STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALLSTAR CARE, INC., )

)

Petitioner, )

)

vs. ) CASE NOS. 92-2289

) 92-4795

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, final hearing in the above-styled case was held in Tallahassee, Florida, on December 11, 1992, before William Dorsey, Hearing Officer of the Division of Administrative Hearings. Mr. Dorsey subsequently resigned from the Division of Administrative Hearings, and Robert E. Meale was assigned the responsibility of preparing the recommended order. Pursuant to Section 120.57(1)(b)11, Florida Statutes, Mr. Meale determined that he could prepare the recommended order without additional evidence or argument.

APPEARANCES

The parties were represented at the hearing as follows: For Petitioner: Robert D. Newell, Jr.

Newell & Stahl, P.A.

817 North Gadsden Street Tallahassee, Florida 32303-6313

For Respondent: Richard A. Patterson

Senior Attorney

Agency for Health Care Administration 2727 Mahan Drive, Suite 103

Tallahassee, Florida 32308 STATEMENT OF THE ISSUE

The issue in this case is whether Respondent properly calculated the fixed need pool for home health agencies for the July, 1993, planning horizon and whether Petitioner is entitled to a certificate of need for a home health agency.

PRELIMINARY STATEMENT

Respondent published a fixed need pool for home health agencies for the certificate-of-need review cycle commencing in March, 1992, and determined that Service District XI did not need any additional home health agencies. On February 17, 1992, Petitioner timely notified Respondent that the fixed need

pool calculation was in error. On March 6, 1992, Petitioner timely filed a petition challenging the fixed need pool determination, thereby commencing DOAH Case No. 92-2289.

On February 24, 1992, Petitioner filed a letter of intent to submit a certificate of need application for the development of a home health agency in District XI. On March 24, 1992, Petitioner timely submitted an application for certificate of need 6951 to establish a home health agency in Service District XI.

On July 17, 1992, Respondent notified Petitioner of the intent to deny the application. Petitioner timely filed a petition challenging the intent to deny, thereby commencing DOAH Case No. 92-4795.

At the hearing, Petitioner called four witnesses and offered into evidence nine exhibits. Respondent called two witnesses and offered into evidence ten exhibits. All exhibits were admitted.

The transcript was filed December 29, 1992. Each party filed a proposed recommended order. Rulings on the proposed findings are in the appendix.

FINDINGS OF FACT

1. Background

   
   

   1. Respondent published a fixed need pool for Medicare- certified home health agencies for the certificate-of-need (CON) review cycle commencing in March, 1992, and determined that Service District XI did not need any additional home health agencies. On February 17, 1992, Petitioner timely notified Respondent that the fixed need pool calculation was in error. On March 6, 1992, Petitioner timely filed a petition challenging the fixed need pool determination, thereby commencing DOAH Case No. 92-2289.

      
      

   2. On February 24, 1992, Petitioner filed a letter of intent to submit a CON application for the development of a Medicare-certified home health agency in District XI. On March 24, 1992, Petitioner timely submitted an application for CON 6951 to establish a home health agency in Service District XI.

      
      

   3. On July 17, 1992, Respondent notified Petitioner of the intent to deny the application. Petitioner timely filed a petition challenging the intent to deny, thereby commencing DOAH Case No. 92-4795.

      
      

   4. Petitioner is adversely and substantially affected by Respondent's decisions concerning the fixed need pool and intent to deny Petitioner's CON application.

      
      

2. Need for Proposed Health Care Facilities and Services in Relation to Applicable District Plan and State Health Plan

1. Fixed Need Bed Pool

   
   

   1. Respondent calculated the fixed need bed pool based on Rule 59C-1.031, which is set forth in the Conclusions of Law. The purpose of the rule is to determine the required number of home health agencies by finding the cost efficient agency size (CEAS) "in number of visits at which economy of scale is

      achieved." Once the optimal number of visits is thereby determined, Respondent can calculate how many home health agencies are required in a specific service district.

      
      

   2. Pursuant to the rule, Respondent divided 181 nonexcluded home health agencies into four equal groups of equal numbers of agencies. These groups were divided by median numbers of visits and arrayed, as required by the rule, into groups from the lowest to the highest number of visits. Respondent then calculated for each group the median number of visits and mean cost per agency.

      
      

   3. The results of these calculations are as follows: Group Median # of Visits Average Cost Per Visit

      1	5,000	$42.14
      2	15,000	$45.88
      3	31,000	$46.93
      4	64,000	$45.95

      
      

   4. Pursuant to Rule 59C-1.031, Respondent determined the percentage reductions, comparing "each grouping to the previous grouping." Respondent next checked for a cost reduction of at least 5 percentage points between two groups, as required by the rule. Between groups 1 and 2, there was no reduction of cost, but rather an increase of 8.88 percent. Between groups 2 and 3, there was no reduction, but an increase of 2.29 percent. Between groups 3 and 4, there was a reduction, but only of 2.09 percent.

      
      

   5. Under the rule, the only role of the first group, and its average cost per visit, is to serve as a standard against which the second group can be measured. Thus, Respondent did not calculate the percentage reduction between the average cost of the first group, which has the lowest average cost, and the average cost of any other group.

      
      

   6. Petitioner contends that the rule requires or permits a rolling comparison of group 4 with group 1. If so, the reduction between groups 4 and 1 would be 8.29 percent.

      
      

   7. There are no mean visit cost reductions of at least 5 percent between groups 1 and 2, 2 and 3, or 3 and 4. Under the rule, Respondent is required to choose the median number of visits of the grouping for which the average cost per visit was at least 5 percent less than the average cost per visit of the "previous grouping." If two or all three of the comparisons yield at least 5 percent reductions, then, rather than take the grouping corresponding to the greatest reduction or the lowest average cost per visit, the rule identifies the last of the qualifying reductions as the CEAS. As noted above, the CEAS is used to calculate the fixed need pool.

      
      

   8. In the absence of any 5 percent reduction between groups 1 and 2, 2 and 3, or 3 and 4, Respondent identified two alternatives. First, it could find that there was no fixed need pool. As Respondent's Health Services and Facilities Consultant Supervisor testified, Respondent could have declined to publish a fixed need pool because it could not apply the rule. "And at that point, the certificate of need reviewer would have to rely on other criteria other than fixed need-pool in determining whether there was a need." Tr., p. 87.

   9. In the second alternative identified by Respondent, it could select group 4 as the CEAS because the comparison between it and group 3 resulted in the only positive reduction in average costs per visit, unless group 1 was compared with some other group. An unfortunate concomitant of this alternative is that group 4 represents the second highest cost per visit. Despite this fact, Respondent chose the second alternative and proceeded to calculate the fixed need pool for home health agencies accordingly.

      
      

   10. The effect of Respondent's selection of group 4 was to calculate the fixed need bed pool based upon a relatively high number of visits per facility. The CEAS in this case was 64,000 visits. Thus, roughly 1/13th of the agencies would be needed under Respondent's fixed need pool than would have been needed if the CEAS had been set at 5000 visits, which corresponds to the least expensive group--group 1.

       
       

   11. The practical effect of Respondent's selection of group 4 was that the fixed need pool for Service District XI was zero. If group 1 had been selected, the fixed need pool would have been 14.

       
       

   12. The interpretation given the rule by Respondent lacks reason, as does the interpretation for which Petitioner contends. The correct interpretation requires the adoption of the first alternative in which Respondent acknowledges the inapplicability of the rule and leaves parties free to litigate the issue of need without regard to any published fixed need pool.

       
       

   13. Both rejected interpretations ignore the plain language of the rule. Respondent's argument falters by setting up group 1 as a "previous group" to group 4. The rule leaves no doubt that the groups are to be arrayed in ascending order of size. Given the rule's obvious reliance upon the principle of economies of scale, there is no reasonable basis for inferring the authority for a final comparison of group 4 to group 1.

       
       

   14. On the other hand, Petitioner's interpretation disregards the requirement that a substantial reduction of 5 percent triggers the identification of the CEAS group. Petitioner's argument that this interpretation most closely follows the intent of the rule is erroneous.

       
       

   15. In fact, two contradictory intentions emerge from close study of the rule. The more evident is that the rule intends to restrict market access without substantial regard to the principle of cost containment. In the absence of a rule challenge, the rule must be applied without regard to this feature. But Respondent's unchallenged disregard of the critical principle of cost- containment does not militate strongly in favor of allowing Respondent to extend the reach of this dubious aspect of the rule by engrafting upon it layers of nonrule policy to cover contingencies, which, incidentally, Respondent should have easily foreseen.

       
       

   16. The rule reflects a bias toward restricting market entry by home health agencies without regard to cost efficiency. As noted above, the rule precludes the possibility that the group with the lowest number of visits (and thus generating the largest fixed need pool) could ever be selected as the CEAS. Also as noted above, the rule's preference for later reductions of at least 5 percent, without regard to comparing average costs or even percentage reductions, again encourages the selection as the CEAS of the group with the larger number of visits (thus generating the smallest fixed need pool). Third, as Respondent contends, in no way can Rule 59C-1.031 be interpreted to require

       Respondent to select the CEAS based on the group with the lowest average cost per visit.

       
       

   17. As Respondent's Health Services and Facilities Consultant Supervisor testified, "the only reason why we regulate home health agencies under the certificate of need program and why we restrict market entry is based on the argument that larger size agencies are more cost-effective." The Supervisor added: "If that assumption were no longer true generally, then there would be actually no reason for us to control market entry for home health agencies." Tr., p. 81.

       
       

   18. In fact, Respondent has detected a decreasing correspondence between the size of a home health agency in number of visits and its average cost per visit, as agencies' costs migrate toward applicable cost ceilings. This was easily predictable and means that many more cases can be anticipated in which no CEAS will emerge from the rule's formula because no later group represents a 5 percent reduction in cost from a previous group. Implicitly acknowledging this practical problem with the rule, as well as hopefully the counterproductive effect of the rule upon the attainment of cost-containment, Respondent has also proposed the deregulation of home health agencies in terms of the issuance of CON's.

       
       

   19. The other source of the intent of the rule is derived from the definition of the CEAS, which is the objective of the rule's calculations. The CEAS is the "cost efficient agency size . . . at which economy of scale is achieved."

       
       

   20. "Economy of scale" is defined in the following statement:

       
       

       The behavior pattern of costs recognizes that gains in operating efficiencies act to reduce costs per unit to a certain point (economies of scale) and that[,] as the level of production continues to increase[,] operating

       inefficiencies take effect (diminishing returns).

       
       

   21. Respondent's interpretation of the rule, which stresses the intention to restrict market access without substantial regard for the principle of cost containment, fails to account adequately for the fact that diminishing returns or diseconomies of scale may actually have already begun before the second group is considered. The intent of the rule is to find the cost efficient agency size at which economies of scale are achieved. If, as here, the economies of scale are only encountered within the first group (i.e., the group with the agencies with the smallest number of visits), then it is impossible to justify Respondent's interpretive nonrule policy that exacerbates the tendency of the rule to restrict market access without substantial regard to the principle of cost containment.

       
       

   22. Thus, Respondent's claim that its interpretation of the rule is most consistent with the intent of the rule is flawed. In fact, the rule contains contradictory intentions, and Respondent, at best, has adopted the interpretation most consistent with the more dubious intent inferable from the rule.

       
       

   23. Petitioner's interpretation is most consistent with the better intent inferable from the rule--i.e., the CEAS is the "cost efficient agency size . . . at which economy of scale is achieved." However, Petitioner's interpretation

       fails to take into account the intent of the rule favoring larger providers. Petitioner's deemphasis of this aspect of the rule commendably pursues the critical principle of cost containment. But Petitioner's contrivance of the rolling comparison in which group 4 is compared to group 1 suffers from a disregard of the language of the rule regarding the arraying of the groups in ascending order and the comparison of each of the three largest groups with its previous group.

       
       

   24. There is no other reasonable conclusion than that the rule could not produce a fixed need pool, Respondent's determination of a fixed need pool of zero is incorrect, and the parties should have been allowed to litigate the question of need without regard to Respondent's incorrect determination of a fixed need pool of zero and without a showing of not-normal circumstances.

       
       

2. Need in General

1. The absence of the fixed need pool does not mean that the inputs to the formula are without value. To the contrary, the above-described calculations under the rule clearly justify determining need on the basis of the finding that the most cost efficient agency size is the agency in which the median number of visits is 5000. To achieve this most cost-efficient agency size, the number of home health agencies in District XI could be expanded by 14. Thus, Petitioner has proved the need for another home health agency.

   
   

2. The applicable district and state health plans fail to identify any groups with a quantifiable lack of services or special need for home health care services. Plan language regarding preferences implies a comparative evaluation process, which is, at most, not readily applicable to the present situation involving a single applicant.

   
   

3. In any event, it appears that Petitioner would serve a variety of subgroups of District XI that are specified in the district plan as medically underserved, even though the plan does not indicate that any of these groups currently has unmet needs in terms of home health agency services. It also appears that Petitioner would serve a greater percentage of Medicaid-eligible and medically indigent patients that is typical for existing home health agencies in District XI.

   
   

4. Based on the findings of the preceding paragraph, Petitioner was entitled to full compliance with the corresponding preferences of the district plan, rather than the noncompliance and partial compliance that it was given for these preferences in the State Agency Action Report (SAAR). Respondent should have given Petitioner full compliance on the remaining preferences under the district plan, although several of them appear to have little to do with need. Petitioner has a working arrangement with the prime referral source, physicians. Also, by virtue of its acquisition of an existing home health agency, Petitioner will also have working arrangements with various health care providers in the area. The deficiency with the district plan cited in the SAAR concerning working arrangement with AIDS referral networks is of little importance as the AIDS referral networks, which have their own home health agencies, will be competitors of Petitioner.

   
   

5. The SAAR likewise incorrectly gives Petitioner partial or no compliance with preferences in the State plan with respect to AIDS patients, which Petitioner clearly proposes to serve; counties underserved by existing home health agencies, which includes Dade County based on the above-described calculations concerning the most cost efficient agency size; and the proposal

   of a comprehensive quality assurance program and the seeking of accreditation by the Joint Commission on Accreditation of Healthcare Organizations, both of which Petitioner proposes to do.

   
   

6. Based on the foregoing, Petitioner has clearly demonstrated a need for the proposed project without regard to not-normal circumstances and despite the absence of a valid fixed need pool for home health agencies in the subject batching cycle.

   
   

   1. Availability, Quality of Care, Efficiency, Appropriateness, Accessibility, Extent of Utilization, and Adequacy of Like and Existing Health Care Services

      
      

7. According to the SAAR, there are sufficient home health agencies in District XI. However, Petitioner has proved that the proposed project will increase the availability or access of home health agency services based on the above-described calculations concerning the most cost efficient agency size.

   
   

   1. Ability of Applicant to Provide Quality of Care

      
      

8. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

   
   

   1. Availability and Adequacy of Other Health Care Facilities and Services

      
      

9. According to the SAAR, there are sufficient home health agencies in District XI. However, Petitioner has proved that existing home health agencies are not adequate or sufficiently available based on the above-described calculations concerning the most cost efficient agency size.

   
   

   1. Probable Economies and Improvements in Service that May

      Be Derived from Operation of Joint, Cooperative, or Shared Health Care Resources

      
      

10. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

    
    

    1. Need for Special Equipment and Services Not Reasonably and Economically Accessible in Adjoining Areas

       
       

11. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

    
    

    1. Need for Research and Educational Facilities

       
       

12. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

    
    

    1. Availability of Resources for Project Accomplishment and Operation, Effects of Project on Clinical Needs of Health Professional Training Programs, Extent to

       which Services Will Be Accessible to Schools for Health

       Professions, Availability of Alternative Uses of Such Resources for the Provision of Other Health Services, and Extent to which the Proposed Services Will Be Accessible to All Residents of the Service District

       
       

13. The parties have stipulated that these criteria are either not applicable to Petitioner's application or that the application has adequately addressed the criteria. The sole exception concerns the extent to which the proposed services will be accessible to all residents of the service district. Petitioner has proved that the proposed services would be accessible to all residents of the service district.

    
    

    1. Immediate and Long-Term Financial Feasibility of Project

       
       

14. The parties have stipulated that these criteria are either not applicable to Petitioner's application or that the application has adequately addressed the criteria. The sole exception concerns the extent to which the long-term financial feasibility of the project is a function of Petitioner's utilization assumptions. The SAAR predicates its assignment of only partial compliance with this criterion upon Petitioner's failure to demonstrate access problems and justify the projected patient volume. However, to the extent that these criticisms reflect an incorrect need determination, Petitioner has proved that the proposed project satisfies the criterion of long-term financial feasibility based on the above-described calculations concerning the most cost efficient agency size.

    
    

    1. Special Needs and Circumstances of Health Maintenance Organizations

       
       

15. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

    
    

    1. Needs and Circumstances of Entities Providing a Substantial Portion of Their Services or Resources to Individuals Not Residing in the Service District in which the Entities Are Located or in Adjacent Service Districts

       
       

16. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

    
    

    1. Probable Impact of Proposed Project on Costs of Providing Health Services Proposed by Applicant Based on Effects of Competition on Supply of Health Services Being Proposed and Improvement or Innovations in the Financing and Delivery of Health Services which Foster Competition and

       Service to Promote Quality Assurance and Cost-Effectiveness

       
       

17. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

    
    

    1. Costs and Methods of Proposed Construction

18. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

    
    

    1. Applicant's Past and Proposed Provision of Health Care Services to Medicaid Patients and the Medically Indigent

    
    

19. The parties have stipulated that this criterion is either not applicable to Petitioner's application or that the application has adequately addressed the criterion.

    
    

    CONCLUSIONS OF LAW

    
    

20. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes (Supp. 1992). All references to Rules are to the Florida Administrative Code.)

    
    

21. Petitioner has standing.

    
    

22. Petitioner has the burden of proving its entitlement to a certificate of need. Department of Transportation v. J. W. C. Co., Inc., 396 So. 2d 778 (Fla 1st DCA 1981).

    
    

23. Section 408.035(1) provides:

    
    

    1. [Respondent] shall determine the reviewability of applications and shall review applications for certificate-of-need determinations for health care facilities and services, . . . in context with the following criteria.

       
       

       1. The need for the health care facilities

          . . . being proposed in relation to the applicable district plan and state health plan . . ..

       2. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services in

          the service district of the applicant.

       3. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care.

       4. The availability and adequacy of other health care facilities and services in

          the service district of the applicant, . . .

          which may serve as alternatives for the health care facilities and services to be provided by the applicant.

       5. Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources.

       6. The need in the service district of the applicant for special equipment and services

          which are not reasonably and economically accessible in adjoining areas.

       7. The need for research and educational facilities . . ..

       8. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation;

          the effects the project will have on clinical needs of health professional training programs in the service district; the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities; the availability of alternative uses of such resources for the provision of other health services; and the extent to which the

          proposed services will be accessible to all residents of the service district.

       9. The immediate and long-term financial feasibility of the project.

       10. The special needs and circumstances of health maintenance organizations.

       11. The needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. Such entities may include medical and other professions, schools, multidisciplinary clinics, and specialty services such as

           open-heart surgery, radiation therapy, and renal transplantation.

       12. The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost- effectiveness.

       13. The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction.

       14. The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent.

24. Rule 59C-1.030 provides that, "[i]n addition to criteria set forth in [Section] 408.035 . . ., the following criteria are used in the review of an application."

    
    

    * * *

    (2) Health Care Access Criteria

    (a) The need that the population served or to be served has for the health . . . services proposed to be offered . . ., and the extent to which all residents of the district, and in particular low-income persons, racial and ethnic minorities, women, handicapped

    persons, other underserved groups and the elderly, are likely to have access to those services.

    * * *

    1. The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and State health plan as deserving of priority.

    2. In determining the extent to which a proposed service will be accessible, the following will be considered:

    1. The extent to which medically underserved individuals currently use the applicant's services, as a proportion of the medically underserved population in the applicant's proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved;

    * * *

    1. The extent to which Medicare, Medicaid and medically indigent patients are served by the applicant; and

    2. The extent to which the applicant offers a range of means by which a person will have access to its services.

    * * *

    (f) In evaluating the accessibility of a proposed project, the accessibility of the current facility as a whole must be taken into consideration. If the proposed project is disapproved because it fails to meet the need and access criteria specified herein, the agency will so state in its written findings.

    
    

25. Rule 59C-1.031(1)(a) defines a "home health agency" as a "Medicare certified home health agency "

54. Rule 59C-1.031(3) states:

(a) The establishment of a home health agency by a provider who does not currently operate

a Medicare certified home health agency in a district, shall require a certificate of need for the operation of a Medicare certified home health agency in the district.

Applications for home health agencies shall be reviewed against all applicable statutory and related rule criteria. Applications for home health agencies shall not normally be approved unless a need is indicated in accordance with the formula under subsection (3). . . .

* * *

1. The net need for new Medicare home health agencies in each district is calculated as follows:

   HHNN = (PHHV - AHHV)/CEAS) - AHH

   Where:

   1. HHNN equals the Medicare certified home health agency net need.

   2. PHHV equals the projected number of home health agency visits for the respective district and planning horizon. The projected number of home health agency visits is calculated by multiplying the number of home health visits per 1000 population 65 years and over provided by the Medicare certified agencies in the district for the most recent year for which data are available, by the projected population 65 years and over for the respective district. . . .

   3. AHHV equals the actual number of home health agency visits provided by all Medicare certified home health agencies in the district based on cost report data obtained from Medicare intermediaries for the most recent year . . ..

   4. CEAS is the cost efficient agency size in numbers of visits at which economy of scale is achieved according to the data available to the agency. If the fraction (PHHV-AHHV)/ CEAS is .5 or exceeds .5, the fraction shall

      be rounded upward to the nearest whole number.

   5. CEAS shall be updated by the agency annually and shall be determined by the agency according to the following methodology:

      1. Rank all agencies by visit size ....

      2. Calculate the average cost for all visits for each remaining agency.

      3. Calculate the mean visit cost for all agencies . . ..

      * * *

      1. Array remaining agencies by visit size from low to high, and sort agencies into 4 groupings by visit size containing an equal or similar number of agencies, and calculate the mean cost for each grouping.

      2. Calculate the percentage reduction, if any, in mean visit cost for each grouping as compared to the previous grouping. Identify the agency size groupings which have a mean visit cost reduction of 5 percent or more compared to the mean visit cost of the previous grouping.

      3. Select the agency size grouping for which the last 5 percent or more reduction in mean visit cost is achieved prior to a grouping for which a less than 5 percent reduction is achieved as compared to the previous grouping and determine the median agency size for this grouping rounded to the nearest thousand.

      This agency size is defined as CEAS.

   6. AHH equals the number of approved home health agencies in the district.

2. Preference shall be given to applicants proposing to provide home health care services to indigent persons and Medicaid patients.

3. Preference shall be given to applicants proposing a comprehensive range of home health services if it is determined by the agency that certain types of services are unavailable or that there is a shortage of certain types of home health agencies.

4. Preference shall be given to applicants proposing to provide home health services and establish a physical presence in underserved areas of the district.

1. Based on the findings of fact, Petitioner has proved that Respondent incorrectly calculated the fixed need pool as zero. Although Petitioner's approach in determining a fixed need pool finds insufficient support under the applicable rule, Petitioner is free to prove need without regard to any fixed need pool and without regard to not-normal circumstances.

   
   

2. Based on the findings of fact, Petitioner has proved the need for the proposed home health agency in District XI. The record establishes that the greatest costs savings will be realized as a sufficient number of home health agencies are authorized so that the median number of visits reaches 5000 annually. The approval of Petitioner's proposed project, which generally meets the other applicable criteria for issuance of a CON, assists in the realization of such savings.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that the Agency for Health Care Administration issue a final order approving the application for CON 6951.

ENTERED on September 8, 1993, in Tallahassee, Florida.

ROBERT E. MEALE

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 8th day of September, 1993.

ENDNOTE

1/ Formerly 381.705.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2289

Treatment Accorded Proposed Findings of Petitioner 1-15: adopted or adopted in substance.

16: adopted as to data inputs. Rejected as to methodology as unsupported by the appropriate weight of the evidence.

17-22: adopted or adopted in substance.

23: rejected as unsupported by the appropriate weight of the evidence. 24-27 (first sentence): adopted or adopted in substance.

27 (second sentence): rejected as unnecessary.

28: rejected as unsupported by the appropriate weight of the evidence and legal argument (that the question is whether the rule contains a prohibition against, rather than whether the rule authorizes, a comparison of group 4 with group 1).

29 (first sentence) and 30: rejected as unsupported by the appropriate weight of the evidence.

29 (remainder): adopted.

31: adopted, although the rule is not so used in the recommended order to determine a fixed need pool of 14.

32-33: adopted.

34: rejected as unnecessary.

35-38: adopted or adopted in substance.

39: adopted, except that Petitioner's interpretation of the rule is not sufficiently consistent with the existing rule as to warrant Petitioner's interpretation.

40-46: rejected as subordinate and unnecessary. 47-49: adopted or adopted in substance.

Treatment Accorded Proposed Findings of Respondent 1-2: adopted or adopted in substance.

3 (first two sentences): rejected as recitation of testimony.

3 (remainder): adopted or adopted in substance.

4: rejected as recitation of testimony, irrelevant, legal argument, and unsupported by the appropriate weight of the evidence.

5-7: adopted in substance.

8: rejected as unsupported by the appropriate weight of the evidence. 9: adopted as to compliance. Rejected as to noncompliance or partial

compliance, where so indicated in recommended order, as unsupported by the appropriate weight of the evidence.

10-11: rejected as unsupported by the appropriate weight of the evidence. 12: adopted in substance as statement of issue.

COPIES FURNISHED:

Douglas M. Cook, Director

Agency for Health Care Administration 2727 Mahan Drive

Tallahassee, Florida 32308

Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Sam Power, Agency Clerk

Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Robert D. Newell, Jr. Newell & Stahl, P.A.

817 North Gadsden Street Tallahassee, Florida 32303-6313

Richard A. Patterson, Senior Attorney Agency for Health Care Administration 2727 Mahan Drive, Suite 103

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

ALLSTAR CARE, INC.,

CASE NO.: 92-2289

vs.

Petitioner, 92-4795

RENDITION NO.: AHCA-93-144-FOF-CON

STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

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FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Agency for Health Care Administration (AHCA). The Recommended Order entered September 8, 1993, by Hearing Officer William Dorsey is incorporated by reference.

RULING ON EXCEPTIONS

Counsel for the agency excepts to the second sentence of paragraph 30 that consideration of the preferences set forth in the state and local health plans is not required except where competing applications are being comparatively reviewed. Section 408.035(1)(a), Florida Statutes (Supp. 1992) requires all certificate of need applications to be reviewed in accordance with the applicable district and state plans. See Health Care and Retirement Corporation vs. Department of Health and Rehabilitative Services, 14 FALR 1518, 1532 (HRS 1992); St. Mary's Hospital vs. Department of Health and Rehabilitative Services, 13 FALR 2096, 2098 (HRS 1991); Charter Medical - Orange County, Inc.

vs. Department of Health and Rehabilitative Services, 11 FALR 1087, 1128 - 1129 (HRS 1989); and Inverness Convalescent Center vs. Department of Health and Rehabilitative Services, 9 FALR 3137, 3139 - 3140 (HRS 1986). The exception is granted.

FINDINGS OF FACT

The agency hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.

CONCLUSIONS OF LAW

The agency hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except as noted in the Ruling on Exceptions.

Based upon the foregoing, it is

ADJUDGED, that the application of Allstar, Inc. for CON 6951 be APPROVED. DONE and ORDERED this 21st day of October, 1993, in Tallahassee, Florida.

Douglas M. Cook, Director Agency for Health Care

Administration

Copies furnished to:

Robert D. Newell, Jr., Esquire NEWELL & STAHL, P. A.

817 North Gadsden Street Tallahassee, Florida 32303-6313

Richard A. Patterson, Esquire Senior Attorney

Agency for Health Care Administration

325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131

William Dorsey Hearing Officer

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550 Elizabeth Dudek (AHCA/CON)

Elfie Stamm (AHCA/CON) Alberta Granger (AHCA/CON)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named people by U. S. Mail this 21st day of October, 1993.

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

Health Care Administration

325 John Knox Road

The Atrium Building, Suite 301 Tallahassee, Florida 32303

(904)922-3808

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

power/9-29-93

Docket for Case No: 92-002289CON

Orders for Case No: 92-002289CON