7.36.6 STATE OF FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION — BROOK WOOD EXTENDED CARE OF HIALEAH GARDENS, LLP, d/b/a A i THE WATERFORD CONVALESCENT CENTER, DOAH CASE NO. 00-1491 PROVIDER NO. 209333 AUDIT NO. NH98-089M RENDITION NO. AHCA-02- 0076-S-MDA . JDP ~Closecl STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION, Petitioner, Respondent. ee BROOKWOOD-WASHINGTON COUNTY CONVALESCENT CETNER, INC., d/b/a WASHINGTON COUNTY CONVALESCENT, DOAH CASE NO. 00-1493 PROVIDER NO. 206709 Petitioner, AUDIT NO. NH98-088M vs. STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION, Respondent. / FINAL ORDER This cause was referred to the Division of Administrative Hearings and assigned to an Administrative Law Judge (ALJ) for a formal administrative hearing and the entry of a Recommended Order. The Recommended Order of July 30, 2001, is attached to this Final Order, and incorporated herein by reference except as noted below. FINDINGS OF FACT Except as modified per the discussion, infra, the Agency adopts the findings set forth in the Recommended Order. CONCLUSIONS OF LAW The Agency has reviewed the record and concludes that it must respectfully disagree with the Administrative Law Judge’s (ALJ) decision in this case, where the issue is infused with policy considerations and where the Agency’s interpretation of its statutory duty is as reasonable or more reasonable than the ALJ’s. Specifically, the ALJ’s conclusions at paragraphs 26 and 28 of the Recommended Order are rejected. The record reveals that, before January of 1997, both AHCA and Brookwood recognized the latter’s need to be able to compete with local markets in hiring and maintaining personnel. Brookwood proposed to meet that need by (1) increasing the hourly rate it paid to its Certified Nursing Assistants (CNAs), and (2) hiring six additional CNAs to share the workload. AHCA agreed with Brookwood’s proposal and granted Brookwood an interim rate adjustment, retroactive to July of 1996, to reflect the increased cost that would be associated with those two activities. The increased revenues, however, were not used solely for those two activities. Rather, Brookwood also provided additional employment incentives to recruit and maintain CNAs, such as giving bonuses and allowing them to “cash in” their unused sick leave. Later, therefore, when Brookwood submitted its actual cost report in November of 1997, Brookwood’s calculations of the “actual” cost of hiring and maintaining personnel included not only the cost of increasing the i) ‘ hourly rate and hiring six additional CNA’s but also the additional cost associated with the additional incentives. An audit later revealed the discrepancy, and the Agency sought reimbursement of the overpaid Medicaid amounts consistent with the Florida Title XIX Long Term Care Reimbursement Plan, which specifically states that “(a)ny (interim reimbursement rate) overpayments or underpayments resulting from the difference between budgeted costs and actual costs (limited by class or statewide ceilings), as determined through an audit of the same reporting period, will be either refunded to the Agency, or paid to the provider as appropriate.” (JI, Tab 2, Plan at 66-Definition of Medicaid Interim Reimbursement Rate). Brookwood asked for a hearing to be conducted by an Administrative Law Judge (ALJ) assigned by the Division of Administrative Hearings. Among other findings, the ALJ stated, at paragraph 17, that The auditors used $3.56 instead of $3.91 as the starting point for the cost report figures. (Brookwood) had relied on the higher number as the cost-settled figure for the audit. More important, (Brookwood) relied on the same accounting method it had relied on for the interim rate request. A review of the record reveals, however, that the auditors did not err in using the $3.56 figure. Indeed, the $3.56 figure was the figure associated with the interim rate adjustment that occurred during the year covered by the audit. The purpose of an audit, meanwhile, is to learn whether costs incurred match the purpose for which the funds were requested and granted, and the fact that Brookwood may have relied on the higher number ($3.91) associated with its submission of its actual cost report in November of 1997 (which included incentives other than an increase in the hourly rate and the employment of six additional] CNAs) is irrelevant. Likewise, the ALJ’s finding at paragraph 19, that “all of the costs reported by [Brookwood] are allowable under the Medicaid guidelines,” is irrelevant because, even if the costs of the additional employment incentives are allowable, the fact remains that Brookwood did not specify those additional employment incentives as the basis for asking for the interim rate adjustment that was granted in January of 1997. Consequently, it does not matter, as the ALJ found at paragraph 20, that the additional employment incentives were “within the parameter of curing the deficiency that the interim rate sought to address.” Rather, the purpose of the audit was to ensure that the money was used for the specific purpose of increasing the hourly wage and employing six additional CNAs. At paragraph 24 the ALJ found that that “(t)he allowable expenses incurred by [Brookwood] support the reimbursement rate paid to this provider.” No one at the hearing doubted that the provider, in offering additional employment incentives, was merely trying to recruit and maintain staff to meet the needs of its residents. The issue remains, however, whether Brookwood’s employment of those additional incentives can be paid for with the Medicaid funds obtained by Brookwood for its own expressly stated purpose of increasing the hourly wage and employing six additional CNAs. For policy considerations directly related to the Agency’s substantive statutory responsibilities, the answer must be no. At paragraph 26, the ALJ concludes that: In this case AHCA has interpreted the provisions of the Plan to conclude that the overpayment between the budgeted costs and the actual costs must be repaid by the provider. More specifically, AHCA’s position is that the overpayment that resulted from Brookwood’s gratuitous provision of employment incentives in addition to an increased hourl Pp. y wage and the reduced workload that attends the hiring of six more CNAs must be repaid. To ‘ conclude otherwise is to suggest that, in the future, providers may decide for themselves how Medicaid dollars should be spent, and audits will serve no useful purpose. This is an untenable proposition. Moreover, it is inconsis-tent with financial accountability and AHCA’s statutory obligation to ensure the efficient, effective use of limited Medicaid funds, which, as the ALJ correctly points out, cannot be used to pay for luxury services, excessive charges, or operating costs that exceed what a prudent, efficient operated facility would incur. That recoupment in this case will occur “some three years after the interim rate was cost settled” and “will work a financial hardship for this provider,” as stated by the ALJ in paragraph 28, camnot, unfortunately, be the basis upon which hard decisions like this must be made in order to ensure the integrity of the Medicaid program overall. Given, therefore, that the decision in this case is infused with policy considerations about matters over which AHCA has substantive jurisdiction, that the entire record has been reviewed, and that the Agency’s interpretation is as reasonable or more reasonable than the ALJ’s, the ALJ’s contrary conclusions of law and recommended disposition are hereby rejected and reversed. See, eg., Eulo v. Florida Unemployment Appeal Comm’n, 724 So.2d 636, 637 (Fla. 2d DCA 1999) (“While the (Agency) must accept...factual findings if they are supported by substantial, competent record evidence, it may reject the...legal conclusions based on that evidence.”); Florida Public Employees Council 79, AFSCME v. Daniels, 646 So.2d 813, 816 (Fla. 1° DCA 1994) (“An agency has the principal responsibility of interpreting statutes dealing with matters within (its) regulatory jurisdiction and expertise... Therefore, (the Agency) has authority to overrule statutory interpretation and applications...”). AHCA has great flexibility in determining the methodology by which to reimburse providers. The Florida Pharmacy Ass'n v. Cook, 17 F. Supp.2d 1293 (N.D. Fla. 1998). Additionally, AHCA’s interpretation should be afforded great deference, Baptist Hospital, Inc., v. Dept. of Health and Rehabilitative Services, 500 So.2d 620 (Fla.1* DCA 1986); Dept. of Professional Regulation Board of Medical Examiners v. Durrani, 455 So.2d 515 (Fla. 1* DCA 1984); Pan Am Airways v. Fla. Pub. Serv. Com’n, 427 So.2d 716 (Fla. 1983), because the interpretation is infused with policy determina-tions consistent with AHCA’s statutory obligation to administer the Medicaid Program effectively and efficiently so as to preserve funding for patient care. Heifetz v. Department of Professional Regulation, Division of Alcoholic Beverages and Tobacco, 475 So.2d 1277, 1282 (Fla. 15* DCA 1985); Holmes v. Turlington, 480 So.2d 150, et eaeeer 153 (Fla. 1" DCA 1985). An agency’s interpretation of its own rules and regulations is entitled to great weight and should not be overturned unless the interpretation is clearly erroneous. Orange Park Kennel Club, Inc., v. DBPR, 644 So.2d 574 (Fla. 1 DCA 1994). j IT IS THEREFORE ADJUDGED THAT: | The ‘Agency’s Medicaid audit adjustments for the cost reporting year ending January 31, 1997, are proper and in accordance with the Florida Title XIX Long Term Care Reimbursement Plan, HCFA PUB. 15-1 aka HIM 15, and generally accepted accounting principles governing the state Medicaid program. DONE and ORDERED this ¢_ day of we atel— _, 2002, in Tallahassee, Ay Le a RHONDA M. ME ows, MD., SECRETARY Agency for Health Care Administration Florida. NOTICE OF RIGHT TO JUDICIAL REVIEW A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER iS ENTITLED TO 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 THE FILING FEE 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 THE RENDITION OF THE ORDER TO BE REVIEWED. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order has been furnished by U.S. Mail, or by the method indicated, to the persons named below on this Lg day of atets _. 2002. a, Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, FL 32308-5403 COPIES FURNISHED TO: Joyous Parrish Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-3060 Steven A. Grigas, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3 Suite 3431 Tallahassee, FL 32308-5403 Theodore E. Mack, Esquire Powell & Mack 803 North Calhoun Street Tallahassee, FL 32303 Lisa Milton Administrative Audit Services AHCA MSC #21

Docket for Case No: 00-001493

Orders for Case No: 00-001493