STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HALIFAX MEDICAL CENTER, )
)
Petitioner, )
)
vs. ) CASE NO. 89-1278
) THE DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Stephen F. Dean, held a formal hearing in the above- styled case on May 4 and 5, 1989, in Tallahassee, Florida.
APPEARANCES
For Petitioner: Theodore E. Mack, Esquire
Cobb Cole & Bell
315 South Calhoun Street, Suite 500 Tallahassee, Florida 32301
For Respondent: Carl B. Morstadt, Esquire
Assistant General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700 STATEMENT OF THE ISSUES
The principal factual and legal issue is whether HRS properly interpreted Chapter 88-294, Laws of Florida, to exclude the use of any data provided after July 1, 1988 to compute the disproportionate share distribution.
HRS asserts that it transmitted the correct data for computation of the disproportionate share distribution to the Hospital Cost Containment Board (now Health Care Cost Containment Board-HCCCB) based upon information reported to it by Halifax prior to July 1, 1988 as required by law. HRS further asserts the Medicaid per diem rate of $465.82 for Halifax was established utilizing information reported in August of 1988, and that information cannot be utilized in calculating the disproportionate share distribution.
The issues are:
Whether Chapter 89-294, Laws of Florida, precludes using data reported after July 1, 1988 in computing the disproportionate share distribution (DSD).
Whether $347.93 is the correct rate to be utilized for calculation of the disproportionate share distribution.
Whether the HCCCB allowed other hospitals to submit data after July 1, 1988.
Whether correct raw data submitted in reports or schedules other than the one required for computation of the Medicaid per diem rate can be used to compute the disproportionate share distribution.
PRELIMINARY STATEMENT
Petitioner introduced Exhibits 6 through 17 and 25 which were received into evidence except for Exhibit 25 and Respondent introduced Exhibits 1 through 5,
18 through 24, and 26 which were received into evidence except for Exhibits 23 and 24. The following witnesses testified at the hearing: Edwin Ellis Howell,
R. Stephen LaBell, William Summers, Gary Clarke, Carlton Dyke Snipes and Thomas
Wallace.
FINDINGS OF FACT
Notice of intended agency action was received by the Petitioner, Halifax Medical Center (Halifax), by a letter from HRS dated February 6, 1989. A Petition for Formal Administrative Hearing was filed timely by Halifax with HRS on March 3, 1989 requesting an administrative hearing on the agency's computation of its disproportionate share distribution (DSD). (See Petition, paragraph four and Exhibit "4".)
Halifax operates a hospital at 303 North Clyde Morris Boulevard, Daytona Beach, Florida. Halifax is a Florida Medicaid provider which serves Medicaid recipients and is eligible for reimbursement under the Florida Medicaid program's hospital reimbursement plan. (See Petition, paragraph two and Pre- Hearing Stipulation, paragraph five.)
The Respondent, Department of Health and Rehabilitative Services (HRS), is a state agency designated to administer Florida's Medicaid program pursuant to Chapter 409.266, et. seq., Florida Statutes. The Medicaid program is governed by state and federal laws, rules, and regulations. HRS and HCCCB are designated to administer the provisions of Chapter 88-294, Laws of Florida, (See Petition, paragraph one and Pre-Hearing Stipulation, paragraph four and Chapter 88-294, Laws of Florida.)
The HCCCB, a state agency, was the Respondent in DOAH case number 89- 1143H, which was consolidated with this case number. Based on the representation that HCCCB would recompute the disproportionate share distribution based upon data received from HRS, the HCCCB was dismissed and Case No. 89-1143H was closed by order of the Hearing Officer dated April 14, 1989. (Order 4/14/89)
Pursuant to the Federal Omnibus Budget Reconciliation Act of 1986 ("OBRA"), HRS is required to provide disproportionate share distributions of money to Medicaid hospital providers who provide a higher percentage of the Medicaid and charity days of care. (See Pre-Hearing Stipulation, paragraph six)
OBRA allows flexibility by the states in payment methodology, but requires that hospitals meet federal minimum requirements to receive payments. If a hospital did not qualify under state law, but did qualify under OBRA, the
Florida Disproportionate Share Program included those hospitals under the federal minimum criteria to satisfy federal requirements. (See transcript, pages 58-62 and 245-247.)
Chapter 88-294, Laws of Florida, sets forth the methodology for calculating the disproportionate share distribution amount for hospitals meeting the state's eligibility requirements.
Chapter 88-294, Laws of Florida, became effective on July 1, 1988 and provided that the disproportionate share distribution be calculated using data required to have been reported by hospitals for other purposes on or before July 1, 1988. (See Prehearing Stipulation, paragraph nine.)
In the previous year, Section 12, paragraph five of Chapter 87-92, Laws of Florida, making distributions to hospitals from the Public Medical Assistance Trust Fund, allowed a ninety (90) day grace period in which a hospital could amend data after the effective day of the act.
As a result of the ninety (90) day grace period in the 1987 legislation, an inordinate number of delays and problems were experienced in calculating hospital distributions. (See transcript, pages 72-73, 180, 196-197, 217-218, and 232-235, and Exhibit "20," and Chapter 87-92, Laws of Florida, Section 12, paragraph five.)
Representatives from the Florida House of Representatives, Senate, HRS, HCCCB, and hospital associations met on July 12, 1988 and all agreed on the procedures for implementing the disproportionate share distribution. An important issue was avoidance of the prior years' delays. (See transcript, pages 193-196, 228-232, 263-264 and Exhibit "18".)
It was determined at the July 12, 1988 meeting that neither HRS nor HCCCB would accept amended disproportionate share data from hospitals after June 30, 1988. (See transcript, pages 193-196, and 230-232.)
The disproportionate share distribution for 1988 was calculated for Halifax utilizing HCCCB data and the per diem rate established by HRS for Medicaid. (Prehearing Stipulation) HRS determined Halifax's Medicaid per diem rate on May 31, 1988, from data submitted by Halifax on January 15, 1988. (Prehearing Stipulation; T-35; E-4-5) This was the most recent period reported and Halifax received notice of the per diem rate shortly after May 31, 1988. The per diem rate was effective July 1, 1988. (Prehearing Stipulation; T-27, 29; E-2, 5, 6)
No one knew when the January 15, 1988 cost report was filed that the Medicaid per diem rate would be used for calculating the disproportionate share distribution. (T-125)
Hospitals, including Halifax, were required by law to submit the cost report which is an audited report. Halifax admits it knew there was a problem with the Medicaid rate by no later than mid-June, because its rate had dropped. (T-124; E-5)
Halifax had time to correct the data and resubmit it prior to July 1, 1988.
The error in the data submitted by Halifax resulted from its failure to report cost data on psychiatric care on Schedule D-1. Halifax's cost report
contained the correct number of Medicaid days, but its psychiatric unit days were not reported separately from its routine hospital days on its Schedule D-1. Halifax had broken out its psychiatric data on the S-3 worksheet but the data was not included in Schedule D-1 for Medicaid purposes. (T-126-138, 149-153; E- 6)
Individual cost items cannot be identified without the appropriate schedules. (See transcript, page 159.) It is the provider's responsibility to put the costs and days in the schedules. It is not HRS's responsibility to pull costs and days from one place in a cost report and put them where they belong. (See transcript, page 153.) Accordingly, Halifax received the lower per diem for routine hospital days rather than the higher per diem for psychiatric days. (See transcript, pages 151-152 and Exhibits "6" and "7", Schedules D-1.)
It is understood in the hospital industry that Schedule D-1 is the proper place to report hospital costs. (See transcript, page 160.)
Unlike Chapter 88-294, Laws of Florida, Rule 10C-7.0391, Florida Administrative Code, allows a hospital to submit an amended cost report up to three years after the Medicaid reimbursement rate was established. HRS does not interpret this rule to create an extension of time in which to file or amend reports for disproportionate share distribution purposes. (See transcript, pages 50-51, 89, 285-286, and 305).
Halifax submitted an amended cost report to HRS on July 21, 1988. (T- 30, 124; E-3, 7) The amended cost report was used for retroactive adjustment of Medicaid per diem rates (T-43, 139; E-8), a fact known to hospitals.
(Prehearing Stipulation; T-43; E-1) For purposes of Medicaid reimbursement, Halifax's amended cost report was utilized by HRS to establish a Medicaid per diem rate of $465.82 for Halifax on August 31, 1988. (Prehearing Stipulation; T-26; E-1)
Although HRS recalculated the Medicaid per diem rate using data in Halifax's amended report, Halifax was notified in February of 1989 that its DSD was $322,586 based upon a per diem rate of $347.93 computed on the basis of the data contained in its original report filed in January 1988. (T-140) If Halifax's DSD were calculated using the amended Medicaid per diem rate based upon data filed on July 21, 1988, the DSD would be $431,597. 1/ (See transcript, page 76 and Exhibits "1" and "5".)
Medicaid cost reports are not normally reported to the HCCCB. (T-182, 183). HRS did not transmit Medicaid per diem rates to the HCCCB until August or September of 1988, and HRS received the amended cost report from Halifax before it transmitted the data to HCCCB.
HRS interpreted Chapter 88-294, Laws of Florida, to preclude use of data received from the hospitals after July 1, 1988 to compute DSD. (T-37, 80- 81, 232, 257-259, 308-310; E-10) The HRS interpretation of Chapter 88-294, Laws of Florida, was based upon the need for administrative simplicity, the HRS understanding of legislative intent to avoid the prior year's delays, and the HRS reading of the statute. (T-307) Its interpretation is entitled to great weight.
Section 30, Chapter 88-294, Laws of Florida, had an effective date of July 1, 1988; was approved by the Governor July 6, 1988; and filed in the Office of the Secretary of State on July 6, 1988. It would have been impossible for
HRS to have noticed the public of the preclusion of data filed after July 1, 1988 prior to the effective date of the Disproportionate Share Program. (See Chapter 88-294, Laws of Florida, and transcript, page 276.)
HRS published notice of its revised payment methodology for inpatient hospital services in the Florida Administrative Weekly on September 23, 1988. The rule became effective January 10, 1989 and is codified at 10C-7.0391, Florida Administrative Code. The rule incorporates by reference the Florida Title XIX Inpatient Hospital Reimbursement Plan, and uses basically the same language as Chapter 88-294, Laws of Florida. (See transcript, pages 89-91 and Exhibit "9".)
The rule was effective before the first disproportionate share payments were made on February 6, 1989.
HCCCB used data developed after July 1, 1988 in its calculations of the disproportionate share distribution (T-165; E-10, 11, 12, 14, 15)
The HCCCB audited Desoto Hospital and Lake Wales Hospital after July 1, 1988 and utilized the audit findings instead of the data reported by HRS to determine the disproportionate share distribution for those hospitals. (T-166, 169-170, 174; E-14)
The HCCCB settled a dispute with Palm Springs Hospital in DOAH Case Number 89-0633H involving issues similar to those involved in this case by agreeing to utilize data provided after July 1, 1988. (T-175-176; E-15)
HRS made two "technical" adjustments by redistributing payments after the disqualification of previously participating hospitals and to correct its own mistakes. (T-235-236; E-11)
George E. Weems Hospital was one of four hospitals which were Medicaid providers without a Medicaid per diem rate and the only one which met the state's qualifications for disproportionate share payments. HRS accidentally left Weems Hospital off the distribution list; however, when this was discovered, HRS corrected the error and posted a Medicaid per diem rate for Weems Hospital of $484.71. Weems Hospital submitted no amended data after July 1, 1988. Weems Hospital made no error in reporting its costs to HRS. (See transcript, pages 81-82, 84, 97, 104, and 114.)
HRS credited St. Mary's Hospital with the wrong Medicaid per diem rate. Prior to July 1, 1988, St. Mary's Hospital had been granted an interim rate to be effective July 1, 1988. By oversight, HRS did not utilize the interim rate in computing DSD. When this was discovered, HRS corrected the error after July 1, 1988. St. Mary's Hospital made no error in reporting its costs to HRS and submitted no amended reports. (See transcript, pages 82, 84, 97, 104, 114, and 164.)
When HRS became aware of a divergence in policy of the two agencies, HRS and the HCCCB discussed using data submitted after July 1, 1988 to compute the DSD. (T-178)
Based upon his understanding of a meeting held between the executive director of the HCCCB and the head of the HRS Medicaid program, a representative of the HCCCB testified that the HCCCB intended to reverse its position on the changes made for Desoto, Lake Wales, and Palm Springs Hospitals. (T-188, 198- 199, 201)
HCCCB attempted to settle two cases involving disputes over disproportionate share distributions. These settlements would have involved using data developed after July 1, 1988. HCCCB has withdrawn or attempted to withdraw from these settlements. HCCCB's action in at least one of these cases is currently being appealed to the appellate court. (Official Notice of Pending Court Proceedings)
HRS realizes that its position means that some hospitals will not receive as great a disproportionate share distribution as they would have received and other hospitals, such as Halifax, will receive less. HRS refuses to use corrections of submitted data in computing DSD. (T-219, 316)
HRS has authority to direct payment of disproportionate share distributions. HRS plans to cancel or prevent payment of the check that would have gone to DeSoto Hospital and to cut a check for Lake Wales Hospital that has never been sent but which was based on their pre-HCCCB audited data received prior to July 1, 1988. (See transcript, page 303.)
HRS has attempted to treat all qualifying hospitals equally and has uniformly applied the statutory cutoff date for the application of data used to compute each such hospital's disproportionate share. (See transcript, pages 304-305.
HRS will propose to the Legislature that it be the sole agency to determine the disproportionate share distribution and have the authority to recover over payments discovered by audits. (T-265, 266, 319)
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of these proceedings. Section 120.57(1), Florida Statutes.
Section 30 of Chapter 88-294, Laws of Florida, sets forth the requirements and methodology for the Disproportionate Share Program as follows:
Section 30. DISPROPORTIONATE SHARE
PROGRAM. Effective July 1, 1988, and for the 1988-89 fiscal year only, the department (HRS) shall distribute, pursuant to this section, moneys appropriated from the Public Medical Assistance Trust Fund to hospitals providing a disproportionate share of Medicaid or charity care services by increasing Medicaid per diem payments to hospitals as required by the Federal Omnibus Budget Reconciliation Act of 1987.
Notwithstanding the provisions of section 409.267, Florida Statutes, counties shall be exempt from contributing toward the cost of this special reimbursement for hospitals serving a disproportionate share of low income patients.
DEFINITIONS. As used in this section:
"Base Medicaid per diem" means the hospital's most recent Medicaid per diem rate
as determined by the department from the hospital's Medicaid cost report. The base Medicaid per diem rate shall not include any additional per diem increases received as a result of the disproportionate share distribution.
"Board" means the Hospital Cost Containment Board as established in section 395.503, Florida Statutes.
"Department" means the Department of Health and Rehabilitative Services.
"Disproportionate share rate" means a rate of increase in the Medicaid per diem rate pursuant to the Federal Omnibus Budget Reconciliation Act of 1987 as calculated under this section.
METHODOLOGY. The board shall utilize the following criteria to determine a hospital's disproportionate share rate:
(a) In computing the disproportionate share rate, the following minimum requirements shall apply:
3. The fiscal base year used to determine a hospital's Medicaid and charity care days shall be the most recent audited actual experience as reported to the board prior to July 1, 1988.
4.(b) The following formula shall be utilized by the board to calculate the maximum disproportionate share rate used to increase a qualified hospital's Medicaid per diem rate:
where:
CCD MD
DSR = (---) x 4.5 + (---)
APD APD
APD = adjusted patient days. CCD = charity care days.
DSR = disproportionate share rate. MD = Medicaid days.
Chapter 88-294, Laws of Florida, was approved by the Governor July 6, 1988 and filed in the Office of the Secretary of State on July 6, 1988. HRS could not implement rules notifying providers of the July 1, 1988 cutoff for receipt of data before the effective date of the law. (See Chapter 88-294, Laws of Florida, and transcript, page 276.)
HRS published notice of its rules in the Florida Administrative Weekly on September 23, 1988. The rule incorporates by reference the Florida Title XIX Inpatient Hospital Reimbursement Plan and uses basically the same language as Chapter 88-294, Laws of Florida. The rule, Rule 10C-7.0391, Florida Administrative Code, became effective January 10, 1989 before the first disproportionate share payments were made on February 6, 1989. (See transcript, pages 89-91 and Exhibit "9".)
The position of HRS is that the use of Medicaid cost report data submitted after July 1, 1988, is precluded by the language of Section 30, (2)(a)3, of Chapter 88-294, Laws of Florida, which provides:
3. The fiscal base year used to determine a hospital's Medicaid and charity care days shall be the most recent audited actual experience as reported to the board prior to July 1, 1988. (emphasis supplied)
In determining if the HRS interpretation is a permissible one, an analysis of the language of Chapter 88-294 must be made and examined along with the facts bearing on the situation.
The intent of the law is to increase Medicaid per diem payments to hospitals providing a disproportionate share of Medicaid or charity care services. A statutory formula is used to compute the disproportionate share rate. This rate was based upon data required to be regularly submitted by hospitals for other purposes before July 1, each year.
The facts reveal that permitting hospitals to amend their reports in 1987 had delayed and complicated distribution of monies. Many of the recipients were dependent upon a rapid distribution of the funds to stay in business. The prior year's delays were a matter of legislative inquiry and concern.
The HRS exclusion of data received after July 1, 1988, in computing DSD is permissible because the hospitals had a standing requirement to submit the reports accurately prior to July 1, 1988; there had been delays and problems caused by amendment of similar reports the year before; the Legislature eliminated the grace period included in the prior year's law in the 1988 law; and statute specifically calls for the use of data "as reported prior to July 1, 1988. (emphasis supplied)
Section 30(2)(a)(3), Chapter 88-294, Laws of Florida, defines the fiscal base year used to determine a hospital's Medicaid and charity care days as the most recent audit actual experience reported prior to July 1, 1988, as reported to the board prior to July 1, 1988. The number of Medicaid and charity days are used to compute the DSD. The July 1, 1988 cutoff provides consistency with the cutoff date used by the HCCCB, administrative simplicity, and matches the effective date of Section 30, Chapter 88-294, Laws of Florida. (See transcript, pages 295-296.)
To eliminate the delays in finalizing distribution of DSD, a cutoff date was necessary. Cutoff dates appear arbitrary; however, they are necessary and appropriate when applied uniformly.
The evidence appears to indicate several cases in which the rule was not uniformly applied; however, in every case the determination to receive data after July 1, 1988, was made by the HCCCB, an agency separate from HRS, based upon reports and information developed by HCCCB after July 1, 1988. HRS made no changes based upon the use of data submitted after July 1, 1988, although, it did alter the DSD for several hospitals which were in error due to the mistakes of HRS.
With regard to settlements by HCCCB of cases in which it was involved which would have utilized data submitted after July 1, 1988, HCCCB has withdrawn
or attempted to withdraw from these settlements. At least one of these cases is currently being appealed to the appellate court.
HRS has authority to direct payment of disproportionate share distributions. HRS plans to void the check that would have gone to DeSoto Hospital and to approve a check for Lake Wales Hospital that has never been sent based on their pre-HCCCB audited data received prior to July 1, 1988. (See transcript, page 303.)
HRS has applied the cutoff date uniformly with regard to excluding data submitted by the hospitals after July 1, 1988.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the petition be denied and the disproportionate share distribution to Halifax not be altered
DONE and ORDERED this 19th day of July, 1989, in Tallahassee, Florida.
STEPHEN F. DEAN
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 19th day of July, 1989.
ENDNOTE
1/ The $431,598 is based upon the Department's proposed findings and is larger than the figure presented by Halifax. It is taken as the more accurate statement of the amount in controversy.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-1278
Annex A
The Petitioner's Proposed Findings were adopted or rejected as indicated:
Paragraphs 1-5 Adopted
Paragraphs 6-8 Substantially rewritten
Paragraphs 9 & 10 Irrelevant
Paragraphs 11-18 Adopted
Paragraph 19 True, but it is a fact leading to findings in Paragraph 18
Paragraphs 20-26 Substantially rewritten Paragraphs 27-31 Adopted
Paragraph 32 Conclusion of Law
Paragraphs 33 & 34 Irrelevant
Paragraph 35 Argument
Paragraphs 36-39 Adopted
Paragraphs 40 & 41 Argument
Paragraphs 42 & 43 Irrelevant
Paragraphs 44-52 Adopted
Paragraphs 53 Irrelevant
Paragraphs 54-59 Adopted, Substantially rewritten Paragraphs 60 & 61 Irrelevant
Paragraphs 62 & 63 Adopted
Paragraph 64 Irrelevant
The Respondent's Proposed Findings were adopted or rejected as indicated: Paragraphs 1-15 Adopted
Paragraphs 16 & 17 Substantially rewritten
Paragraph 18 Irrelevant
Paragraph 19 Duplicates Paragraph 16
Paragraph 20 Substantially rewritten
Paragraphs 21-26 Irrelevant, restates math calculations Paragraph 27 Adopted; however, $531,597 is a misprint
of the transcript. The correct amount is
$431,597. See Tx-76, line 2.
Paragraphs 28-40 Adopted
Paragraph 41 Irrelevant
Paragraphs 42-45 Adopted
Paragraph 46 Irrelevant
Paragraphs 47-52 Adopted
Paragraph 53 Irrelevant
Paragraphs 54-56 Adopted
Paragraph 57 Irrelevant
Paragraphs 58-62 Irrelevant
Paragraph 63 Adopted
Paragraphs 64,65 Argument
Paragraphs 66-68 Adopted
COPIES FURNISHED:
Theodore E. Mack, Esquire Cobb Cole & Bell
Suite 500
315 South Calhoun Street Tallahassee, Florida 32301
Carl Morstadt, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
John Miller, Esquire General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
| Issue Date | Proceedings |
|---|---|
| Jul. 19, 1989 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 06, 1989 | Agency Final Order | |
| Jul. 19, 1989 | Recommended Order | OBRA, disproportionate share calculations, amendment of reports prohibited, error in reporting, allowed to correct for Medicaid purposes but not Disproportionate Share Distribution |
