.H. did not make significant improvement within the time prescribed by ISD criteria, he did make significant improvement during his stay at Florida Hospital. He was successfully treated and timely discharged in a manner that was suitable for his individual needs and consistent with appropriate medical care.

      
      

      4.2(a)(1) Mental Impairment

      
      

   8. J.H. was 15 years old when he was admitted to Florida Hospital on August 24, 1992. He had chronic schizophrenia, with borderline intellectual capabilities ("mental retardation"), and a well-documented explosive disorder.

      
      

      4.2(a)(2) Emotional Impairment

      
      

   9. J.H. had attention deficit disorder ("ADD"). He could not process information. He had difficulty sitting still and focusing.

      
      

   10. J.H. had previously been treated in a residential placement setting. He set fires and abused animals.

       
       

   11. J.H. attempted to choke a dog and had to be restrained. He broke windows and committed acts of mischief.

       
       

   12. J.H. picked up other children by their neck and ears. He jumped up and down on their toes and punched them in the face. He struck staff and used razor blades to attack authority figures.

       
       

       4.2(a)(3) Medication

       
       

   13. The combination of ADD, mental retardation, and schizophrenia made appropriate medical care for J.H. difficult and slow. Medicines used to control the ADD often make schizophrenia more fluid.

       
       

   14. J.H. had been treated successfully with medications in the past. However, J.H. was noncompliant with medication.

       
       

   15. More time than that prescribed by ISD criteria was medically necessary to discover the combination of medicines that would be effective for J.H. in this instance. When the right combination was determined, additional time was needed to stabilize the multiple medications.

       4.2(b) Alternative Placement

       
       

   16. Petitioner correctly considered alternative placements in prescribing inpatient services for J.H. after his initial treatment. Petitioner identified an available alternative for J.H. on August 28, 1992. However, no alternative placement existed for J.H. prior to the date he was stabilized and discharged by Petitioner.

       
       

   17. Discharge before J.H. was stabilized would have been neither suitable for the needs of the individual patient nor consistent with appropriate medical care. Before J.H. was stabilized, he was a danger to himself and others. J.H. was a danger to himself and others when he resided in an alternative facility prior to his admission to Florida Hospital.

       
       

   18. The services that were medically necessary to stabilize J.H. could only be provided in an acute care facility like Florida Hospital. They could not have been furnished effectively in an alternative facility. Florida Hospital provided J.H. with 24 hour supervision, nursing staff, physicians, and support personnel trained in psychology and psychiatry.

   
   

5. N.S.

   
   

   1. N.S. was admitted through Florida Hospital's emergency room on October 18, 1989, when she was 14 years old. She was discharged on June 14, 1991, to a long term residential treatment facility.

      
      

   2. Respondent does not seek a refund of Medicaid payments from October 18, 1989, through November 17, 1989. Respondent seeks a refund of payments made from November 18, 1989, through June 14, 1991.

      
      

      1. Alternative Source Of Payment

         
         

   3. Respondent alleges that an alternative source of payment existed in a settlement agreement to which neither Petitioner nor Respondent were parties. The settlement agreement resolved a federal law suit filed by the mother of N.S. against the Department of Health and Rehabilitative Services ("HRS") and the Orange County School Board (the "school board"), Case No. 90- 134-CIV-ORL-18.

      
      

   4. The settlement agreement was executed on November 30, 1990, between the mother of N.S., HRS, the school board, and BRV, Inc., ("BRV"). BRV is a Florida non-profit corporation named after its three directors: Usher L. Brown, Esquire, counsel for N.S.; Wynelle Roberson; and Gregory Valcante.

      
      

   5. BRV was formed to create an alternative placement that is suitable for N.S.'s individual needs. BRV operates a long term residential facility that effectively furnishes services to N.S. in a manner that is suitable for her needs and consistent with appropriate medical care.

      
      

   6. The BRV program is designed and supervised by Dr. Ralph Maurer, an expert in the disorders suffered by N.S. Dr. Maurer designs and supervises the protocols, strategies, and approaches utilized in the BRV program.

      
      

   7. The BRV program provides N.S. with residential and educational components. The program also provides N.S. with components in behavior management and medical care and treatment.

   8. HRS paid $60,000 for the residential component and support staff required in the BRV program. The school board paid $100,000 to BRV for the education component.

      
      

   9. None of the settlement proceeds are allocated to the type of services provided by Petitioner during N.S.'s hospitalization, including behavior management and medical care and treatment. Petitioner did not receive any funds from the settlement agreement.

      
      

   10. Petitioner is not a party to the settlement agreement. The settlement agreement does not address payment of the Medicaid services provided by Petitioner.

       
       

   11. The settlement agreement is not an alternative source of payment for the Medicaid services provided by Petitioner. If Respondent is entitled to a refund as a result of the settlement agreement, Respondent must seek its refund from the settlement proceeds. 34/ Applicable law mandates that Respondent, "shall seek recovery of reimbursement from third-party benefits." 335/

       
       

   12. Even if Respondent were entitled to a refund from Petitioner as a result of the settlement agreement, the amount of refund would be limited to the portion of the settlement proceeds actually received by Petitioner. 36/ The maximum amount of refund to which Respondent would be entitled is $160,000; not the $232,831.16 sought by Respondent.

       
       

       1. Medical Necessity

       
       

   13. Once N.S. was admitted to Florida Hospital on October 18, 1989, she did not make significant improvement after 30 days. She did not meet ISD criteria for continued inpatient services.

       
       

       5.2(a) Appropriate Medical Care

       
       

   14. ISD criteria were correctly overridden by the treating physician for

       N.S. Inpatient services Petitioner provided to N.S. after her initial treatment were consistent with appropriate medical care.

       
       

   15. Although N.S. did not make significant improvement within the time prescribed by ISD criteria, she did make significant improvement during her stay at Florida Hospital. She was successfully treated and timely discharged in a manner that was suitable for her individual needs and consistent with appropriate medical care.

       
       

       5.2(a)(1) Mental Impairment

       
       

   16. N.S. is mentally retarded. She was born missing the right and left temporal lobes of her brain. As a result of her brain damage, N.S. suffers rapid mood changes and can not process certain higher orders of function.

       
       

       5.2(a)(2) Emotional Impairment

       
       

   17. N.S. also suffers from agenesis. Agenesis is a brain development problem in which N.S. can not control emotional circuits in her brain.

       
       

   18. N.S. suffers from animalistic and aggressive patterns of behavior. Her symptoms include stalking, leaping, biting, screaming, spitting, and smashing.

       5.2(a)(3) Learning Impairment

       
       

   19. N.S. has significantly impaired memory. Her memory consists of short term memory from day to day.

       
       

   20. N.S. has difficulty learning. She can not process certain higher orders of functions. It is difficult for her to pay attention. She has a significant language disorder.

       
       

   21. The memory disorder dates from birth. N.S. has no period of normal learning to use as a point of reference.

       
       

   22. N.S. learns differently from others. She does not respond to praise or punishment and does not understand discipline.

       
       

   23. N.S. does not learn from consequences. She can not store the information necessary to learn from consequences.

       
       

   24. N.S. reacts to undesired behavior with aggression. As a simplistic example, if one gives N.S. candy, the donor is a nice person. If one withholds candy, that person is not nice. Adverse treatment from others will lead to aggression from N.S.

       
       

   25. The learning strategies used to teach N.S. are similar to those used to tame a frightened animal. They are comparable to those used to train dolphins at Seaworld.

       
       

   26. Prior to her admission to Florida Hospital, N.S. was treated at the Children's Mental Health Unit, Shands Teaching Hospital, University of Florida ("Shands"). She was treated by Dr. Maurer, who later set up the program at BRV.

       
       

       5.2(a)(4) Post Traumatic Stress Disorder

       
       

   27. N.S. was admitted to Florida Hospital as a result of an incident at the school where HRS placed N.S. at the time. N.S. had been aggressive toward her teacher. Two large males held N.S.'s head between her legs for 45 minutes to teach her not to be aggressive.

       
       

   28. The inappropriate attempt to discipline N.S. caused post traumatic stress disorder. The disorder required over a year and a half to control.

       
       

   29. In this type of post traumatic stress disorder, normal antipredator behavior is intensified in a manner similar to that an animal might experience in the presence of predators. Because N.S. is a frail individual, this one incident was sufficient to require hospitalization in the acute care unit at Florida Hospital.

       
       

   30. N.S. went berserk. At the time of admission, N.S. was grossly psychotic. Her paranoia was global. She was totally out of control with aggressive and violent behavior. She bit a security guard, and had to be restrained.

       
       

   31. N.S. grunted and did not speak. She neither fed nor dressed herself. She leaped off of chairs, bit others and herself, and did not socialize. She had no sustained attention.

   32. Doctors at Shands correctly determined that N.S. needed an acute care facility because N.S. was acutely psychotic and uncontrollable. The objective was to control her, settle her down, and transition her out to a long term residential program.

       
       

   33. N.S. was treatable. She was appropriately not "warehoused" in an alternative facility that was not suitable for her needs.

       
       

       5.2(a)(5) Significant Improvement

       
       

   34. At the time of her discharge on June 14, 1991, N.S. showed dramatic improvement for the severity of impairment that she suffered. She was alert and cooperative. She had learned some language and communication skills.

       
       

   35. N.S. dressed herself and ate appropriately. Her affect and mood were stable. She did not attack others and was able to socialize.

       
       

   36. N.S.'s global paranoia was reduced. She was able to go out from seclusion with one-to-one adult supervision. However, the potential to hurt herself and others persists. She requires close adult supervision.

       
       

       5.2(a)(6) Medication

       
       

   37. N.S. was a very complex and difficult patient to treat. Her developmental disabilities and severe psychiatric disorders were difficult by themselves. The incident at school superimposed a post traumatic disorder over her existing disabilities and disorders.

       
       

   38. More time than that prescribed by ISD criteria was medically necessary to discover the combination of medicines that would be effective for N.S. When the right combination was determined, additional time was needed to stabilize the multiple medications.

       
       

   39. There is no specific medication for the treatment of post traumatic stress disorder. Medicines used for all disorders may be tried on an empirical basis and juggled until the right medication, or combination of medications, is found.

       
       

   40. N.S. is very fragile. The margin of error for her medication is very small.

       
       

   41. N.S. was treated with a variety of medications. She had reactions to some medications, and they had to be changed. She did not respond well to others, and they had to be changed.

       
       

   42. The treating physician conducted an elaborate search for an effective combination of medications. The medications were titrated slowly.

       
       

   43. A total of nine combinations were tried. Unlike antibiotics that work in 24 to 36 hours, medications for psychiatric disorders and major depression may require two to six weeks before their effectiveness can be determined.

       
       

   44. During the time that her treating physician was attempting to stabilize N.S.'s medications, N.S. needed the medical care provided by doctors and nurses in a hospital setting. N.S. could not have been discharged to a less restrictive setting due to her level of acuity.

   45. Medications for N.S. were not stabilized until April 16, 1991. It was consistent with appropriate medical care to keep N.S. in Florida Hospital until June 14, 1991; approximately two months after her medications were stabilized.

       
       

       5.2(a)(7) Violence And Seclusion

       
       

   46. Violent behavior was another reason why it took so much time to stabilize N.S. N.S. was violent throughout much of her treatment.

       
       

   47. N.S. had to be repeatedly secluded. The seclusion was medically necessary. However, the intervals of seclusion slowed her improvement.

       
       

       5.2(a)(8) Behavior Modification And Learning Disabilities

       
       

   48. Even without intervals of seclusion, behavior modification would have been slow because N.S. suffered from memory disorder. She could not store the information necessary to make ordinary means of discipline and learning effective.

       
       

       5.2(b) Alternative Placement

       
       

   49. Petitioner correctly considered alternative placements in prescribing inpatient services for N.S. after her initial treatment. No alternative placement existed for N.S. prior to June 14, 1991. The acute care admission and treatment of N.S. at Florida Hospital for approximately 605 days was suitable for the needs of N.S. and consistent with appropriate medical care.

       
       

   50. Earlier discharge would have been neither suitable for the needs of the individual patient nor consistent with appropriate medical care. Before

       N.S. was stabilized, she was a danger to herself and others.

       
       

   51. It would have been unsuitable for the individual needs of N.S. and inconsistent with appropriate medical care to discharge N.S. while she was a danger to herself and others. N.S. was a danger to herself and others when HRS placed her in an alternative facility prior to her admission to Florida Hospital.

       
       

       5.2(b)(1) Suitable Services Effectively Furnished

       
       

   52. The services that were medically necessary to stabilize N.S. could only be provided in an acute care facility like Florida Hospital. Florida Hospital provided N.S. with 24 hour supervision, nursing staff, physicians, and support personnel trained in psychology and psychiatry. The inpatient services Petitioner provided could not have been furnished effectively in an alternative facility prior to June 14, 1991.

       
       

   53. Multiple medications could only be administered in an acute care facility. Nursing staff monitored N.S. for side effects at 15 minute intervals,

       24 hours a day. They monitored the effectiveness of multiple medications and the toxicity of those medications.

       
       

   54. Psychiatric acute care nurses are best equipped to work with patients who are very sick. The doctors and nurses at Florida Hospital know how to handle disturbed, depressive, and psychotic people. N.S. was one of those people for most of her inpatient treatment.

   55. N.S. was isolated and safe in Florida Hospital. She became familiar with staff and settled down.

       
       

   56. Florida Hospital was close enough that N.S.'s mother could visit her regularly. Visitation from her mother was an integral part of the medical treatment and behavior modification that was suitable for N.S.

       
       

   57. Petitioner effectively treated N.S.'s disorders. Doctors and nurses at the hospital changed N.S.'s behavioral pattern, stabilized her behavior, and taught N.S. the social skills needed for her to function in a residential treatment facility like BRV.

       
       

       5.2(b)(2) Available And Suitable Alternatives

       
       

   58. An alternative facility, if it had been available, was not suitable for the needs of N.S. prior to her discharge. Until N.S. was stabilized, she was the type of patient who could not function in a residential setting.

       
       

   59. N.S. could not use even a word or two. She could not communicate in any intelligible manner. She could not dress or feed herself.

       
       

   60. Petitioner considered every reasonable alternative in prescribing treatment for N.S. Petitioner reviewed every reasonable alternative in the state and elsewhere, including Texas.

       
       

   61. One factor that complicated an alternative placement was the need for staff at an alternative facility to be able to consult with doctors at Florida Hospital. As the distance between the two increased, the ability to consult decreased.

       
       

   62. It was medically necessary for N.S.'s mother to provide support. The ability to provide such support decreased as distance increased.

       
       

   63. Residential treatment facilities and group homes would not accept N.S. due to her degree of disorganization. Those types of facilities were unable to guarantee N.S.'s safety.

       
       

   64. Many facilities used treatment plans that were unsuitable for N.S.'s condition. The Montanari and Au Clair Palms programs, for example, were punitive and relied on consequences. Punishment and consequences are ineffective and unsuitable for N.S.

       
       

   65. Petitioner attempted to place N.S. in the Brown School in Texas. However, that facility refused to accept N.S.

       
       

   66. N.S. could not be placed in a residential program until her medication was stabilized. None of the residential programs had an acute care psychiatric unit where multiple medications could be administered and monitored until N.S. was stabilized.

       
       

   67. Petitioner could not return N.S. to Shands. The patients there are younger and severely handicapped. Shands does not have an adolescent unit.

       
       

   68. Petitioner could not place N.S. in Northeast Florida Mental Health Hospital ("Northeast"). It would not have been consistent with appropriate medical care for Petitioner to make such a placement.

   69. Northeast did not have long term acute care for chronically ill children. N.S. did not meet Northeast's criteria. Northeast refused to accept N.S.

       
       

   70. Petitioner attempted to involuntarily admit N.S. at Medico pursuant to the Baker Act. However, Medico refused to accept N.S.

       
       

   71. Treating physicians created a facility and program that was suitable for N.S.'s needs and consistent with appropriate medical care. BRV effectively furnishes services in a program that includes a high level of supervision, structure, and behavioral management.

       
       

   72. N.S. has done well since being placed in BRV. She is functioning well in school.

   
   

6. A.B.

   
   

   1. A.B. was admitted to Florida Hospital on October 4, 1991, and discharged on November 4, 1991. Respondent claims a refund of Medicaid payments for A.B.'s hospitalization from October 12, through November 4, 1991.

      
      

      1. Alternative Sources Of Payment

         
         

   2. No alternative sources of payment existed for the inpatient services Petitioner provided to A.B. after her initial treatment. Respondent does not claim that any alternative sources of payment existed for A.B.

      
      

      1. Medical Necessity

      
      

   3. After A.B. was admitted to Florida Hospital on October 4, 1991, she did not make significant improvement after eight days. She did not meet ISD criteria for continued inpatient services.

      
      

      6.2(a) Appropriate Medical Care

      
      

   4. ISD criteria were correctly overridden by the treating physician for

      A.B. Inpatient services Petitioner provided to A.B. after her initial treatment were consistent with appropriate medical care.

      
      

   5. Although A.B. did not make significant improvement within the time prescribed by ISD criteria, she did make significant improvement during her stay at Florida Hospital. She was successfully treated and timely discharged in a manner that was suitable for her individual needs and consistent with appropriate medical care.

      
      

      6.2(a)(1) Mental Impairment

      
      

   6. A.B. suffered from multiple medical problems. She had cerebral palsy and was wheel chair bound. She had arthritis.

      
      

   7. A.B. had a brain injury and suffered seizure disorders. Her arms, hands, and legs were drawn into distorted positions. She was unable to take care of herself.

      
      

   8. A.B. had a progressive depressive disorder. At the time of admission,

      A.B. suffered from major depression. She had a history of attempted suicides.

      6.2(a)(2) Substance Abuse And Suicide

      
      

   9. A.B. had a long history of alcohol and drug abuse, including cocaine and crack cocaine. A.B. abused alcohol while on Antabuse. Antabuse is a medicine that makes the patient sick if the patient ingests alcohol.

      
      

   10. If a patient ingests alcohol in sizeable quantities, Antabuse may cause a severe reaction that can be fatal. A.B. consumed excessive amounts of alcohol while on Antabuse in the hope that she would kill herself.

       
       

       6.2(a)(3) Medication

       
       

   11. More time than that prescribed by ISD criteria was medically necessary to discover the combination of medicines that would be effective for A.B. When the right combination was determined, additional time was needed to stabilize the multiple medications.

       
       

   12. It took approximately 30 days for A.B.'s treating physician to stabilize her with medications. Four to six weeks are usually required before the effectiveness of psychiatric medications can be determined.

       
       

   13. The patient requires time to adjust to the level of dosage needed to treat the particular impairment. After the appropriate dosage of medication is administered, additional time is needed to determine whether the drug is effective.

       
       

   14. Eight to ten days are needed for the medication to reach a steady blood level in the patient. Until that time, the medication is not at a therapeutic level. Once the medication has reached a therapeutic level, it takes another 8 to 10 days to determine if the patient is at an appropriate dosage and is responding.

       
       

   15. Psychiatric medications require longer to work when the level of impairment is high. The level of impairment in A.B. was high because she had to be detoxified.

       
       

   16. The time needed for the medications to work was greater because they created side affects for A.B.'s brain and other conditions. For example, antidepressant medication increases the risk of seizure. This is particularly true when a patient suffers from cerebral palsy and substance abuse. Side affects had to be monitored to make sure that the medication was not at a toxic level.

       
       

       6.2(b) Alternative Placement

       
       

   17. Petitioner correctly considered alternative placements in prescribing inpatient services for A.B. after her initial treatment. No alternative placement existed for A.B. until she was stabilized. Prior to that time, A.B. was a danger to herself. It would have been inconsistent with appropriate medical care for Petitioner to discharge A.B. when she was a danger to herself.

       
       

       6.2(b)(1) Effective And Appropriate Medical Care

       
       

   18. Earlier outpatient services would not have been suitable for the needs of A.B. An outpatient clinic could not effectively furnish the services A.B. needed prior to the date of her discharge.

   19. A.B. could not be discharged before she was ambulatory and functional. The treating physician prescribed physical therapy.

       
       

   20. At the time of discharge, A.B. was ambulatory and able to take care of her essential needs. She was timely discharged for outpatient care at the mental health clinic.

       
       

       6.2(b)(2) No Available And Suitable Alternative

       
       

   21. It takes approximately six to eight weeks to obtain an appointment as an outpatient at the local mental health clinic. A.B. has no social support network.

       
       

   22. The risk of suicide is high if patients such as A.B, who have little or no support network, are discharged as soon as they say they are no longer suicidal. A.B. needed to be kept in the hospital until she was in remission from her depression and until she developed some insight into self-medication.

   
   

7. B.W.

   
   

   1. B.W. was admitted to Florida Hospital on May 10, 1991. She was discharged on June 10, 1991. Respondent claims a refund of Medicaid payments for B.W.'s hospitalization from May 23, through June 10, 1991.

      
      

      1. Alternative Source Of Payment

         
         

   2. No alternative source of payment existed to pay the medical services Petitioner provided to B.W. Respondent does not assert that any alternative sources of payment were available.

      
      

      1. Medical Necessity

      
      

   3. After B.W. was admitted to Florida Hospital on May 10, 1991, she did not make significant improvement after 13 days. She did not meet ISD criteria for continued inpatient services.

      
      

      7.2(a) Appropriate Medical Care

      
      

   4. ISD criteria were correctly overridden by the treating physician. Inpatient services Petitioner provided to B.W. after her initial treatment were consistent with appropriate medical care.

      
      

   5. Although B.W. did not make significant improvement within the time prescribed by ISD criteria, she did make significant improvement during her stay at Florida Hospital. She was successfully treated and timely discharged in a manner that was suitable for her individual needs and consistent with appropriate medical care.

      
      

      7.2(a)(1) Mental Impairment

      
      

   6. At the time of admission, B.W. had organic affective disorder with severe depression. She was psychotic and was hallucinating. She heard voices and talked to herself. She was acutely suicidal.

      
      

   7. B.W. had a history of prolonged depression, multiple hospitalizations, and failed courses of outpatient treatment. This was B.W.'s fifth psychiatric admission.

   8. B.W. was last admitted on March 3, 1991, for an overdose of medication. She was hospitalized for four days and discharged.

      
      

   9. B.W. was obsessed with suicide and how she was going to carry out her suicide. She had a specific plan to kill herself.

      
      

      7.2(a)(2) Emotional Impairment

      
      

   10. B.W. was unwashed, unkept, disheveled, and depressed. Her speech was blurred. She suffered from sleep disorder and loss of appetite.

       
       

   11. B.W. suffered from multiple substance abuse problems and impaired judgment. B.W.'s substance abuse was an attempt to self medicate for anxiety. The anxiety was caused by conditions in her home environment.

       
       

   12. B.W. was responsible for the care of minor children. She was separated from her husband and living with an elderly mother who could not take care of B.W. Her mother was significantly depressed and was, herself, at risk of suicide.

       
       

       7.2(a)(3) Medication

       
       

   13. More time than that prescribed by ISD criteria was medically necessary to discover the combination of medicines that would be effective for

       B.W. When the right combination was determined, additional time was needed to stabilize the medications.

       
       

   14. B.W. was on antipsychotic drugs because she was hallucinating and hearing voices. She was also on antidepressants.

       
       

   15. It takes time for psychiatric drugs to take effect. The treating physician had to gradually increase the dosage administered to B.W. until the medication reached a therapeutic level.

       
       

   16. B.W. made steady improvement during her hospitalization. As late as June 4, 1991, however, B.W. was nauseated, vomiting, and had headaches. B.W. was treated effectively and timely discharged in a manner that was suitable for her individual needs and consistent with appropriate medical care.

       
       

       7.2(b) Alternative Placement

       
       

   17. Petitioner correctly considered alternative placements in prescribing inpatient services for B.W. after her initial treatment. No alternative placement existed for B.W. before she was stabilized and discharged. It was consistent with appropriate medical care for Petitioner to keep B.W. in the hospital until her treating physician stabilized her.

       
       

   18. It required approximately 30 days for B.W.'s treating physician to stabilize her. Outpatient care would not have been effective before B.W. was stabilized.

       
       

   19. At the time that Respondent claims B.W. should have been discharged,

       B.W. was depressed and was hallucinating. She was still in withdrawal from her substance abuse.

   20. Earlier outpatient care would have been neither effective nor suitable for the needs of B.W. It would not have been consistent with appropriate medical care to discharge B.W. to her home.

       
       

   21. B.W. is responsible for the care of two minor children. She has an unstable home environment. It would not have been consistent with appropriate medical care to discharge B.W. to such an environment before she was stabilized.

       
       

       CONCLUSIONS OF LAW

       
       

   22. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto. The parties were duly noticed for the formal hearing.

   
   

8. Burden Of Proof

   
   

   1. The parties stipulated that the burden of proof is on Respondent. See, Transcript at pages 17 and 19. The parties' stipulation is consistent with applicable rules.

      
      

   2. Rule 59G-7.046(2) provides in relevant part that Rule 10-2.060 controls administrative proceedings except as provided otherwise in Rule 59G-7. Rule 59G-7.046(3) provides in relevant part that the burden of proof in an administrative proceeding is on the recipient.

      
      

   3. Petitioner is not a recipient within the meaning of Rule 59G- 1.010(243). Petitioner is a provider within the meaning of 59G-1.010(233).

      
      

   4. For a non-recipient, such as Petitioner, Rule 10- 2.060(2) provides in relevant part that the burden of proof is on:

      
      

      . . . the Department when the Department takes action which would reduce or terminate the benefits . . . being received by the recipient.

      
      

   5. Respondent asserts that it is entitled to a refund. A refund would reduce the benefits received by recipients within the meaning of Rule 10- 2.060(2). Therefore, the burden of proof is on Respondent pursuant to Rule 2.060(2).

      
      

   6. The burden of proof is on Respondent because Respondent asserts the affirmative of the issue of whether it is entitled to a refund. The party asserting the affirmative of an issue generally has the burden of proof. Young

   v. State, Department of Community Affairs, 567 So.2d 2 (Fla. 3d DCA 1990); Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981); Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

   
   

9. Standard Of Proof

   
   

   177. Respondent must satisfy its burden of proof by a preponderance of the evidence. Adam Smith Enterprises v. Department of Environmental Regulation, 553 So. 2d 1260 (Fla. 1st DCA 1990); Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1979). Respondent must show by a preponderance of the evidence that it is entitled to a refund because: an alternative source of payment existed for the Medicaid services provided to

   J.H. and N.S. after their initial treatment; and the Medicaid services for all four recipients were medically unnecessary.

   
   

10. Ultimate Issues

    
    

    1. Respondent failed to satisfy its burden of proof in this proceeding. No alternative source of payment existed for J.H. and N.S. The inpatient services provided by Petitioner after initial treatment of the four Medicaid recipients were medically necessary.

       
       

    2. The evidence submitted by Petitioner was generally credible and persuasive. The evidence submitted by Respondent generally was not.

    
    

11. Alternative Source Of Payment

    
    

    1. Petitioner failed to show by a preponderance of the evidence that alternative sources of payment existed for J.H. and N.S. Respondent does not allege that alternative sources of payment existed for A.B. and B.W.

       
       

       1. J.H.

          
          

    2. The involuntary commitment of J.H. pursuant to Florida's Baker Act did not provide an alternative source of payment for inpatient services Petitioner provided for a portion of the time that J.H. was involuntarily committed. Respondent failed to support its position with either a preponderance of the evidence or persuasive legal authority.

       
       

       1. N.S.

       
       

    3. Respondent showed that the mother of N.S. entered into a settlement agreement with HRS, the school board, and BRV, in which HRS and the school board paid $160,000 to BRV. However, Respondent failed to show that any of the

       $160,000 paid to BRV found its way to Petitioner. Respondent also failed to show why any portion of the settlement proceeds should have been allocated to Medicaid services that Petitioner provided to N.S.

       
       

    4. Petitioner is not a party to the settlement agreement. The settlement agreement does not provide for payment of the specific Medicaid services furnished by Petitioner.

       
       

    5. The settlement agreement acknowledges that the BRV program is divided into separate components, including residential and educational components as well as a component for medical care and treatment. The settlement agreement specifically allocates all of the settlement proceeds to the residential and educational components of the BRV program. The settlement agreement does not allocate any portion of the settlement proceeds to the type of services provided by Petitioner, including medical care and treatment.

       
       

    6. Petitioner did not receive any of the settlement proceeds indirectly. Respondent did not show that Petitioner was a shareholder in BRV; or that BRV and Petitioner were sibling corporations owned by identical shareholders (including N.S.'s treating physicians) who received any portion of the settlement proceeds.

       
       

    7. Even if Petitioner received all of the settlement proceeds, Respondent failed to show why its refund claim is not limited to $160,000. Sections 409.910(4) and (7) limit Respondent's claim against third party

       benefits to the amount of the benefits. Yet, Respondent claims that it is entitled to a refund of $232,831.16.

       
       

    8. Even if Petitioner received some or all of the settlement proceeds, directly or indirectly, Respondent failed to show why its refund claim should not be further reduced by the proportionate share of settlement proceeds allocable to N.S.'s initial treatment from October 18 through November 17, 1989. By not seeking a refund of Medicaid payments for N.S.'s initial treatment, Respondent admits that the settlement proceeds do not constitute an alternative source of payment for her initial treatment. 37/

    
    

12. Medical Necessity

    
    

    1. Inpatient services Petitioner provided after initial treatment of the four Medicaid recipients are medically necessary if they satisfy a two-prong test. Orlando General Hospital v. Department of Health and Rehabilitative Services, 567 So.2d 962, 965 (Fla. 5th DCA 1990). First, inpatient services must be consistent with appropriate medical care. 42 CFR, Section 456.6; Rule 59G-1.010(167)(a). See also, Orlando General Hospital, 567 So.2d at 965 (holding that medically necessary services must alleviate a harmful medical condition). Second, an alternative placement must not exist. Rule 59G-1.010(167)(b); Orlando General Hospital, 567 So.2d at 965.

       
       

       1. Appropriate Medical Care

          
          

    2. The relevant purpose for which KEPRO is authorized by federal regulation to review Petitioner's inpatient services is to determine the "appropriateness" of those services. 42 CFR Section 456.6. Federal regulations require Respondent to establish criteria to review the appropriateness of medical services. 42 CFR, Section 456.1(b)(2)(iii). Respondent uses ISD criteria for that purpose.

       
       

    3. ISD criteria neither limit the scope of KEPRO's review nor define the "appropriateness" of inpatient services. ISD criteria can be overridden by the clinical judgment of the treating physician. Orlando General Hospital, 567 So.2d at 964 and 966.

       
       

    4. ISD criteria were correctly overridden by the treating physicians for the four Medicaid recipients in this proceeding. The clinical judgments of those physicians were consistent with appropriate medical care.

       
       

    5. The inpatient services provided by Petitioner after initial treatment were medically necessary. Those services were consistent with appropriate medical care. The four Medicaid recipients were effectively treated and stabilized. They were timely discharged in a manner that was consistent with appropriate medical care.

       
       

       1. Alternative Placement

       
       

    6. Petitioner correctly considered alternative placements in prescribing inpatient services after initial treatment of the four Medicaid recipients. An alternative placement did not exist for any of the four Medicaid recipients until the respective dates of their discharge.

       
       

    7. No alternative existed for N.S. prior to her discharge. Alternatives did exist for the other three Medicaid recipients prior to the dates they were stabilized and discharged.

    8. The medical services needed to stabilize the four Medicaid recipients could not have been effectively furnished in any alternative except an acute care hospital like the hospitals operated by Petitioner. None of the four recipients had been stabilized when their initial treatment was completed. It would have been neither suitable for the individual needs of those four patients nor consistent with appropriate medical care to discharge any of them before they were stabilized.

       
       

    9. Before J.H. and N.S. were stabilized, each was a danger to themselves and others. Before A.B. and B.W. were stabilized, each was a danger to herself. It would not have been consistent with appropriate medical care to discharge any one of those four patients while such a danger existed.

       
       

       12.2(a) Alternative Placement Must Be Considered In Determining Medical Necessity

       
       

    10. Respondent is judicially required to consider alternative placements in determining whether inpatient services are medically necessary. When asked if Respondent does not consider alternative placements in determining medical necessity, Respondent gave the following answer:

        
        

        Correct. We don't believe that the concept of medical necessity includes the concept of

        . . . alternative placement.

        
        

        Transcript at 128.

        
        

    11. In Orlando General Hospital, 567 So.2d 962, 965 (Fla. 5th DCA 1990), the court specifically rejected such an argument by HRS, the predecessor agency to Respondent. The court held that alternative placement is an essential part of the medical necessity test. The court stated in relevant part:

        
        

        . . . HRS stated that the two-pronged test adopted by the hearing officer was correct . . . whether the admission and treatment alleviated a harmful medical condition as the first prong and whether treatment could have been provided in a more economical setting than an acute care hospital as the second prong.

        * * *

        The term "medically necessary" . . . was defined by HRS when it supplied the officer the definition. . . .

        
        

        Orlando General Hospital, 567 So.2d at 963 and 965. 12.2(b) Availability And Suitability

    12. Respondent must consider the availability and suitability of alternatives in determining medical necessity. However, Respondent does not consider availability or suitability. Respondent determines medical necessity in a manner that requires Respondent:

        
        

        . . . to deny payments for patient days . . .

        even if there is a complete lack of . . .

        alternate placement.

        Transcript at 170.

        
        

    13. In Orlando General Hospital, 567 So.2d at 965, the court rejected a similar argument by the agency. In relevant part, the court held:

        
        

        The second prong of the definition of "medically necessary" requires a finding that no other equally effective course of treatment is available and suitable. (emphasis supplied)

        
        

        Orlando General Hospital, 567 So.2d at 965. 38/..

        
        

    14. Respondent failed to establish an evidentiary basis for the requisite finding of fact. Respondent failed to show by a preponderance of the evidence that an effective course of treatment was available and suitable for the four Medicaid recipients prior to their respective dates of discharge.

        
        

        12.2(c) Stare Decisis

        
        

    15. Respondent must consider alternative placements, including the availability and suitability of alternatives, in determining medical necessity. Both the holding in Orlando General Hospital and the final order of the agency in that case are binding on Respondent under the doctrine of stare decisis.

        
        

    16. The legislature intends for the principle of administrative stare decisis to apply to Respondent. Cf. Gessler v. Department of Business and Professional Regulation, 627 So.2d 501, 503 (Fla. 4th DCA 1993). In Gessler, the court explained:

        
        

        The purpose is to protect citizens against arbitrariness . . . and to give the courts an opportunity to determine whether the agency is acting arbitrarily or evenhandedly. (citation omitted)

        
        

        Gessler, 627 So. 2d at 503-504.

        
        

    17. The object of stare decisis is uniformity, certainty, and stability in the law. The objective is accomplished by:

        
        

        . . . treating like cases alike and following decisions rendered previously involving similar circumstances

        . . . .

        
        

        Gessler, 627 So. 2d at 504.

        
        

    18. The doctrine of stare decisis:

        
        

        . . . ensures that similarly situated individuals are treated alike rather than in accordance with the personal view of any particular [agency employee]

        . . . .

        Perez v. State, 620 So.2d 1256, 1259 (Fla. 1993) (Overton, J., concurring).

        
        

    19. Respondent must adhere to the two prong medical necessity test applied in Orlando General Hospital or explain Respondent's deviation. As the court stated in Gessler:

        
        

        . . . the entry of inconsistent orders . . . without a reasonable explanation, may violate section 120.68(12)(b), Florida Statutes (1991), as well as the equal protection guarantees of both the Florida and United States Constitutions.

        
        

        Gessler, 627 So.2d at 503-504.

        
        

        Respondent did not provide a reasonable explanation for its deviation from the two prong test applied in Orlando General Hospital.

        
        

    20. Although application of the doctrine of stare decisis may not be obligatory in a particular case, the doctrine is almost invariably applied to issues of law unless there is a compelling reason for departing from existing precedent. Forman v. Florida Land Holding Corporation, 102 So.2d 596, 598 (Fla. 1958). The doctrine of stare decisis is almost invariably applied in the construction of statutes because the issue decided is an issue of law rather than a factual issue. Old Plantation Corporation v. Maule Industries, Inc., 68 So.2d 180, 183 (Fla. 1953); Metropolitan Dade County v. E.B. Elliott Advertising Co., 214 So.2d 511, 512 (Fla. 3d DCA 1968). It is of utmost importance that the statutory law be of certain meaning and fixed interpretation. Old Plantation, 68 So.2d at 183.

        
        

    21. The two prong test of medical necessity is an issue of law determined by the court in Orlando General Hospital and by the agency in its final order. Respondent is bound to follow the prior decision of its predecessor agency unless Respondent can show a compelling reason for departing from controlling precedent. Respondent failed to demonstrate a compelling reason for not adhering to the two prong test of medical necessity applied in Orlando General Hospital.

    
    

13. Agency Policy

1. Respondent characterizes its refusal to consider alternative placements, including the availability and suitability of alternatives, as an unwritten policy that is not bound by stare decisis. In Gessler, the court stated:

   
   

   . . . While it is apparent that agencies, with their significant policy-making roles, may not be bound to follow prior decisions to the extent that the courts are bound by precedent, it is nevertheless apparent the legislature intends there be a principle of administrative stare decisis in Florida.

   
   

   Gessler, 627 So.2d at 503-504.

   
   

2. Respondent attempts to legitimize its unwritten policy with the following explication:

   If persons come into hospitals who should not be in hospitals . . . because the state has simply . . . not provided adequate funds [for alternative facilities], we're sort of caught between a rock and a hard place

   . . . . We are not permitted to say, "Well, they can stay in a hospital until such facilities may be built two or three years down the road," probably in response to a federal court order.

   We don't, at Medicaid, do anything. . . .

   [W]e don't provide any services whatsoever. We pay those who do.

   So, we don't operate homes for the develop- mentally disabled. . . . We don't run any nursing homes. We don't run any insane asylums. We can't pay for any institutions for mental disease. We just pay the providers [in those facilities] for covered services.

   * * *

   . . . there's many homeless people living under bridges. Certainly, they'd be a lot better off being in the hospital, but that wasn't the

   intent of Congress in funding Medicaid, to provide for that kind of service.

   There's no question that somebody living under a bridge would be medically better off being in a hospital getting some food and probably a checkup and everything else, but that's not the intent of Congress.

   
   

   Transcript at 174 and 176-177.

   
   

3. Respondent's explication of its unwritten policy is factually flawed, definitionally biased, and has previously been rejected as a matter of law. The factual flaws and definitional bias are illuminated by comparing Respondent's explication with this caustic observation of equality in the law:

   
   

   The law, in its majestic equality, forbids the rich as well as the poor to sleep under

   bridges, to beg in the streets, and to steal bread.

   
   

   Anatole France, Le Lys Rouge (1894).

   
   

4. The quoted observation is factually flawed because the rich don't sleep under bridges, beg in the streets, or steal bread. The law itself, in effect, is definitionally biased. It defines criminals on the basis of economic status by forbidding acts which only the economically abject have any need to commit in order to survive.

   
   

   1. Factually Flawed

      
      

5. Like the quoted observation, Respondent's explication of its unwritten policy is factually flawed. For example, homeless people living under bridges, although better off in a hospital, do not ipso facto qualify for admission into Petitioner's hospitals.

6. Respondent does not challenge Petitioner's admission of the four Medicaid recipients into Florida Hospital. The recipients were not in Florida Hospital merely to provide better care than they would have received if they had been sleeping under bridges.

   
   

7. Existing tests for medical necessity are sufficient to preclude hospitalization as a means of housing the economically abject. If the four Medicaid recipients had been hospitalized to shelter them from sleeping under bridges, their inpatient services would not have been specific and consistent with symptoms or a confirmed diagnosis of illness or injury within the meaning of Rule 59G-1.010(167)(a).

   
   

8. Petitioner is not claiming Medicaid reimbursement for several years while alternative facilities can be constructed. Nor is Petitioner claiming Medicaid reimbursement until the state appropriates the money necessary to fund existing facilities adequately. 39/

   
   

9. Petitioner is merely claiming Medicaid payments for covered services while Respondent has the federal funds appropriated for that purpose. Respondent is responsible for administering the Medicaid program in accordance with applicable law and not in accordance with select subsets of that law.

   
   

   1. Definitional Bias

      
      

10. There is a generalized problem in placing Medicaid recipients in alternative facilities if the recipients are psychiatric patients. Many alternative facilities are unable to handle psychiatric patients because the patients have severe behavioral or medication problems.

    
    

11. If a psychiatric patient in Florida Hospital is unsuitable for the admission criteria of one alternative, the patient frequently is not unsuitable for any other alternative. Many psychiatric patients come from alternative facilities before they are admitted to Florida Hospital. The same or a similar facility frequently does not want the patient returned.

    
    

12. When Florida Hospital spends Medicaid funds caring for psychiatric patients who can not be discharged to an alternative facility and Respondent recovers payments for those services on the ground that the services are medically unnecessary, Medicaid payments for the total population of Medicaid recipients are reduced below the actual cost of the services provided by Florida Hospital. The effect of Respondent's recovery is to shift the economic burden for the Medicaid program from Respondent to the provider and other hospital patients.

    
    

13. Respondent reviews 100 percent of psychiatric inpatient services. Respondent reviews other inpatient services on a sampling basis.

    
    

14. The denial rate is far greater for psychiatric services than it is for other acute care services at Florida Hospital. The denial rate in the Medicaid program for psychiatric services is five times greater than the number of days generated.

    1. Legally Rejected

    
    

15. Respondent's unwritten policy is based on the need to preserve scarce funds for patients who truly have no alternative to hospitalization. However, Respondent's implementation of its policy has previously been rejected as a matter of law. In Orlando General Hospital, the court stated:

There can be no doubt that [the agency's] concern for protecting public funds is admirable and in conformity with the duties assigned to it. . . .

* * *

We agree . . . that referral of patients to alternative treatment facilities in the place

of . . . acute hospital inpatient treatment centers is an urgent policy consideration that is required to preserve scarce funds

for patients who truly have no alternative to hospitalization.

* * *

On the other hand, medical providers are placed in an awkward position where reimburse- ment by [the agency] may be denied.

* * *

The medical determination of those who qualify for hospitalization is a difficult task and a risky one for physicians and hospitals in today's litigious society

. . . . An after-the-fact determination that a provider . . . is not entitled to payment under a public program when the provider followed prescribed broad procedures which . . . can be overridden by the treating physician . . . is simply unfair.

Orlando General Hospital, 567 So.2d at 963 and 966.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order denying its claim for

refund of the Medicaid payments at issue in this proceeding.

RECOMMENDED this 20th day of December, 1995, in Tallahassee, Florida.

DANIEL S. MANRY, 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 20th day of December, 1995.

ENDNOTES

1/ All chapter and section references are to Florida Statutes (1993) unless otherwise stated.

2/ Unless otherwise stated, all references to rules are to rules promulgated in the Florida Administrative Code published at the time of this Recommended Order.

3/ 42 CFR Sec. 456.1-456.145.

4/ 42 CFR Sec. 456.4 requires Respondent to provide independent professional review.

5/ Respondent does not claim that it is entitled to a refund because the services at issue exceed applicable caps or because Petitioner was paid at an improperly higher rate due to inflated cost reports. See, Transcript at 169.

6/ 42 USC Sec. 1396a(a)(25), a(a)(45), and b(o); Sec. 409.910, Fla. Stat. New York Department of Social Services v. Bowen, 846 F.2d 129 (2d Cir. 1988); Evanston Hospital v. Hauck, 1 F.3d 540 (7th Cir. 1993); Rubin v. Sullivan, 928 F.2d 898 (9th Cir. 1990).

7/ See, e.g., Sec. 409.901. Florida law generally tracts federal statutes. Compare, 42 USC Sec. 1396. See also, Orlando General Hospital v. Department of Health and Rehabilitative Services, 567 So.2d 962, 963-964, 965 (Fla. 5th DCA 1990) (finding that no statutory definition of medical necessity exists).

8/ The two-prong test for medical necessity was upheld in Orlando General Hospital, 567 So.2d at 962-963, 964-965.

9/ The purpose for which KEPRO is authorized by federal regulation to review utilization is to determine the "appropriateness" and quality "of medical services." 42 CFR Sec. 456.6 requires Respondent to establish a plan for the review by professional health personnel of the "appropriateness" and quality of Medicaid services. Compare, 42 CFR Sec. 456.60 (requiring a physician to certify the need for inpatient services).

10/ The second prong of the medical necessity test is promulgated in Rule 59G- 1.010(167)(b) and applied in Orlando General Hospital, 567 So.2d at 963. In Orlando General Hospital, the court held that the second prong of the medical necessity test requires alternative placement to be considered in prescribing inpatient services.

11/ Orlando General Hospital, 567 So.2d at 963. 12/ Rule 59G-1.010(167)(a).

13/ Id.

14/ 42 CFR Sec. 456.1(b)(2)(iii) requires Respondent to establish criteria for review of the appropriateness of Medicaid services.

15/ Orlando General Hospital, 567 So.2d at 964.

16/ See, Orlando General Hospital, 567 So.2d at 964 and 966 (holding that a physician can override the procedures that a professional review organization requires providers to follow).

17/ See n. 9, supra. See also, Rule 59G-1.010(167)(b) (requiring alternative placements to be made in a manner consistent with appropriate medical care).

18/ In response to the question of whether Respondent challenges the admission of any of the four patients, Respondent stated:

We do not contest that. These people needed to be in the hospital.

Transcript at 172.

Compare, Orlando General Hospital, 567 So.2d at 964 (in which the agency challenged the admission of the patients at issue in that case).

19/ Compare, Orlando General Hospital, 567 So.2d at 964 (in which the agency challenged the post-admission treatment of the patients at issue in that case).

20/ The findings in this Recommended Order that inpatient services were consistent with appropriate medical care are based on the evidentiary record and not on the representations of Respondent's counsel.

21/ Rule 59G-1.010(167)(b) Provides:

"Medically necessary" or "medical necessity" for inpatient hospital services requires that those services furneshed in a hospital on an inpatient basis could not, consistent with appropriate medical care, be effectively furnished more economically on an outpatient basis or in an inpatient facility of a different type.

In Orlando General Hospital, the court articulated the second prong of the medical necessity test as follows:

There is no other equally effective (i) more conservative, or (ii) substantially less costly course of treatment available or suitable for the recipient.

. . . .

Orlando General Hospital, 567 So.2d at 963. 22/ Rule 58G-1.010(167)(b).

23/ In Orlando General Hospital, the court held:

The second prong of the definition of "medically necessary" requiress a finding that no other equally effective course of treatment is available and suitable. (emphasis supplied)

Orlando General Hospital, 567 So.2d at 965.

24/ The conjunctive requirements for an alternative placement are the cumulative requirements described in n. 22 and n. 23. The conjunctive requirements are evidentiary requirements for which Respondent must satisfy the burden of proof discussed in paras. 171-176, infra.

The agency must present evidence to show the existence of an alternative placement. In Orlando General Hospital, the court stated:

The second prong of the definition of "medically necessary" requires a finding that no other equally effective course of treatment is available or suitable that is more conservative or substantially less costly. [The agency's] final order recited, "The Medicaid program routinely transports patients across the state in pursuit

of the most cost-effective facility, and there

is no basis for justifying hospitalization merely for lack of a less costly and appropriate facility in the immediate vicinity." This recital was used to negate the idea that the Orlando area where OGH is located is the appropriate geographic measure of the availavility of less costly treatment alternatives. The record indicates that [the agency] did not present any such information

at the hearing. This factfinding beyond the record by [the agency] is prohibited. . . .

(citations omitted)

Orlando General Hospital, 567 So.2d at 965.

25/ The methods and procedures followed by Petitioners are discribed in the Transcript at 192-206.

26/ When asked if Respondent challenged the system Petitioner had in place to determine the availability of an alternative placement or the diligence exercised by Petitioner in implementing its system, Respondent stated:

There certainly was a system in place. and

. . . there was diligence. . . .

Transcript at 197.

Compare, Orlando General Hospital, 567 So.2d at 963(where the agency alleged that the provider did not consider alternative placement in prescribing treatment).

27/ All of the Medicaid recipients received inpatient services for some period of time prior to the period challenged by Respondent. In response to a question from theundersigned, Respondent stated:

We're not challenging that these admissions were properly made. It's the length of stay once they were in the hospital which us at ussye.

Transcript at 175.

28/ Respondent's position is discussed in paras. 197-223, infra. 29/ Orlando General Hospital, 567 S0.2d at 966.

30/ This matter is discussed in paras. 197-223. infra. 31/ Sec. 394.467.

32/ J.H. was subject to Baker Act for most of his stay at Florida Hospital. Respondent does not contest the Medicaid services provided from August 31 through September 24, 1992. It is uncontroverted that the Baker Act did not provide an alternative source of payment prior to September 25, 1992.

33/ Respondent neither alleged nor cited any authority for its argument that the Baker Act did not provide an alternative source of payment prior to September 25, 1992, but did provide an alternative source of payment from September 25 through October 29, 1992. Respondent also did not address, either legally or factually, the funding provisions, if any, in the Baker Act.

Respondent has the burden of showing that it is entitled to a refund. 34/ Sec. 409.910(3) and (6)

35/ Sec. 409.910(4)

36/ See, Sec. 409.910(4) (providing in relevant part that Respondent has a right to reimbursement "for the full amount of third-party benefits"). See also, Sec. Sec. 409.910(7)(providing that Respondent,". . . shall recover . .

.to the full extent of third-party benefits").

37/ The days of hospitalization for which Respondent does not assert an alternative source of payment are approximately 4.96 percent of the total number of days N.S. was hospitalized. The$7,933.88. Respondent failed to show why

$7,933.88 of the $160,00 should not be allocated to the uncontested portion of the inpatient services. If Petitioner received less insettlement proceeds, Respondent failed to show why 4.96 percent of the settlement proceeds should not be allocated to the uncontested portion of inpatient services.

38/ The court rejected the agency's attempt to negate the idea that the Orlando area was the appropriate geographic measure of the availability of less costly treatment alternatives. The court explained:

. . [the agency's expert testified that] although hospital inpatient treatment was not required for the Medicaid recipients, highly structured, residential programs were required for . . .the patients. When asked if he knew of any such residential programs in the area, he was unable

to name them.

Orlando General Hospital, 567 So.2d at 965.

39/ Nor is Peitioner claiming Medicaid reimbursement for days in excess of applicable caps.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-1573

Petitioner's Proposed Findings Of Fact. 1.-7. Accepted in substance

8. Rejected as recited testimony and issues of credibility 9.-13. Accepted in substance

14. Rejected as recited testimony 15.-16. Accepted in substance

17. Accepted in part and rejected in part as recited testimony

18.-20. Rejected as recited testimony

21. Accepted in substance

22.-24. Rejected as recited testimony

25. Accepted in substance

26.-28. Rejected as recited testimony 29.-33. Accepted in substance

34.-35. Rejected as recited testimony

1. Accepted in substance

2. Rejected as recited testimony 38.-39. Accepted in substance

40.-41. Rejected as recited testimony 42.-43. Accepted in substance

44. Rejected as issues of credibility exclusively within the province of the trier of fact

45.-48. Accepted in substance

1. Rejected as recited testimony

2. Accepted in substance

3. Rejected as recited testimony 52.-53. Accepted in substance

54. Accepted in part and rejected in part as recited testimony

55.-56. Accepted in substance

57. Rejected as recited testimony 58.-61. Accepted in substance

62.-68. Rejected as recited testimony 69.-71. Accepted in substance

72.-73. Rejected as recited testimony

74. Accepted in substance

75.-76. Rejected as recited testimony

77. Accepted in substance

78.-84. Rejected as recited testimony 85.-86. Rejected as immaterial

87.-88. Rejected as recited testimony

89. Rejected as immaterial

90.-91. Rejected as recited testimony

1. Rejected as irrelevant and immaterial

2. Rejected as recited testimony

94.-99. Rejected as irrelevant and immaterial

100. Accepted in part and rejected in part as recited testimony

100.(sic) Accepted in substance

101.-102. Rejected as irrelevant and immaterial to the four Medicaid recipients at issue

103. Accepted in substance

104.-107. Rejected as irrelevant and immaterial to the four Medicaid recipients at issue

108.-110. Rejected as recited testimony

1. Rejected in part and accepted in part

2. Rejected as recited testimony

3. Rejected as irrelevant and immaterial Respondent's Proposed Findings Of Fact.

1.-4. Accepted in substance

5. Rejected as recited testimony

6.-7. Rejected as issue of credibility solely within the province of the trier of fact

8.-9. Accepted in substance

10.-17. Rejected as irrelevant and immaterial to any disputed issue of material fact

18.-20. Accepted in substance

1. Rejected as irrelevant and immaterial to the four recipients at issue

2. Accepted in substance

23.-27. Rejected as irrelevant and immaterial to the four recipients at issue

COPIES FURNISHED:

Douglas M.Cook, Director

Agency For Health Care Administration 2727 Mahan Drive

Tallahassee, Florida 32308

Jerome W. Hoffman, Esquire General Counsel

Agency For Health Care Administration 2727 Mahan Drive

Tallahassee, Florida 32309

Karel Baarslag, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Ft. Knox Building Number 3 Tallahassee, Florida 32308-5403

John D. Buchanan, Jr., Esquire

117 South Gadsden Street

1. Drawer 1049-32302 Tallahassee, Florida 32302-1409

   
   

   Sam Power, Agency Clerk

   Fort Knox Building Number 3, Suite 3431 2727 Mahan Drive

   Tallahassee, Florida 32308-5403

   
   

   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 10 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.

   ================================================================= AGENCY FINAL ORDER

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

   
   

   STATE OF FLORIDA

   AGENCY FOR HEALTH CARE ADMINISTRATION

   
   

   FLORIDA HOSPITAL - ORLANDO and FLORIDA HOSPITAL - ALTAMONTE SPRINGS,

   
   

   Petitioner,

   
   

   vs. CASE NO.: 95-1573

   RENDITION NO.: AHCA-96-1345-FOF-MDP

   STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION,

   
   

   Respondent.

   /

   
   

   FINAL ORDER

   
   

   This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Agency for Health Care Administration (AHCA). The Recommended Order entered December 20,1995, by Hearing Officer Daniel Manry is incorporated by reference.

   
   

   EXCEPTIONS BY COUNSEL FOR AHCA

   
   

   Florida Hospital challenges the agency's determination that it provided unnecessary inpatient psychiatric care to four patients. The agency s determination is founded on a retrospective review of the patient care records by a peer review organization. The agency conceded that Florida Hospital properly admitted the patients, but the agency maintains that the patients were stabilized and that the extended time periods of inpatient care were not medically necessary. The agency seeks a refund of Medicaid payments totaling

   $285,649.26. The entire record has been reviewed in addressing the exceptions.

   
   

   Counsel excepts to the statement that "medical necessity" is not defined by state or federal law. "Medical necessity" is defined at subsection 167 of Section 59G-1.010, Florida Administrative Code. The exception is granted.

   
   

   Counsel excepts to the conclusion that ISD screening criteria are not binding on the treating physician on the issue of "medical necessity". The hearing officer found that SD criteria are not dispositive in determining "medical necessity" for treatment ordered and provided by the treating physician. ISD screens are check off criteria used as screening tools in the initial stage of retrospective auditing of patient care records for "medical necessity". Such retrospective review by an independent peer review

   organization, a PRO, is required of a hospital which participates in the Medicaid program. As authority for his exception, counsel cites a federal regulation, 42 CFR 456.135(h).

   
   

   To address counsel's exception, it is necessary to point out the distinction between the retrospective review by a PRO and concurrent review by the treating hospital. Retrospective review by a PRO is an after the fact review normally done after a patient has been treated and discharged. Federal regulations also require each participating hospital to have an internal utilization review process to review admission and treatment decisions; this is concurrent review. 42 CFR 456.101, .123, .132, and .133. Concurrent review normally is done while the patient is being treated. The only disputed issues in this case relate to retrospective review by a PRO. The regulation cited by counsel, 42 CFR 456.135(h), is applicable to the internal concurrent review, not the retrospective PRO review. The record supports, without contradiction, the hearing officer's finding that the SD screening criteria are not dispositive in determining "medical necessity". The cited federal regulation is not relevant. The exception is denied.

   
   

   Counsel excepts to the hearing officer's conclusion that the agency failed to establish that treatment for two of the four patients should have been funded in part by appropriations for operation of the Baker Act, Chapter 394, Part Florida Statutes. Counsel relies on a line item of the 1992-93 General Appropriations Act designating funds for Baker Act services statewide (respondent's exhibit 8) and testimony showing the patients to be a danger to themselves and thus, meeting the criteria for involuntary commitment under the Baker Act. There is no evidence showing that Florida Hospital could have been paid from the cited appropriation, but there is persuasive evidence to the contrary, petitioner's exhibit 3. Petitioner's exhibit 3 is a bulletin of March, 1993, published by the peer review section of Medicaid Program Integrity. The bulletin makes the following statement regarding eligibility of a treating facility to receive Baker Act funds:

   
   

   Public receiving facilities are defined as those facilities, designated by the Department, which provide the required services to all persons admitted under the Baker Act regard- less of their ability to pay, and which

   require state reimbursement for providing treatment services

   
   

   Private receiving facilities are those facilities, designated by the Department

   which select their own patients who are "Baker Acted and are not entitled to receive any state reimbursement from funds made available by the Legislature specifically to implement the provisions of the Act. .

   
   

   Florida Hospital is listed in the bulletin as a private receiving facility.

   
   

   There is no evidence in the record contradicting petitioner's exhibit 3. The hearing officer's finding is supported by competent, substantial evidence; therefore, the exception is denied.

   
   

   Counsel excepts to the hearing officer's conclusion that the proceeds of a settlement resolving a federal lawsuit constituted a source of funding for the

   care services provided to N. S. In this lawsuit the patient, N. S., brought an action against the Department of Health and Rehabilitative Services (HRS) and the Orange County School Board. Florida Hospital was not a party to this lawsuit and received none of the proceeds of the $160,000 settlement. The settlement provided for payment by HRS and the School Board upon N. S.`s discharge from the hospital for a plan to house and educate N. S., not for acute care services.

   The exception is denied.

   
   

   Counsel excepts to the hearing officer's conclusion that availability of an appropriate facility for alternative placement of a hospital patient is relevant in determining whether there is a "medical necessity" for continued inpatient treatment. "Medical necessity" is defined at subsection 167 of Section 59G- 1.010, Florida Administrative Code, as follows:

   
   

   (1 67)"Medically necessary" or "medical necessity" means that the medical or allied care, goods, or services furnished or ordered must:

   1. Meet the following conditions:

      1. Be necessary to protect life, to prevent significant illness or significant disability, or to alleviate severe pain;

      2. Be individualized, specific, and consistent with symptoms or confirmed diagnosis of the illness or injury under treatment, and not in excess of the patient's need;

      3. Be consistent with generally accepted professional medical standards as determined by the Medicaid program, and not experimental or investigational;

      4. [Be reflective of the level of service that can be safely furnished, and for which no equally effective and more conservative

         or less costly treatment is available; state- wide]; and

      5. Be furnished in a manner not primarily intended for the convenience of the recipient, the recipient's caretaker, or the provider.

   2. ["Medically necessary" or "medical necessity" for inpatient hospital services requires that those services furnished in a hospital on an inpatient basis could not, consistent with the provisions of appropriate medical care, be effectively furnished more economically on an outpatient basis or in an inpatient facility of a different type.]

   3. The fact that a provider has prescribed, recommended, or approved medical or allied care, goods, or services does not, in itself, make such care, goods or services medically necessary or a medical necessity or a covered service.

Section 59G-1.010 Definitions. [emphasis added].

The plain language of the rule supports the hearing officer's conclusion. Concurrently with the treatment, Florida Hospital diligently pursued possible alternative placements for N. S. No existing facility was found which was willing to accept N. S. in the condition she was in. The record contains ample evidence under all the criteria of the rule that the acute care services provided by Florida Hospital were "medically necessary". I concur with the hearing officer's conclusion; the exception is denied.

Counsel excepts to the hearing officer's conclusion that when a hospital has been paid by Medicaid, but an alternate source (liable third party) of funding is discovered, the agency should recover the amount Medicaid has paid from the third party, not seek a refund from the hospital. Having concurred with the hearing officer that no alternate source of funding was shown in this proceeding the conclusion is unnecessary and is deleted.

FINDINGS OF FACT

The agency hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where inconsistent with the rulings on the exceptions.

CONCLUSIONS OF LAW

The agency hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the rulings on the exceptions. The conclusion on page 36 of the Recommended Order that Section 10-2.060(2), Florida Administrative Code controls on the issue of which party had the burden of proof at the final hearing is rejected.

Based upon the foregoing, it is

ADJUDGED, that the agency's claim for a refund of the Medicaid payments at issue in this proceeding is denied.

DONE and ORDERED this 22nd day of November, 1996, in Tallahassee, Florida.

STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION

Douglas M. Cook, Director

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

COPIES FURNISHED:

Karel Baarslag, Esquire Senior Attorney, Agency for Health Care Administration 2727 Mahan Drive

Fort Knox 3, Suite 3431

Tallahassee, Florida 32308-5403

Daniel Manry Hearing Officer

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

John D. Buchanan, Jr., Esquire Post Office Drawer 1049 Tallahassee, Florida 32302-1409

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addresses by U.S. Mail this 27th day of November, 1996.

R. S. Power, Agency Clerk State of Florida, Agency for

Health Care Administration 2727 Mahan Drive

Fort Knox 3, Suite 3431

Tallahassee, Florida 32308-5403

(904) 922-3808

Docket for Case No: 95-001573

Orders for Case No: 95-001573