STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CONSULT CARE, INC., )

)

Petitioner, )

)

vs. ) Case No. 99-2497RX

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a formal hearing was conducted in this case on February 17, 2000, in Tampa, Florida, before Lawrence P. Stevenson, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Bruce Culpepper, Esquire

Akerman, Senterfitt & Eidson, P.A.

301 South Bronough Street, Suite 200 Post Office Box 10555

Tallahassee, Florida 32302-2555

For Respondent: Moses E. Williams, Esquire

Steven A. Grigas, Esquire

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

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403 STATEMENT OF THE ISSUE

The issue in this case is whether Rule 59G-4.010, Florida Administrative Code, including pages 1-5 and 1-6 of the Florida Medicaid Advanced Registered Nurse Practitioner Coverage and Limitations Handbook (the "ARNP Handbook"), which is incorporated

in the rule by reference, is an invalid exercise of delegated legislative authority.

PRELIMINARY STATEMENT

Petitioner, Consult Care, Inc. ("CCI") challenges the amendment of the ARNP Handbook by the Agency for Health Care Administration ("AHCA"). The amendment to the ARNP Handbook was adopted by reference in Rule 59G-4.010, Florida Administrative Code. The challenge focuses on the ARNP Handbook's amended language regarding mobile ARNP units. CCI is a Medicaid provider offering health related services to the Medicaid community via a stationary office and two retrofitted recreational vehicles.

AHCA published its notice of development of proposed rules in the December 4, 1998, issue of the Florida Administrative Weekly (vol. 24, no. 49, pp. 6616-6617). The agency conducted a rule development hearing on December 21, 1998. AHCA published its rule adoption notice in the February 19, 1999, issue of the Florida Administrative Weekly (vol. 25, no. 7, p. 702). The agency conducted a rule adoption hearing on March 18, 1999. CCI attended the adoption hearing and provided oral and documentary testimony regarding the proposed rule. On May 19, 1999, AHCA submitted its filing for final adoption to the Secretary of State. CCI filed its petition challenging the adopted rule on June 1, 1999. The final hearing was scheduled for June 29-30, 1999, but was continued and then abated at the parties' request.

The hearing was eventually rescheduled for and held on February 17, 2000.

At final hearing, Petitioner CCI called as witnesses Alan Strowd, program administrator in Medicaid program development; Jackie Manescala, co-owner of Albany Avenue ACLF, Inc.; Thomas J. McClusky of McClusky Enterprises; and JoAnna Mulder, president of CCI. Petitioner's Exhibits 1 and 2 were admitted into evidence. AHCA called as witnesses John A. Owens, bureau chief of the Medicaid Program Integrity Section of AHCA; Glen D. Stone, a medical program analyst in the Medicaid Program Integrity Section, accepted as an expert in Medicaid program integrity oversight functions; and Lynne Metz, physician services coordinator for AHCA, accepted as an expert in Medicaid program development and rule making. AHCA Exhibits 1 through 23 were admitted into evidence.

The parties requested and were given 30 days from the filing of the transcript in which to file proposed final orders. The Transcript was filed on March 13, 2000, and parties filed Proposed Final Orders on April 12, 2000.

FINDINGS OF FACT

Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made:

1. Rule 59G-4.010, Florida Administrative Code, "applies to all advanced registered nurse practitioners enrolled in the

   Medicaid program for advanced registered nurse practitioner services under Section 409.906, F.S." It requires all ARNP service providers to comply with the "Florida Medicaid Advanced Registered Nurse Practitioner Coverage and Limitations Handbook, January 1999, which is incorporated by reference "

2. The ARNP Handbook "explains covered services, their limits and who is eligible to receive them." The issue in this proceeding is Medicaid reimbursement for mobile ARNP units. The challenged language is found at pp. 1-5 and 1-6 of the ARNP Handbook, and reads as follows:

   Mobile ARNP Units Description

   A mobile ARNP unit is a fully operational vehicle, unit, trailer or office that travels to different locations for the provision of ARNP services and is not a stationary ARNP unit or office.

   
   

   Limitations and Exceptions

   
   

   Medicaid will not reimburse for any ARNP service rendered in a mobile unit regardless of the location with the following exceptions:

   
   

   Mobile ARNP unit owned or operated by the Department of Health complying with Medicaid's County Health Department (CHD) Clinic Services program specifications as a CHD provider;

   
   

   Mobile ARNP unit owned, operated by, or having a contractual arrangement with a Federally Qualified Health Center (FQHC), complying with Medicaid's Federally Qualified Health Center

   specifications as a FQHC provider; and

   
   

   Mobile ARNP unit certified as a mobile Rural Health Clinic (RHC)

   
   

   Contractual Arrangements with an FQHC

   
   

   Any contractual arrangement between a mobile ARNP unit and a FQHC for the provision of Medicaid ARNP services is subject to the following conditions:

   
   

   The services must be provided by a licensed ARNP on the premises;

   
   

   The services must be covered by the Medicaid ARNP services program and be subject to the same limitations and prior authorization requirements that apply to the ARNP services program;

   
   

   Medicaid reimbursement for ARNP services will only be to the FQHC, which is assigned a clinic group number to bill an encounter rate for clinic services. The treating practitioner who renders the services must enroll as a Medicaid provider affiliated with the FQHC clinic group provider number;

   
   

   The services must be provided at a mobile satellite clinic affiliated with the FQHC; and

   
   

   The services must be provided in accordance with the policy guidelines specified in the Federally Qualified Health Center Coverage and Limitations Handbook.

   
   

   Contractual Arrangements with an RHC

   
   

   All services must be provided in accordance with the policy guidelines specified in the Medicaid Rural Health Clinic Services Coverage and Limitations Handbook.

3. Federal law governs the provisions, requirements, benefits, and service payments of Rural Health Clinics (RHCs), Federally Qualified Health Centers (FQHCs), and County Health Departments (CHDs) as they participate in the Medicaid program. See Title 42 C.F.R. Parts 440.20 and 491 (RHCs), 491 (FQHCs), and

   440.130 (CHDs).

   
   

4. CCI is a private corporation providing on-site community based primary and behavioral health care services in Hillsborough, Pinellas, Pasco, Polk, and Manatee counties. CCI offers services through a stationary facility in Tampa and two mobile units. The mobile units are retrofitted recreational vehicles configured to have waiting areas, patient work-up areas, lab areas, and private examination rooms. CCI has ceased treating Medicaid patients in the mobile units since the adoption of the challenged rule.

5. CCI's client population consists of the developmentally disabled, psychiatric disabled, and displaced frail elderly living in congregate living facilities. CCI's group of health care professionals includes physicians, ARNPs, and behavioral care therapists.

6. The genesis of the challenged rule was reports of abusive practices by mobile dental units providing services to children. In 1997, ACHA received reports that several such units, all based in Miami, were trolling the state seeking large concentrations of Medicaid-eligible children. These units would

   stop in low-income housing projects and offer free diagnostic and preventive services to children.

7. Diagnostic and preventive services are especially profitable for the provider, as they take comparatively little time and are usually performed by auxiliary staff rather than the dentist. AHCA found that some of these mobile units functioned as mills, treating as many as 60 children per day.

8. Problems began to arise when these children later presented themselves to their regular dentists for treatment. Medicaid places six month reimbursement limits per child for items such as periodic exams and x-rays. The regular dentists, unaware that their patients had used their eligibility in their visits to the mobile units, performed these services and then found their reimbursement denied due to the six month rule.

9. AHCA also found problems with the treatment provided by the nomadic mobile dental units. There could be no continuity of care because the units moved on after the initial visit. Audits of certain mobile providers found the mobile units dirty, disorganized, and packed with waiting children. Up to 75% of the x-rays taken in the audited units were not of diagnostic quality. Obvious problems such as rotting teeth were ignored in the mobile units, leaving these time consuming and less remunerative procedures to be performed by the regular dentists.

10. During the same time period, AHCA became aware of billing discrepancies involving Vision Express, a mobile provider

    of optometric services. AHCA found that Vision Express was billing for services not covered by Medicaid, and was employing misleading place of service codes on its claims.

11. AHCA introduced several exhibits documenting its investigation of Vision Express. The exhibits show that the agency's concerns with Vision Express involved billing, not quality of service. The exhibits also indicate that Vision Express was the only mobile visual or optometric unit known to have presented Medicaid billing problems for the agency.

12. The conjunction of problems with dental and optometric mobile units led the agency to conduct a review of its policies and practices regarding mobile units overall. The agency's traditional practice had been to deny reimbursement to mobile service providers because a mobile unit was not termed a valid "place of service" under the Medicaid billing codes. AHCA had no written rule or policy regarding Medicaid reimbursement to mobile service providers in any discipline.

13. AHCA's review was intended to determine whether mobile units should henceforth be reimbursed by Medicaid and, if so, what restrictions should be placed on the activities of mobile units to curb the potential for abuse.

14. Lynne Metz, AHCA's expert in Medicaid program rule making, testified that the agency's research revealed additional problems with ARNPs, as well as the already acknowledged problems with dental and optometric mobile units.

15. Ms. Metz explained that Medicaid rules permit ARNPs to treat a patient and bill Medicaid under their own provider number, which reimburses the ARNP at 80% of the reimbursement rate for physicians. ARNPs may also bill under the provider number for their supervising physician and receive 100% of the physician rate, but may do so only when the physician is physically present and reviews, dates, and co-signs the medical record. Ms. Metz testified that some ARNP mobile units were found to have billed Medicaid at the higher rate even though the supervising physician was not physically present on the mobile unit.

16. Alan Strowd, who was program administrator with the practitioner services unit of Medicaid during the development of this rule, testified that he recalled no complaints about ARNP mobile units regarding the delivery of services, as opposed to billing complaints.

17. AHCA ultimately determined that mobile units have the potential to increase the availability of and access to medical services. However, the agency also determined that there is a potential for abuse of services, potential lack of follow-up care, and potential problems with management of patient records involved with the provision of mobile unit services. The agency decided to craft rules allowing Medicaid reimbursement for mobile unit services, but also decided that some monitoring system should be put in place to minimize the potential for abuse.

18. Mr. Strowd admitted that the agency could address abuse through the existing means of billing edits and the investigative Medicaid Integrity Bureau, and that these means were attempted prior to promulgation of the challenged rule. However, Mr. Strowd testified that these were inefficient "pay and chase" methods, meaning that Medicaid routinely pays the claims, then investigates fraud and abuse after the fact. He testified that these methods require the agency to sift through thousands of providers to find the ones who are committing fraud.

19. John A. Owens, bureau chief of the Medicaid Program Integrity Section, agreed that the standards were in place to enforce compliance with the Medicaid program by mobile unit providers prior to adoption of the rule. Mr. Owens stated that the rule was desirable because it "places a control mechanism" on the mobile unit providers, giving AHCA an entity it can look to for assurance that proper medical records and quality of service are maintained. Mr. Owens testified that AHCA is "at capacity" in terms of the direct oversight it is able to provide.

20. Ms. Metz testified that the agency sought some mechanism to monitor the mobile unit providers that was less onerous than the "pay and chase" method. After considering and discarding the idea of carving out geographic regions to regulate the mobile providers, the agency decided to examine programs that were already working successfully at the county level. The agency's registered nurse specialist for CHDs informed Ms. Metz

    that federal law has already established mobile provider guidelines for CHD, FQHC, and RHC programs. Ms. Metz testified that "the system was almost handed to us . . . . Here was a local control network . . . that had already been sitting there for us to just turn on the allowance and put it into place."

21. Mr. Strowd opined that he saw no distinction between the activities of a mobile dental unit and a mobile ARNP unit in terms of the potential for problems with continuity of care, billing fraud, and sanitary conditions. No evidence was presented that the agency performed an actual evaluation comparing the services offered by a mobile dental unit to those performed by a mobile ARNP unit. Mr. Strowd agreed that a mobile unit could provide a valuable service, especially if it confined its activity to a small geographic area or primarily serviced rural areas.

22. Thus, the agency decided to amend all twelve of its practitioner handbooks, including the ARNP Handbook, to allow reimbursement of mobile unit service providers, but only if they were owned by or contractually affiliated with a CHD, FQHC, or RHC. The agency determined that this was the least intrusive method to allow the provision of mobile unit services while ensuring quality and continuity of care and reducing the potential for fraud and abuse in the Medicaid program.

23. Mr. Strowd testified that this limitation would assure that there would be oversight of the mobile unit providers at the

    local level, thus eliminating the need for AHCA supervision at the state level. Ms. Metz also stated that a main purpose of the limitation was to provide for local control:

    That's the basis of Medicaid, to make sure recipients can get the services they need when they need it, not just, okay, I need a doctor but not five days from now. So that's why we're trying to put this in the local area and not have it regulated from up at the Tallahassee headquarters office. We don't need to be the ones regulating the policy.

    It has to be in the local county level, FQHC level or RHC level, where they know these recipients are the ones who need the phone pickup, the phone call, the mobile provider, and say we need you to go out.

24. However, Ms. Metz also stated that AHCA would allow a mobile unit provider to provide services pursuant to a contractual arrangement with any RHC, FQHC, or CHD, regardless of the entity's location in the state. Ms. Metz testified that she told Joanna Mulder, the president of CCI, that she did not have to contract with an entity in her service area, that "she could get a contract with anybody and do her services in this area." Ms. Metz did not explain how an FQHC in Pensacola, for example, could provide to a mobile unit provider in Tampa the kind of local knowledge and control that she stated was a prime reason for the limitation adopted by the challenged rule.

25. Mr. Strowd conceded that the actual language adopted in the ARNP Handbook, quoted above, appears to allow mobile ARNP providers to contract with FQHCs and RHCs, but not with CHDs. Mr. Strowd testified that this was an inadvertent omission, and

    that the intent of the rule is to allow mobile ARNP providers to affiliate contractually with any of the three named providers.

26. Both Mr. Strowd and Ms. Metz conceded that the agency conducted no inquiry as to the practical ability of mobile unit providers to contract with RHCs, FQHCs, or CHDs, or as to legal impediments to such contracts.

27. Ms. Mulder of CCI testified that she has made several efforts to contract with the listed entities. She contacted the Hillsborough CHD and was told that it does not contract with private entities and had no interest in offering additional services. The Polk and Pasco CHDs also had no interest.

28. Ms. Mulder stated that she spent five days trying to contact FQHCs, and that most of them also showed no interest. She was finally able to meet with Jeff Zimmerman, the chief financial officer of Parrish Health Clinic, an FQHC. Mr. Zimmerman told Ms. Mulder that reimbursement limitations in the FQHC Handbook made it impossible for his FQHC to contract with CCI in a way that would provide any financial benefit to the FQHC.

29. Mr. Strowd testified that he had assurances from Greg Glass, president of the Florida Association of Community Health Clinics, the statewide FQHC organization, that any of the 27 FQHCs in the state would be willing to discuss and enter into contracts with private mobile service providers. However, Ms. Mulder testified that Mr. Glass refused to discuss the issue with

    her, and told her that she would have to contact the individual FQHCs. Ms. Mulder stated that Mr. Glass could not or would not provide her with a list of the FQHCs. He referred her to AHCA for the list. AHCA promised to provide the list, but never did so.

30. Finally, Ms. Mulder stated that she could find only one RHC, and that it never returned her calls. She did not believe a contract with an RHC would be workable in any event, because not all of her patients live in the rural areas to which RHCs are limited in their provision of services.

31. AHCA demonstrated that the amendment to Rule 59G-4.010, Florida Administrative Code, was properly promulgated, and that the procedures instituted for its adoption were proper. The agency considered the rule's impact on small business, concluding it was negligible.

32. The federal Health Care Financing Administration ("HCFA") reviewed and approved the proposed amendment to Rule 59G-4.010, Florida Administrative Code. AHCA conceded that no federal statute or rule mandates the limitation of mobile unit services to entities affiliated with RHCs, FQHCs, or CHDs, but

    contended that there would be practical difficulties in obtaining HCFA approval of further changes to the approved rule.

    CONCLUSIONS OF LAW

    
    

33. Section 120.56(1)(a), Florida Statutes (1999), provides: "Any person substantially affected by a rule or a

    proposed rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority." An existing rule is presumed valid, and the petitioner challenging the rule has the burden of establishing that it is invalid. St. Johns River Water Management District v. Consolidated-Tomoka Land Company, 717 So. 2d 72, 76 (Fla. 1st DCA 1998).

34. Rule 59G-4.010, Florida Administrative Code, incorporates by reference the January 1999 edition of the ARNP Handbook. Petitioner challenges only pages 1-5 and 1-6 of the ARNP Handbook. Petitioner demonstrated at hearing that it is substantially affected by the challenged portion of the rule and accordingly has standing to bring this rule challenge.

    Petitioner has alleged a real and sufficiently immediate injury in fact, in that the rule has forced it to cease serving Medicaid clients from its mobile unit. Petitioner's alleged injury is within the zone of interest that is regulated by the Medicaid statutes purportedly implemented by the challenged portion of the rule. See Lanoue v. Florida Department of Law Enforcement, 751 So. 2d 94 (Fla. 1st DCA 1999), and cases cited therein regarding the "substantially affected" test to establish standing in a rule challenge proceeding.

35. AHCA contends that Petitioner's "alleged injury does not appear substantial given the availability of the exceptions and alternatives afforded" by the challenged portion of the rule,

    i.e., the ability to contract with RHCs, FQHCs, or CHDs. A party is not required to comply with a rule at his peril in order to obtain standing to challenge the rule. Ward v. Board of Trustees of the Internal Improvement Trust Fund, 651 So. 2d 1236, 1238 (Fla. 4th DCA 1995); Professional Firefighters of Florida, Inc. v. Department of Health and Rehabilitative Services, 396 So. 2d 1194, 1195 (Fla. 1st DCA 1981). A logical corollary is that a party's ability to comply with the challenged rule should not stand as a barrier to the challenge.

36. Section 120.52(8), Florida Statutes (1999), provides:

    
    

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

    
    

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

       
       

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

       
       

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

       
       

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

    5. The rule is arbitrary or capricious;

       
       

    6. The rule is not supported by competent substantial evidence; or

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

       
       

       A grant of rulemaking authority is necessary but not sufficient to allow an agency to adopt a rule; a specific law to be implemented is also required. An agency may adopt only rules that implement or interpret the specific powers and duties granted by the enabling statute. No agency shall have authority to adopt a rule only because it is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious or is within the agency's class of powers and duties, nor shall an agency have the authority to implement statutory provisions setting forth general legislative intent or policy. Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than implementing or interpreting the specific powers and duties conferred by the same statute.

37. The specific authority cited by AHCA is Section 409.919, Florida Statutes (1999), which provides: "The agency shall adopt any rules necessary to comply with or administer ss. 409.901-409.920 and all rules necessary to comply with federal requirements." Petitioner concedes that this provision allows AHCA to adopt rules relative to the disbursement of Medicaid funds for the delivery of health services to qualified recipients. However, Petitioner contends that the selection of some ARNP mobile service providers for reimbursement, to the exclusion of others, is not "necessary" for the conduct of the Medicaid program and requires a more specific grant of authority.

38. The laws implemented by Rule 59G-4.010, Florida Administrative Code, as set forth in the agency's notice of rulemaking, are Sections 409.905, 409.908, and 409.9081, Florida Statutes.

39. Section 409.905, Florida Statutes, titled "Mandatory Medicaid services," provides in relevant part:

    The agency may make payments for the following services, which are required of the state by Title XIX of the Social Security Act, furnished by Medicaid providers to recipients who are determined to be eligible on the dates on which the services were provided. Any service under this section shall be provided only when medically necessary and in accordance with state and federal law. Nothing in this section shall be construed to prevent or limit the agency from adjusting fees, reimbursement rates, lengths of stay, number of visits, number of services, or any other adjustments necessary to comply with the availability of moneys and any limitations or directions provided for in the General Appropriations Act or chapter 216.

    
    

    1. Advanced registered nurse practitioner services.-- The agency shall pay for services provided to a recipient by a licensed advanced registered nurse practitioner who has a valid collaboration agreement with a licensed physician on file with the Department of Health or who provides anesthesia services in accordance with established protocol required by state law and approved by the medical staff of the facility in which the anesthetic service is performed. Reimbursement for such services must be provided in an amount that equals not less than 80 percent of the reimbursement to a physician who provides the same services, unless otherwise provided for in the General Appropriations Act. (Emphasis added)

40. The underscored portion of Section 409.905 provides the agency with authority to make reimbursement adjustments, but limits that authority to those "adjustments necessary to comply with the availability of moneys" and any limitations set forth by the Legislature in the General Appropriations Act or in Chapter 216, Florida Statutes, which governs agency planning and budgeting.

41. Petitioner contends that this language provides no authority for AHCA to differentiate between qualified Medicaid providers or selectively allow reimbursement to one qualified provider over another in the provision of ARNP services. Petitioner contends that Section 409.905 provides for reimbursement determinations "across the board," to be applied evenly to every ARNP, without a distinction as to whether the ARNP is employed by a private company, an RHC, an FQHC, or a CHD.

42. Petitioner's contention has merit, under the circumstances presented by this case. Section 409.905(1) establishes that ARNP services are reimbursable, and provides no basis for distinguishing between ARNP services provided by private corporations and those provided by government affiliated entities. The italicized statutory language is plainly aimed at providing the agency flexibility in performing its legislatively defined duties within budgetary constraints; it does not give the agency authority to redefine its duties. The "adjustments" set forth in the statute are in the nature of accounting or budgetary

    adjustments, as opposed to substantive changes in the reimbursable services enumerated below the underscored language, including those for ARNPs. For example, the statute allows AHCA to adjust the number of visits or services to comply with budget constraints, but does not of itself allow the agency to adjust the kind of services that are reimbursable. Similarly, the statute allows AHCA to adjust reimbursement rates, but does not of itself give the agency authority to declare some otherwise qualified providers ineligible for reimbursement.

43. It is concluded that the challenged portions of Rule 59G-4.010, Florida Administrative Code, improperly enlarge or modify the provisions of Section 409.905, Florida Statutes.

44. Section 409.908, Florida Statutes, titled "Reimbursement of Medicaid providers," provides in relevant part:

    Subject to specific appropriations, the agency shall reimburse Medicaid providers, in accordance with state and federal law, according to methodologies set forth in the rules of the agency and in policy manuals and handbooks incorporated by reference therein. These methodologies may include fee schedules, reimbursement methods based on cost reporting, negotiated fees, competitive bidding pursuant to s. 287.057, and other mechanisms the agency considers efficient and effective for purchasing services or goods on behalf of recipients. Payment for Medicaid compensable services made on behalf of Medicaid eligible persons is subject to the availability of moneys and any limitations or directions provided for in the General Appropriations Act or chapter 216. Further, nothing in this section shall be construed to prevent or limit the agency from adjusting fees, reimbursement rates, lengths of stay, number of visits, or number of services, or

    making any other adjustments necessary to comply with the availability of moneys and any limitations or directions provided for in the General Appropriations Act, provided the adjustment is consistent with legislative intent.

    
    

    * * *

    
    

    (3) Subject to any limitations or directions provided for in the General Appropriations Act, the following Medicaid services and goods may be reimbursed on a fee-for-service basis. For each allowable service or goods furnished in accordance with Medicaid rules, policy manuals, handbooks, and state and federal law, the payment shall be the amount billed by the provider, the provider's usual and customary charge, or the maximum allowable fee established by the agency, whichever amount is less, with the exception of those services or goods for which the agency makes payment using a methodology based on capitation rates, average costs, or negotiated fees.

    
    

    1. Advanced registered nurse practitioner services.

    
    

45. The underscored language in Section 409.908, Florida Statutes, is virtually identical to that discussed above in Section 409.905, Florida Statutes. For the reasons discussed above, it is concluded that the challenged portions of Rule 59G- 4.010, Florida Administrative Code, improperly enlarge or modify the provisions of Section 409.908, Florida Statutes. The analysis is not affected by the fact that Section 409.908(3) provides that allowable services or goods must be furnished in accordance with Medicaid policy manuals and handbooks. The policy manuals and handbooks are adopted by reference as rules,

    and rules must comport with the specific provisions of law they purport to implement.

46. Section 409.9081, Florida Statutes, titled "Copayments," provides in relevant part:

    1. The agency shall require, subject to federal regulations and limitations, each Medicaid recipient to pay at the time of service a nominal copayment for the following Medicaid services:

       
       

       1. Hospital outpatient services: up to $3 for each hospital outpatient visit.

          
          

       2. Physician services: up to $2 copayment for each visit with a physician licensed under chapter 458, chapter 459, chapter 460, chapter 461, or chapter 463.

          
          

    2. The agency shall, subject to federal regulations and any directions or limitations provided for in the General Appropriations Act, require copayments for the following additional services: hospital inpatient, laboratory and X-ray services, transportation services, home health care services, community mental health services, rural health services, federally qualified health clinic services, and nurse practitioner services. The agency may only establish copayments for prescribed drugs or for any other federally authorized service if such copayment is specifically provided for in the General Appropriations Act or other law.

47. Section 409.9081, Florida Statutes, relates exclusively to co-payments. On its face, it appears not to be implemented by or related to the challenged portions of Rule 59G-4.010, Florida Administrative Code. AHCA offered no evidence for or explanation of any connection between this statute and the challenged portions of the rule.

48. At the final hearing and in its proposed final order, AHCA contended that two other provisions of the governing statutes are implemented by the challenged provisions of Rule 59G-4.010, Florida Administrative Code. Those provisions are Section 409.912(13)(a) and 409.913, Florida Statutes.

49. Section 409.912(13)(a), Florida Statutes, provides:

    
    

    The agency shall identify health care utilization and price patterns within the Medicaid program which are not cost-effective or medically appropriate and assess the effectiveness of new or alternate methods of providing and monitoring service, and may implement such methods as it considers appropriate. Such methods may include disease management initiatives, an integrated and systematic approach for managing the health care needs of recipients who are at risk of or diagnosed with a specific disease by using best practices, prevention strategies, clinical-practice improvement, clinical interventions and protocols, outcomes research, information technology, and other tools and resources to reduce overall costs and improve measurable outcomes.

50. Section 409.913, Florida Statutes, provides the following preliminary statement:

    The agency shall operate a program to oversee the activities of Florida Medicaid recipients, and providers and their representatives, to ensure that fraudulent and abusive behavior and neglect of recipients occur to the minimum extent possible, and to recover overpayments and impose sanctions as appropriate.

51. Section 409.913 goes on to define the terms "abuse," "fraud," and "overpayment," then to list in detail the agency's powers to curb those activities. Those powers include the

    conduct of reviews, investigations, analyses and audits of Medicaid providers; prepayment review of provider claims; reporting of criminal violations to the Attorney General's Medicaid Fraud Control Unit; peer review of Medicaid providers; provider certification of submitted claims; provider retention of records for five years and free agency access to those records; provider repayment of for inappropriate, medically unnecessary or excessive services; administrative remedies, including fine, suspension, and termination of participation in the Medicaid program; follow-up reviews of providers with a history of overpayments; and the withholding of payments upon receipt of reliable evidence of fraud or willful misrepresentation by the provider.

52. Putting aside the question of the agency's authority to rely on statutory provisions not set forth as "specific provisions of law implemented" in the rule, these late-cited statutes are not properly implemented by the challenged portions of Rule 59G-4.010, Florida Administrative Code.

53. Section 409.912(13)(a), Florida Statutes, requires AHCA to identify cost-ineffective and medically inappropriate health care utilization and price patterns in the Medicaid program, and permits the agency to implement "new or alternate methods of providing and monitoring service." While the accompanying list of methods is not exclusive, it does indicate a legislative intent that the methods to be employed should be in the nature of

    improvements in practice management techniques in utilization or price patterns shown not to be cost effective or medically appropriate as currently practiced.

54. No persuasive evidence was presented at hearing that the utilization or price patterns of ARNP mobile unit providers are not cost-effective or medically necessary, or that the agency conducted a review specific to mobile ARNP providers to determine their utilization or price patterns. AHCA had in hand some anecdotal evidence of utilization problems with mobile dental units. Rather than treating these as problems related to such services as dental examinations, which may be performed quickly on many patients and thus invite abuse by unscrupulous providers, the agency simply assumed that these problems were generic to all mobile providers, including ARNPs. Even assuming that Section 409.912(13)(a) could be implemented by the rule at issue, AHCA failed to meet the statutory condition precedent to introducing a "new or alternate method of providing and monitoring service:"

    it failed to identify utilization or price pattern problems that would justify the restrictions placed on ARNP mobile unit providers by the challenged portions of the rule.

55. Section 409.913, Florida Statutes, requires the agency to operate a program of Medicaid oversight designed to minimize fraudulent and abusive behavior and to recover overpayments and impose sanctions where appropriate. This requirement, and the powers granted to the agency to meet it, substantially embody the

    "pay and chase" concept that ACHA's witnesses derided at the hearing as an inefficient, ineffective way to combat fraud and abuse.

56. AHCA is granted some authority to take preemptive action to deny or withhold claims, but only as to individual providers suspected of wrongdoing or known to have committed violations in the past. Section 409.913, Florida Statutes, provides no authority to take preemptive "fraud and abuse" control measures against entire classes of providers, or to subject a subclass of ARNPs to special "fraud and abuse" controls, absent any evidence that the class or subclass has engaged in fraudulent or abusive activities. To the extent AHCA may rely on a statute not expressly cited in its rule as a "specific provision of law implemented," the challenged portions of Rule 59G-4.010, Florida Administrative Code, enlarge and modify the provisions of Section 409.913, Florida Statutes.

57. Section 409.913, Florida Statutes, provides that the agency shall operate a program to oversee the Florida Medicaid program to minimize fraudulent and abusive behavior and neglect of recipients. The statute makes no provision for delegation of the agency's authority to other entities. The challenged portions of Rule 59G-4.010, Florida Administrative Code, allow private ARNP mobile unit providers to participate in the Medicaid program only through contractual arrangements with RHCs, FQHCs, and CHDs. However, the rule does not require those entities to

    contract with ARNPs, meaning that AHCA has delegated to those entities the power to prevent private ARNP mobile unit providers from participating in the Medicaid program at all. The agency's witnesses made it clear that this delegation was a prime motivation for drafting the rule as it did. In this respect, the challenged portions of the rule contravene the provisions of Section 409.913, Florida Statutes.

58. AHCA argues that the rule is justified by the overall goals of the Medicaid program: efficiency, economy, and quality care. AHCA argues that it is the best judge of the means by which those goals are to be achieved, quoting a recent federal decision: "A general and undefined requirement of efficiency and economy for the Medicaid program as a whole is a concept for policy makers, not for the courts." Florida Pharmacy Association v. Cook, 17 F.Supp. 3d 1293, 1301 (N.D. Fla. 1998).

59. This argument is unpersuasive. For purposes of this rule challenge proceeding, the ultimate "policy maker" is the Legislature. The agency's policy decisions must be premised upon specific statutory authority. In the Florida Pharmacy case, the plaintiffs were attempting to challenge the ACHA's implementation of a Medicaid pharmacy fee schedule that was expressly mandated by the Legislature itself. In the instant case, ACHA pointed to no persuasive legislative authorization for the challenged portions of Rule 59G-4.010, Florida Administrative Code. The general goals of efficiency, economy, and quality care do not

    substitute for the specific authority required by Section 120.52(8)(b)&(c), Florida Statutes.

60. Finally, the challenged portions of Rule 59G-4.010, Florida Administrative Code, are arbitrary and capricious. An "arbitrary" decision is one not supported by facts or logic, or despotic. A "capricious" decision is one taken irrationally, or without thought or reason. Board of Clinical Laboratory Personnel v. Florida Association of Blood Banks, 721 So. 2d 317,

    318 (Fla. 1st DCA 1998); Board of Trustees of the Internal Improvement Trust Fund v. Levy, 656 So. 2d 1359, 1362 (Fla. 1st DCA 1995). In undertaking this analysis, the undersigned is mindful that these definitions

    add color and flavor to our traditionally dry legal vocabulary, but do not assist an objective legal analysis. If an administrative decision is justifiable under any analysis that a reasonable person would use to reach a decision of similar importance, it would seem that the decision is neither arbitrary nor capricious.

    Dravo Basic Materials Company, Inc. v. Department of Transportation, 602 So. 2d 632, 634 n.3 (Fla. 2d DCA 1992).

61. Under any of the standards provided by the cited cases, the challenged portion of Rule 59G-4.010 is arbitrary and capricious. Having received anecdotal complaints of abuses by mobile dental units, the agency leaped to the conclusion that mobile units generally presented a fraud and abuse problem, and crafted a rule that prohibits private ARNPs from providing mobile unit services unless they are able to establish contractual

    affiliations with RHCs, FQHCs, or CHDs. As noted above, the rule does not require those entities to enter contracts with the ARNPs, or even to negotiate with them. The evidence at hearing established that CCI made substantial efforts to contract with one of the named entities, and was uniformly rebuffed. The practical effect of the rule has been to prohibit CCI from providing ARNP mobile unit services to Medicaid recipients, because the agency discovered abuses by mobile dental units.

    There is no rational connection between the cause and effect of the rule.

62. AHCA promulgated the rule without making inquiry as to the willingness or ability of RHCs, FQHCs, or CHDs to contract with private ARNPs. Neither was evidence provided that the agency chose those entities based on their ability to deliver the ARNP mobile unit services differently or better than private providers. The agency's stated reason for choosing these entities was not their capacity for delivering services but their ability to provide local oversight of the ARNPs' activities. However, Ms. Metz testified that the rule would allow an ARNP to contract with an RHC, FQHC, or CHD anywhere in the state, thus rendering irrational the purported local control purpose.

63. The evidence established that ACHA promulgated the challenged portions of the rule as part of a blanket amendment to its practitioner handbooks, without thought for ARNP services in particular. The agency conceded there was no evidence that ARNP

    mobile unit providers were engaging in the abusive practices found in the dental field, and provided no evidence as to the pervasiveness of the abusive practices even among dental providers. The agency provided no evidence that it even considered whether the nature of ARNP services carries the potential for such "Medicaid patient mill" abuses as it found in certain mobile dental units. These factors further indicate that the rule is arbitrary and capricious.

64. In conclusion, Petitioner established, and Respondent failed to refute, that the challenged portions of Rule 59G-4.010, Florida Administrative Code, enlarge, modify, or contravene the specific provisions of law implemented, and are arbitrary and capricious.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that pages 1-5 and 1-6 of the ARNP Handbook, adopted by reference in Rule 59G-4.010, Florida Administrative Code, constitute an invalid exercise of delegated legislative authority within the meaning of Sections 120.52(8)(c)&(e), Florida Statutes.

DONE AND ORDERED this 27th day of June, 2000, in Tallahassee, Leon County, Florida.

LAWRENCE P. STEVENSON

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 27th day of June, 2000.

COPIES FURNISHED:

Bruce Culpepper, Esquire

Ackerman, Senterfitt & Eidson, P.A.

301 South Bronough Street, Suite 200 Post Office Box 10555

Tallahassee, Florida 32302-2555

Moses E. Williams, Senior Attorney Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308

Sam Power, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308

Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308

NOTICE OF RIGHT TO JUDICIAL REVIEW

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

Docket for Case No: 99-002497RX

Orders for Case No: 99-002497RX