STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HILLSBOROUGH COUNTY HOSPITAL, )
)
Petitioner, )
)
vs. ) Case No. 87-5207H
) HOSPITAL COST CONTAINMENT BOARD, )
)
Respondent. )
) TAMPA GENERAL HOSPITAL, )
)
Petitioner, )
)
vs. ) Case No. 87-5208H
) HOSPITAL COST CONTAINMENT BOARD, )
)
Respondent. )
)
RECOMMENDED ORDER
The formal administrative hearing in these cases was held before William C. Sherrill, Jr., in Tallahassee, Florida, on December 10, 1987. The issue in these cases is whether the Hospital Cost Containment Board has correctly certified to the Department of Health and Rehabilitative Services amounts to be redistributed to the Petitioners from the Public Medical Assistance Trust Fund pursuant to section 12, chapter 87-92, Laws of Florida. The redistribution depends upon two accounting classification issues. One issue only applies to Tampa General Hospital. That issue concerns the proper accounting classifications relating to the regional perinatal intensive care center (RPICC) program. The other issue, accounting for certain sales tax funds, applies to both hospitals.
Appearing for the parties were:
For the Petitioner: John H. Parker, Jr., Esquire
1200 Carnegie Building
133 Carnegie Way Atlanta, Georgia 30303
For the Respondent: Gary Walker, Esquire
Hospital Cost Containment Board
325 John Knox Road Building L, Suite 101 Tallahassee Florida 32303
The Petitioner presented 39 exhibits, which were admitted into evidence, with the exception of exhibit 30, and the testimony of Paul Powers, George Morgan, and Michael Polland. The Respondent presented 4 exhibits, which were
admitted into evidence, and the testimony of Bill Summers and James Bracher. There is a transcript. The testimony of James Bracher was presented by deposition which will be deemed to be a transcript of that testimony. The parties submitted proposed findings of fact and conclusions of law.
These cases were consolidated for hearing with two rule challenge cases numbered 87-5185R and 87-5186R, and the record is consolidated with those cases. This recommended order is entered separately, however, since the order in the section 120.54(4) cases will be a final order.
It appears that following the formal administrative hearing, the rules governing the Hospital Cost Containment Board have been renumbered from chapter 27J to chapter 10N since the Board has been transferred to the Department of Health and Rehabilitative Services. This order, however, will refer only to chapter 27J since that is the form that currently is available in the Florida Administrative Code.
FINDINGS OF FACT
Introduction
Tampa General Hospital is a 530-bed short-term general acute care hospital. Hillsborough County Hospital is a 157 bed-general acute-care hospital. Both are divisions of Hillsborough County Hospital Authority, a public hospital system located in Tampa, Florida. T. 25; Hearing Officer Ex. 1.
Tampa General Hospital and Hillsborough County Hospital filed timely petitions for formal administrative hearings, and have standing to seek such hearings.
Tampa General Hospital and Hillsborough County Hospital historically have provided high levels of uncompensated indigent care. T. 26.
If Tampa General Hospital prevails on the RPICC issue and the sales tax issue, it will be due a total of $4,713,108, subject to a final adjustment factor. Hearing Officer Ex. 1, ex. C-4.
If Tampa General Hospital prevails only upon the RPICC issue as reported in its April 23, 1987, correction to its fiscal year 1986 actual report, it will be due a total redistribution of $3,806,371, subject to the final adjustment factor. Hearing Officer Ex. 1, ex. C-1.
If Tampa General Hospital prevails only upon the sales tax issue, by comparison of exhibits C-1 and C-4 to Hearing Officer Ex. 1, the total redistribution due will be increased by the difference between the two amounts in the last two paragraphs, or by $906,737.
The Hospital Cost Containment Board's proposed agency action is contrary to the position urged by Tampa General Hospital on the two issues, and the proposed agency action would result in a total distribution of $3,015,907, subject to the final adjustment factor. T. 29; Hearing Officer Ex. 1, ex. C-5.
If Hillsborough County Hospital prevails on the single issue that pertains to it, the sales tax issue, its total redistribution will be $315,543, subject to the final adjustment factor. Hearing Officer Ex, 1, ex. D-2.
The preliminary determination of the Hospital Cost Containment Board is that Hillsborough County Hospital should receive $247,883 as a total redistribution, subject to the final adjustment factor. Hearing Officer Ex. 1, ex. D-1.
Relevant definitions from the FBURS manual
Account 5940, "contractual adjustments-other," of the FHURS manual, providers in part that:
These accounts must be used to report the differential (if any) between the amount, based on the hospital's full established rates, of contractual patients' charges for hospital services which are rendered during the reporting period and are covered by the contract, and the amount received and to be received from third-party agencies in payment of such charges, including adjustments made
at year end, based upon cost reports submitted.
* * *
In any instance in which the difference between the amount of a patients' [sic] bill and the payment received by the hospital from a third-party agency is recoverable from the patient, any resulting uncollected
amounts should be reported in the appropriate bad debt or uncompensated care category and should not be reported in contractual adjustments. (E.S.)
Account 5960, "charity/uncompensated care-other," of the FHURS manual, provides in part that:
Account 5960 shall be used to report the differential between the amount, based on the hospital's full established rates, of bills for hospital services to charity/ uncompensated care patients and the amounts to be received from patients or on behalf of patients (including amounts received from voluntary agencies or government agencies on behalf of specific indigent patients) in payment for such services. (E.S.)
Account 5960 further requires that the hospital have a verifiable process for determining indigency for each individual patient. Indigency is defined generally as a family income for the preceding 12 months less than 150 percent of the federal poverty guidelines. The instructions for account 5960 further provide that:
When the hospital receives lump-sum grants or subsidies (rather than specific payments for individual patient's bills) from governmental or voluntary agencies for the care of medically indigent patients, the amount of the lump-sum grant or subsidy must be
reported under "Restricted Donations and Grants for Indigent Care." (Account 5970). (E.S.)
Account 5970, "Restricted Donations and Grants for Indigent Care," of the FHURS manual, provides:
This account is used to report voluntary and governmental agency grants or subsidies for the care of non-specified medically indigent patients during the current reporting period. (E.S.)
Account 9130, "Unrestricted Tax Revenue and Appropriated Funds," of the FHURS manual, provides:
This account contains the revenue obtained from assignment of unrestricted tax revenue and funds appropriated by governmental entities.
The RPICC issue, Tampa General Hospital
The April 23, 1987, revision to Tampa General Hospital's 1986 actual report
Tampa General Hospital's fiscal year ends on September 30th. On January 29, 1987, Tampa General Hospital filed its prior year report of its fiscal year 1986 actual experience. P. Ex. 2. As originally filed, Tampa General Hospital reported the following on worksheet C-2: $14,466,596 on line
11 as contractual adjustments-other; nothing on line 13, charity/uncompensated care-other; and ($2,633,338) on line 14, restricted donations and grants for indigent care. Id. Included in the amounts on line 11 of the report as a contractual adjustment-other were the total charges for all patients served by the RPICC program at Tampa General Hospital in fiscal year 1986, and included in line 14 as restricted donations and grants for indigent care were all the amounts received by Tampa General Hospital in fiscal year 1986 from the RPICC program. T. 38.
Prior to July 1, 1987, the Hospital Cost Containment Board accepted corrections to prior year reports of actual experience. Dep. (James Bracher),
p. 6.
On about April 23, 1987, Tampa General Hospital filed a revision to worksheet C-2 of its 1986 report of actual experience. P. Ex. 3. The revision reported $2,067,928 on line 11 as contractual adjustments-other, $32,104,116 on line 13, charity/uncompensated care-other, and made no change to line 14. (A negative $2,633,338 was still reported on line 14 as restricted donations and grants for indigent care.) Id.
The April 23, 1987, revision moved the RPICC charges from line 11, contractual adjustment-other, to line 13, charity/uncompensated care-other. There was no change to line 14 since Tampa General Hospital had already reported all amounts received from the RPICC program on line 14 as restricted donations and grants for indigent care. T. 39-40.
The fortieth day from April 23, 1987, was June 2, 1987. In the 40 days that followed April 23, 1987, and including a reasonable time thereafter for filing of the April 23, 1987, revision, Tampa General Hospital was given no written notice by the Hospital Cost Containment Board that the April 23, 1987, revision to its fiscal year 1986 report did not conform to the Hospital Uniform Reporting System Manual requirements, or did not otherwise conform to rule or statute. T. 42; Dep. (James Bracher), p. 27. Such written notice was not given until October 28, 1987.
James Bracher, Executive Director to the Hospital Cost Containment Board, testified that it was his "understanding" that "we did discuss the possibility with the hospital of having, conducting a site visit to review this information." Dep. (James Bracher), p. 19. But on cross examination, Mr. Bracher qualified the implications of that statement. He was asked: "You earlier testified about some discussions with unnamed hospital people about a site visit on the RPICC issue. When did those discussions occur?" Mr. Bracher testified: "I don't recall that I said I discussed with them. I think I said I discussed with HCCB staff about the need to make site visits as a result of the April submission by Tampa General." (E.S.) Id. at pp. 51-52. The examination continued:
Q. So you're not aware of any discussions between staff and the hospital?
A. I did not participate in any direct discussions, no.
Q. And you're not aware of any?
A. I could not give you a date on any specific ones.
The only other witness who testified as to oral communications to Tampa General Hospital concerning the issues in dispute in this case was Bill Summers. Mr. Summers was under going examination only with respect to the sales tax issue, not with respect to the RPICC issue. T. 181. Mr. Summers was asked "[W]hat did you do before October 13th, in reviewing this issue. Anything?" He answered in pertinent part: "I made a visit to the facility and reviewed their patient accounting records, in terms of determining medical indigency. I have had numerous conversations with hospital personnel, Mr. Powers, and others." T. 182.
In summary, the testimony of Mr. Summers did not clearly pertain to either the April 23, 1987, revision or the RPICC issue. Thus, even if there had been visits or discussions with Tampa General Hospital, there is no evidence that the position of the Hospital Cost Containment Board concerning the RPICC issue was orally conveyed to Tampa General Hospital. Moreover, Mr. Summers provided no dates of such visits or discussions. On this record, one cannot determine if the visits and discussions occurred near the October 13, 1987, the end date used in the question, or in the 40 days following April 23, 1987. Similarly, Mr. Bracher's testimony is insufficient to determine when the Hospital Cost Containment Board orally notified Tampa General Hospital that the April 23, 1987, revision was nonconforming, or, indeed, that such notification in fact did occur. Consequently, there is no credible evidence to infer that within forty days after April 23, 1987, the Hospital Cost Containment Board orally notified Tampa General Hospital that its April 23, 1987, revision was nonconforming.
On July 17, 1987, the Hospital Cost Containment Board determined the amount of redistribution due Tampa General Hospital pursuant to section 12, chapter 87-92, Laws of Florida, and advised Tampa General Hospital of its decision by a memorandum of that date. P. Ex. 4. The memorandum states that the redistribution has been determined "based on 1986 actual audited data." The redistribution formula attached to the first page of the memorandum shows the redistribution calculation. One factor accepted by the Hospital Cost Containment Board for its determination of redistribution was the amount of charity care ($32,104,116) contained in Tampa General Hospital's April 23, 1987, revision to its 1986 actual audited data. Id.; T. 40-41. Thus, the initial calculation of redistribution by the Hospital Cost Containment Board was based upon the accounting classifications contained in the April 23, 1987, revision to Tampa General Hospital's 1986 actual report.
As a general policy, if, after July 1, 1987, a hospital did not attempt to correct its fiscal year 1986 actual report, the redistribution to that hospital would have been calculated upon the prior actual report of the hospital. T. 174-76. In the case of Tampa General Hospital, however, the magnitude of the change prior to July 1, 1987, was the reason that at some time after July 17, 1987, the staff of the Hospital Cost Containment Board decided to subject the change to scrutiny.
The prior year report of actual experience contains two parts. The first is a detailed report containing worksheets and must be prepared pursuant to the uniform financial accounting system of the FHURS manual. The first report is not certified by a certified public accountant. See e.g., P. Ex. 2. The second is a summary report certified by the hospital's certified public accountant. Worksheet C-2 is contained in the first report which is not certified by a certified public accountant. Dep. (James Bracher), p. 4-5; P. Ex. 2. The April 23, 1987, revision to the original 1986 prior year report filed by Tampa General Hospital on April 23, 1987, was only a revision to worksheet C-2, and thus was only a revision to the first detailed report. Consequently, the April 23, 1987, revision was a revision to a report that did not require certification by the hospital's certified public accountant.
The Hospital Cost Containment Board has a policy that when a hospital requests that a correction be made to a prior year actual report, the staff of the Hospital Cost Containment Board asks the hospital to have the correction reviewed by its CPA firm to determine why the correction better conforms to the accounting definitions in the FHURS manual. This policy has been in existence for approximately one year preceding December 1987. Dep. (James Bracher), p. 6.
The basis for the policy was not explained in the record. Certification by a CPA, however, is not deemed to be sufficiently reliable to result in automatic approval of the proposed change. Dep. (James Bracher), p. 7.
The Hospital Cost Containment Board did not apply this policy to Tampa General Hospital until after forty days from the date the April 23, 1987, revision was filed. The policy was not applied until about August 3, 1987. On that date, Mr. Bracher sent a letter to Newell France, Tampa General Hospital's chief executive officer. The letter stated that "the revised worksheets for your 1986 actual report have been received." P. Ex. 6. At that point, the only "revised worksheets" for the 1986 actual report were the April 23, 1987,
revisions. Mr. Bracher's letter stated that the revision had to be verified "by the independent auditor who originally prepared the audited financial report for the fiscal year in question."
In response to the letter of August 23, 1987, from Mr. Bracher, by letter dated September 28, 1987, Tampa General Hospital filed a revised worksheet C-2 certified by Price Waterhouse, certified public accountants. Price Waterhouse was the independent certified auditor for Tampa General Hospital for fiscal year 1986. T. 89.
The amount of a negative $2,633,338, as "restricted donations and grants for indigent care" on line 13 was the same on both the September 28, 1987, and April 23, 1987, revisions. As discussed above, this amount represented the receipts from the RPICC program in 1986.
The amount of "charity/uncompensated care-other" reported on the September 28, 1987, worksheet C-2, line 13, changed to $11,457,248. P. Ex. 6. (It was $32,104,116 on the April 23, 1987, report.) Nonetheless, it is clear from the record that the amount of $11,457,248 on the September 28, 1987, revision contained the RPICC charges for 1986 as reported in the April 23, 1987, revision. First, the parties stipulated that exhibit C-3 to Hearing Officer Ex.
1 contained "Tampa General's 9/28/87 submission, which continues to include the RPICC classification." Exhibit C-2 contains $11,457,248 as "charity care," thus reconciling to the September 28, 1987, worksheet C-2. The amount of $11,457,248 of "charity care" could not "continue to include the RPICC classification" unless it contained the same report and classification of RPICC charges as was contained in the immediately preceding report, which was the April 23, 1987, revision. Moreover, having been given the opportunity to deny such continuity, witnesses for the Hospital Cost Containment Board seemed to agree that the September 28, 1987, revision did not change the amounts and classifications of RPICC charges and receipts from the April 23, 1987, revision. T. 200-201; Dep. (James Bracher), p. 64.
As a part of the September 28, 1987, revision Price Waterhouse submitted a letter dated September 25, 1987, to Mr. Bracher that stated that it had been asked by Tampa General Hospital to "review the Hospital's original and amended HCCB 1986 Actual Report for its method of presenting deductions from revenue." (E.S.) P. Ex. 6. The letter appended to the September 28, 1987, revision from Price Waterhouse then explicitly states that "the $11,457,248 reclassified from Contractual Adjustments-Other to Charity/Uncompensated Care- Other is arithmetically accurate and represents a correction to the original submission in order to comply with the definitions contained in . . . the FHURS Manual definitions of account numbers 5940 and 5960." (E.S.) The letter from Price Waterhouse further states on page 2 that the RPICC reclassification relates to "unpaid portion of gross bills for services rendered to patients economically eligible for the RPICC grant funds," and demonstrates that this amount, which has been placed into the Charity/Uncompensated Care-Other category, is $6,141,002. In the same calculation, the review shows that Tampa General Hospital received $2,633,338, in RPICC grants in fiscal year 1986. P. Ex. 6.
Upon consideration of findings of fact 24 through 27, it is further concluded that on September 28, 1987, Price Waterhouse, as certified public accountants, independently verified and approved the accounting classifications contained in the April 23, 1987, revision.
b. The proper FHURS manual accounting classifications of RPICC charges and receipts: characteristics of the RPICC program
The RPICC (Regional Perinatal Intensive Care Center) program is a state program administered by the Children's Medical Services (CMS) program office of the Department of Health and Rehabilitative Services. The program is established to provide state funding of services at designated hospitals for high risk pregnant women and infants. These patients typically have long (45 to
50 day) stays in the hospital. T. 29-30.
RPICC funds are grant funds. P. Ex. 11; sections 383.17, 383.171, 383.18, and 383.19, Fla. Stat. (1987).
RPICC funds do not constitute restricted or unrestricted revenues provided to a hospital by local governments or tax districts.
Persons eligible for RPICC services must be indigent, and must be individually qualified. P. Ex. 11, attachment I; T. 75-77. The hospital has to maintain logs of specific patients in the RPICC program, and the patients have to meet certain criteria. Dep. (James Bracher), p. 44. The hospital must maintain detailed records containing information specific to each RPICC patient served.
By statute, the procedures for disbursement of RPICC funds must be pursuant to and according to the terms of contracts. Sections 383.117, 383.18, and 383.19(3), Fla. Stat. (1987).
These contractual agreements must provide "that parents or guardians of those patients who are financially eligible to participate in the RPICC program shall not be additionally charged for treatment and care which has been contracted for by the [Department of Health and Rehabilitative Services]." Section 383.18, Fla. Stat. (1987). Thus, no hospital bills may be sent to RPICC patients or to their guardians, and these persons may not be charged by the hospital. Tampa General Hospital did not send any bills to its RPICC patients, or to the guardians of those patients.
By statute and by contract, a hospital that participates in the RPICC program must serve all patients eligible, regardless of-funding from HRS. T. 35.
Tampa General Hospital entered into a contract with HRS to be a Regional Perinatal Intensive Care Center, and received RPICC funds during fiscal year 1986 pursuant to that contract. P. Ex. 11.
By contract, Tampa General Hospital was promised what the contract called a "fixed price," subject to availability of state funds. P. Ex. 11.
Contracts for administration of RPICC grants do not in effect have a fixed contract price, but provide instead a lump sum that is the maximum amount promised, to be paid according to the conditions of attachment I to the contract. P. Ex. 11, attachment I. Attachment I further provides that the
"grant funds" specified in lump sum amount "will be disbursed and accounted for according to the approved RPICC neonatal care (NCG) payment system for hospital services . . . The "payment schedule" requires submission by the hospital of the "expenditure report" which is the form marked exhibit K, P. Ex. 11. Tampa General Hospital was by contract entitled to receive each month the lesser of the prorated portion of the grant or the "total expenditures" for that month.
P. Ex. 11.
The hospital is normally paid a fixed prorated share of the total grant amount each month. T. 31. The monthly payment does not fluctuate by numbers of patients seen in that month. T. 33-34, 80-81.
The RPICC program does not make payments for specific services rendered to specific patients, and does not make payments for specific bills of patients, and thus is not like the Medicaid or Medicare programs, or an HMO contract. Dep. (James Bracher), pp. 47, 60. Instead, the RPICC program has a provision that if certain minimum levels of service are not reached, the total amount of funds will not be disbursed to the hospital. Id. Even when all RPICC funds are not "earned," the result is not patient-specific. Funds which are not earned must, pursuant to the RPICC contract, be paid back to HRS at the end of the year. T. 86; P. Ex. 11, attachment I, paragraph D.1.d. The hospital also has the option of having the shortfall applied to funds due in the next fiscal year. Dep. (James Bracher), pp. 48, 53.
The RPICC program requires the submission of a cost report at the end of the year, but monthly payments are not made by cost reports. Dep. (James Bracher), p. 25; T. 32. Medicaid reimbursement is based on cost reports at the end of the fiscal year. T. 33. Under the RPICC program, there is no relationship between actual costs and payments made. Id.
With Medicaid and Medicare, the more patients the hospital treats, the more money the hospital receives. The same is true for HMO contracts. Payment is thus made for services rendered to specific patients for these programs.
Dep. (James Bracher), p. 47. This is not true in the RPICC program. Although Tampa General was obligated by law and its contract to serve all RPICC eligible patients, the maximum that it would be paid was the fixed price stated in its contract.
Tampa General Hospital applied the payments it received from HRS in the RPICC program to its general ledger accounts, not to specific patient accounts. T. 120.
A grant may have a contract involved for administration of the grant. Dep. (James Bracher), pp. 44, 46.
It is not unusual for a governmental agency that administers a grant program to require the recipient of the grant to substantiate that it used the grant for the purposes intended by the grant program. T. 122.
Tampa General Hospital's charges associated with RPICC patients have historically far exceeded the state funding of this program. T. 81; P. Ex. 12. In fiscal year 1986, RPICC charges at Tampa General Hospital were $10,067,448, and Tampa General Hospital received only $2,633,338 in RPICC payments. T. 34;
Ex. 12. Tampa General Hospital thus has never had to return overpayments due to unearned funds.
The sales tax issue
Introduction
Pursuant to chapters 84-373 and 85-555, Laws of Florida, Hillsborough County was authorized to enact a 1/4 cent sales tax, the proceeds of which could be allocated to health care providers for certified indigent patients who were residents of the county. Pursuant to this authority, Hillsborough County enacted ordinance 85-2, levying a tax from April 1, 1985, through March 31, 1987. P. Ex. 14.
In fiscal year 1986, Hillsborough County Hospital and Tampa General Hospital received funds from this 1/4 cent sales tax. The funds were appropriated to the Hillsborough County Hospital Authority for allocation to both hospitals.
Revisions submitted by Hillsborough County Hospital.
Hillsborough County Hospital submitted its fiscal year 1986 report of actual experience on January 29, 1987. P. Ex. 22. On worksheet C-2 of that report, Hillsborough County Hospital reported the difference between patient charges and funds received on line 7, bad debts, (FHURS account 5900). T. 52.
On about June 9, 1987, Hillsborough County Hospital filed a revision to its fiscal year 1986 report, changing the manner in which the sales tax charges and receipts were accounted on worksheet C-2 of the original prior year report. P. Ex. 23; T. 52. The revision still reported the charges for services provided with sales tax funds on line 7, provision for bad debts, but did not deduct the receipts associated with those services as reported in the original fiscal year 1986 report. Instead, receipts of $647,543 were classified as "unrestricted tax revenue and appropriated funds," FHURS account 9130 (line 39a, worksheet C-4) and were moved to worksheet line 29, non-operating revenue. T.
52. As a result, both lines 7 and 29 increased by $647,543 on the revised worksheet C-2.
55. The June 9, 1987, revision by Hillsborough County Hospital was accompanied by a certification by Price Waterhouse, certified public accountants, verifying the changes in classifications of sales tax patient charges and receipts on worksheet C-2 for Hillsborough County Hospital. P. Ex.
Although the verification was submitted by Price Waterhouse in connection with a main penalty issue, the verification concerned only the June 9, 1987, revision as an amendment to the fiscal year 1986 actual report. The verification pertained to the amended report, which itself has multiple uses, including the redistribution at issue in this case. In sum, the verification was not limited to main penalty issues.
The Price Waterhouse verification of June 9, 1987, stated that the sales tax funds received by Hillsborough County Hospital were from the special county sales tax that had been appropriated to the Hillsborough County Hospital Authority, and then allocated among both Hillsborough County Hospital and Tampa General Hospital.
On June 30, 1987, counsel for Hillsborough County Hospital sent to counsel for the Hospital Cost Containment Board a letter with numerous attachments. P. Ex. 14. The letter was sent in connection with the main penalty issue concerning Hillsborough County Hospital, but generally addressed
the sales tax issue from the perspective of the Hillsborough County Hospital Authority, and expressly mentioned both Hillsborough County Hospital and Tampa General Hospital. The documents were received by the Hospital Cost Containment Board shortly after June 30, 1987.
Hillsborough County Hospital filed two revisions to worksheet C-2 after June 9, 1987. P. Exs. 25 and 26. Both revisions were filed by Hillsborough County Hospital at the request of staff of the Hospital Cost Containment Board and both contained accounting classifications for the sales tax issue with which Hillsborough County Hospital then disagreed. The September 28, 1987, revision as to the sales tax issue was filed under protest. P. Ex.
Likewise, the revision of October 12, 1987, was filed under protest. P. Ex. 26. As to the sales tax issue, neither revision is a revision adopted by, or a revision of, Hillsborough County Hospital.
When the September 28, 1987, revision was filed under protest, Price Waterhouse did not renew its verification of the sales tax accounting because the September 28, 1987, submission was incorrect, in its opinion, and because Price Waterhouse believed the June 9, 1987, submission to be correct. P. Ex. 25; T. 91-95. Price Waterhouse has not verified the accounting methods for the sales tax funds in the October 12, 1987, revision, and did not testify during the hearing that those methods are correct. Thus, the Price Waterhouse verification of June 9, 1987, of the classification of sales tax charges and receipts has never changed and remains as the verification of the June 9, 1987, revision relevant to this case.
By letter dated October 28, 1987, the Hospital Cost Containment Board notified Hillsborough County Hospital that it rejected Hillsborough County Hospital's method of accounting for sales tax receipts. The letter stated that the FHURS manual required that the difference between indigent patient charges and sales tax receipts be reported as charity/uncompensated care-other, FHURS account 5960. P. Ex. 27.
There remains the question of when did the Hospital Cost Containment Board first advise either of the Petitioners that their method of reporting the sales tax issue did not conform to the FHURS manual. Mr. Summers and Mr. Bracher were the only members of the staff of the Hospital Cost Containment Board who worked on the calculations to determine the initial distribution of Public Medical Assistance Trust Fund monies and to review corrections filed by hospitals to their 1986 prior year reports. T. 146-47. No one else testified for the Hospital Cost Containment Board. Thus, their testimony on this issue should be examined closely.
Mr. Summers testified that in the middle of the summer he told both hospitals that the sales tax charges and receipts should be "grossed up" rather than "netted down." T. 150. He had previously defined "grossing up" in the context of the sales tax as reporting patient charges on line 13 of worksheet C-
2 (charity/uncompensated care-other) and reduction of those charges by a negative amount on line 14 (restricted donations and grants for indigent care)
T. 147. Although the communication did take place, the timing of this communication by Mr. Summers is not supported by the preponderance of the evidence in the record. On September 28, 1987, Hillsborough County Hospital filed the first revision under protest. The amount reported in line 7, worksheet C-2, in the September 28, 1987, revision, was the same as reported in the original fiscal year 1986 actual report filed January 29, 1987, less $148. Compare P. Ex. 22 to P. Ex. 25. The letter transmitting the September 28, 1987, revision stated that the sales tax accounting remained "netted in total
deductions from revenue," which is the case since the net was still contained on line 7. The letter of transmittal stated that Hillsborough County Hospital filed the September 28, 1987, revision because "of the position that you and your staff have taken on this issue." It was not until sometime between September 28, 1987, and October 12, 1987, that Mr. Summers changed his position, and told Hillsborough County Hospital to "gross up." P. Ex. 26.
In summary, from the testimony of Mr. Summers it is unclear as to when he told Hillsborough County Hospital that its June 9, 1987, revision did not conform to the FHURS manual.
Mr. Bracher was asked if he was aware of any written notice to either of the Petitioners that anything in the reports submitted June 9, 1987, was not conforming. He answered that he was not aware of any specific notice. He said he thought the issue was wrapped up in the main penalty case, and would be resolved when that case was heard. Dep. (James Bracher), p. 28-29.
It is concluded that there is no evidence that within the forty days following June 9, 1987, the Hospital Cost Containment Board communicated written notice to either Petitioner that the June 9, 1987, revision with respect to sales tax associated charges and receipts was not in conformance with the FHURS manual.
Nonetheless, on June 30, 1987, counsel for Hillsborough County Hospital sent a letter to counsel for the Board transmitting a package of information concerning the sales tax. P. Ex. 14. It is inferred from the efforts of counsel for Hillsborough County Hospital that there was disagreement between the parties at this stage. It is also inferred that the package of explanatory documents was sent to the Hospital Cost Containment Board by Hillsborough County Hospital on June 30, 1987, because Hillsborough County Hospital and the Hillsborough County Hospital Authority then knew that the Board disagreed with the June 9, 1987, revision.
Moreover, on July 17, 1987, the Hospital Cost Containment Board transmitted to Hillsborough County Hospital its initial calculation of the redistribution. The amount of charity care shown on the accompanying calculation ($2,559,133) is obviously from line 7, worksheet C-2, of the original fiscal year 1986 actual report. P. Exs. 22 and 24. From this it is clear that as of July 17, 1987, the Hospital Cost Containment Board had rejected the accounting on that line contained in the June 9, 1987, revision.
Thus, from these activities, it is inferred that within forty days of receipt of the June 9, 1987, revision, the Hospital Cost Containment Board did orally communicate to both Petitioners its disagreement with the June 9th revision with respect to the sales tax question.
Revisions submitted by Tampa General Hospital
Tampa General Hospital originally reported the differential between charges for patients associated with the sales tax funds and receipts of sales tax funds on line 7, of worksheet C-2, FHURS account 5900, "provision for bad debts." T. 52.
On September 28, 1987, Tampa General Hospital filed a "revision" to its fiscal year 1986 actual report. P. Ex. 6. The cover letter from Mr. Powers stated that the sales tax monies "remain netted in total deductions from revenue
(lines 7-17)." However, the letter made it clear that Tampa General Hospital disagreed with this accounting method, and that the report was submitted "because of the position that you and your staff have taken on this issue." Like the September 28, 1987, "revision" filed by Hillsborough County Hospital, which was submitted with an identical cover letter, the September 28, 1987, report by Tampa General Hospital was not adopted by Tampa General Hospital.
Also as discussed above, the September 28, 1987, revision by Tampa General Hospital as to the sales tax issue was not verified by the hospital's certified public accountant.
Thus, it is clear that Tampa General Hospital did not file its own formal written revision to its fiscal year 1986 report with respect to sales tax funds within the ninety-day period following July 1, 1987.
Nonetheless, it is inferred from the evidence that the Hospital Cost Containment Board was aware that Tampa General Hospital was seeking within 90 days of July 1, 1987, to change its sales tax reporting in the same manner as Hillsborough County Hospital. This inference is based upon the following:
The initial revision submitted by Hillsborough County Hospital on June 9, 1987, contained a discussion by Price Waterhouse, and in that discussion of the nature of the sales tax funds, Price Waterhouse stated that the funds were appropriated to the Hillsborough County Hospital Authority and allocated to both Hillsborough County Hospital and Tampa General Hospital. The letter from Price Waterhouse further stated that Price Waterhouse were the auditors for the Authority. It was thus evident from the June 9, 1987, submission that the sales tax issue applied to the Hillsborough County Hospital Authority, and thus applied equally to Hillsborough County Hospital and to Tampa General Hospital.
The letter of June 30, 1987, from counsel for Hillsborough County Hospital to counsel for the Hospital Cost Containment Board, while concerned with the main penalty and Hillsborough County Hospital, stated that the funds went to the Authority, and noted that the Authority was composed of both hospitals.
Much of the communication between the parties in this case was with Paul Powers, who is the Chief Financial Officer for the Authority and for both hospitals.
As previously discussed, it is evident that staff of the Hospital Cost Containment Board orally advised representatives of the hospitals that the Board disagreed with the June 9, 1987, revision.
Both hospitals filed revisions dated September 28, 1987, showing that both hospitals were actively discussing the matter during this period with the Hospital Cost Containment Board.
After the September 28, 1987, revisions were filed, staff of the Hospital Cost Containment Board advised both hospitals to resubmit worksheets C- 2, "grossing up" the monies by reporting charges for sales tax patients on line 13, and receipts on line 14. T. 54-57. (Staff of the Hospital Cost Containment Board later determined this advice to have been erroneous.) Both hospitals complied under protest. P. Exs. 7 and 26.
Further, while Price Waterhouse did not on June 9, 1987, formally certify that the sales tax funds should be accounted for by Tampa General Hospital in the same manner as reported by Hillsborough County Hospital in its
June 9, 1987, revision, the identity of the issues discussed above for both hospitals causes that result in effect. The June 9, 1987, certification made it clear that the funds were appropriated to the Authority, and thus the character of the funds, for accounting purposes, would be the same for both hospitals that compose the Authority. Moreover, certification as to the exact dollar amounts involved in the reclassification for Tampa General Hospital was made by Price Waterhouse during the de novo formal administrative hearing. In sum, the record contains a certification by a certified public accountant as to the sales tax accounting change sought by Tampa General Hospital, both as to amount and as to classification.
The proper FHURS manual accounting for sales tax funds: characteristics of the sales tax funds
In fiscal year 1986, both Hillsborough County and the Hillsborough County Hospital Authority budgeted and appropriated sales tax funds to Tampa General Hospital and Hillsborough County Hospital for indigent care. T. 44, 101-102. Hillsborough County is a governmental agency.
As an appropriation, these sales tax funds were set aside for a specific purpose, indigent care, by Hillsborough County. T. 96-100.
The method of distribution of sales tax funds was not specified by statute or by contract. T. 79. As discussed above, the enabling statutes simply stated that the funds were to be used for indigent patients who were county residents.
The record does not contain any credible evidence to explain how the fiscal year 1986 sales tax appropriations were supposed to have been distributed to the two Petitioners. It might have originally been based on specific patient bills, or it might have been lump sum distribution, but there is no evidence.
At least this is known: the sales tax money was not available until ad valorem appropriations were spent, and those appropriations were not being spent because there were insufficient numbers of patients meeting the ad valorem eligibility requirements. T. 66-67.
Midway through the fiscal year, it was determined by Hillsborough County that the appropriated funds were not being transferred to the two Petitioners as originally intended. 44-45, 65-67. In fact, no funds had been transferred by June, 1986, the ninth month of the fiscal year. P. Exs. 17 and 18.
Hillsborough County then determined to spend the money by a method other than what was originally envisioned. It did so by arbitrarily and substantially loosening eligibility requirements and expanding the distribution to other programs. T. 67, 69-71, 45.
Since there is no clear evidence in the record as to how the sales tax program was originally intended to have operated, and since the only clear evidence in the record is that the County chose drastically to alter the method of transferring the sales tax appropriated funds to the two Petitioners, it must be concluded as a matter of fact that for accounting purposes, the only relevant facts are those facts showing how the sales tax program was changed midway through the fiscal year. In particular, due to the change made by the County, references to earlier plans to transfer the money in the May 22, 1985, minutes of the Board of County Commissions, exhibit 3, P. Ex. 14, are not relevant.
It is important to note that the change in the manner of transferring the sales tax appropriations to the Petitioners was caused solely by the fact that the original method did not work. Thus, the County had no underlying basis to determine how to loosen eligibility requirements and to select new programs to cover. Requirements were loosened and new programs were covered until the prior appropriated funds were transferred. The only requirement was that the funds pay for patients who were medically indigent. T. 108. Thus, the method of selection of requirements to loosen and programs to cover was essentially arbitrary. T. 69-74, 103-104, 45, 47-48.
At least 25 percent of the sales tax funds was paid on a per diem basis, based upon specific patients and days elapsed. T. 72, 68. But not all was based on per diem, contrary to the testimony of Mr. Summers. T. 152. At least 25 percent of the sales tax funds paid for the specific charges of specific patients who suffered catastrophic illnesses (charges in excess of 125 percent of annual income). T. 72-73. Other sales tax funds paid for amounts not paid (funds exhausted or not yet available) in the RPICC program, the tuberculosis program, the Medicaid program, and the Medicare kidney program. T. 45-46.
In fact, payments were superficially made based upon charges submitted by specific patients in all cases, although payment was limited to a set per diem rate for those patients who qualified based upon the original indigency criteria. T. 73-74.
Although the method of transfer of sales tax funds to the Petitioners was superficially by payments for charges associated with specific patients, that observation does not go far enough. The context of the payments cannot be ignored. Specific patient charges were identified in the transfer process only to give the County assurance that the money was going for indigent services. T.
109. Moreover, the payments were made for specific charges solely pursuant to the arbitrary change in the sales tax program discussed above, which was motivated solely by the desire of the County to expend all of the sales tax funds (the entire lump sum) previously appropriated to the two Petitioners. T. 73-74. Neither of the two Petitioners had any preexisting contract with the County that establish a system of payment of charges for specific patients. Nor is there any evidence that the County itself, as it shifted gears midway in the fiscal year, established a program to pay charges for specific patients based on reasoned criteria for identification of such patients. Instead, as discussed above, the choices of programs and eligibility requirements was driven only by the desire to spend a prior determined lump sum amount. The observed effect was the transfer to the Petitioners of the entire appropriated amount in only three months, the last three months of the County's fiscal year. P. Exs. 17 and 18. In context, then, the payments for charges associated with specific patients was not fundamentally a series of discrete payments of charges for specific patients, but was merely the mode of transfer of a lump sum payment.
Exhibit 12, P. Ex. 14, initially relied upon by Board staff, contains a mixture of payments made by the County from ad valorem tax funds and sales tax funds. Compare to P. Ex. 17 and 18. Thus, for this reason, in addition to the discussion above, one cannot conclude from this exhibit that sales tax funds were transferred to the Petitioners as specific payments for specific patients.
The proper accounting classification for the sales tax monies (or the RPICC funds, for that matter) depends upon the nature of the payment mechanism. T. 145.
Mr. Summers was of the opinion that if Hillsborough County determined to distribute the sales tax funds by an arbitrary method, totally changing the prior method, with the only criteria that the funds pay for services to indigent patients, then receipts from the sales tax funds should be reported on line 14 of worksheet C-2, FHURS manual account 5970, "restricted donations and grants for indigent care." T. 189-90. That is in fact what occurred.
The distribution to the Petitioners with respect to the sales tax issue will be the same whether the receipts of sales tax funds are classified on line 29 or on line 14 of worksheet C-2. T. 94-95.
CONCLUSIONS OF LAW
Preliminary matters
The Division of Administrative Hearings has jurisdiction of the parties and subject matter of these cases.
The Petitioners timely filed their petitions and have substantial interests sufficient to entitle them to a formal administrative hearing.
Petitioners have the burden to prove all factual contentions by a preponderance of the evidence. Section 395.5135, Fla. Stat. (1987).
The two objections on pages 55-56 of the deposition of James Bracher are overruled. The objections as to predicate relate to credibility, not admissibility. The best evidence rule (section 90.952, Fla. Stat. (1987)) does not apply due to the operation of a statute, section 120.58(1)(a), Fla. Stat. (1987), which applies only the hearsay and relevancy rules to administrative hearings. Moreover, hearsay is not involved, since the testimony relates to what Mr. Bracher observed when he read the other contracts. The fact of the existence of the statements in the contracts is at issue, not the truth of the statements in the contracts.
The motion to strike and the response thereto have been considered as argument pertaining to proposed findings of fact previously submitted, and have been relied upon in making findings of fact, but the relief requested in the motion to strike is denied.
The authority of the Board to disapprove corrections to fiscal year 1986 actual reports filed pursuant to section 12, chapter 87-92, Laws of Florida
Section 12(5), Chapter 87-92, Laws of Florida, provides that: A hospital may correct, subject to verifica-
tion by the hospitals' [sic] independent
certified auditors, its 1986 fiscal year data up until 90 days after the effective date of this act. Based upon this corrected
data, the board [the Hospital Cost Containment Board] shall recalculate the distribution due under this act no later than October 15, 1987,
and shall certify to the department [HRS] a revised formula by October 25, 1987.
Amounts previously distributed may be adjusted based upon this final determination. (E.S.)
The Petitioners argue that the Hospital Cost Containment Board must accept the corrected fiscal year 1986 data, once it has been verified by an independent certified auditor, and has no authority to reject the corrections to the fiscal year 1986 data. The argument is premised upon the phrase emphasized above that the Board "shall" recalculate the distribution due "based upon this corrected data."
Section 12(3), Chapter 87-92, Laws of Florida, provides that the redistribution of trust funds "shall be based upon the fiscal 1986 hospital data as reported to the board. Both parties in this case agree that "fiscal 1986 hospital data" means the hospital's report of "its actual audited experience" for the fiscal year as required by section 395.507(7), Fla. Stat. (1987)
The report of "actual audited experience" must be filed on forms adopted by the Hospital Cost Containment Board and must be "based on the uniform system of financial reporting" established by the Board. Section 395.507(7), Fla. Stat. (1987).
The Board is also required by subsection (1) of the same statute to establish by rule a uniform system of financial reporting based upon "a uniform chart of accounts developed after considering" certain industry standards and "generally accepted accounting principles." The Hospital Cost Containment Board has adopted a number of procedural rules establishing the uniform system of financial reporting, and the system established includes the Florida Hospital Uniform Reporting System (FHURS) Manual. Section 395.507(1) further provides that:
As a part of such uniform system of financial reporting, the board may require the filing of any information related to the cost of
any service provided in such hospital . . . .
(E.S.)
Thus, the report of actual audited experience for the preceding fiscal year must be filed on forms adopted by the Board and must comply with the uniform system of financial reporting which, by statute, the Board was required to establish by rule.
While section 12(3) of Chapter 87-92, Laws of Florida, does not explicitly state that the correction to 1986 fiscal year data must be reported pursuant to the uniform financial reporting system established by the Board, that surely must have been the intent of the Legislature. It would be unreasonable to infer that the Legislature intended that such corrective reports might be filed without uniformity, given the mandate of section 395.507(1), Fla. Stat. (1987), that reporting be uniform. This is especially true given the purpose of section 12 of Chapter 87-92: that the Public Medical Assistance Trust Fund was established to provide "equity among hospitals," and the redistribution was "needed in order to accomplish the original intent." Section 12(1), Chapter 87-92, Laws of Florida.
Thus, it is concluded that the corrective report must be filed pursuant to the uniform financial reporting system established by the Board.
Does, then, the Board have authority to disapprove a corrective report for failing to comply with the uniform accounting system? Since the Board is required to establish the system of uniformity, and since equity is to be done among the hospitals in the redistribution of trust funds, then the answer surely is yes. Verification by an independent auditor is a step toward uniformity, but independent auditors, in good faith, can be expected to reach differing accounting conclusions at least some of the time. As in most cases that are litigated, the experts in this case disagreed. Neither uniformity nor equity can be expected nor will it be achieved if the final accounting in the various corrected reports depends solely upon the various opinions of different auditors.
An express grant of power to an agency includes, by implication, such powers as are necessarily or reasonably incident to the powers expressed. Hall
v. Career Service Commission, 478 So.2d 1111, 1112 (Fla. 1st DCA 1985).
Implicit in the requirement that the Board establish a uniform financial reporting system is that there be power in a single entity, the Board, to reject reports that are not uniform.
Therefore, it is concluded that the Hospital Cost Containment Board has authority to disapprove a corrective report for noncompliance with the uniform accounting system.
Whether charges and receipts associated with the RPICC program and the special sales tax are charity care as defined by section 12, chapter 87-92, Laws of Florida
Section 12 of Chapter 87-92, Laws of Florida was enacted to redistribute funds in the Public Medical Assistance Trust Fund.
The distribution formula enacted by the Legislature is based upon the "uncompensated care" of a hospital. Section 12(3)(b), Chapter 87-92, Laws of Florida.
"Uncompensated care" is defined as "the sum of charity care and bad debts." (E.S.) Section 12(2)(k), Chapter 87-92, Laws of Florida.
"Charity care" is then defined by section 12(2)(e), Chapter 87-92, Laws of Florida, as follows:
[T]hat portion of hospital charges for care provided to a patient whose family income for the 12 months preceding the determination is below 150 percent of the federal nonfarm poverty level unless the amount of hospital charges due from the patient exceeds 25 per- cent of the annual family income, and for which there is no compensation. Charity care shall not include administrative or courtesy discounts, contractual allowances to third- party payers, or failure of a hospital to collect full charges due to partial payment
by government programs. (E.S.)
The RPICC program is a government program. It is created and funded by the Legislature of the State of Florida. Sections 383.15 through 383.212, Fla. Stat. (1987).
In fiscal year 1986, Tampa General Hospital did not collect full charges for RPICC patients. Is this a "failure" to collect full charges "due to partial payment by government programs?" Hospitals which participate in the RPICC program are forbidden by statute from charging parents or guardians of financially eligible patients served by the program. Section 383.18, Fla. Stat. (1987). A "failure" is defined as "a falling short; deficiency. . ." Webster's New Twentieth Century Dictionary, 2nd Ed. (Unabridged). Thus, the word "failure" does not necessarily connote the preexistence of a duty to succeed.
It follows, then that the "falling short" of collection of full charges for RPICC patients is a "failure" to collect such charges, notwithstanding the impossibility of collection and the lack of a duty to collect from patients or patients' guardians.
But is the "failure" "due to partial payment by government programs?" The failure of hospitals which participate in the RPICC program to collect full charges for services rendered to RPICC patients is not a failure due to the lack of diligence on the part of the hospital. It might have been a failure due to the lack of resources of the patients or those responsible for the care of the patients, since indigency is a requirement for eligibility; but that cause of failure to collect full charges will never been known since the statute forbids any activity (notably, it forbids the billing of those patients) which would result in ascertainment of that cause of failure to receive full payment.
The cause of the failure to collect full charges from RPICC patients is due to the way in which the payment system of the program itself is established by statute. The program statutorily forbids any efforts to charge parents or guardians any additional amount. Thus, the "failure of [the] hospital to collect full charges" is only "due to partial payment by [a] government program."
The words "due to partial payment by government programs" should be given a plain meaning. "Partial payment" undoubtedly means "partial payment of specific charges to specific patients," but there is no logical reason to restrict the meaning to only such governmental programs that itemize payments by patient. The RPICC funds received in fiscal year 1986 by Tampa General Hospital from HRS were clearly "payments" due under the contracts. The "payments" were partial, as the parties to the contracts were well aware, because Tampa General Hospital kept a record of full charges by patient, and the "payments" were less than the total of such full charges.
Consequently, the difference in this case between the amounts received by Tampa General Hospital from the RPICC grant funds, and the full charges for services rendered to RPICC patients in fiscal year 1986 is not "charity care" as defined by section 12(2)(e), Chapter 87-92, Laws of Florida, and should not be counted as "uncompensated care" in the distribution of Public Medical Assistance Trust Funds pursuant to section 12(3)(b), Chapter 87-92, Laws of Florida.
There is no need to look to FHURS manual definitions of "charity care" with respect to the RPICC program since the issue is determined by the statute. The discussion which follows is provided so that a this order will address all issues presented.
The sales tax funds, on the other hand, do not fall within the statutory exclusion that applies to the RPICC program. The governmental program that establishes the sales tax does not contain any provision forbidding the collection of additional charges from patients served.
Whether the April 23, 1987, RPICC revision filed by Tampa General Hospital is now deemed to conform to the FHURS manual definitions of accounting
As discussed above, section 395.507(1), Fla. Stat. (1987), requires the Hospital Cost Containment Board to establish a uniform system of financial reporting by rule. The Board has complied with that mandate by adoption of section 27J-1.003, Fla. Admin. Code, which establishes the Hospital Uniform Reporting System (FHURS) Manual as the uniform system of financial accounting.
Section 395.507(7), Fla. Stat. (1987), requires that within 120 days of the end of the fiscal year, each hospital shall file with the board a report of its "actual audited experience for the prior fiscal year," and that the report shall be based on the uniform system of financial reporting. A report of the actual audited experience for the prior fiscal year is also expressly required in that format and within that period by sections 27J-1.003 and 1.004, Fla. Admin. Code.
Section 27J-1.004, Fla. Admin. Code, does not expressly provide a procedure for filing amendments or revisions to reports of actual audited experience for the prior fiscal year. However, the Board has accepted corrections or amendments to reports of actual audited experience in the period prior to July 1, 1987. Finding of fact 15. Moreover, it appears that such amendments are within the intent of the rule since section 27J-1.004(7)(b), Fla. Admin. Code, mentions "[p]rior year report and amendments" in the list of reports which may be filed with the Board. It is concluded as a matter of law that independently of section 12, chapter 87-92, Laws of Florida, a hospital is authorized to file a correction or revision to its prior year report of actual experience.
Since the prior year report clearly must conform to the uniform system of financial accounting (the FHURS manual) adopted by the Board, an amendment to the prior year report surely must likewise conform to the uniform system of accounting.
Part II of chapter 27J, Fla. Admin. Code, is entitled "Uniform Hospital Report Review Process." Immediately following are sections 1.008, 1.009, 1.010, and 1.013, which are intended to establish that report review process.
Section 27J-1.008(1), Fla. Admin. Code, provides:
Every report provided the Board pursuant to Section 395.507, Florida Statutes, and Rules 27J-1.003 and 27J-1.004, shall be stamped by the agency clerk or other desig- nated employee as to the date received by the Board.
An amendment to a prior year report of actual audited experience is a "report provided the Board pursuant to Section 395.507, Florida Statutes, and Rules 27J-1.003 and 27J-1.004."
The April 23, 1987, RPICC revision filed by Tampa General Hospital to its 1986 actual audited report was a "report provided the Board pursuant to Section 395.507, Florida Statutes, and Rules 27J-1.003 and 27J-1.004." The April 23, 1987, revision was required to conform to the FHURS manual system of accounting.
Section 27J-1.009, Fla. Admin. Code, provides: Report Review--Timing. Within forty (40)
days after receipt of any report, the staff shall determine and notify the hospital whether it is complete and conforms to applicable statutory, rule, and Hospital Uniform Reporting System Manual requirements; and verify the data contained therein. (E.S.)
Section 27J-1.010(1) and (3), Fla. Admin. Code, provide: Notice of Deficiencies.
Written notice shall be provided by certi- fied mail or telegram to a hospital in the event the staff determines a report is incom-
plete; fails to conform to applicable statutory, rule, or Hospital Uniform Reporting System Manual Requirements; or contains data that cannot be verified. The notice shall clearly indicate the deficiencies found, the correc- tions or modifications that must be made to
make it complete or conforming or its data verifiable, as well as time by which a corrected or modified report must be received in the Board's office.
* * *
(3) A hospital not notified as provided in Rule 27J-1.009, above shall be deemed to have
submitted a report that is complete, conforming and verified. (E.S.)
Section 27J-1.013(1)(b), Fla. Admin. Code, provides: Criteria for Report Review.
A report shall be deemed:
* * *
(b) "Conforming" when it has been prepared in the form and manner specified by the Board
and otherwise conforms to applicable statutory, rule, or Hospital Uniform Reporting System Manual requirements regarding reports in
effect at the time such report was submitted to the Board. (E.S.)
An agency must follow its own clearly established rules. Kearse v. Department of Health and Rehabilitative Services, 474 So.2d 819 (Fla. 1st DCA 1985); Woodley v. Department of Health and Rehabilitative Services, 505 So.2d 676 (Fla. 1st DCA 1987).
The Hospital Cost Containment Board did not give Tampa General Hospital written notice that its April 23, 1987, amendment to its prior year report of actual audited experience failed to conform to the accounting classification system of the FHURS manual within the forty days following April 23, 1987.
Thus, by operation of rule 27J-1.010(3), Fla. Admin. Code, the April 23, 1987, amendment to Tampa General Hospital's 1986 actual audited experience is deemed to conform to the Hospital Uniform Reporting System manual.
Section 12(3), chapter 87-92, Laws of Florida, provides that the redistribution of surplus funds from the Public Medical Assistance Trust Fund "shall be based upon fiscal 1986 hospital data as reported to the board." "Fiscal year 1986 hospital data" is the prior year report of actual audited experience filed by each hospital as discussed above.
It is argued in this case that the April 23, 1987, revision cannot be the basis for redistribution pursuant to section 12, chapter 87-92, Laws of Florida, because the April 23, 1987, revision was not verified by the independent certified auditors of the hospital. This argument appears to be incorrect for several reasons.
Analysis must begin by locating the source of the asserted requirement for verification by an independent auditor. Two sources have been suggested.
First, there is the redistribution law itself. Section 12(5), chapter 87-92, Laws of Florida, explicitly grants an opportunity to correct the 1986 report, but conditions that opportunity upon "verification by the hospitals' independent certified auditors." The opportunity granted by section 12(5) did not exist until section 12, chapter 87-92, Laws of Florida, became law on July 1, 1987. By its own terms, the opportunity expired "90 days after the effective date of this act." Thus, the opportunity to correct 1986 actual reports afforded by section 12(5), chapter 87-92, Laws of Florida, existed only for the 90 days following July 1, 1987.
Tampa General Hospital filed its revision to its 1986 report on April 23, 1987, before section 12, chapter 87-92, came into being, and thus before the opportunity granted for that correction even existed. Moreover, the revision was not within the 90 day period of opportunity after July 1, 1987, granted by the new law. Thus, the April 23, 1987, revision was not filed pursuant to section 12(5), chapter 87-92, Laws of Florida.
Instead, Tampa General Hospital's April 23, 1987, revision was filed as an amendment to its 1986 report under preexisting legal authority to file such amendments to prior year reports. Thus, the procedures specified for filing the original prior year report must be consulted to determine the necessity for certification by an independent auditor of changes to the original prior year report.
Section 27J-1.004(3)(a), Fla. Admin. Code, provides that the prior year report shall consist of two parts, "audited financial statements," and a "prior year audited actual data report for the fiscal year then ended." Subsection (b) of the same rule requires that the audited financial statements be examined by an independent, Florida licensed, certified public accountant. Subsection (c) provides that the "prior year audited actual data report" shall then be prepared from the financial statements. As discussed in finding of fact
24, the detailed prior year report, including worksheet C-2, does not require certification or verification by an independent auditor. Since the revision or amendment was only to worksheet C-2, which in the original report did not require certification by a CPA, the April 23, 1987, revision, under the law that existed when it was filed, did not require certification or verification by an independent certified public accountant.
The second potential source of a requirement for certification by an independent auditor is the policy that the staff of the Board has followed for the year preceding December, 1987, to require such certifications when corrections to actual reports are filed. This source is inapplicable to the April 23, 1987, revision for two reasons.
First, the Respondent did not explicate the basis for its incipient policy in the record. The only fact known about the policy is that a certification by a CPA is not deemed by staff to be sufficiently reliable to result in automatic approval of the change. Finding of fact 26. Evidence of potential unreliability is obviously not a reasonable basis for the policy. Lacking a basis in the record for the policy, the policy cannot be applied to Tampa General Hospital. Florida Cities Water Company v. Florida Public Service Commission, 384 So.2d 1280, 1281 (Fla. 1980); Florida Medical Center v. Department of Health and Rehabilitative Services, 463 So.2d 380, 382 (Fla. 1st DCA 1985); McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977).
But more important, Tampa General Hospital was not notified of the application of this policy to its April 23, 1987, revision until after August 3, 1987. By this time, more than 40 days had elapsed from the date the revision was filed, and Tampa General Hospital had been given no written notice (or, for that matter, no oral notice) that its April 23, 1987, revision did not conform to the FHURS manual definitions. Thus, after 40 days had elapsed without written notification of disagreement, pursuant to rule 27J-1.010(3), the April 23, 1987, revision was deemed to conform to the FHURS manual. Consequently, there was no accounting issue remaining to be certified by an independent auditor. By operation of law, the matter was moot.
In any event, the April 23, 1987, revision was certified by an independent public accountant. Finding of fact 32. Thus, but for the fact that the RPICC charges and receipts are expressly excluded from the definition of charity care by section 12, chapter 87-92, Laws of Florida, the redistribution to Tampa General Hospital of funds from the Public Medical Assistance Trust Fund would be based upon Tampa General Hospital's prior year report for fiscal year 1986 as amended by the April 23, 1987, revision.
The proper accounting for RPICC charges and receipts
But for the fact that the April 23, 1986, revision to the 1986 actual report of Tampa General Hospital is now deemed to conform to the FHURS manual, the differential between RPICC charges and receipts at Tampa General Hospital should be reported as a "contractual adjustment-other," FHURS account 5940, line
11 of worksheet C-2, as discussed in paragraphs 26-52 of the conclusions of law in the recommended order entered on February 17, 1988, in All Children's Hospital v. Hospital Cost Containment Board, DOAH case number 87-4988H, which are incorporated herein by reference.
Whether the June 9, 1987, revision to the accounting for sales tax funds at Hillsborough County Hospital and
Tampa General Hospital is now deemed to conform to the FHURS manual definitions of accounting
The Hospital Cost Containment Board did not within forty days of June 9, 1987, give written notice to Hillsborough County Hospital that its sales tax revision of June 9, 1987, did not conform to the FHURS manual. The Board did, however, orally communicate its disagreement to Hillsborough County Hospital and to Tampa General Hospital within the forty day period.
Section 27J-1.010(3), Fla. Admin. Code, causes a report to be deemed to be conforming when a hospital is "not notified as provided in Rule 27J-1.009.
. . ." Rule 27J-1.009 requires notice, but does not specify that such notice be in writing. The requirement of written notice is only in rule 27J-1.010(1).
If, as concluded earlier in this recommended order, that rule 27J- 1.010(3) should be strictly applied, it follows that the rule only applies when there has been no notice at all given. The lack of written notice is irrelevant to the strict terms of the rule.
Consequently, the June 9, 1987, revision by Hillsborough County Hospital and the subsequent informal revision by Tampa General Hospital to their fiscal year 1986 actual reports are not now deemed to be conforming to the FHURS manual due to lack of notice that it was not conforming pursuant to rules 27J- 1.009 and 27J-1.010.
The proper accounting for sales tax funds
The instructions for account 5960 provide that:
When the hospital receives lump-sum grants or subsidies (rather than specific payments for individual patient's bills) from govern- mental or voluntary agencies for the care
of medically indigent patients, the amount of the lump-sum grant or subsidy must be reported under "Restricted Donations and Grants for Indigent Care." (Account 5970). (E.S.)
Account 5970, "Restricted Donations and Grants for Indigent Care," of the FHURS manual, provides:
This account is used to report voluntary and governmental agency grants or subsidies for the care of non-specified medically indigent patients during the current reporting period. (E.S.)
The sales tax funds, previously appropriated by Hillsborough County, were in fact transferred to Hillsborough County Hospital and to Tampa General Hospital in a lump sum, and not pursuant to a predetermined program for the payment of individual patient's bills. Findings of fact 79 through 85. The funds clearly were for medically indigent patients. Thus, pursuant to the direction of account 5960, sales tax funds received by Hillsborough County Hospital and by Tampa General Hospital should be reported in account 5970.
Account 9130 appears to be not an acceptable account for sales tax funds because such funds were restricted. Moreover, since account 5970 is expressly for medically indigent patient funds, account 5970 is more appropriate.
Most of the litigation in this case has focused upon the question of how the receipts of sales tax funds should be classified, and thus there is little guidance in the record as to how the charges associated with those payments should be classified. It appears to make no difference whether the charges are classified in bad debt, line 7 of the worksheet, or charity/uncompensated care-other, line 13, since "uncompensated care" for purposes of redistribution of trust fund money by definition includes both charity care and bad debts.
There is no evidence as to the definitions of account 5900, bad debts. There is some evidence in the record that the charges associated with sales tax payments should be classified in account 5960, line 13 of worksheet C- 2, and it is this category that seems best suited for such charges. Having been identified by Hillsborough County as patients meeting indigency requirements of the sales tax law to justify transfer of sales tax funds, it would seem more appropriate to select account 5960 since that account is expressly for "the amount, based on the hospital's full established rates, of bills for hospital services to charity/uncompensated care patients." Finding of fact 11.
Unlike the RPICC associated charges, there is no evidence in this record that the Petitioners were forbidden to bill these patients, and thus the amounts were technically "recoverable." Thus, the exclusion contained in the definition of account 5940 and relied upon in the recommended order in All Children's Hospital v. Hospital Cost Containment Board, DOAH case number 87- 4988H, is not operative in this case with respect to the sales tax associated charges.
For these reasons, it is recommended that the Hospital Cost Containment Board enter its final order:
Confirming that the April 23, 1987, revision by Tampa General Hospital to its 1986 actual report conforms to the FHURS manual by operation of rule 27J- 1.010(3).
Due to the definition of charity care in section 12, chapter 87-92, Laws of Florida, denying to Tampa General Hospital recalculation of distribution from the Public Medical Assistance Trust Fund with respect to the RPICC program.
Correcting the 1986 actual reports of Tampa General Hospital and Hillsborough County Hospital with respect to sales tax funds, reporting charges on line 13, "charity/uncompensated care-other," and receipts on line 14, "restricted donations and grants for indigent care," and recalculating the redistribution due the two hospitals based upon these corrections. (The result appears to be stated in findings of fact 6 and 8.)
DONE and ENTERED this 9th day of March, 1988.
WILLIAM C. SHERRILL, JR.
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 9th day of March 1988.
APPENDIX TO RECOMMENDED ORDER
IN DOAH CASE NUMBERS 87-5207H AND 87-5208H
The following are rulings upon findings of fact proposed by the parties which have been rejected or adopted by reference in this Recommended Order. The numbers correspond to the numbers of the proposed findings of fact as used by the parties.
Findings of fact proposed by the Petitioner:
9. The last half of the paragraph is an issue of law, not fact.
All but the first sentence are cumulative and unnecessary.
Irrelevant.
17. The motive of the county is irrelevant.
19. Not supported by the record cited. Mr. Bracher qualified his testimony with the phrase "I guess," and then qualified his opinion. Dep. (James Bracher), p. 27.
24. Irrelevant since the April 23, 1987, revision is operative.
These findings of fact are adopted by reference.
Irrelevant.
The first two sentences are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference.
The first sentence is not supported by the record.
The first sentence is rejected in the conclusions of law.
The first sentence is rejected in the conclusions of law.
The first sentence is rejected in the conclusions of law.
The existence or absence of cost reports is not persuasive that account 5940 is or is not applicable. The phrase "cost reports" in the FHURS manual with respect to account 5940 only appears in a parenthetical, "including adjustments made at year end." As such, it is inclusive of circumstances where adjustments are made at year end based on cost reports, but is not necessarily limited to that circumstance.
38. Blue Cross accounting occurs in account 5930, and thus reference thereto is irrelevant for this case.
40 and 41. Irrelevant. A formal administrative hearing is intended to formulate agency action, not to review prior action. McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977).
42 and 43. These proposed findings of fact are true but are not relevant. A formal administrative hearing is intended to formulate agency action, not to
review prior action. McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977).
44. This is an issue of law, not fact.
50. The last sentence is true, but is subordinate to findings of fact adopted in the recommended order. This finding of fact, however, is adopted by reference.
The second sentence is irrelevant. A failure to make the recalculation by October 15, 1987, while a technical violation of the statute, could hardly have been intended by the Legislature to result in no recalculation at all.
The last portion of the sentence is incompetent as legislative history.
59. The distributions were initially and superficially calculated on specific patients' charges, but were not ultimately "based" thereon, as discussed in the findings of fact.
63. The second through fifth paragraphs are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference.
63-64. These proposed findings of fact are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference.
Irrelevant for lack of sufficient credible evidence showing identity of-circumstance to justify the comparison.
Irrelevant for lack of sufficient credible evidence showing the lack of identity of circumstance to justify the comparison.
68-70. These proposed findings are issues of law, not fact. 71-72. Irrelevant.
Findings of fact proposed by the Respondent:
2-4. These are issues of law, not fact.
The second sentence is contrary to the record. T. 52, 55-56; P. Exs. 7 and 26. The remainder is irrelevant.
These proposed findings have been rejected in findings of fact 79-86.
The first four sentences, while true, are not adopted as findings of fact because of little help in resolving the question of which expert to believe. Both parties have submitted proposed findings of fact concerning the shifting bases of expert opinion. About all that can be concluded from these proposed findings, all of which are true, is that the accounting definitions are so unclear and loose that experts have difficulty finding their way. The next sentence is true, and is adopted by reference.
Although the testimony cited would lead to the finding that the Petitioners originally classified the sales tax differential on line 13, this is in conflict with testimony at T. 52 that the differential was originally reported in bad debts, line 7. Moreover, there is no entry on line 13 on the original submission. P. Exs. 2 and 22. The proposed finding to this extent is rejected for these reasons.
While the basis for Mr. Summer's ultimate opinion is relevant to this case, the path he took to that opinion is not. The formal hearing is de novo, and Mr. Summer's opinion at the hearing is the only one relevant.
While the proposed finding of fact is true, and is adopted by reference, the ultimate conclusion has been rejected because the payment mechanism was, in effect, by lump sum.
The first paragraph is cumulative to other findings of fact, and thus not necessary.
21. There is not sufficient evidence in the record to adopt the proposed finding that the original RPICC accounting by Tampa General Hospital was "consistent with the manner in which other hospitals report it."
This paragraph is an issue of law, not fact.
The proposed finding that the Hospital Cost Containment Board notified Tampa General Hospital that it "intended to review Petitioner's records" has been rejected by findings of fact 19-21. Moreover, notice of intent to review records is irrelevant. The notice required by the rule is notice that the report of April 23, 1987, did not conform to FHURS manual accounting classifications.
While it is true that the July 17, 1987, memorandum was a preliminary document with respect to the amount of distribution that might be received ultimately by a hospital, it was preliminary only with respect to changes that might occur due to corrections filed by individual hospitals that elected to file such a change pursuant to the opportunity afforded by section 12 chapter 87-92, Laws of Florida. There was no reason for it to be preliminary with respect to reliance by the Hospital Cost Containment Board upon the fiscal year 1986 actual reports filed by hospitals that were already final and would not be changed by a new correction.
All sentences after the first two are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference. However, the proposed finding that the RPICC cost reports were "like those required by Medicare and Medicaid" is rejected because the RPICC cost reports were not used to settle up at the end of the year.
The sentences in this paragraph are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference.
The record in this case does not explain how the NCG system works. Thus, this proposed finding of fact must be rejected.
These proposed findings of fact are not supported by the record. It appears that cost reports were not used to settle up or in the manner used by cost reports in the Medicaid and Medicare programs.
34 and 35. These proposed findings accurately reflect the assumed facts that underlie the opinions at the hearing of Mr. Summers and Mr. Bracher, and are adopted by reference. This is not, however, an adoption as fact of the matters which form the basis of opinions.
36. These proposed findings are essentially arguments of law that have been considered in the conclusions of law.
COPIES FURNISHED:
John H. Parker, Jr., Esquire 1200 Carnegie Building
133 Carnegie Way Atlanta, Georgia 30303
Gary Walker, Esquire
Hospital Cost Containment Board
325 John Knox Road Building L, Suite 101 Tallahassee, Florida 32303
James J. Bracher Executive Director
Hospital Cost Containment Board
325 John Knox Road Building L, Room 101 Tallahassee, Florida 32303
Gregory L. Coler, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
| Issue Date | Proceedings |
|---|---|
| Mar. 09, 1988 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 09, 1988 | Recommended Order | Recommended Hospital Cost Containment Board confirm revision to report conforms with FHURS, deny recalculation of Public Medical Assistance Trust Fund for Regional Perinatal Intensive Care Center, and recalculate indigent care distribution. |
