STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ABC HOME HEALTH SERVICES, ) INC., )

)

Petitioner, )

)

vs. ) CASE NO. 90-0946

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William R. Cave, held a formal hearing in the above- captioned matter on April 12 and 13, 1990, in Tallahassee, Florida.

APPEARANCES

For Petitioner: R. Terry Rigsby, Esquire

F. Philip Blank, P.A.

204-B South Monroe Street Tallahassee, FL 32301

For Respondent: Edward Labrador, Esquire

Assistant General Counsel 2727 Mahan Drive, Suite 103

Tallahassee, FL 32308 STATEMENT OF THE ISSUE

Whether ABC Home Health Services, Inc. should be issued certificate of need number 6015 for a medicare certified home health agency in Department of Health and Rehabilitative Services' District Four.

PRELIMINARY STATEMENT

Pursuant to Sections 381.701 - 381-715, Florida Statutes, a home health provider must obtain a certificate of need (CON) from the Department of Health and Rehabilitative Services (HRS) prior to offering Medicare home health services or operating a Medicare certified home health agency. ABC Home Health Services, Inc. (ABC) timely filed a CON application (#6015) to establish and operate a Medicare certified home health agency in Duval County within HRS District Four.

Subsequent to a statutory and rule criteria review of ABC's CON application, HRS concluded that ABC's application did not sufficiently comply with statutory and rule standards to warrant the issuance of a certificate of

need. Pursuant to Section 120.57, Florida Statutes, ABC filed a petition challenging HRS' denial of its CON.

Prior to the final hearing, the parties entered into a prehearing stipulation where the parties agreed that the following statutory criteria were deemed as having been met or otherwise were not applicable in the case:

Section 381.705(1)(b), Florida Statutes, to the extent of need for the project as evidenced by the extent of utilization of like and existing services;

Section 381.705(1)(c), Florida Statutes; Section 381.705(1)(d), Florida Statutes; Section 381.705(1)(e), Florida Statutes; Section 381.705(1)(f), Florida Statutes; Section 381.705(1)(g), Florida Statutes;

Section 381.705(1)(h), Florida Statutes, to the extent of effects project will have on the clinical needs of health professional training programs; to the extent to which services will be accessible to schools for health professions in the service district;

Section 381.705(1)(j), Florida Statutes; Section 381.705(1)(k), Florida Statutes; Section 381.705(1)(m), Florida Statutes; Section 381.705(2), Florida Statutes; and Section 381.705(3), Florida Statutes.

By stipulation of the parties, the following portions of Section 381.705, Florida Statutes, are pertinent to this proceeding:

Section 381.705(1)(a), Florida Statutes;

Section 381.705(1)(b), Florida Statutes, concerning the availability, quality of care, efficiency and appropriateness of like and existing services;

Section 381.705(l)(h), Florida Statutes, concerning the availability of resources and funds, and the extent to which the proposed services will be accessible to all residents of the service district;

Section 381.705(1)(i), Florida Statutes; Section 381.705(1)(l), Florida Statutes; Section 381.705(1)(n), Florida Statutes;

At the hearing, ABC presented the testimony of Newell D. Yarborough, Jr., an expert in health planning, Arthur DeLozier, an expert in third party reimbursement and health care financial analysis and Ann C. Denton, an expert in home health nursing and an Acquired Immune Deficiency Syndrome (AIDS) certified instructor. ABC exhibits 1 through 8 were received into evidence.

HRS presented the testimony of Elizabeth Dudek, an expert in health planning and Gary Clark, an expert in health planning, medical program administration and policy and as a public health expert in AIDS. HRS exhibits 1 through 5, 7 and 8 were received into evidence.

A transcript of the proceeding was filed with the Division of Administrative Hearings on April 25, 1990. The parties requested, and were granted, additional time to submit posthearing proposed findings of fact and conclusion of law and in accordance with Rule 22I-6.031(2), Florida Administrative Code the time frame for submission of the Recommended Order by

the hearing officer under Rule 28-5.402, Florida Administrative Code was waived. The parties timely filed their posthearing proposed findings of fact and conclusions of law in accordance with the extended time frame. A ruling on each proposed finding of fact has been made as reflected in an Appendix to the Recommended Order.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. The letter of intent and authorizing board resolution to establish a new Medicare certified home health agency filed by ABC for District Four for the September, 1989 batching cycle was timely filed with HRS and the Health Planning Council for Northeast Florida, Inc., and met all statutory and rule requirements for filing.

   
   

2. The CON application to establish a new Medicare certified home health agency filed by ABC for District Four for the September, 1989 batching cycle was timely filed with HRS and the Health Planning Council for Northeast Florida, Inc.

   
   

3. The CON application to establish a new Medicare certified home health agency for District Four for the September, 1989 batching cycle was deemed complete and accepted for review by HRS, effective November 13, 1989.

   
   

4. There is a numeric need for one additional Medicare certified home health agency in District Four as determined by HRS and published pursuant to Rule 10-5.011(1)(d), Florida Administrative Code.

   
   

   Local Health Plan

   
   

5. The 1989-90 CON Allocation Factors Report for HRS District Four (Health Plan) is the applicable health plan with regards to this proceeding.

   
   

6. In its application ABC addressed the recommendations found in the Health Plan.

   
   

7. The Health Plan recognizes that under the new methodology for determining numeric need, a licensed home health agency within an HRS district could serve any and all counties within the district. However, the Health Plan contains recommendations for allocating home health agencies. The Health Plan makes the following recommendations:

   
   

   1. Geographic Preference

      Home health agencies should be allocated to counties on the following basis:

      1. Preference should go to applicants who will establish their program in a county which

         does not have any CON approved agencies or subunits based in the county.

      2. Consideration should be given to counties with a low number of Medicare visits per 1,000 persons 65 years and older.

   2. Competing Applications

      In the case of competing applications for the same or similar geographic area, preference should be given to those applicants which demonstrate:

      1. They will meet identified needs in the most cost-effective manner.

      2. They are addressing a current or potential geographic access problem in the district.

      3. They will serve the widest spectrum of the population, including the medically indigent.

      4. They have written agreements with a broad spectrum of local hospitals, nursing homes, mental health resources and/or other service providers in order to help ensure continuity of care.

      5. They demonstrate in their CON application how they will comply with any conditions placed

         on the CONs.

      6. They will serve AIDS patients.

      
      

8. ABC proposes to locate its agency office in Duval County because it contains medical centers, hospitals with discharge planners and physician staff for referrals, and because of enhanced recruiting and retaining of appropriate staff. However, it proposes to serve all patients referred to it in all counties located throughout District Four, including Baker County.

   
   

9. Baker County has no CON approved home health agency based within the county. However, it is presently being served by home health agencies based in Duval County.

   
   

10. Because of its small population, with a relatively low percentage of the population being 65 years old or older, its distance from hospitals and the recruiting and staffing problems it would engender, it is doubtful that Baker County could support a main office for a home health care agency. In fact, the 1988 Local Health Plan indicated that Baker County should probably not have a home health agency physically located within the county.

    
    

11. Baker County has the lowest number of citizens 65 years of age or older and the lowest usage rate for home health agencies. There is no data or documentation to show why the usage of home health services in Baker County is low. However, HRS makes the assumption from the usage rate only that Baker County is underserved.

    
    

12. Duval County is not considered as being underserved in terms of Medicare units.

    
    

13. By locating in Duval County, ABC does not specifically comply with preference 1A or 1B. However, ABC has proposed to serve all patients within District Four referred to it regardless of where the patient is located, and regardless of the patient's payor class. (Medicare, Medicaid, private pay or indigent)

    
    

14. While 1A and 1B of the Health Plan's recommendation is concerned with geographic preferences, 2A through 2F of the Health Plan's recommendations are preferences that relate mainly to situations involving competing applications in the same batch. ABC meets a majority of those preferences, including:

    1A. ABC will be among the lowest in cost of the existing providers in District Four.

    1B. ABC goes to the patient and has stated it will serve all of the patients within District Four referred to it.

    1C. ABC proposed to serve all patients referred to it, including the medically indigent and medicaid. Because of the situation with Medicaid patients, ABC did not project any Medicaid patients. However, ABC proposed to serve all patients on which it has referrals including Medicaid patients.

    1D. ABC did not have written referrals with hospital, nursing homes and other resources for patient referrals. However, ABC stated that this was its standard operating procedure and if granted a CON they would establish written referrals.

    1E. ABC does not specifically address how they would comply with any condition placed on the CON.

    1F. Again, ABC proposed to serve all patients within District Four referred to it, including AIDS and HIV patients. Since ABC has no control over which patients are referred to it, then its payor mix is just a projection. Whether an AIDS or HIV patient is on Medicare, Medicaid, private pay or medically indigent ABC has proposed to served them. In fact, it has a corporate policy to train and educate its employees in this area of service. ABC has shown that it intends to serve AIDS and HIV patients on which it has referrals.

    
    

    State Health Plan

    
    

15. The 1989 Florida State Health Plan is the applicable health plan in this proceeding. The State Health Plan is a comprehensive three-volume document which describes Florida's health system and the services available to Florida residents.

    
    

16. Specifically, the State Health Plan addresses certain preferences which HRS uses in reviewing home health CON applicants. They are as follows:

    
    

    1. Preference shall be given to an applicant proposing to serve AIDS patients.

    2. Preference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area.

    3. Preference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same HRS service district and proposing to serve such patients within its market area.

    4. Preference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies.

    5. Preference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction.

    6. Preference shall be given to an applicant proposing a comprehensive quality assurance program and proposing to be accredited by the Joint Commission on Accreditation of Healthcare Organizations.

    
    

17. As to 16A, ABC has proposed to serve all patients in District Four that are referred to it by referring agencies, including AIDS and HIV patients regardless of their of payor class. ABC has a stated commitment to serving AIDS and HIV patients.

    
    

18. The evidence establishes that of all AIDS cases reported in District Four, Duval County has approximately 69 percent. District-wide 52 percent of all reported AIDS cases have ended in death whereas in Duval County the percentage is 56.

    
    

19. Very few AIDS patients are medicare eligible. A higher percentage of AIDS patients in Duval County are served as indigents or under Medicaid, notwithstanding HRS' Medicaid Project AIDS Care.

    
    

20. As to 16B, ABC proposes to provide the full range of services, including high technology services. ABC included in it application excerpts from its high tech policy manual. There was no data available from local health council on what high tech services are available from existing providers.

    
    

21. As to 16C, while ABC's payor mix does not indicate that they would be serving a disproportionate share of Medicaid and indigent patients there is no data indicating what access problem, if any, exists for Medicaid and indigent case patients needing home health care services. ABC proposes service to all patients within District Four that are referred to it be referring agencies.

    
    

22. As to 16D, while there is no data available that any county within District Four is in fact underserved, ABC has stated that it will serve all counties in District Four and there is no evidence to show that ABC will not serve all counties in District Four.

    
    

23. As to 16E, ABC has indicated it will comply with this requirement and there is no evidence to show that ABC will not furnish the data in terms of consumer survey response.

    
    

24. As to 16F, ABC has a quality assurance program in place and HRS agreed that ABC could provide quality of care to its patients.

    
    

    Statutory Criteria

    
    

    Section 381.705(1)(a), Florida Statutes - Availability and Access to Services

    
    

25. District Four has 20 Medicare certified home health agencies, with five located in Duval County and, one approved but not yet established Medicare certified home health agency. However, as stated in the State Agency Action Report (SAAR) there is a market for another home health agency in District Four as determined by the fixed need pool.

26. ABC's stated commitment to serve all counties in District Four and to serve all patients in those counties referred to it by referring agencies regardless of whether the patient's payor class should enhance the convenience and accessibility to patients.

    
    

    Section 381.705(1)(b), Florida Statutes - Quality of Care, Efficiency and Adequacy of Existing Area Providers

    
    

27. There is no specific data available from HRS concerning the quality of care, efficiency and adequacy of services being provided by existing care providers in District Four. ABC did not conduct a survey to assess the existence of quality care problems in District Four. However, the existence of quality care problems in District Four would be difficult to gauge since the in- home provision of services makes them largely beyond public or professional scrutiny. In fact, generally, with few exceptions, application for home health agencies do not address this criterion.

    
    

28. The parties stipulated that the provisions of Section 381.705(1)(c) through (g), Florida Statutes were deemed to have been met or otherwise not applicable.

    
    

    Section 381.705(1)(h), Florida Statutes -

    Availability of Resources and Funds and Accessibility of Service to all Residents of Service District

    
    

29. The evidence establishes that ABC has sufficient resources and funds to accomplish what it proposes.

    
    

30. HRS has no data suggesting significant access problems for Medicaid patients to home health care nor was there sufficient evidence that AIDS or HIV patients suffer an access problem for home health care. However, due to improvements in terms of Medicaid reimbursement any access problem that may exist should be reduced.

    
    

31. ABC has a stated commitment to serving all patients in District Four regardless of the patient's payor class. This commitment should improve the accessibility of home health care to underserved patients if, in fact, there is an access problem for the Medicaid, AIDS, HIV or indigent patients.

    
    

    Section 389.705(1)(i), Florida Statutes - Financial Feasibility

    
    

32. ABC projects it will do 12,000 home visits in year one and 14,000 home visits in year two. These projections are based on ABC's experiences in other districts, particularly District Three. These projections also represent approximately 25 and 29 percent of the new visit pool market for each year, respectively. However, ABC clients would not necessarily all come from the new visit pool. ABC's projected home care visits are reasonable based on its experience in other Florida districts and its experience in other states, notwithstanding its lack of an established referral network in District Four and being a new entrant into the District Four market.

    
    

33. ABC's financials displayed in its application are reasonable and consistent with its Florida experience.

    
    

34. ABC's payor mix and visit each correlate to its actual Florida experience.

35. ABC's pro forma expenses for year one and year two are reasonable.

    
    

36. ABC projects a first year profit of $3,914 and a second year profit of

    $5,010 and after the second year, ABC should continue to show a profit.

    
    

37. ABC's proposed project will benefit ABC by allowing it to meet its long term goals.

    
    

38. ABC's existing Florida agencies are operating in financially sound manner and there is no reason to believe that ABC's proposed agency will not operate in the same manner.

    
    

39. ABC's liquidity ratio is 0.7 to one which means that ABC has excess current liabilities over current assets and is one factor used for determining the general health of a company.

    
    

40. ABC has an accumulated deficit of $651,836.

    
    

41. From all of the above, ABC's proposed agency is feasible in both the short term and the long term.

    
    

42. It was stipulated that Section 381.705(1)(j) and (k), Florida Statutes were deemed to have been met or otherwise inapplicable.

    
    

    Section 381.705(1)(l), Florida Statute - Impact on Competition

    
    

43. Since ABC has a stated commitment to serve all patients in all counties in District Four referred to it regardless of the payor class and is offering a full range of services, including high tech, its proposal should only serve to enhance competition within District Four, notwithstanding that the proposal is primarily a Medicare home health care provider which would not provide any financial competition.

    
    

44. The parties stipulated that Section 381.705(1)(m), Florida Statutes was deemed to have been met or otherwise inapplicable.

    
    

    Section 381.705(1)(n), Florida Statutes - Medicaid and Indigent Care

    
    

45. Very few medicaid and indigent patients are served by the existing agencies in District Four. Most of these patients are served by the Visiting Nurses Association (VNA) which is subsidized by United Way, local governments and other sources.

    
    

46. There is no data or documentation that Medicaid patients do not in fact have a significant access problem.

    
    

47. Medicare is the predominant payor source in Florida and is ABC's primary payor source even though ABC has a stated commitment to serve all patients regardless of payor class.

    
    

48. A high percentage of Florida's Medicaid budget for home health services is used for co-insurance for medicare. Therefore, Medicaid patients that are "dually eligible" are receiving home health care under Medicare.

49. Florida's Medicaid program does not reimburse for physical therapy, speech therapy or occupational therapy for adults.

    
    

50. In a Medicare certificate home health agency there is only a certain pool of profit available to serve Medicaid and indigent patients. Therefore, if the percentages of Medicaid service goes up then indigent or charity cases must suffer or the agency cannot operate in the "black".

    
    

51. While HRS usually places a condition on the CON concerning Medicaid services, a majority of the recently issued CONs for home health care had no such condition placed on them.

    
    

52. The parties stipulated that Section 381.705(2) and (3), Florida Statutes were deemed to have been met or otherwise inapplicable.

    
    

    State Agency Action Report (SAAR)

    
    

53. HRS up to and including, the home health care agency batching cycle immediately preceding the instant September 1989 batch, used not applicable (N/A) on those criteria that were not typically addressed by applicants or were not considered to be applicable to an applicant. HRS now enters a "no" in those situations but a "no" in this situation has no adverse or negative impact on HRS' decision.

    
    

54. Typically, approved applicants do not meet all the statutory criteria. Some of the criteria may be only partially met and some may not be met at all.

    
    

    CONCLUSIONS OF LAW

    
    

55. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter, this proceeding pursuant to Section 120.57(1), Florida Statutes.

    
    

56. ABC has the burden of establishing its entitlement to a CON for a home health care agency in HRS' District Four. Florida Department of Transportation

    v. J.W.C. Co., Inc. 396 So.2d 778 (1 DCA Fla. 1981); Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative Services, 475 So.2d 26 (1 DCA Fla. 1985). In determining whether a certificate of need should be granted, a balanced consideration of all statutory and rule criteria must be undertaken. Department of Health and Rehabilitative Services v. Johnson and Johnson, Id. The weight to be given to each criteria is not fixed, but varies depending on the facts of each case. North Ridge General Hospital v. NME Hospitals, 478 So.2d 1138 (1 DCA Fla. 1985); Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (1 DCA Fla. 1985).

    
    

57. At the hearing, HRS made an ore tenus motion to exclude certain testimony of Ann Denton relating to ABC's serving AIDS patients, on its policy of not permitting applicants to substantively amend an application after the agency has deemed it complete. A ruling was reserved on the motion and the testimony allowed so as to determine if these were valid grounds for the motion. After a review of the testimony it is clear that it did not constitute an amendment to ABC's application. See Manor Care, Inc. and Health Quest Corp. v. Department of Health and Rehabilitative Services, 558 So.2d 26 (1 DCA Fla. 1989).

58. Under the facts and circumstances of this case, as heretofore found, ABC shows that its proposal is consistent with the local and state health plans and the necessary statutory and rule criteria and is entitled to a certificate of need for a certified medicare home health care agency.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED:

That a final order be entered granting ABC's application for a certificate of need (CON No. 6015).

DONE and ENTERED this 26th day of October, 1990, in Tallahassee, Florida.

WILLIAM R. CAVE

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 26th day of October, 1990.

APPENDIX TO THE RECOMMENDED ORDER

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case.

Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, ABC

1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the finding of fact which so adopts the proposed finding of fact: 6(2,3); 7(8); 8(7,8,11); 9(8,10); 11(7,14); 15(4); 16(16,17,18,19); 17(16,18); 18(16,21); 19(16,22); 20- 21(23,24); 23(25); 25(4,25); 28-29(25-27); 31-38(29); 40-42(29); 45(32); 48- 52(33,34,35,36); 54-58(32,37,38,41); 61-64(43); 68-70(45,46,47); 72- 77(47,48,49); 79-81(47,49,50); 83(51); 85-87(53); 89(53); 90(54).

2. Proposed findings of fact 1-5, 10, 12-14, 22, 24, 26, 27, 30, 39, 43, 44,

46, 47, 53, 59, 60, 65-67, 71, 78, 82, 84, 88, 91 and 92 are unnecessary.

Specific Rulings of Proposed Findings of Fact Submitted by Respondent, HRS

1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 3-9(5,6,7,9,12,13,14); 12- 26(14,18,19); 28-29(15,16); 44-46(32) 48-51(39,40).

   
   

2. Findings of fact 1 and 2 are covered in the preliminary statement.

   
   

3. Proposed findings of fact 10, 11 as to the last 2 sentences, 27, 30, 31, 32 other than last sentence, 33, 35, 36 other than last sentence, 37, 38, 39, 41, 42, 47 and 52 are not supported by substantial competent evidence in the record.

   
   

4. The last two sentences of finding of fact 34 are adopted in finding of fact 25, otherwise not supported by substantial competent evidence in the record.

   
   

5. Proposed finding of fact 43 is unnecessary.

   
   

6. The first two sentences of proposed finding of fact 53 are adopted in finding of fact 36, otherwise not supported by substantial competent evidence in the record.

Copies furnished to:

R. Terry Rigsby, Esq.

F. Philip Bank, P.A.

204-B South Monroe Street Tallahassee, FL 32301

Edward Labrador, Esq. Assistant General Counsel 2727 Mahan Drive, Suite 103

Tallahassee, FL 32308

Sam Power, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, FL 32399-0700

Linda Harris, General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, FL 32399-0700

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.

Docket for Case No: 90-000946

Orders for Case No: 90-000946