STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA ASSOCIATION OF ) REHABILITATION FACILITIES, ) INC., )

)

Petitioner, )

)

vs. )

) DEPARTMENT OF CHILDREN AND ) FAMILY SERVICES AND AGENCY FOR ) HEALTH CARE ADMINISTRATION, )

)

Respondents. )

Case No. 04-0216RP

)

ASSOCIATION FOR RETARDED ) CITIZENS OF FLORIDA, INC., )

)

Petitioner, )

)

vs. )

) DEPARTMENT OF CHILDREN AND ) FAMILY SERVICES AND AGENCY FOR ) HEALTH CARE ADMINISTRATION, )

)

Respondents. )

Case No. 04-0258RP

)

FINAL ORDER

Pursuant to notice, a final hearing was held in these cases on May 3 through 7 and 10 through 13, 2004, in Tallahassee, Florida, before Susan B. Harrell,1 a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Gary J. Clarke, Esquire

Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A.

411 East College Avenue Tallahassee, Florida 32301

For Respondent: M. Catherine Lannon, Esquire

Stephanie Daniel, Esquire Chesterfield Smith, Esquire Office of the Attorney General Administrative Law Section The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUE

Whether proposed amendments to Florida Administrative Code Rule 59G-8.200 are invalid exercises of delegated legislative authority.

PRELIMINARY STATEMENT

On January 16, 2004, each Petitioner individually filed challenges to proposed rule amendments to Florida Administrative Code Rule 59G-8.200 and challenges to a non-rule policy. The proposed rule challenges were assigned Case Nos. 04-0216RP and 04-0258RP. The challenges to a non-rule policy were assigned Case Nos. 04-0217RU and 04-0259RU. By order dated February 10, 2004, the cases were consolidated.

Respondents filed a Motion to Dismiss the Joint Amended Petition to Challenge Proposed Rule 59G-8.200, and the motion was heard by telephonic conference call on April 20, 2005. The

undersigned orally granted the motion as it pertained to the Department of Children and Family Services (DCF).

At the final hearing, Petitioners called the following witnesses: Terry Farmer, John Hall, Donna Fassett, Sheldon J. Hershman, Nancy Waglow, Jean-Marie Moore, James G. Weeks, Suzanne Sewell, Deborah Linton, Keith Young, and Michelle Kathleen Brantley. Petitioners' Exhibits 1 through 27 were admitted. Petitioners' Exhibit 28 was proffered. Petitioners submitted the two-volume deposition of Dennis Haas, which was received in evidence.

At the final hearing, Petitioners requested that portions of Karen Henderson's deposition be admitted as rebuttal testimony. Petitioners, pursuant to leave granted by the undersigned, filed portions of the deposition after the final hearing. Respondent Agency for Health Care

Administration (AHCA) filed Respondent's Motion to Strike or to Deny Petitioner's Rebuttal Submittal of Deposition Transcript of Karen Henderson. Having considered the submittal and response, it is ORDERED that the deposition testimony is admitted in evidence.

AHCA called the following witnesses: Michelle Kathleen Brantley, Karen Henderson, Denise T. Arnold, Kerry Schoolfield, and John Hall. AHCA's Exhibits 1, 3 through 11, 13 through 19,

21 through 26, 33, 34, 41, 46, 48, 50 through 54, 58 through 65,

and 93 through 97 were admitted in evidence. Official recognition was taken of AHCA's Exhibits 74 and 84, and Florida Administrative Code Chapter 65-29.

Joint Exhibits 1 through 27 were admitted in evidence.

During the final hearing Respondent AHCA announced that it had filed a Notice of Rule Development with regard to the matter alleged to constitute an unpromulgated rule. By separate, order Case Nos. 04-0217RU and 04-0259RU have been placed in abeyance.

The 12-volume Transcript was filed on July 27, 2005. On September 4, 2005, the parties filed their proposed orders, which have been considered in rendering this Final Order.

FINDINGS OF FACT

1. AHCA is designated as the single state agency for administering the Federal/State Medicaid Program pursuant to Section 409.902, Florida Statutes (2003).2 The Florida Medicaid Developmental Services Home and Community-Based Services Waiver Program (HCBS or DS waiver services) is one of several Medicaid waiver programs. HCBS is designed to provide services to individuals with developmental disabilities to allow them to remain in the community and avoid placement in institutions.

2. AHCA and DCF have entered into an agreement, by which DCF has agreed to implement the HCBS program. AHCA retains the authority and responsibility to issue policy, rules, and regulations concerning the HCBS program, and DCF is required to

   operate the program in accordance with those policies, rules, and regulations.

3. The Florida Association of Rehabilitation Facilities, Inc. (FARF), is a not-for-profit 501(c)3 corporation, and a state-wide association of corporate organizations providing services to handicapped and developmentally disabled persons. Of the 61 members of FARF, 51 are Medicaid home and community- based waiver providers who provide services to developmentally disabled persons, who are recipients of the Florida Medicaid program and are enrolled under the HCBS waiver program.

4. The Association for Retarded Citizens of Florida, Inc. (ARC), a not-for-profit corporation, is a state-wide association which works through advocacy, education, and training to reduce the incidence of mental retardation and other developmental disabilities. It has 43 affiliate chapters located throughout the state. Of those affiliate chapters, 40 are Medicaid providers, which provide Medicaid services to developmentally disabled persons who are recipients of the Florida Medicaid program and are enrolled under the HCBS waiver program. ARC also has approximately 1,500 individual members. Between 25 to

   50 percent of the individual members are either self-advocate recipients of services from the HCBS waiver program or family members or guardians of HCBS waiver program recipients.

5. On January 17, 2003, AHCA published a Notice of Rule Development concerning proposed amendments to Florida Administrative Code Rule 59G-8.200. The proposed amendments incorporated by reference changes to a handbook entitled "Developmental Services Waiver Services and Coverage and Limitations Handbook" (Handbook). AHCA published its Notice of Proposed Rule on July 25, 2003. A First Notice of Change was published on October 17, 2003, and a Second Notice of Change was published on November 26, 2003. A Notice of Additional Hearing was published on November 26, 2003, and a final public hearing on the proposed amendments was held on January 6, 2004.

6. The Handbook's purpose is stated in the Handbook as follows:

   The purpose of the Medicaid handbooks is to furnish the Medicaid provider with the policies and procedures needed to receive reimbursement for covered services provided to eligible Florida Medicaid recipients.

   
   

7. The Handbook provides that a provider must have a signed DS Waiver Services Agreement with DCF in order to be eligible to provide DS waiver services. The Developmental Disabilities Program Medicaid Waiver Services Agreement (DS Waiver Services Agreement) requires the provider to comply with all the terms and conditions contained in the Handbook for specific services rendered by the provider.

8. During the rulemaking process, AHCA involved stakeholders in the development of the amendments to Florida Administrative Code Rule 59G-8.200, including changes to the Handbook. A stakeholder is an organization or individual who has a primary interest in the HCBS waiver program or is directly affected by changes in the program. At the final hearing, Shelly Brantley, former bureau chief of AHCA's Medicaid Program Development, correctly described ARC and FARF as stakeholders for the HCBS waiver program.

9. Petitioners conducted surveys of their membership to determine whether the proposed changes to the Handbook would adversely affect their members. Surveys were also conducted to determine whether any of the members were small businesses as that term is defined in Section 288.703, Florida Statutes. Of the 51 provider members in FARF, 15 qualified as small businesses having less than 200 employees and less than $5 million in total assets. Of ARC's 40 provider members, 38 met the small business definition of Section 288.703, Florida Statutes. Such surveys by associations provide the type of information that would be commonly relied upon by reasonably prudent persons in the conduct of their affairs.

10. AHCA acknowledged that small businesses would be impacted by the changes to the Handbook, and the impact to small businesses was discussed and considered in developing the

    proposed rules. As of the date of the final hearing, AHCA had not sent a copy of the proposed rules to the small business ombudsman of the Office of Tourism, Trade, and Economic Development as required by Subsection 120.54(3)(b)2.b., Florida Statutes.

11. Petitioners have alleged that AHCA failed to follow applicable rulemaking procedures by not having the Handbook available at the time of the publication of the notice of rulemaking on July 25, 2003, and the notices of changes published on October 17, 2003, and November 21, 2003. Although the Handbook was incorporated by reference as an amendment to Florida Administrative Code Rule 59G-8.200(12), the major purpose of the amendment was to make changes in the Handbook. The Notice of Rulemaking published on July 25, 2003, provided that the Handbook was available from the Medicaid fiscal agent. However, the revised Handbook was not generally available until August 2003. Further revisions to the Handbook were not readily available at the time the notices of changes were published. The lack of availability of the Handbook on the dates of the publication of the notices did not impair the fairness of the rulemaking proceedings or the substantial interests of Petitioners. Petitioners had an opportunity to review the handbook and to give input to AHCA concerning the proposed changes. Petitioners did get copies of the revised Handbook in

    time to meaningfully participate in the two public hearings which were held on the proposed rules, and Petitioners had an opportunity to provide written comments on the revisions to the Handbook.

12. At the final public hearing held on January 6, 2004, AHCA provided the participants with a "clean copy" of the Handbook, meaning a copy in which the underlines and strike- throughs had been deleted and the text read as it would read when published in the Florida Administrative Code. This caused confusion among the attendees at the public hearing because "clean copy" Handbooks had not been available to the public prior to the final hearing. With one exception concerning residential habilitation services for children, which is discussed below, the "clean copy" of the Handbook was essentially the same as the version which had been available to the public, in which added language was underlined and deleted language was struck-through. The interests of Petitioners and the fairness of the rulemaking proceedings were not impaired by the use of a "clean copy" of the Handbook at the January 2004 final public hearing.

13. A state Medicaid Agency is required to provide notice to a recipient ten days before the agency takes action to reduce a benefit pursuant to 42 CFR Section 431.200. The evidence did not establish whether AHCA provided notice to HCBS waiver

    recipients that the proposed changes to the rule would reduce certain benefits. Some of Petitioners' witnesses did not think that any of their individual members received notice, but there was no direct evidence to establish that no notice was provided.

14. Petitioners challenged the following provision of the Handbook:

    Providers wishing to expand their status from a solo provider to an agency provider, or a provider desiring to obtain certification in additional waiver services must be approved by the district in order to expand. A provider must have attained an overall score of at least 85% on their last quality assurance monitoring conducted by the Agency, the Department, or an authorized agent of the Agency or Department in order to be considered for expansion.

    
    

    Petitioners argue that the language in this portion of the Handbook is vague and gives AHCA unbridled discretion when "considering" a provider for expansion. The language is not vague and does not give AHCA unbridled discretion when a provider is considered for expansion. In order for a provider to be considered for expansion, the provider must have scored at least 85 percent on their last quality assurance monitoring.

    The 85-percent score is a threshold which the provider must meet before AHCA will determine whether the provider meets other criteria for expansion, which are set out in the Handbook, statutes, and rules.

15. Recipients have a freedom of choice in selecting their service providers from among enrolled, qualified service providers. Recipients may change service providers to meet the goals and objectives set out in the their support plans. Petitioners have challenged the following provision, which AHCA proposes to add to the freedom of choice section of the

    Handbook:

    
    

    Freedom of choice includes recipient responsibility for selection of the most cost beneficial environment and combination of services and supports to accomplish the recipient's goals.

    
    

    Petitioners contend that the language is vague, arbitrary, and capricious, fails to establish adequate standards for agency discretion, and vests unbridled discretion in AHCA.

16. The term "cost beneficial" is defined in the Handbook to mean "economical in terms of the goods or services received and the money spent." The Handbook also contains the following definition for a support plan:

    Support plan is an individualized plan of supports and services designed to meet the needs of an enrolled recipient. This plan is based upon the preferences, interests, talents, attributes and needs of a recipient. The recipient or parent, legal guardian advocate, as appropriate, shall be consulted in the development of the plan and shall be receive a copy of the plan and any revisions made to the plan. Each plan shall include the most appropriate, least restrictive, and most cost-beneficial environment for accomplishment of the

    objectives and a specification of all services authorized. The plan shall include provisions for the most appropriate level of care for the recipient. The ultimate goal of each plan, whenever possible, shall be to enable the recipient to live a dignified life in the least restrictive setting, appropriate to the recipient's needs. The support plan must be completed according to the instructions provided by the Department. (emphasis supplied)

    
    

17. The "most cost-beneficial" language is not new. It already exists in the current Handbook, which is incorporated by reference in Florida Administrative Code Rule 59G-8.200. The proposed amendment does not impose a new requirement on recipients, and it is not vague, arbitrary, or capricious.

18. The "most cost beneficial" language is consistent with the Handbook provision defining the terms "medical necessity" or "medically necessary" as they relate to the determination of the need and appropriateness of Medicaid services for a recipient. One of the conditions needed for a determination that a service is a medical necessity is that the service "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, statewide."

19. Petitioners have challenged the following provision of the Handbook:

    All direct service providers are required to complete training in the Department Direct Care Core Competencies Training, or an

    equivalent curriculum approved by the Department within 120 days from the effective date of this rule. Said training may be completed using the Department's web- based instruction, self-paced instruction, or classroom instruction.

    
    

20. Providers are expected to have direct care staff who are competent in a set of direct care core areas. A curriculum has been developed to provide assistance to the providers in training their direct staff to become competent in these direct care areas. The training curriculum consists of two modules, with three different training formats.

21. Petitioners contend that the curriculum was not completely developed, and would not be in existence at the time the rules are adopted. The Web-based format was completed in the fall of 2003, and the other two formats were completed in the spring of 2004. Thus, the Department's Direct Care Core Competencies Training is available.

22. Petitioners have challenged the following provision of the Handbook:

    The current Department approved assessment, entitled Individual Cost Guidelines (ICG), is a tool designed to determine the recipients' resource allocations of waiver(s) funds for recipients receiving supports from the State of Florida, Department of Children and Families, Developmental Disabilities Program (DDP).

    The ICG is a validated tool that provides a rational basis for the allocation of the waiver funds to individuals with developmental disabilities. Waiver(s) funds

    refers to funds allocated through the Developmental Services HCBS waiver, the Supported Living Wavier, and the Consumer- Directed Care Plus waiver (CDC+). The instructions for the completion of this assessment is provided by the Department and is completed at least every three years or as determined necessary by the recipient and the waiver support coordinator, due to changing needs of the recipients.

    
    

23. It is Petitioners' contention that the ICG, like the Direct Care Core Competencies Training, was not completed and would not be available to the providers prior to the adoption of the proposed rules. The ICG was completed in the fall of 2003. Its validity and reliability as an assessment tool for assessing needs of individual recipients has been tested.

24. During September and October 2003, a three-day workshop was held in every district of DCF for the purpose of training workers to administer the ICG. The first day of the workshop provided an overview for interested persons. Hardcopies of the ICG were handed out for review by the participants, including providers.

25. Petitioners have challenged the portion of the Handbook which provides, "[t]he primary live in support worker shall be named on the lease along with all other recipients." It is Petitioners' position that the proposed language is in conflict with unchallenged language in the proposed Handbook and is contrary to the guidelines in the State Medicaid Manual.

26. The unchallenged portion of the Handbook at page 2-77 provides:

    The in-home support provider or the provider's immediate family shall not be the recipient's landlord of have any interest in the ownership of the housing unit as stated in Chapter 65B-11.005(2)(c), F.A.C.[3] If renting, the name of the recipient receiving in-home support services must appear on the lease singularly or as a guarantor.

    
    

27. The State Medicaid Manual provides at page 4-450, subsection 12, that "FFP for live-in care givers is not available in situations in which the recipient lives in a caregiver's home or a residence owned or leased by the provider of Medicaid services."

28. AHCA contends that the purpose for requiring the live- in support worker to sign the lease is to prevent the live-in home support worker (worker) from taking advantage of the recipient by failing to contribute anything to the normal living expenses. Having the worker named on the lease does not guarantee that the worker will pay his or her portion of the rent. The recipient is still liable to the landlord whether the worker pays, and the worker would be liable whether the recipient paid. The unchallenged portion of the proposed changes to the Handbook provides that the worker must pay an equal share of the room and board for the home.

29. Having the worker on the lease poses problems when the worker is no longer providing services. The landlord may not be willing to renegotiate the lease by substituting another worker on the lease. Additionally, the worker may not wish to vacate the premises just because he or she is no longer providing services, and, since the worker is a lessee of the property, the recipient may have to find new quarters if the recipient does not desire to share the home with the worker.

30. Petitioners have challenged the portion of the Handbook which provides that "[t]he amount of respite services are determined individually and limited to no more than thirty

    (30) days per year, (720 hours) per recipient." Respite care is defined in the Handbook as "a service that provides supportive care and supervision to a recipient when the primary caregiver is unable to perform these duties due to a planned brief absence, an emergency absence or when the caregiver is available, but temporarily unable to care for or supervise the recipient for a brief period of time." Respite care services are designed to be provided for a short time.

31. In determining the amount of time to limit respite care, AHCA reviewed historical data and did not find that many individuals used respite care service for more than two weeks. Stakeholders, family members of recipients, and recipients were involved in discussions with AHCA concerning the time limitation

    to 30 days. AHCA reviewed other waiver state agencies and found that waivers for individuals with developmental disabilities have similar limits on respite care.

32. Individuals whose primary caregiver may become unavailable for a period of greater than 30 days may receive other types of services to assist them while their caregivers are absent. The types of services that may be available are determined on a case-by-case basis.

33. Petitioners have challenged the portion of the Handbook which provides:

    III. FINES AND PENALTIES

    
    

    1. In accordance with the provisions of Section 402.73(7), Florida Statutes, and Section 65-29.001, Florida Administrative Code, penalties may be imposed for failure to implement or to make acceptable progress on such quality improvement plans as specified in Section II.A of this Agreement.

    2. The increments of penalty imposition that shall apply, unless the Department determines that extenuating circumstances exist, shall be based upon the severity of the non-compliance, non-performance or unacceptable performance that generated the need for a quality improvement plan. The penalty, if imposed, shall not exceed ten percent (10%) of the total billed by the provider for services during the period in which the quality improvement plan has not been implemented, or in which acceptable progress toward implementation has not been made. This period is defined, as the time period from receipt of the report of findings to the time of the follow-up determination that correction or progress toward improvement has not been made.

    3. Non-compliance that is determined to have a direct effect on individual health and safety shall result in the imposition of a ten percent (10%) penalty of the total payments billed by the provider during the period in which the quality improvement plan has not been implemented or in which acceptable progress toward implementation has not been made.

    4. Non-compliance involving the provision of training responsibilities or direct service to the individual not having a direct effect on individual health and safety shall result in the imposition of a five percent (5%) penalty. Non-compliance as a result of unacceptable performance of administrative tasks, such as policy and procedure development, shall result in the imposition of a two percent(2%) penalty.

    5. In the event of nonpayment, the Department will request the Agency for Health Care Administration deduct the amount of the penalty from claims submitted by the provider for the covered time period.

    
    

34. This penalty provision is contained in the DS Waiver Services Agreement contained in Appendix B of the Handbook. The providers are required to complete the agreement to provide services to recipients and are required to comply with the terms and conditions of the agreement.

35. Although the agreement is between the Developmental Disabilities Program of DCF and the providers, DCF is entering into the agreement pursuant to an interagency agreement between DCF and AHCA that DCF will operate the waiver program on behalf of AHCA. AHCA establishes the rules, policies, procedures,

    regulations, manuals, and handbooks under which DCF operates the program.

36. The inclusion of the penalties provision in the agreement is done based on the authority of Subsection 402.73(7), Florida Statutes, and Florida Administrative Code Rule 65-29.001, which govern the authority of DCF, not AHCA. If AHCA seeks to impose penalties on providers relating to the waiver program, it can do so only based on its statutory authority. DCF merely stands in the shoes of AHCA and has only the authority for the operation of the waiver program that AHCA would have if AHCA were operating the program itself.

37. Petitioners have challenged the portion of the Handbook which reduces the maximum limits of residential habilitation services from 365 days to 350 days. AHCA contends that the reduction of days is merely a reduction in the maximum number of days that a provider can bill for residential habilitation services. The rate at which the provider is being compensated includes a 15-day vacancy factor. The State Medicaid Manual from the Center for Medicare and Medicaid allows for this type of reimbursement and provides:

    FFP [federal financial participation] is not available to facilities providing services in residential settings on days when waiver recipients are temporarily absent and are not receiving covered waiver services (sometimes called reserve bed days). Medicaid payment may be made only

    for waiver services actually provided to an eligible recipient. Since providers incur fixed costs such as rent, staff salaries, insurance, etc., even when a waiver recipient is temporarily absent, you may account for such continuing costs when developing payment rates for these providers. For example, rent is generally paid for a period of 1 month. However, day habilitation services are generally furnished only 5 days per week. You may take the entire month's rental cost into consideration in setting the rate paid for services furnished on the days the recipient is present. Similarly, if data shows that a recipient is served in residential habilitation an average of 325 days per year and the slot is held open when the recipient is on a leave of absence, you may consider the entire yearly cost to the provider when establishing its rate of payment. However, in the rate setting process, it must be assumed that a facility will not have a 100 percent utilization rate every day of the year. Consequently, payment rates are established by dividing the provider's total allowable costs by the number of Medicaid patient days you estimate recipients will actually utilize.

    
    

38. The change from 365 days to 350 days is not a reduction in service, it is a reimbursement method which utilizes a 15-day vacancy factor. The number of days chosen was based on information furnished by the providers to AHCA during a survey completed in July 2003. Based on the survey, it was concluded that the providers billed for services for 345 to 350 days per year.

39. Contrary to its present position, Petitioner FARF took the position early in the rulemaking procedure that billing on a

    365-day year would be harmful to the providers. In a letter to AHCA dated February 4, 2003, Terry Farmer, CEO of FARF, advised:

    Attached is a compilation of written comments from Florida ARF members on the proposed rule #59G-8.200, titled "the Home and Community Based Services Waiver."

    
    

    * * *

    
    

    Going to the 365 day billing schedule will create hardships for consumers, families and providers because it discourages weekly home visits and doesn't address frequent hospitalizations or vacations. The 15 day down factor is very low for consumers who want to go home 2-3 times a month and would also like a yearly vacation.

    
    

    Recommendation: Increase the down factor to

    5 days per month (60 days per year) to accommodate for absences in order to reduce the negative impact of home visits and vacations upon both the consumer and group home provider. This is particularly important when the focus is on meeting Personal Outcomes that may result in the consumer being away from the group home.

    
    

40. Petitioners have challenged the portion of the Handbook which deleted the following provision:

    Residential habilitation services may be provided to children residing in a licensed facility or children with severe behavioral issues living in their family home. The child must have a written behavior analysis service plan that is written and monitored by a certified behavior analyst, in order for the services by a behavior assistant to be reimbursed under residential habilitation. The focus of the service is to assist the parents in training and implementing the behavior analysis services plan.

41. At the final hearing, AHCA conceded that it was in error when it deleted the language relating to the provision of residential habilitation services to children and stated that the language would be reinstated.

42. Section 409.908, Florida Statutes, provides:

    
    

    Subject to specific appropriations, the agency shall reimburse Medicaid providers, in accordance with state and federal law, according to methodologies set forth in the rules of the agency and in policy manuals and handbooks incorporated by reference therein.

    
    

    AHCA set out its rate methodology for Developmental Services Home and Community Based Services rate reimbursement in Appendix A of the Handbook. Petitioners have challenged the rate methodology, stating that it was vague, failed to establish standards for agency discretion and vested unbridled discretion in AHCA's determination of rate reimbursement.

43. The rate of reimbursement cannot be determined based on rate methodology. However, based on a reading of the introductory language to the rate methodology, it does not appear that it was the intent of AHCA to be able to determine the rates by using the rate methodology in Appendix A, and staff of AHCA readily admit that a specific rate for a specific service cannot be determined using the language in the

    methodology alone. The first paragraph of the methodology states:

    The following section describes key aspects of the Developmental Services (DS) Home and Community Based Services (HCBS) rate reimbursement structure. Specifically the cost items for each rate component are listed, agency and independent contract status is defined, and the rate structure for various services is described.

    
    

44. It appears that the methodology set out in Appendix A is an overview of the process that was used in determining the rates. AHCA is in the process of developing rules that set out the actual rates that will be used.

45. Petitioners have challenged the portion of the Handbook which provides that the maximum limit for adult day training is 240 days, a reduction from 260 days. The reduction of adult day training days is a limitation on services and a limitation on billing. The rate for providing adult day training contains a similar vacancy factor as contained in the rate for residential habilitation services.

46. The purpose of adult day training is to provide training for skills acquisition. Adult day training is provided five days a week, meaning that the maximum time any recipient could spend in adult day training is 260 days a week. However, adult day training is not provided 260 days a year. No training is provided on holidays such as Christmas, Thanksgiving,

    Memorial Day, Labor Day, and other normal holidays. Generally, individuals do not attend training 260 days a year for other reasons such as hospitalizations.

47. In determining that 240 days would be sufficient in amount, duration, and scope, AHCA contacted providers and learned that recipients generally do not receive adult day training more than 240 days per year.

    CONCLUSIONS OF LAW

    
    

48. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. § 120. 56, Fla. Stat.

49. Respondents have asserted that Petitioners do not have standing to challenge the proposed rules or do not have standing to challenge some of the proposed rules. In order for associations such as Petitioners to have standing, they must demonstrate the following:

    1. substantial number of its members, although not necessarily a majority, are "substantially affected" by the challenged rule[,] . . . the subject matter [is] within the association's general scope of interest and activity, and the relief requested [is]of the type appropriate for a trade association to receive on behalf of its members.

       
       

       Florida Home Builders Association v. Department of Labor and

       
       

       Employment Security, 412 So. 2d 351, 353-354 (Fla. 1982).

50. Petitioners have demonstrated that they have standing to challenge the proposed amendments to the Handbook. Both associations have a substantial number of provider members who provide DS waiver services. ARC has 1500 individual members, and a substantial number of these members, from 25 to 50 percent, receive DS waiver services or are guardians or family members of individuals who are receiving DS waiver services. Requesting that the proposed amendment to the Handbook be changed is a type of relief that is appropriate for ARC and FARF to ask on behalf of its members.

51. The DS waiver program is within the scope of interest and activity of the associations. The associations have been involved in the development of the proposed amendments to the handbooks and have provided comments to AHCA during the rulemaking process concerning the amendments.

52. Subsection 120.56 (2)(b), Florida Statutes, provides that the petitioner in a challenge to a proposed rule has the burden of going forward and that the agency has the burden to prove by a preponderance of the evidence that the proposed rule is not an invalid exercise of delegated legislative authority as to the objections raised by the petitioner. See Florida Board of Medicine v. Florida Academy of Cosmetic Surgery, Inc., 808 So. 2d 243, 251 (Fla. 1st DCA 2002).

53. "Invalid exercise of delegated legislative authority" is defined in Subsection 120.52(8), Florida Statutes, as

    follows:

    
    

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

       1. The agency has materially failed to follow the applicable rulemaking procedures or requirements set forth in this chapter;

       2. The agency has exceeded its grant of rulemaking authority, citation to which is required by s.120.54(3)(a)1.;

       3. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(3)(a)1;

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

       5. The rule is arbitrary or capricious. A rule is arbitrary if it is not supported by logic or the necessary facts; a rule is capricious is it is adopted without thought or reason or is irrational; or

       6. The rule imposes regulatory costs on the regulated person, county, or city which could be reduced by the adoption of less costly alternatives that substantially accomplish the statutory objectives.

    
    

54. Petitioners have alleged that AHCA failed to follow certain applicable rulemaking procedures. Subsection 120.56(1)(c), Florida Statutes, provides:

    The failure of an agency to follow the applicable rulemaking procedures or requirements set forth in this chapter shall be presumed to be material; however, the

    agency may rebut this presumption by showing that the substantial interests of the petitioner and the fairness of the proceeding have not been impaired.

    
    

55. Petitioners have established that at the times the Notice of Rulemaking and the Notices of Changes were published that the Handbook with its revisions was not readily available to the public. AHCA has demonstrated that the failure to have Handbook available on the day that the notices were published did not impair either the substantive interests of Petitioners or the fairness of the rulemaking proceedings. Petitioners did get the revised Handbook and had ample opportunity to be heard during the rulemaking proceedings concerning the changes to the Handbook.

56. Subsection 120.54(3)(b)2.b., Florida Statutes, provides:

    b.(l) If the agency determines that the proposed action will affect small businesses as defined by the agency as provided in sub- subparagraph a., the agency shall send written notice of the rule to the small business ombudsman of the Office of Tourism, Trade, and Economic Development not less than 28 days prior to the intended action.

    
    

    (ll) Each Agency shall adopt those regulatory alternatives offered by the small business ombudsman and provided to the agency no later than 21 days after the ombudsman's receipt of the written notice of the rule which it finds are feasible and consistent with the stated objectives of the proposed rule and which would reduce the impact on small businesses. When regulatory

    alternatives are offered by the small business ombudsman, the 90-day period for filing the rule in subparagraph (e)2. is extended for 21 days.

    
    

    In reading sub-subparagraphs (l) and (ll) in pari materia, it appears that an agency does not have to give notice to the small business ombudsman until 28 days before the agency plans to file the proposed rule.

57. The evidence established that the proposed revisions to the Handbook would affect small businesses and AHCA had discussed and considered the impact on small businesses during the rulemaking process. Thus, it is clear that AHCA should provide notice to the small business ombudsman prior to filing the proposed rule for adoption. However, the fact that AHCA has not provided notice to the small business ombudsman at this point in the rulemaking proceeding does not mean that AHCA has failed to follow the rulemaking procedures required by

    Section 120.54, Florida Statutes. AHCA has until 28 days prior to the filing of the proposed rule to provide notice to the small business ombudsman.

58. Petitioners have argued that AHCA failed to give notice to recipients pursuant to 42 CFR Section 431.200. There is no direct evidence whether notice was provided; however, there is no requirement in Chapter 120, Florida Statutes, that AHCA provide such notice as part of the rulemaking process.

    Petitioners argued in their proposed order that AHCA failed to comply with the public notice requirement in 42 CFR Section 447.205; however, Petitioners did not raise that issue in their Joint Second Amended Petition to Challenge Proposed Rule 59G-

    8.200. Thus, compliance with 42 CFR Section 447.205 is not considered in this Final Order.

59. Petitioners have alleged that the provision of the Handbook requiring that an agency provider or a solo provider must have a total score of 85 percent on its last quality assurance monitoring is vague and vests AHCA with unbridled discretion. The language is not vague and does not vest AHCA with unbridled discretion. The language states merely that the provider has to have a total score of 85 percent to be considered and does not eliminate other requirements imposed by the Handbook, statute, or rule that the provider has to meet in order to expand its services. It is not an invalid exercise of delegated legislative authority.

60. Petitioners have challenged the portion of the Handbook which adds "most cost beneficial" language to the provision dealing with a recipient's freedom of choice of enrolled, qualified service providers. The proposed language adds no new requirements, is not arbitrary, capricious, or vague, and does not vest AHCA with unbridled discretion. It is not an invalid exercise of delegated legislative authority.

61. Petitioners have challenged the portion of the Handbook requiring the providers to have their staff meet the training requirements in the Department's Direct Care Core Competencies within 120 days of the effective date of the rule. Petitioners contend that the training modules were not in existence, and therefore, the proposed rule was arbitrary, capricious, and vague, vested unbridled discretion in AHCA, and failed to establish adequate standards for agency discretion. As of the date of the final hearing, AHCA established that the modules were completed. The modules were completed in a Web- based format in the fall of 2003. AHCA has established that the modules will be available as of the date of the filing of the rules. Thus, the portion of the Handbook requiring compliance with the Department's Direct Core Competencies Training is not vague, arbitrary, or capricious; does not vest AHCA with unbridled discretion, and establishes adequate standards to be used by AHCA. It is not an invalid exercise of delegated legislative authority.

62. Petitioners contend the portion of the Handbook relating to the use of ICG as an assessment tool to determine the allocation of waiver funds to individuals with developmental disabilities is vague, arbitrary, and capricious; vests AHCA with unbridled discretion; and fails to establish standards for AHCA in using its agency discretion. This contention is based

    on Petitioners belief that the ICG was not finalized and had not been validated. Contrary to Petitioners' belief, the ICG was completed in the fall of 2003 and has been validated. The ICG portion of the Handbook is not arbitrary, capricious or vague.

    It does not give AHCA unbridled discretion and does establish standards which can be used in assessing the needs of the recipients. The portions of the Handbook relating to the use of ICG is not an invalid exercise of legislative delegated authority.

63. Petitioners correctly contend that the provision of the Handbook requiring that the live-in home support worker be named on the lease along with the recipient is an invalid exercise of delegated legislative authority. The proposed amendment is contrary to the unchallenged portion of the Handbook which prohibits a worker from having an ownership interest in the housing unit. Although ownership interest is not defined in the Handbook, it could be interpreted to mean one who has a possessory right to the land or the person occupying the land. See State Road Department v. White, 148 So. 2d (Fla. 2d DCA 1963); and Tobin v. Gartiez, 191 P. 1063 (Nev. 1920).

64. The proposed lease amendment is contrary to the State Medicaid Handbook which precludes federal fund participation for live-in care givers when the recipient lives in the caregiver's home which is leased by the provider of the Medicaid services.

65. The proposed lease amendment is arbitrary in that it is without logic. The unchallenged portion of the Handbook requires the worker to share in the costs of room and board. Making the worker a lessee on the same lease with the recipient will not necessarily prevent the worker from taking advantage of the recipient, and it will cause numerous problems when the worker is no longer providing the services, but the lease is still in effect.

66. Petitioners contend that the provision in the Handbook limiting respite care to 30 days is arbitrary and capricious. The evidence presented does not support Petitioners' contention. A 30-day limitation on respite care is reasonable and is based on information gleaned from providers, recipients, and other states. If a recipient is in need of assistance longer than 30 days, other types of services may be available to the recipient.

67. Whether AHCA is required to give notice to recipients pursuant to federal rules prior to the effective date of the

    30-day limitation is not relevant to whether the proposed change is an invalid exercise of delegated legislative authority because such notice is not part of the rulemaking process. If notice is required and not given, a recipient's remedy is in a forum other than that which would pertain to a rule challenge.

68. The portion of the Handbook limiting respite care services to 30 days per year is not an invalid exercise of delegated legislative authority.

69. Petitioners correctly contend that the inclusion of the penalties provision in the Medicaid Waiver Services Agreement is an invalid exercise of delegated legislative authority. Article I, Section 18 of the Florida Constitution provides that no administrative agency shall impose a penalty except as provided by law. AHCA has no statutory authority to impose the penalties allowed by Subsection 402.73(7), Florida Statutes.

70. Petitioners challenged the reduction of residential habilitation days from 365 to 350, claiming that AHCA did not have the authority to make the change, that the recipients had not been advised of the change pursuant to 42 CFR Section 431.211, and that the rulemaking record was devoid of any comments as to the "365 day amendment."

71. AHCA does have the authority to determine whether the rates paid to the providers have a built-in vacancy factor, and AHCA has chosen to use that method. If the providers are paid on a reimbursement rate based on a 365-day billing schedule, the providers will not be able to recoup their continuing costs such as utilities and rent because they will not be paid for days in when the recipient is absent.

72. No direct evidence was presented that recipients did or did not receive notice of the change; however, since the change is not a reduction in services, but a change in billing methodology, notice would not be required pursuant to 42 CFR Section 431.211. Additionally, such notice is not required as part of the rulemaking process pursuant to Chapter 120, Florida Statutes.

73. Comments were submitted to AHCA by FARF during the rulemaking process that the 365-day billing was detrimental to the recipients and to the providers. FARF advocated reducing the number of billing days from 365 to 350 days. Thus, there were comments to support a reduction from billing 365 days per year for residential habilitation services.

74. The reduction in billing from 365 days to 350 days for residential habilitation services is not an invalid exercise of delegated legislative authority.

75. AHCA acknowledged that the deletion of the language in the Handbook relating to residential habilitation services for children is an invalid exercise of delegated legislative authority.

76. The rate methodology challenged by Petitioners is not an invalid exercise of delegated legislative authority. The rate methodology is a general overview of the factors that AHCA

    considered in determining what rate would be applied. The actual rates will be established by a separate rule.

77. Petitioners challenged the portion of the Handbook that reduces the number of adult day training days from 260 to

240. Petitioners contend that portion of the Handbook is an invalid exercise of delegated legislative authority because AHCA has no statutory authority to reduce the number of days and did not provide notice to recipients pursuant to 42 CFR Section 431.200.

1. Subsection 409.906, Florida Statutes, provides that AHCA may make payments for optional services such as the waiver services. The section also provides: "Nothing in this section shall be construed to prevent or limit the agency from adjusting fees, reimbursement rates, lengths of stay, number of visits, or number of services, or making any other adjustments necessary to comply with the availability of moneys and any limitations or directions provided in the General Appropriations Act or chapter 216." Thus, AHCA does have the authority to adjust the days of services that may be provided.

2. AHCA is directed in 42 CFR Section 440.230 to provide services that are sufficient in amount, duration and scope and that appropriate limits may be placed on a service based on medical necessity and control utilization services. The reduction of adult day training days to 240 is sufficient in

   amount, duration, and scope to provide training on a five-day per week basis, given the inclusion of holidays and days in which recipients are not attending the training for other reasons. It is not logical to have a maximum limit of days that is greater than the days that the training is available to the recipient or that the recipient is available to participate in the training.

3. As previously stated, whether AHCA is required to provide notice to recipients of a reduction in benefits pursuant to 42 CFR Section 431.200 is irrelevant to the rulemaking proceeding.

4. The reduction in adult day training days from 260 to

240 is not an invalid exercise of delegated legislative authority.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED

1. Case Nos. 04-0216RP and 04-0258RP are dismissed as to Respondent Department of Children and Family Services.

2. The challenged portions of the Handbook pertaining to the deletion of residential habilitation services for children at page 2-104; the penalty structure contained in Appendix B, and the leasing requirements for in-home support workers at page 2-77 are invalid exercises of delegated legislative authority.

3. The remainder of the challenged provisions of the Handbook are not invalid exercises of delegated legislative authority, and the Joint Second Amended Petition to Challenge Proposed Rule 59G-8.200 is dismissed as to those provisions.

4. Jurisdiction is reserved to determine attorney's fees pursuant to Subsection 120.595(2), Florida Statutes, as it relates to those portions of the Handbook held to be invalid exercises of delegated legislative authority.

DONE AND ORDERED this 29th day of April, 2005, in Tallahassee, Leon County, Florida.

S

SUSAN B. HARRELL

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 29th day of April, 2005.

ENDNOTES

1/ At the time of the final hearing Administrative Law Judge Harrell was named Susan B. Kirkland.

2/ All references to the Florida Statutes are to the 2003 version unless otherwise indicated.

3/ The correct reference is 65B-11.005(2)(b).

COPIES FURNISHED:

Gary J. Clarke, Esquire Frank P. Rainer, Esquire

Sternstein, Rainer & Clarke, P.A.

411 East College Avenue Tallahassee, Florida 32301

M. Catherine Lannon, Esquire Stephanie Daniel, Esquire Chesterfield Smith, Esquire Office of the Attorney General Administrative Law Section The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

Scott Boyd, Executive Director and General Counsel Joint Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32399-1300

Liz Cloud, Program Administrator Administrative Code

Department of State

R. A. Gray Building, Suite 101 Tallahassee, Florida 32399

Gregory Venz, Agency Clerk

Department of Children and Family Services Building 2, Room 204B

1317 Winewood Boulevard

Tallahassee, Florida 32399-0700

Richard Shoop, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

NOTICE OF RIGHT TO JUDICIAL REVIEW

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

Docket for Case No: 04-000258RP

Orders for Case No: 04-000258RP