The Issue The issues presented concern the question of the Petitioner's entitlement to amend its license to expand its geographic service area to include Hillsborough and Manatee Counties with a base of operation being its existing offices in Pinellas County.
Findings Of Fact Petitioner is a home health care provider in Florida. Subsequent to April 30, 1976, it applied for and was granted a statement of need to serve patients in Pinellas County, Florida. Statement of Need No. 450 was issued on July 13, 1976. At that time, Global was not requesting opportunities to offer service for patients in other counties within the district, those outlying counties being Pasco, Hillsborough and Manatee. Consequently, the focus of the review related to Pinellas County, notwithstanding the fact that the reviewing agency, Florida West Coast Health Planning Council, Inc. had as its responsibility consideration of health care needs in the aforementioned four counties. Although the license that was granted to the Petitioner as a result of the Statement of Need did not on its face limit the geographic area of service, the license opportunity only pertained to Pinellas County. The license from the Respondent for the Pinellas service was issued in September 1976, following the grant of the Statement of Need by the local HSA. Petitioner's Exhibits No. 22 and No. 41, admitted into evidence describe this Statement of Need review process and evidence the fact that the review only encompassed Pinellas County. In 1977, Petitioner indicated to the Respondent that it had an interest in serving patients in Pasco County, on the basis of a perceived need for home health care services for those patients. At about this time, Petitioner also expressed an interest in serving patients in Hillsborough and Manatee counties. (The Petitioner did not provide home health services in Manatee and Hillsborough Counties prior to April 30, 1976, nor did it have a Medicare Provider Number issued by the United States Department of Health and Human Services, formerly Health, Education and Welfare, prior to that date). Out of this process litigation occurred and in the course of the conflict, the request to serve patients in Hillsborough and Manatee Counties was dropped. The effect of the Petitioner's dismissal of its request to operate in Manatee and Hillsborough Counties did not foreclose future efforts to expand its service to Hillsborough and Manatee patients based upon the outcome of the 1977-78 proceeding nor did that proceeding establish the right of the Petitioner to serve the Hillsborough and Manatee patients. The outcome of the litigation was an expansion of the Petitioner's license opportunity to include patients in Pasco County, without the necessity to obtain a Certificate of Need to operate in Pasco County. The expansion of services into Pasco County was not in keeping with the Statement of Need which had been issued for Pinellas County. The reason for granting the license in Pasco County was premised upon the Petitioner's reliance on specific permission which had been given by the Respondent to the Petitioner to operate in Pasco County, which permission was later disclaimed and finally reinstated by a formal Section 120.57(1), Florida Statutes, hearing. In essence, the license was afforded Petitioner upon the theory of equitable estoppel. Intervenor's composite Exhibit No. 2, admitted into evidence contains the Recommended Order and Final Order related to the Pasco County expansion of services. Subsequent to the expansion referred to in the previous paragraph, Global requested recognition of two subunits to be placed in Pasco County. One was to be located in the New Port Richey/Port Richey area and the other was to be located in the Zephyrhills/Dade City area. The application may be found as Respondent's exhibit No. 2, admitted into evidence. This expansion was the subject of Certificate of Need review both at the local level by the Florida Gulf Health Systems Agency and by the Respondent in its office of Community Medical Facilities. The State Agency Action Report related to this application may be found as Respondent's Exhibit No. 4, admitted into evidence and contains review comments for all four counties in the related health service area, namely Pinellas, Pasco, Manatee and Hillsborough; however, the primary emphasis of the project review pertained to Pasco and Pinellas Counties. Following review, proposed agency action in the way of the issuance of a Certificate of Need was to the effect that the two subunits should be granted Certificate of Need No. 2072. A copy of that proposed agency action (certificate) may be found as Respondent's Exhibit No. 5, admitted into evidence. This proposed agency action granting a Certificate of Need for two subunits was challenged by the present Intervenor leading to a joint stipulation for settlement between the present parties to this action related to the Pasco County subunits. A copy of the joint stipulation may be found in Petitioner's Exhibit No. 25. That joint stipulation was accepted by the Secretary of the Department of Health and Rehabilitative Services through the entry of a final order on April 25, 1983, and per the order the Petitioner was left with one subunit, Certificate of Need No. 2072 for a Zephyrhills office in Pasco County. The subunit Certificate of Need did not contemplate service expansion into Manatee and and Hillsborough Counties from the remaining office. Independent of Petitioner's efforts to seek the subunit recognition, it determined to expand its service area into Hillsborough and Manatee Counties. In particular, these plans began to take shape in late 1982. The intended expansion does not entail the establishment of any offices or other plant, separate and apart from those in Pinellas and Pasco Counties as recognized with the issuance of the initial Statement of Need 450 and the Certificate of Need 2072, respectively. It is intended that Global provide the services in Hillsborough and Manatee Counties from its existing offices in Pinellas County. In the present hearing, the Petitioner has not indicated an intention to use the Pasco/Zephyrhills offices as the base of its operations in Hillsborough and Manatee Counties. Petitioner holds the opinion that the expansion into Hillsborough and Manatee Counties from its Pinellas County parent home health agency offices would not require Certificate of Need review. Consequently, it believes that it would be entitled to make that expansion simply by complying with other license requirements related to such expansion. In the alternative, Global urges that should a Certificate of Need be necessary before the expansion of service into the new counties, review has been performed upon the occasion of the issuance of the Statement of Need 450 and/or the issuance of the Certificate of Need No. 2072 for the subunit in Pasco County. Global also believes it is entitled to an amendment of its license allowing the expansion based upon its impression that similar permission has been granted other home health providers. After requesting provision of appropriate forms to accomplish the amendment to its license to allow expansion of services into Hillsborough and Manatee, there followed a series of letters between the parties, to include preliminary comments by the Respondent's staff members, some favorable to Petitioner's position, leading to an April 29, 1983, letter from Jay Kassack, Director, Office of Licensure and Certification, found as Petitioner's Exhibit No. 26, which advised the Petitioner that it was denied its expansion of service based upon failure to show evidence of compliance with Certificate of Need requirements set forth in Chapter 381, Florida Statutes, and Rule 10-5, Florida Administrative Code, and a subsequent letter of May 6, 1983, from Thomas J. Konrad, Administrator, Community Medical Facilities, Office of Health Planning and Development, found as Petitioner's Exhibit No. 29, which also denied the request for expansion based upon the inability to utilize the Statement of Need as a basis for expansion into Hillsborough and Manatee Counties, in that criteria of need had not been applied to Hillsborough and Manatee Counties by the Health Systems Agency when it reviewed and issued the 1976 Statement of Need. In the face of the denial of its request for licensure, the Petitioner sought and was provided this formal hearing. Based upon the belief that the necessary permission would be given to expand its service area into Hillsborough and Manatee Counties but prior to final decision by the agency on that request, Petitioner hired six additional nurses and began the development of training aids and other related matters dealing with the expansion of its service area at a cost of approximately $60,000. Those nurses could not be used to attend other patients already being served by the Petitioner. The agency had not promised that the license request would be granted and Global's understanding of the opportunities afforded by its existing license and Statement of Need and Certificate of Need recognition, together with the history of other applicants making similar requests for expansion did not entitle the Petitioner to undertake this development of services and expect to be granted permission to expand upon a theory of estoppel. In pursuing its hiring practices prior to the opportunity for the agency to speak finally to the request for expansion, Global did so at its own risk and did so not based upon sufficiently specific facts from the Department related to this application request to cause a change in its position after relying on those representations. The impetus for changing its position was provided by the applicant premised upon its presumptions related to the agency's response to the request for expansion, without allowing the agency the opportunity to review and announce its decision in this case. This circumstance is as contrasted with the 1977-78 case in which Global was allowed to expand its operations into Pasco County based upon the agency's initial action of condoning operations in Pasco County and then attempting to retract that permission. On this occasion, the agency has never countenanced the expansion of services into Manatee and Hillsborough Counties. From Respondent's point of view, the license denial is premised upon the use of an item referred to as "home health agency review matrix," a copy of which is found as Petitioner's Exhibit No. 1, admitted into evidence. In particular, reference is made to that portion related to expansion of a service area based upon the use of a Statement of Need. The language of that section says, "HSA Statement of Need remains valid. May expand HHA only in those counties in which criteria of need were applied by HSA." In essence, as indicated in the May 6, 1983, correspondence from Konrad, Petitioner's Exhibit No. 29, the Department was of the opinion that the criteria of need and the recognition of Petitioner by issuance of a Statement of Need No. 450, pertained only to Pinellas County. That perception is correct. A review of the record submitted to include the exhibits and testimony leads to the conclusion the criteria of need were not applied to examine counties other than Pinellas County when the Statement of Need was issued to the Petitioner. Therefore, according to the Department, Petitioner may not expand into Hillsborough and Manatee Counties without further Certificate of Need review related to Hillsborough and Manatee Counties. The Department began to use the matrix in March 1983 in its efforts to create an overview of its responsibilities in considering Certificates of Need and licensure related to home health care agencies. At the time of the final hearing in the instant case, the matrix served as a guide for considering requests to establish new home health agencies, to expand service areas and to establish subunits, depending upon the prior history of the home health agency as being "grandfathered" as a holder of a Medicare Provider Number from HEW prior to April 30, 1976; the holder of Statement of Need issued between 1975 and July 1977 or the holder of a Certificate of Need. The matrix assumes that the expansion of service area is an event requiring Certificate of Need review unless in the Statement of Need situation, as described, review criteria of need have been applied in the area where the home health agency intends its expansion. By contrast, in the instance of the grant of an original Certificate of Need for a new home health agency, there is a presumption that review has been made in all counties prior to the issuance of the Certificate of Need, therefore expansion may be made from that original facility into counties within that service area without the necessity of seeking a further Certificate of Need before offering services in outlying counties within the service area which were not being served before. The matrix makes no specific provision for the expansion of services from a subunit such as the Pasco County subunit held by the Petitioner. That question is not at issue in that the Petitioner does not seek expansion from its Pasco County subunit, so it is not necessary to address whether such expansion is allowed in keeping with the recognition of the subunit. The four county review involved in that recognition and grant of Certificate of Need and amended license, may not serve the secondary purpose of substituting for the criteria of need review contemplated in the Statement of Need process wherein criteria of need had to be examined in the subject counties in order to allow an expansion without the benefit of a Certificate of Need. Recognition of a subunit by the grant of a Certificate of Need is acceptance of a home health agency's base of operation through a semiautonomous entity and each successive subunit, according to the matrix, must undergo Certificate of Need review. Having refused to allow the recognition by issuance of a Certificate of Need for one subunit to form the basis for recognizing an additional subunit in the same county, notwithstanding the area wide review of criteria of need involved with the initial subunit, as expressed in the matrix, it follows that the subunit recognition of the Petitioner's Pasco County Operation not only may not form the basis of expansion, even if offered for that purpose, but may not serve to establish substituted data related to criteria of need in Hillsborough and Manatee Counties that was not forthcoming in the original review for the facility in Pinellas County at the time of the issuance of the Statement of Need. Assuming that the expansion of service from the original home health agency facility in Pinellas County as recognized through the Statement of Need process, without the establishment of a new home health agency, or subunit or fixed plant, by providing home health services in the residence of the patients in Hillsborough and Manatee Counties as delivered by employees of the petitioner is an activity which must undergo Certificate of Need review, the Department's utilization of the matrix to insure that a project undergo examination through the use of criteria of need is reasonable. Recognition of this treatment of the issue of review takes into account the distinction between the presumptions related to the review process in the Certificate of Need analysis by the Department in which full service area review for all counties is contemplated as contrasted with the possibility that the Statement of Need process by the local Health Planning Agency may have been accomplished on less than a full service area review, as was the situation with Global. Given this distinction, the matrix is not found to be at odds with the Legal Opinion 82-2, authored by Staff Attorney, James M. Barclay, dated March 9, 1982, in which significance is placed upon the fact that in the Certificate of Need review process health service area wide review is made and therefore expansion within the service area from the original facility is acceptable given the area wide review related to the proposed home health agency. The memorandum and matrix pertaining to Certificates of Need are consistent. A copy of the memorandum is found as Petitioner's Exhibit No. 3, admitted into evidence. The memorandum does not, from a review of its language and statement of applicable statutes and rules, address the Statement of Need circumstance. Petitioner has alluded to the agency's alleged inconsistent treatment of its request for expansion and amendment to its license allowing services to be offered in Manatee and Hillsborough Counties from its Pinellas County facility, compared to other home health agencies. Materials related to those other requests may be found in Petitioner's Exhibit Nos. 34-39, 41 and 42, admitted into evidence. All of those requests by home health agencies are consistent with the present denial, with the exception of Roberts Nursing. This consistency pertains to the fact that certain expansions were allowed due to special circumstances such as the need to provide service to patients in DeSoto County based upon the abandonment of patients by an ongoing health care provider, special circumstances related to certain counties in North Florida that were being served by Georgia health care providers and the fact that expansion in some instances was based upon the existence of a Certificate of Need as opposed to Statement of Need. The Roberts' situation is either the product of a mistake or is contrary to the present process of analysis of requests for expansions on the basis of Statements of Need. Petitioner has not shown that the expansion without Certificate of Need made by Roberts was pursuant to a contrary policy choice that was applied to Petitioner. On the other hand, there is some testimony that the Roberts' situation was possibly allowed based upon the belief that Roberts was expanded on the basis of a Certificate of Need as opposed to a Statement of Need, when in fact Roberts, like Global, held only a Statement of Need. Whatever the explanation, the treatment of the Roberts' request does not cause the grant of a license to Petitioner. One of the other home health care providers who sought expansion opportunities as found in Petitioner's Exhibit No. 38, admitted into evidence, was Independent Home Health Services, Inc., which was denied its opportunity based upon the agency's assertion that the Statement of Need originally granted that provider only looked at need for Pinellas County and expansion into Pasco County would require a Certificate of Need. Finally, Global has not asserted its entitlement to licensure based upon proof that it has satisfactorily addressed the criteria of need dealing with home health care offered in Hillsborough and Manatee Counties as such, related to a presentation separate and apart from the review process that may have been pursued prior to the present controversy. If it is the intention of the Petitioner to seek a license based upon satisfactorily addressing criteria of need, in substance, related to the offering of services in Hillsborough and Manatee Counties, that showing has not been successfully made on this occasion.
The Issue Whether any or all of the applications for certificates of need to establish medicare-certified home health agencies in Broward County (AHCA District 10) by Petitioners Allstar Care, Inc.; Medicorp Home Health Care Services; and Medshares of Florida, Inc., should be approved by the Agency for Health Care Administration.
Findings Of Fact The Parties Allstar Allstar Care, Inc., with its offices in Miami, is a Florida corporation that operates a licensed Medicare-certified home health care agency in Dade County. It serves, principally, patients aged 65 and over who are Medicare- and Medicaid-eligible by providing them at home: skilled nursing; physical therapy; occupational therapy; speech therapy; and the services of home health aides, when provided physician's order to do so. It also serves at-home indigents with like services when provided appropriate physician's orders. In 1996, Allstar provided a total of 122,000 visits. Fifty percent of them were by home health aides providing assistance with the patients' daily living needs, such as bathing, oral care, dressing, and assistance with meals. Forty- five percent of the visits were by skilled nurses. In addition, licensed social workers employed by Allstar provided social and emotional support for the patient and the patient's family. From 1994 to date, Allstar has provided Medicare- certified home health services in Dade County. It is reasonable to expect that Allstar will provide the same range of services that are described in its application for Broward County that Allstar currently provides in Dade. Medicorp A sister home health agency to Medcorp Home Health Services, Medicorp Home Health Services is a home health agency that serves patients in Wilton Manors and Oakland Park in Broward County, Florida. Although not Medicare-certified, it is Medicaid-certified. Medicorp was founded primarily to bring services to unserved and underserved areas, particularly "the projects," (Tr. 13,) in Broward County, that is areas of low-income housing the building of which was financed by the federal government's Department of Housing and Urban Development. Commencing operations in 1991 with an initial investment of $8,000 and as its only employee, current owner and administrator Beverly Cardozo, LPN and certified respiratory therapist, Medicorp has experienced rapid growth. Last year it grossed $1.8 million. Medshares Medshares of Florida, Inc., is a member of the family of Medshares companies commonly referred to as "Medshares." Medshares provides various home health services, such as Medicare-certified home health services; private nursing services; management services for home health agencies; infusion services; and consulting services. Medshares began in Tennessee in 1985 and since that time has expanded to operation in nine states with 52 locations. In 1996, Medshares provided approximately one million visits through its Medicare-certified home health agencies and approximately 1.7 million visits through its non-Medicare-certified and managed home health agencies. Medshares' long-range plan includes development of Medicare-certified agencies through the southeast. Development of such an agency is a logical step for Medshares, since Medshares currently operates in several other southeastern states. Medshares experiences a low-employee turnover rate of approximately 50 percent, which is less than half of the national average for home health operations. Medshares attribute this low turnover rate to its participatory management style as well as its employee benefits packages. For example, Medshares offers educational packages to any of its employees who wish to further his or her education. For its nurses, Medshares funds the cost of nursing certification by the American Nurses Association. AHCA The Agency for Health Care Administration is the "single state agency [designated by statute] to issue, revoke or deny certificates of need . . . in accordance with the district plans, the statewide health plan, and present and future federal and state statutes." Section 408.034(1), Florida Statutes. Petitioners: Non-competitors The Petitioners each claimed in the hearing that there is sufficient need in the District to support the granting of all three applications. They do not, therefore, view each other as competitors in this proceeding. Filing of the Applications and Preliminary Action by AHCA All three petitioners, Allstar, Medicorp, and Medshares, submitted timely applications for certificates of need to establish Medicare-certified home health agencies in Broward County, AHCA District 10: CON 8448 (Allstar), CON 8418 (Medicorp), and CON 8419 (Medshares). The applications were deemed complete by AHCA. Following preliminary review, however, the agency denied the applications. The State Agency Action Report ("SAAR") sets forth AHCA's findings of fact and determinations upon which the decisions were based. Allstar, Medicorp, and Medshares each filed a timely petition for hearing. The District AHCA District 10 is composed of Broward County, alone and in its entirety. The service area for review of CON applications for Medicare-certified home health agencies is the district. In this case, therefore, the service area is Broward County. In Broward County, there are roughly 190 home health agencies. Of these, however, only 35 are licensed Medicare- certified home health agencies (34 providers hold the 35 licenses). Three are approved Medicare-certified home health agencies, and another three are exempt Medicare-certified home health agencies. Need for Additional Medicare-certified home health agencies in District 10 No AHCA Methodology AHCA did not publish a fixed need pool for Medicare certified home health agencies for the July 1997 planning horizon in Florida because, at the time the Letters of Intent were filed (and when the Formal Hearing was conducted, as well), AHCA did not have any methodology pursuant to rule for projecting need for additional Medicare-certified home health agencies. Reasonable Methodologies of the Petitioners In the absence of AHCA methodology, expert health planners for each of the three petitioners developed reasonable methodologies which, when applied to data relevant in time by demographics to the case, show a need for at least a number in excess of three. Changes in the Health Care Marketplace The methodologies developed by the petitioners recognize ongoing changes in the health care marketplace that began with the implementation of the Medicare prospective payment system. The changes have progressively encouraged the use of less intensive, less costly settings for the provision of health care services. The least intensive and least costly health care service is home health care service. The tremendous demand for non-Medicare and Medicare-certified home health services beyond what would be expected due to simple population growth is the result. Use rates, therefore, are escalating beyond escalation due to population growth alone. AHCA recognizes that there has been a significant trend toward increased use of home health services. Not surprisingly, therefore, AHCA did not criticize the use of compound rates of increase to compute use rates in the need methodologies developed by any of the three petitioners. Allstar's Methodology and Determination of Numeric Need Allstar's health planner determined a need for at least six additional Medicare-certified home health agencies in Broward County for the appropriate planning horizon. The methodology used by Allstar in its application was conceptually identical to that approved in the Recommended and Final Orders in Shands Teaching Hospital and Clinics, Inc. v. AHCA, DOAH Case No. 96-4075 (Recommended Order issued 3/20/97, Final Order 5/12/97). The source of the data used by Allstar to develop its need methodology was the Medicare cost reports that existing providers file with the Federal Health Care Financing Administration, ("HCFA"). Data from 1995 was not available in the spring of 1996 when Allstar's application was filed, so Allstar used a 1994 data base period. The 1994 base period used by Allstar is the last for which data on visits was available from AHCA before the deadline for filing applications in this case. Allstar selected 1997 as the planning horizon because it usually takes one year from the date the application is submitted to get a home health care service in place. The planning horizon selected by Allstar is reasonable. Allstar relied on population estimates published by AHCA in January 1996, the most currently available populations statistics when the application was filed. Allstar received February 1996 population data from AHCA after the application was filed, but before the omissions response was due. When Allstar's methodology is replicated using the February 1996 population data, it does not substantially alter the projected numeric need. Allstar calculated a 1994 District 10 use rate by dividing the total patient visits in 1994 by the 1994 District 10 population 65 years of age and older. Use of the 65-and-older cohort is reasonable since Medicare eligibility begins at age 65 and, historically, 98 percent of all Medicare-certified home health care visits are delivered to that age group. The calculation yields a historic use rate of 6.83 visits per capita. Most use rates developed by health care planners for acute care services are constant. They assume conditions that are found in the base period will remain unchanged. Constant use rates are inappropriate in the instance of Medicare-certified home health care agencies. District 10 historical data from Medicare cost reports for the period 1989 through 1994 show use rates, ranging from 2.82 per capita in 1989 to 6.83 per capita in 1994. This dramatic increase is consistent with the increase in use rates in other AHCA districts. The combination of managed care and Medicare's prospective pay system is producing care for patients in less costly non-institutional settings like the home of the patient. Hence, home health care use rates have increased. The historical use rate trend line developed by Allstar, when extrapolated to 1997, yields 10.47 visits per capita in 1997. Consistent with conservative planning, and in an attempt to avoid either overstating or understating the horizon year use rate, Allstar averaged the trended and constant use rates for 1997, yielding a use rate of 8.65. Since a use rate of 8.65 represents the result of averaging two numbers, the 1997 projected rate is both a median and a mean. It is also both conservative and reasonable. When AHCA's population projection for 1997 is multiplied by the 8.65 use rate, the result is a projection of 2,365,443 Medicare-certified visits in July 1997. The mean agency size in 1994, measured by number of visits, was 54,101. The median number of visits in 1994 was 54,803. Dividing the average agency size of 54,101 visits into the number of projected visits in 1997 yields a gross need for 44 Medicare-certified home health care agencies in 1997. Allstar then subtracted the number 35 (representing the licensed Medicare-certified home health agencies) and another 3 (representing the approved agencies) from 44, yielding the need for 6 new Medicare-certified home health agencies. AHCA criticized Allstar's methodology on two bases. First, Allstar used population estimates published in January 1996, instead of more recent population estimates for February 1996, estimates available to Allstar at the time it filed its omissions response. Second, Allstar calculated its average or mean number of visits by using the total number of licensed Medicare-certified home health agencies in District 10, as opposed to only those licensed agencies which actually reported visits. As to the first criticism, Allstar's health planner explained on rebuttal that the January 1996 population estimates were all that were available when it prepared the application. It is true that the February 1996 population estimates became available prior to the filing of the omissions response and although "there was no . . . formal notification," (Tr. 650), Allstar became aware of their availability before it filed the response. Allstar's health planning expert examined the February 1996 data and concluded that "while different, [the data] . . . weren't significantly different." (Tr. 651). In light of the lack of any significant difference, Allstar's expert summed up the company's analysis of the problem and its approach at that moment in time this way: We had already invested a lot of energy in running the need [with the January 1996 data] and simply made the decision not to go back and redo all of that work based on the February document. (Tr. 650-651.) Since there was no "significant difference," between the January and February data, it does not seem appropriate to require the effort needed to project need based on a calculation employing the more up-to-date data, an effort that would not alter the result of Allstar's projected numeric need. In point of fact, after filing the omissions response, Allstar's expert did the analysis with the more current data and determined that the February population estimates, "had no affect on the conclusion of how many net agencies were needed." (Tr. 652.) As for the second criticism, Allstar's health planner appreciated that there was a choice to be made in its methodology between visits as to total number of licensed Medicare-certified home health agencies in District 10 and the subset of that group consisting of only like agencies which reported visits. Allstar rejected the use of only those who reported visits. By doing so, it assumed that non-reporters did not provide any visits. To do otherwise, that is, to exclude non- reporters, results in the assumption, when using an average number of visits as a component in the methodology, that the non- reporting agencies, on average, had just as many visits as the reporting agencies. Such an assumption is much more likely to be incorrect than the assumption that Allstar made. The law requires Medicare-certified home health agencies to report. In all likelihood, therefore, the non-reporting agencies did not report precisely because, being new agencies, they had no visits to report. Allstar's approach is thus the more valid approach. In short, AHCA's criticism of Allstar's methodology in this regard does nothing to alter the conclusion that Allstar's methodology is reasonable. Medshares' Methodology and Determination Although Medshares used a somewhat different methodology to determine projected need, its methodology was also reasonable. Medshares’ methodology, too, yielded projected need in 1997 for Medicare-certified home health agencies in AHCA District 10 in a number greater than three, the number of applicants involved in this proceeding. Medicorp's Methodology Medicorp's application did not contain a need methodology. At hearing, over AHCA's objection, Medicorp's expert in health planning testified as to the reasonableness of its methodology which also yielded a numeric need in excess of three. The objection of AHCA was treated as a Motion to Strike, and the testimony was allowed. As explained in the Conclusions of Law, the objection is now moot since AHCA did not provide a methodology of its own when it presented its case in chief, and since reasonable methodologies yielding numeric need in excess of the number of petitioners were proven by both Allstar and Medshares. Aside from numeric need, in the case of Medicorp, there is a special need. Special Need for Medicorp Medicorp presented evidence in its application showing the need for an agency, like Medicorp, located among and willing to focus on serving the needs of the District's underserved and, in some cases, unserved, minority and low-income residents. Medicorp's primary service area includes zip code 33311, a federally-designated area of restricted health care. As one might expect from this designation, residents of this zip code have the lowest income per capita, the highest rate of unemployment, and highest rate of Medicaid eligibility in Broward County. A large proportion of the residents of zip code 33311 live in HUD housing. And, the zip code has the highest concentration of HIV/AIDS sufferers in the county. Medicorp's Administrator, Beverly Cardozo, testified that her existing, non-certified agency, Medicorp Home Health Services, currently is providing substantially free care to up to 400 Medicare-eligible patients living in government-subsidized housing within Medicorp's primary service area. Ms. Cardozo and Medicorp have been providing this care since approximately 1994, when Medicorp instituted its "Slice of Life" program consisting of the establishment of health fairs at these housing projects. Since 1994, Ms. Cardozo has been attempting to make arrangements with a Medicare-certified agency to provide the necessary care to Medicare-eligible residents in the projects to provide care, in some cases, desperately necessary. Only one agency agreed to go into the projects. Eventually, it ceased conducting business, leaving Medicorp to provide free health care. In addition to providing this care, Ms. Cardozo has recruited other local providers and business people to donate time and goods for the care of these Medicare-eligible patients. She also has arranged for the provision of care by a wound specialist. Ms. Cardozo's testimony, together with Medicorp's Exhibits 3 and 4, show that a significant portion of the District 10 Medicare-eligible population is underserved. In particular, many of the low-income residents of Wilton Manor and Oakland Park, areas targeted for care by Medicorp's application, are not receiving much-needed care. This care would be made available on a continuous basis by Medicorp's trained and dedicated staff. Notwithstanding numeric need, therefore, there is a special need in District 10 for the Medicorp proposal. Local Health Plan "The District 10, August 1994 CON Allocation Factors Report [used by AHCA in the SAAR for these three applicants] provides [six] . . . preferences in the review of applications pertaining to Medicare certified home health agencies." AHCA No. 5, p. 5. The First Preference AHCA maintains that "Medicorp-[sic] and Medshares do not meet preference one of the [local plan] due to their lack of demonstration that there are identifiable subgroups who are Medicare-eligible and are currently being denied access to Medicare-certified home health agency services." AHCA PRO, p. 5. There is, however, no requirement expressed in the preference that denial of access be shown in order to meet the preference. With regard to Allstar, AHCA makes the same argument related to access denial in relationship to the Hispanic population identified by Allstar as an identifiable subgroup of the District's population to which it will provide service. Again, the preference does not expressly require a showing of denial of access. Allstar demonstrated that Broward County is 8.26 percent Hispanic; that Allstar has bilingual, indeed, multilingual capabilities in Dade County available for use in Broward should the CON be granted; and that it will locate its offices close to south central Broward near the largest Hispanic population. Allstar meets the express requirements of the preference. As explained above, Medicorp proposes to provide care concentrated in the most severely depressed area of District 10, geographically centered in zip codes 33311 and 33312. The proposed agency will provide care to the subgroup of predominantly black residents of the inner city HUD housing projects. It is true that this area may have "the highest concentration and number of Medicaid eligibles as well as the highest percentage of HIV and AIDS cases in the District . . .," and that "this population [is] . . . predominantly 'Medicaid eligibles,' and finally, that these patients could be served through a non-Medicare certified home health agency," AHCA No. 5, p. 6, (e.s.). But these factors do nothing to defeat Medicorp's satisfaction of the preference. Medicorp has demonstrated that it will provide service to an identifiable subgroup of District 10 Medicare-eligible patients based on "ethnicity" and "geographic location." It clearly meets the preference. Medshares meets the priority as well. Based upon geographic analyses contained in its application, Medshares identified lower-income Hispanics and African-Americans, including lower-income females, and persons afflicted with HIV/AIDS as groups in District 10 that it would serve. Medshares’ patient material will be provided in both English and Spanish. It plans to provide a full range of home health care services to these groups with special emphasis on low-income females who typically receive little or no prenatal care, and low-income families in need of pediatric services. And, it will locate in Fort Lauderdale, the urban area in Broward County with the highest number of AIDS cases. Medshares meets the preference. Preference Two All three of the applicants have committed to serve Medicaid and indigents, promoted by Preference Two, as follows: Allstar: 1 percent Medicaid, 0.5 percent indigent; Medicorp 10 percent Medicaid, 2 percent indigent; and Medshares 1.4 percent Medicaid, 2 percent indigent. Preference Three All three of the applicants state they will provide for the provision of maintenance services, as called for by Preference Three of the Local Plan, to Medicaid and indigent patients. Preference Four AHCA agrees that Medicorp and Medshares meet preference four which gives priority to those applications that show reasonable expectations for reaching a patient load of at least 21,000 visits by the end of the first year of operation. As to Allstar, it reasonably projected only 13,265 visits in its first operational year. Allstar's projection, however, includes a rate of 2,000 visits per month by the end of the first year, a monthly rate that leads to 21,000 per year when annualized. None of the Medicare-certified home health agencies opening in Broward County since 1992 have met the 21,000 "priority" threshold. In light of this reality and the reasonableness, in Allstar's view, of interpreting the preference as requiring only a demonstration of capacity to reach 21,000 visits rather than a projection that it actually reach 21,000, Allstar argues that it meets Preference Four of the Local Plan. There may be some room in the wording of the preference to interpret it as allowing a demonstration of capacity by the end of the first year to have achieved 21,000 visits rather than actually reaching the 21,000 visits, but there was no evidence that AHCA has ever made such an interpretation. For its part, AHCA flatly asserts, "Allstar does not meet this preference." AHCA PRO, p. 6. In the absence of an authoritative interpretation in Allstar's favor, Allstar must be considered as not meeting the preference. Preference Five There is no question that all three applicants meet Preference Five. The application of each demonstrates the development of patient transfer and referral services with other health provider agencies as a means of ensuring continuity of care. Preference Six The applications of Medicorp and Medshares demonstrate that they will participate in the data collection activities of the local health council. Allstar has agreed to report data to the regional health planning council but not to the local health council. Medicorp and Medshares meet preference six; Allstar does not. State Health Plan Preference Just as the District 10 Health Plan, the Florida State Health Plan establishes certain preferences for applicants for Medicare-certified home health services certificates of need. The State Health Plan, too, contains six preferences. Preference One Among the three applicants, only Medicorp demonstrated a willingness to commit a specific percentage of total annual visits to AIDS/HIV patients. The State Health Plan in its first allocation factor, however, does not contain a "percentage" requirement in order for preference to be given. All that is required is that the applicant "propos[e] to serve AIDS patients." AHCA Exhibit 10. Consistent with this requirement, all three applicants propose to serve AIDS patients; Medshares proposes to condition its application on such service and Medicorp, additionally, has in place policies and procedures for quality assurance and safety precautions in caring for the HIV/AIDS patient. All three applicants, therefore, meet the preference. Preference Two Although there does not appear to be a universally accepted definition of what "high technology services" means in the home health arena, and although AHCA does not define them, all three applicants have reasonably identified them in their application and have proved sufficient intent to provide them. For example, Medshares proposes to provide a full range of nursing and therapy services, including cardiac care; continuous IV therapy; diabetes care; oncology services; pediatrics; rehabilitation; pain therapy; total parenteral nutrition; speech therapy; physical therapy; occupational therapy; enterostomal therapy; respiratory therapy; audiology therapy; and infusion therapy. Several of these services are unquestionably "high tech." AHCA answers that none of the three showed that the full range of services, including those that are "high tech," were not sufficiently available and accessible in the same service area. Neither, of course, did AHCA. In the context of a litigated case, the wording of the preference is awkward for achievement of the result AHCA seeks: Preference shall be given to an applicant proposing to provide a full range of ser- vices, including high technology services, unless these services are sufficiently avail- able and accessible in the same service area. AHCA No. 5, p., 10. All three applicants receive preference under this part of the State Health Plan. Preference Three There is no definition of "disproportionate share" of Medicaid and indigent patients in AHCA. Nor was there any evidence of such a definition provided in this proceeding by AHCA by way of testimony or in any other way. The term, as used in acute services, contemplates and necessitates the use of Medicaid utilization data of the type that AHCA has never collected for Medicare-certified home health agencies. Nonetheless, both Medicorp and Medshares are entitled to the benefit of this preference. Medicorp's principals have demonstrated a commitment to serving what would constitute a disproportionate share of Medicaid and indigent patients by any common understanding of the term "disproportionate share." Medicorp, as a new entity, is entitled to the benefit that flows from the history of service of its principals and predecessors. Medshares, too, has a history of providing home health services to Medicaid eligible persons and indigents, and Medshares plans to serve all patients in need regardless of ability to pay. Allstar is excused from complying with this preference given the absence of a meaningful definition. Preference Four The preference is not applicable in this case, since it can only apply to multi-county districts. It is worth noting, however, that home health care has been cited as an area of critical need in Broward County by the Broward Regional Health Planning Council. It is also worth re-iterating that several zip code areas within Medicorp's primary service area have been designated by the Federal government as currently and historically medically underserved. Medicorp can fill the needs of the underserved in the Broward County HUD housing projects as a Medicare-certified home health agency should its application be granted. Preference Five Medshares has made an unqualified commitment to provide consumer survey data measuring patient satisfaction to AHCA. Without doubt, it fully meets the preference. Allstar currently collects patient satisfaction data, as well as family and physician satisfaction data. Allstar further stated in its application that, "though there is currently no systematic effort by the department to collect such data, [Allstar] will make this data available to the department, or its designated representative, upon development and implementation of an appropriate data collection and reporting system." AHCA No. 5, p. 13. Likewise, Medicorp indicated willingness to participate in an HRS consumer satisfaction data collection effort "upon the State's development and implementation of an appropriate system." Id., at 12, (e.s.) Medicorp, moreover, is willing to make survey results available to the AHCA, HCFA, the District 10 local planning council, and the Office of Comprehensive Health Planning. Allstar and Medicorp, at least, are entitled to partial credit under this preference. Preference Six Each of the three applicants is entitled to this preference; each proposes a quality-assurance program and JCAHO accreditation. Increase in Availability and Access; Improvement in Quality of Care, Efficiency, Appropriateness, and Adequacy of the Service Assuming existing providers are available, efficient, appropriate, accessible, giving quality care, and are adequately utilized, adding three new Medicare-certified home health agencies is still justified when cost-effective agency size is taken into consideration. The cost-effective size of an agency can be determined using Medicare cost reports. In Florida, the cost-effective size of an Medicare-certified home health agency ranges from 30,000 visits to 95,000 visits annually. Allstar's regression analysis of a cost-effective Medicare-certified home health agency size, measured in terms of visits, took into consideration the type of visits performed, AHCA's geographic price index, and the affects of population density on costs. Adding new Medicare-certified home health agencies is appropriate when the mix of services is taken into account, and when as in this case, adding three such agencies into the marketplace will not reduce the cost-effective size of existing agencies below 30,000 annual visits. Medicorp, moreover, has proven the restricted access to services experienced by Medicare patients residing in inner city HUD housing projects in North Broward County and has established that all payer groups in these areas, including Medicare and Medicaid, are underserved. It was established by Medicorp that the predominantly minority residents of Fort Lauderdale's public housing and surrounding areas of Wilton Manors and Oakland Park are woefully underserved. The already-established role of Medicorp as the accepted and known provider in these areas demonstrates how access to these home health services will improve by Medicorp entering areas that other providers will not serve. Financial Feasibility Short Term It was stipulated that Medshares’ application is financially feasible in the short term, that is, able to obtain the capital for start-up (including any construction costs, if necessary) as well as sufficient working capital to sustain a business until it becomes self-sufficient. While Medicorp's financial feasibility remained an issue going into hearing, it appears from AHCA's proposed recommended order that it continues to challenge only Allstar's short-term financial feasibility. See AHCA PRO, p. 8. In any event, Medicorp proved that adequate funding is available from outside sources to fund the start-up costs and early operations. Its project is therefore financially feasible in the short term. The total project costs for Allstar's proposed project is $102,903, based on reasonable historical data typical of the start-up equipment and expenses for similar Medicare-certified home health agencies in the same geographic area. Allstar's projected start-up costs of $24,956 are reasonable. To fund the proposed project, Allstar has established and maintains an escrow account with Republic Bank in the amount of $150,000 (almost $50,000 more that the projected total project cost). Allstar has adequately demonstrated its ability to fund the project; the project is financially feasible in the short term. b. Long term AHCA maintains that none of the applicants demonstrated long-term financial feasibility for one reason alone: lack of need for the proposals. Contrary to this assertion, there will remain need in Broward County for Medicare-certified home health agencies even if these three applicants receive the applied-for CONs. The projects of all three applicants are financially feasible in the long term. Allstar's and Medicorp's Reliance Solely on Independent Contractors AHCA contends the HCFA interpretation of the federal condition of participation found in 42 CFR s.484.14(a) requires full-time salaried employees to staff at least one qualifying service. Even if the interpretation is correct, it is no impediment to either the Allstar or the Medicorp application. Medical social work is a qualifying service under the federal regulation. Allstar presently staffs its medical social worker in its Dade County office exclusively with a full-time salaried employee for whom an Internal Revenue Service W-2 form must be maintained. Allstar intends to staff its Broward County office in the same manner. (Even if the social medical worker position were staffed with a part-time employee, Allstar would comply with the federal regulation so long as the part-time employee were salaried and received a W-2 form.) Up until hearing, AHCA legitimately maintained that Medicorp violates the federal regulation because of Assumption 11 to the pro forma in its application which stated that, "[i]t is assumed that all caregiving nurses are independent contractors." At hearing, however, Medicorp witnesses testified that nursing staff and CNA staff will be employed. Ms. Cardozo testified that she currently employs these staff and, if awarded a CON, would continue to do so. Similarly, the application repeatedly refers to Medicorp's staff consisting of the same employees working for Medicorp's sister agency, Medcorp. Any inconsistency between the testimony elicited by Medicorp at hearing and the assumption in its pro forma is of no moment in this case. With regard to financial feasibility, the assumption, even if incorrect in part, is not necessarily fatal to the application. (AHCA's finding of financial infeasibility, in the case of Medicorp was not based on the incorrectness of Assumption 11. Moreover, while one would usually expect full- time employees to cost more than less-than full-time independent contractors as to total cost, the direct hourly rate cost of independent contractors is usually higher than the direct hourly rate cost of employees.) Probable Impact on the Cost of Services Only Medshares demonstrated that it would foster competition which would promote quality assurance and cost effectiveness. In the case of Medicorp, eliminating the subcontract arrangements through which it, Medicorp, now provides services to Medicare patients will eliminate an unnecessary level of administrative costs. Other benefits flow from eliminating the need for Medicorp to subcontract with an authorized entity. For example, AHCA discourages such arrangements because removal of direct control of patient care from the authorized entity raises not just quality assurance issues but also the potential for fraud. In any event, granting all three applications should not reduce the cost effectiveness of any providers of Medicare- certified home health care services in Broward County in the future. Past and Proposed Provision of Services to Medicaid and Indigent Patients As detailed above, Allstar is committed to provide home health care services to Medicaid eligible and indigent patients. This commitment, in the absence of any data to the contrary, is an adequate one. That Allstar will make good on this commitment is supported by indicia aside from the express commitment contained in the application. Allstar has a relationship with Jackson Memorial to increase the number of indigent patients Allstar serves. Its brochures and business cards state that it accepts Medicaid patients. This acceptance is confirmed by Allstar at its public presentations and in conversations with referring physicians. Finally, the majority of Allstar's staff is bilingual, and it has nurses who speak as many as five languages. It has the capacity and intent to make a multilingual staff available in Broward County. Medicorp clearly has a history of providing health services to Medicaid patients and the medically indigent. This commitment has been demonstrated through operation of Medicorp's sister agency by Medicorp's principals. If anything, as discussed above, Medicorp's principals have shown a singular dedication to the medically indigent population through operation of health fairs and other charities. Consistent with this dedication, Medicorp has conditioned its application on provision of at least 10 percent of its total visits to Medicaid patients and at least 2 percent of its visits to the medically indigent. Medshares, too, has a history of providing services to Medicaid patients and the medically indigent. In 1995, it provided over $650,000 in uncompensated care. It participates in Medicaid waiver programs in two states which have them. Its application describes its indigent care plan. The pro forma projections of revenue and expense in the application describe the levels of indigent and Medicaid eligible persons that Medshares expects to serve. Medshares offers a CON condition that 1.4 percent of total patients will be Medicaid patients and 2 percent of total patients will be indigent patients.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter a final order granting CON Nos. 8418, 8419, and 8448 to Medicorp Home Health Care Services, Medshares of Florida, Inc., and Allstar Care, Inc., respectively. DONE AND ENTERED this 3rd day of September, 1997, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of September, 1997. COPIES FURNISHED: Robert J. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303 Michael Manthei, Esquire Broad & Cassell Broward Financial Centre, Suite 1130 500 East Broward Boulevard Fort Lauderdale, Florida 33394 Alfred J. Clark, Esquire Suite 201 117 South Gadsden Street Tallahassee, Florida 32301 Richard Patterson, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
Findings Of Fact In the latter part of 1976, Petitioner, chartered in Florida as a corporation on October 23, 1975, applied for licensure as a home health agency to the Office of Licensure and Certification, HRS, under the 1975 edition of Florida Statutes. Petitioner's application, which referred only to lake and Sumter Counties, was referred to the North Central Florida Planning Council (NCFPC), which, at that time, had the responsibility to evaluate the application and issue, if appropriate, a statement of need. Both the Project Review Committee and the Executive Committee of NCFPC reviewed Petitioner's application and recommended a positive statement of need for this project to be established in Lake and Sumter Counties. As a result of those findings and recommendations, and after a public hearing on the matter was held by NCFPC on December 28, 1976, HRS issued License No. 51 to Petitioner on February 14, 1977, to operate a home health agency in Lake and Sumter Counties. The license to operate in Lake and Sumter Counties was renewed annually up to and including the issuance of License No. 1291 by HRS on January 6, 1981, for the period February 1, 1983, through January 31, 1984. On October 29, 1982 Petitioner submitted an application for licensure to operate a home health care program in Citrus and Marion Counties in addition to Lake and Sumter Counties. This change would entail the expansion of geographical area serviced by Petitioner's employees, but would not result in a major increase in either employed personnel or equipment. Only one additional nurse and one additional vehicle would need to be added to Petitioner's operation to serve the expanded area. However, no new office space or equipment would be needed, as Petitioner would continue to operate existing office in Leesburg. The current director of Petitioner's operations, before submitting the expanded license application, spoke with a representative of HRS's Office of Licensure and Certification, Mr. John Adams, and was advised that all that was required was the submission of the application and the fee. Both were submitted, but the application was denied because there was no Certificate of Need issued for the establishment of a new subunit, as required, in the opinion of Respondent, by currently existing rules and statutes. The application submitted, at paragraph 10, listed four "subunits." The term "subunit" is contained only in the printed language of the form, as was the term "parent agency," and neither was used by Petitioner in its description of its operation. Petitioner is a privately owned corporation with a board of directors and corporate officers. It gets referrals from doctors and hospitals in the area for all four counties, but, because of the limitations on its license, can operate only in Lake and Sumter counties. It provides home nursing and various other therapies in several disciplines to individuals in their own residence. According to several physicians in the area, the service rendered by Petitioner is a necessary and, at times, critical portion of their patients' total care and treatment. It is reliable and efficient. At present, all nurses and other personnel report to the Petitioner's office in Leesburg each morning to receive patient assignments before going out to make their visits at the patients' homes. They return to the office in Leesburg at the close of the day, if necessary. The same procedure would be followed if the service were to be expanded into the two additional counties. No new office would be created, nor would anything change except the Petitioner's nurses, and other personnel would have farther to travel from their one office and base of operations. Under the circumstances, and as stipulated to by the parties, Petitioner's proposal does not constitute the establishment of either an autonomous or semiautonomous subunit, nor is the geographic expansion of service a substantial change in health services as defined by Florida Statutes. In a position paper dated February 28, 1983, the NCFPC recognized the existence of a problem in that while an existing home health agency can add new counties to its area of service with a Certificate of Need (CON) if it does not establish a new agency or subunits of the parent agency, and while physical subunits cannot be established without a CON, each of these rules fails to be consistent with the overall goals of planning and regulating health services and facilities, and together they constitute a contradiction and unreasonable set of rules for the home health industry. The agency's recommendations were: (1) A CON should be required prior to the addition of new counties to the service area of any licensed home health agency; (2) CONS should not be required for activities which do not involve substantial changes of services, increased service, or major capital expenditure and (3) CON's should be required for autonomous subunits. On March 9, 1982, James Barclay, an attorney with HRS, issued a written opinion for the agency (HRS) that a CON is not required before a Florida home health agency already licensed to operate within certain counties in a health service area may provide home health services to additional counties within the same health service area. Citrus and Marion Counties, into which Petitioner intends to go, are within the same health service area as Lake and Sumter Counties. Approximately one month after Mr. Barclay's opinion was issued, Mr. Gary J. Clarke, Deputy Assistant Secretary for Health Planning and Development for HRS, in a letter to all Health Service Area Directors, affirmed the position that an agency could provide services in counties when it was not previously providing services in the same health service area so long as there were no establishment of subunits or capital expenditures.
Recommendation Based on the foregoing, it is RECOMMENDED The Petitioner, Home Health Professional Services, Inc., be issued a license to operate in Marion and Citrus Counties. RECOMMENDED this 25th day of January, 1984, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of January, 1984. COPIES FURNISHED: Thomas K. Riden, Esquire Robert Johnson, Esquire 5656 Central Avenue St. Petersburg, Florida 33707 Jonathan S. Grout, Esquire Department of Health and Rehabilitative Services Post Office Box 210 Jacksonville, Florida 32231 Mr. David Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32201 =================================================================
The Issue Whether the Respondent's decision to deny the Petitioner's application for a renewal license for a home health agency on the basis of Section 400.471(10), Florida Statutes (2009),1 constitutes an agency statement of general applicability that has not been adopted as a rule pursuant to Section 120.54, Florida Statutes, and, therefore, violates Section 120.54(1)(a), Florida Statutes.
Findings Of Fact Based on the entire record of this proceeding, the following facts are undisputed and found to be true: My Friend Home Care submitted its application to renew its home health license on or about November 7, 2009. On January 11, 2010, AHCA issued a Notice of Intent to Deny My Friend Home Care's application for a renewal license pursuant to Section 400.471(10)(d), Florida Statutes, which became effective on July 1, 2009. Section 400.471(10), Florida Statutes, provides in pertinent part: The agency may not issue a renewal license for a home health agency in any county having at least one licensed home health agency and that has more than one home health agency per 5,000 persons, as indicated by the most recent population estimates published by the Legislature's Office of Economic and Demographic Research, if the applicant or any controlling interest has been administratively sanctioned by the agency during the 2 years prior to the submission of the licensure renewal application for one or more of the following acts: * * * (d) Failing to provide at least one service directly to a patient for a period of 60 days. On May 13, 2009, a Final Order was entered by AHCA finding that My Friend Home Care failed ensure that at least one service was directly provided to a patient in a 60-day period. An administrative fine of $1,000.00 was assessed against My Friend Home Care, which paid the fine. My Friend Home Care operates a home health agency in Miami, Florida, and is subject to the provisions of Section 400.471, Florida Statutes.
The Issue The issue is whether the application of A Professional Nurse, Inc., (APN) for Certificate of Need No. 4636 to operate a home health agency in HRS District IX should be granted. STIPULATION CONCERNING APPLICABLE STATUTES In the prehearing stipulation, the parties agreed that the issues to be litigated are only those relating to the need for an additional home health agency in the HRS service district. The other criteria found in Section 381.494(6)(c), Florida Statutes, which the Department is required to take into consideration in granting certificates of need, are not in dispute. The only portions of the statute and rules which must be examined here are Section 381.494(6)(c)1., 2. and 12, Florida Statutes, and Rule 10.5.011(1)(b)1., Florida Administrative Code.
Findings Of Fact APN's Applications This case arises from the application by APN for Certificate of Need No. 4636, filed in June, 1986. In 1983, APN had filed another application for a certificate of need when the Department had imposed an administrative moratorium on applications. HRS originally denied the application but during the pendency of formal proceedings, reconsidered and would have granted the application, but other parties intervened. APN failed to respond to certain discovery (it did not have an attorney) and at the final hearing therefore was not allowed to present evidence. As a result, APN's 1983 application was denied. With respect to the current application, based upon its June, 1986, filing, under Rule 10.5.008, Florida Administrative Code, a decision would have been due in October of 1986. On September 16, 1986, an employee of the Department requested an extension of time for the Department's decision until January, 1987, because the Department had no rule methodology for determining need for home health agencies, but hoped to have one by January, 1987. APN agreed to a three-week extension but did not agree to defer a decision until January, 1987. In November, 1986, the Department issued a state agency action report proposing to deny the application. At no time during the application process was APN told how need for an additional home health agency would be determined during departmental review in the absence of any need methodology adopted by departmental rule. There were no other applications in HRS District IX filed in the same batch as this application, and there have been no petitions to intervene in this proceeding. APN And Its Related Companies APN is an existing, licensed home health agency which has operated in District IX for nine years. It has applied for a certificate of need in order to qualify as a Medicare and Medicaid provider. Without the certificate of need, it cannot receive Medicare or Medicaid reimbursement for its services. Due to the recent opening of psychiatric hospitals in District IX and the need for follow-up care after such hospitalization, there is a need in District IX for psychiatric home health services. APN has particular expertise in psychiatric nursing. The requirements APN met for licensure are nearly identical to those for certification. There is no capital expenditure necessary for the Medicare and Medicaid certification. APN also started a related company, Professional Staffing Services, which provides nurses for hospitals, nursing homes and other home health agencies. These clients have called upon Professional Staffing Services when they are short of staff. APN currently receives referrals of persons who need home health services which come from hospitals, social service departments, hospital discharge planners. It also has a plan with hospitals for providing indigent care called "Patient Care Partnership Plan" under which it provides two hours of indigent care for each 40 hours of private duty care obtained through a hospital. There are people who could benefit from home health services who are unaware that they qualify to be reimbursed by Medicare for home health services. There are even some physicians who are not familiar with the availability of home health services. Because of the relatively low level of public awareness of the availability of home health services, patients are sometimes placed in nursing homes rather than deceiving health services at home, which would be less expensive and more cost-effective than nursing home care. Method For Determining Need For Home Health Services in District IX Because there is no rule methodology for determining the need for home health services, the method for determining need used by the Department is subject to de novo review in this proceeding. Section 120.57(1), Florida Statutes (1985). The Department presented no evidence of the number of home health agencies it believes are needed in District IX. In the absence of a rule it has no way of quantifying need. The Department has had difficulty in developing a methodology for determining need for home health agencies. Its first rule promulgated in 1977 was known as the Rule of Three Hundred. That rule is determined to be invalid. See Johnson and Johnson Home Health v. Department of Health and Rehabilitative Services, Final Order, DOAH Case 83-2170R, affirmed 447 So.2d 361 (Fla. 1st DCA 1984). Thereafter, the Department used a nonrule policy requiring an applicant to prove that people were not being served in order to justify a certificate of need for a new home health agency. That policy was applied by the Department at the time of the hearing in Upjohn v. Department of Health and Rehabilitative Services, 496 So.2d 147 (Fla. 1st DCA 1986) and was criticized by the court. The Department's current policy of requiring applicants to show that people are not being served is unreasonable. Existing home health agencies have the ability to expand their staff as demand increases. This would preclude the entry of any new competitor into the market if the rule for determining need for additional agencies is that there must be current potential users who are unserved. The Department's assertion that additional need can be shown by surveys of doctors or hospital discharge planners which indicate an inability to obtain home health services places an unreasonable, unattainable burden on an applicant. The expert retained by the Department to help it develop a rule methodology attempted to survey discharge planners and received only a 25 percent response rate, which is unreliable. The Department's assertion that the applicant could show a waiting list as an indication of need is also unreasonable. Those in need of home health services who cannot obtain them do not wait, they obtain alternate services, by such means as entering a nursing home. Finally, to the extent that patients or even physicians are unaware of the availability of home health services, it is not possible to structure any survey to quantify that pool of unmet need. APN's Need Methodology The testimony of the health planning expert presented by APN, Eugene Nelson, was generally persuasive. He advocated an assessment of need based upon a use rate formula. Nelson found that the patients used home health services at varying rates throughout the state, with greater use in the southeast, less use in the mid-portion of the state, and lower use in north Florida. He therefore suggested the use of different use rates in north, central and south Florida. District IX is in the southern area. The data on the use of home health services by patients is not reported to the Department or to local health councils, and is therefore not readily available. It can be obtained, however, from Medicare financial intermediaries based on reimbursement reports those intermediaries process on behalf of the federal government. Only the Department can obtain this data. Intermediaries will not supply it to CON applicants on request. The most recent data which is complete is 1984 data. When this use rate is applied to the population over age 65, one can derive the expected number of Medicare home health visits for 1987. An HRS service district is the appropriate planning unit. By multiplying the use rate in south Florida times the District IX population over 65 (2.4446 x 268,056) the total expected visits for 1987 are 655,290. Even using the lower, and therefore more conservative, statewide average use rate yields 508,154 visits (1.8957 x 268,056). Nelson then converted the number of visits to a reasonable number of agencies based upon the number of visits each agency ought to be able to perform. There is little economy of scale in home health agencies and it is therefore difficult to determine an optimum agency size. Nelson discussed data showing reasonable agency size ranges from 9,000 to 15,000 visits per year. This range of agency size is accepted as reasonable. Using 15,000 visits as the appropriate agency size (which is conservative), there would be a need for 44 agencies in District IX if the south Florida use rate is applied, and 34 agencies needed if the statewide use rate is applied to the appropriate population. There are currently 25 existing home health agencies which have certificates of need in District IX. This methodology shows a net need for between nine and 19 new home health agencies. APN's use rate formula for determining the number of home health agencies is consistent with the goals and priorities found in the State Health Plan and the Local Health Plan. In this case, one of the significant objectives of the State Health Plan is Objective 1.5 which is To assure that the number of home health agencies in each service area promote the greatest extent of competition consistent with reasonable economies of scale by 1987. RECOMMENDED ACTION: 1.5a: Develop a need methodology based on historic cost data for Florida Home Health Agencies. Because it currently has no rule methodology for determining need for home health agencies, the Department has contracted with Dr. Elton Scott to draft a formula for determining need. The preliminary report of Dr. Scott recommends a methodology based on the historical Medicare use rate and is generally similar to one presented by APN. Until it adopts a new methodology by rule, the current policy of the Department is to request extensions of time for CON review from applicants rather than process the applications. This results in a de facto moratorium. No applications have been approved under the current policy of requiring the applicant to prove unmet need. In the record of this case the Department has failed to present any qualified health care expert to give any opinion about appropriate health care planning for home health agencies or to justify its current policy of requiring applicants to present evidence of need on an anecdotal basis. The policy is unreasonable for reasons stated in Finding of Fact 15.
The Issue The issues concern the question of the entitlement of Petitioner to the grant of a certificate of need (CON) to provide home health services in District III.
Findings Of Fact On December 15, 1986, Petitioner made application for a certificate of need (CON) to provide home health services in Citrus County, Florida. That application was denied by Respondent on December 14, 1987. The basis for denial as set out in Respondent's State Agency Action Report (SAAR) was to the effect that there was no demonstrated need when resort was made to the methodology suggested by the North Central Florida Health Planning Council in its 1986 District III Health Plan. (At that time Respondent did not have a methodology for determining need). It was felt that some advantage might be gained in serving the needs of underserved groups; however, there was limited information to demonstrate that existing home health agencies in the county could not meet the demands for service. Finally, it was stated that the referral agreement between Petitioner, as a source of clients from its hospital operation, and Intervenor as an existing home health care provider, to include use of Petitioner's employees in the provision of care, care which was as "hi-tech", as Petitioner could provide, was sufficient. Following the application denial, Petitioner filed a timely request for formal hearing under the authority set forth in Section 120.57(1), Florida Statutes. On February 17, 1988, Intervenor was allowed to intervene. Given that the Respondent did not have a rule methodology in place to consider this application when first filed or at the point in time where the case was referred to the Division of Administrative Hearings for consideration, on May 12, 1988, Respondent moved, unopposed, to have the case returned to the agency to await the promulgation of a new home health rule. The motion was granted. On September 12, 1988, the new rule became effective as Rule 10- 5.011(1)(d), Florida Administrative Code. Which provided as follows: (d) Medicare Certified Home Health Agencies. Definitions. Home Health Agency. A home health agency is defined as a Medicare certified home health agency in accordance with subsection 381.702(10), F.S. Home Health Services. Home Health Services are defined in accordance with subsection 400.462(3), F.S. Home Health Services Provider. For the purpose of this rule, a home health services provider is defined as the person or corporate entity to which the certificate of need or license is issued. District. District means a service district of the department as established in subsection 20.19(5), F.S. Service Area. A certificate of need for the establishment of a home health agency shall authorize a home health services provider to locate a home health agency and serve persons anywhere within the district for which the certificate of need is awarded. Planning Horizon. The planning horizon is the anticipated time frame within which the agency is expected to be licensed. The planning horizon for applications submitted between January 1 and June 30 of each year, shall be July of the following year; the planning horizon for applications submitted between July 1 and December 31 of each year shall be January of the year following the year subsequent to the application deadline. Approved Home Health Agency. For the purpose of this rule, an approved home health agency is defined as a new agency within the district which holds a valid certificate of need and has not been licensed by the department one moth prior to the publication date of the semi-annual fixed need pool. Persons or corporations who do not operate Medicare certified home health agency in the district and are the holder of one or more certificate of need approvals within the same district, shall only be counted as one approval. Persons or corporations who do operate a Medicare certified home health agency in the district and are also the holder of a certificate of need approval for the same district, shall not be counted in the inventory of approved agencies. Quality of Care. Home health agencies regulated under this rule shall meet the minimum of care standards contained in HRS rules 10D-68, F.A.C. Need Methodology. 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 paragraph 3. The establishment of additional Medicare certified home health agencies, additional offices, mail drops, or any other physical presence by a Medicare certified home health services provider within the same district is not subject to a certificate of need. The need for the establishment of a new home health agency within the HRS district shall be determined twice a year. The net need for new Medicare home health agencies in each HRS district is calculated as follows: HHNN = ((PHHV - AHHV)/CEAS) - AHH Where: HHNN equals the Medicare certified home health agency net need. 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 available, by the projected population 65 years and over for the respective district. The population projections shall be based on the population projects issued by the Executive Office of the Governor available to the department 1 month prior to the publication date of the semi- annual fixed pool. 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 available to the department 1 month prior to the publication date of the semi-annual fixed need pool as specified in Rule 10-5.008(2), F.A.C. 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 department. If the fraction (PHHV - AHHV)/CEAS is .5 or exceeds .5, the fraction shall be rounded upward to the nearest whole number. CEAS shall be updated by the department annually and shall be determined by the department according to the following methodology: Rank all agencies by visit size, excluding hospital-based agencies. calculate the average cost for all visits for each remaining agency. Calculate the mean visit cost for all agencies, excluding hospital-based agencies, and two standard deviations from the mean for the remaining agencies. Eliminate agencies with average visit costs at or exceeding two standard deviations above and below the mean visit cost from further calculations. 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 groupings. 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 groupings. 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. AHH equals the number of approved home health agencies in the district. Preference shall be given to applicants proposing to provide home health care services to indigent persons and Medicaid patients. Preference shall be given to applicants proposing a comprehensive range of home health services if it is determined by the department that certain types of services are unavailable or that there is a shortage of certain types of home health service. Preference shall be given to applicants proposing to provide home health services and establish a physical presence underserved areas of the district. Data Reporting Requirements. Home health agencies regulated under this rule shall provide the following information to the department or its designee. The information shall be provided for the same reporting period covered by the annual cost reports submitted to the Medicare Intermediaries, and shall be submitted to the department or its designee at the same time the annual cost report is submitted to the Medicare Intermediary. The total number of patients served less than 65 years of age and 65 years of age and over by county of residence. The total number of visits provided by type of service. The total number of patients served by payment source including Medicaid, Medicare, and uncompensated care. As can be seen, this rule considers the need question district-wide as opposed to a county-by-county analysis in effect at the time of application by Petitioner. District III, which contains Citrus County, has fifteen other counties. The rule in its text is not found to be applicable per se to this application, although its underlying concepts arguably have an influence on the case outcome. While the Petitioner and Respondent urge that the rule does-have retroactive effect and the Intervenor disagrees, all parties acknowledge the logistical awkwardness of trying to employ the rule's terms in a literal sense. In fact, the rule cannot be used as it is written, for reasons to be explained and in any event neither of the proponents have exercised its terms in exact detail. When Respondent reviewed the application using a modified version of the new rule in the interest of what Respondent believed to be an equitable treatment of pending home health applicants who had waited for the rule to be enacted, it changed its position from one of recommended denial to recommended grant of the CON. The case was returned to the Division of Administrative Hearings and upon motion by the Intervenor, as granted, the Petitioner updated its application on December 5, 1988. This lead to the hearing on the dates previously described The updated information was provided to the other parties in this case. It was not given to the local health council for further review by that organization. Petitioner is a public not-for-profit healthcare organization created by state law. The hospital is governed by a Board of Trustees appointed by the Governor of the State of Florida. The proposed home health agency would be owned and operated by Petitioner. It treats indigent and Medicaid patients and other medically underserved groups. The hospital's mission is to serve the residents of the community regardless of their ability to pay. This approach would be continued in home health care. Petitioner provides high quality patient care and this could be expected to continue if a CON for home health care was granted. The quality assurance plan and mechanisms in place at Petitioner's hospital would be used in its home health agency to help assure high quality patient care. Petitioner would also develop a utilization review plan similar to what is in effect at the hospital that would help insure proper utilization of the home health agency. Petitioner is JCAH accredited and licensed by the State of Florida, and is currently in compliance with all State of Florida licensure requirements. Petitioner's home health agency would be a hospital-based home health agency, as opposed to a free-standing home health agency. There are benefits to being a hospital-based home health agency. The home health agency employees have the advantage of being part of the hospital's employment benefit package; the home health agency has the ability to tap into the expertise of the hospital in such areas as accounting, data processing, and so forth; discharge planning is easy to coordinate; and, the home health agency has the potential ability to use trained hospital personnel who have high tech skills and expertise and can provide services to the home health agency in their area of expertise. However, the suggestion that employees would be involved in both roles of hospital care and home health care is suspect in that certain employees such as nursing staff are not expected to fulfil that dual role and other employees such as the dietician were unable to consistently aid the patient in the home and carry out the duties in the hospital under an arrangement by which the Intervenor per agreement with the Petitioner sought to have continuation of services from the hospital to the home. If this could not be done, given the demands on the dietician in the hospital duties at that time, then there is no reason to believe that it would be any easier to achieve if the hospital had a home health agency. None of the aforementioned benefits are significant improvements over existing conditions in Citrus County where home health care is provided by freestanding agencies. More specifically, Petitioner currently has physical therapists, respiratory therapists, dietitians, and social workers on its full-time paid staff that could conceivably be available to the home health agency. Since these persons are already full-time salaried employees of the hospital, it would not cost the home health agency any additional amount for these skilled persons to provide services to home health care patients, assuming the ability to meet the needs of hospital patients and home health care patients, again a real uncertainty. Petitioner's personnel would be available to assist in the development of policy and procedure manuals, quality assurance plan and utilization review plan for the home health agency. There are other possible economies in service that could be derived from Petitioner's operation of a hospital-based home health agency. These include: the hospital-based agency is easily accessible to physicians; discharge planning is facilitated due to the close cooperation of nursing, social worker, and home care provider while the patient is still in the hospital; services will be available 24-hours a day through the use of hospital switchboard and communications systems; and use of current medical records systems will mean a patient's entire medical history will be available to practitioners. Again, these arrangements do not afford a significant improvement over existing home health services. Petitioner has sufficient resources available to initiate and operate a hospital-based home health agency. Necessary staff can be employed to the extent they are not already working at the hospital. Petitioner is in sound financial condition. Petitioner would be able to hire a qualified administrator. Petitioner's projected payor mix of 88% Medicare, 3% Medicaid, 4% insurance and 5% indigent, is an admirable goal. However, there is some question about whether the projections of Medicare and indigent care levels of service will be achieved. Petitioner as a referral source from its hospital operations had not achieved those projected levels of referrals in the past. This is important because Petitioner expects to obtain its home health patients from the hospital referrals. Consequently to promote the grant of the CON premised solely upon the belief that underserved groups will be better off would not be warranted. The possibility exists that with greater awareness more underserved persons might be referred for home health care but nothing in this case points to any increased effort to publicize the availability of home health for the underserved to justify the optimistic levels the applicant predicts. In a home health agency, all of the patient services are provided in the patient home. Thus, the only space requirement is for office space for the administrative staff and working space for the employees to do their necessary paperwork. Petitioner Memorial Hospital has about 1,600 square feet of vacant space available in which to house the home health agency offices. This building is currently owned by Petitioner. There is no debt associated with this building, and the building has been fully depreciated. Contrary to the statement in its application, Petitioner has decided not to offer prescription delivery services. This is not a significant change. Intervenor is a licensed home health agency in Citrus County. It first became licensed by the State of Florida in February, 1986. Intervenor has been surveyed annually by Respondent since 1986. In each of these surveys, it received no deficiencies. Intervenor is a full-service home health agency. It offers a range of "hi-tech" home health services, including: skilled nursing services; physical therapy; occupational therapy; speech therapy; social services; home health aide services; dietary guidance; medical supplies; home IV therapy; parenteral nutrition; interostomal therapy; home phlebotomy and lab testing services; and respiratory care. It has offered these services since its inception. Intervenor provides some homemaker services during home health aide visits, such as cleaning, straightening, and laundry. Intervenor's personnel include registered nurses, certified home health aides, physician therapists, licensed physical therapist assistants, speech therapists, occupational therapists, a medical social worker who holds a masters in social work, interstomal therapists, nutritionists, and respiratory therapists. Intervenor offers quality of care and ensures continuity of care in the delivery of home health services. Petitioner has never complained that a patient could not be discharged quickly enough due to Intervenor's shortcomings in taking on home health services for the discharged patient. Intervenor makes every effort to coordinate its operations with Petitioner to ensure quality and continuity of care related to patients referred by the hospital. The service area of Intervenor is Citrus County. Until late 1988, about 70% of Intervenor's referrals came directly from Petitioner. On average, Intervenor provides about 28.6 home health visits per patient. Intervenor provides home health services to all patients regardless of ability to pay. Intervenor provides home health services to the following payor classes: Medicare, Medicaid, VA, workmen's compensation, private insurance, and indigent. Its CON contemplates 2% Medicaid and 3% indigent patients. Since opening in 1989, Intervenor has treated 985 patients. Of these 985 patients, only ten (10) have been indigent and fifteen (15) have been Medicaid patients. This works out to one percent (1%) indigent care and one and one half percent (1.5%) Medicaid care. Community Care publishes a brochure that advertises its services to the community. Nowhere in this brochure does it indicate that Community Care serves indigent patients. The brochure stresses that services will be provided through reimbursed coverage, either Medicare, insurance, or other reimbursement sources. On the other hand it does not require any deposit or up-front payment from new home health patients and has never refused a patient due to an inability to pay. As stated until recently a very substantial portion of the Intervenor's referrals came from Petitioner and levels of service to the underserved, that is, Medicaid and indigent, have been low. This ties back to the observation that the 3% Medicaid and 5% indigent projection of service made by Petitioner may not be any easier to achieve and probably less so than the 2% Medicaid and 3% indigent which Intervenor is committed to. This is supported by the fact that on the first 11 months in 1988, Petitioner referred less than 2% Medicaid and 1% indigent. Moreover, the District III average for existing agencies of services to these underserved groups is .8% Medicaid and 1.3% indigent. As alluded to before, in December, 1985, Petitioner and Intervenor entered into an agreement. Per that agreement, Petitioner would refer all home health patients to Intervenor unless a patient or physician specifically requested otherwise. The agreement provided that Petitioner would provide certain services and personnel to Intervenor in exchange for compensation. It was a two-year agreement with an automatic one-year renewal. Petitioner chose to extend the contract for three years through the latter part of 1988. Since late 1988, Petitioner rotates its hospital referrals in the instance where the patient, patient's family or physician did not specify which home health agency was preferred. This means that as many as seven agencies could be involved in the rotation if Petitioner gained a CON, with Petitioner having no greater share than the rest. At present, there are four providers, two in the rotation are from the ABC home health group, the Intervenor and Upjohn another home health provider. Petitioner would make five. To make seven, VNA and Gulf Coast Home Health Services who have come into Citrus County would be added. VNA is another provider with a history of service to underserved patients. In this connection, Petitioner argues that its equal treatment of existing providers and itself, if granted a CON, minimizes the adverse impact of another competitor arriving on the scene and allows existing providers who are for profit agencies to remain financially viable. This together with trends toward early release in DRG for the hospital inpatient sector; provision of home health care through the Catastrophic Healthcare Act, and the general trend in increased home health visits in Citrus County make it possible for both the existing providers and the Petitioner to survive in the market place, if you accept the point of view of those who favor the grant of a CON to Petitioner. In fact, the DRG situation and the Catastrophic Healthcare Act, as events, are too speculative to say what their influence will be in promoting greater use of home health services. Otherwise, the trend toward increased visits that have been pointed out are now being met with an increased number of providers to deliver those visits. This dilutes market share. The Petitioner's rotation system further dilutes market share, especially as to the Intervenor. Thus, the question is raised on the matter of whether the historical trend toward increased visits is enough to sustain the existing providers with the advent of the Petitioner's presence and choice to rotate referrals. On the whole, the Petitioner's influence on competition is not positive and is not acceptable. The Petitioner's projections concerning its own market acceptance are unrealistic and unacceptable. The projections in the original application and in the December 5, 1988 update to that application as to skilled visits per patient far exceed the experience in the service area, Citrus County. The applicant speaks in terms of 53 visits when the historical experience in the county is approximately 30. Nothing in the record of the hearing tends to support the idea that Petitioner can deliver such an excessive increase in visits. Additionally, estimates of total home health visits in the first two years of operation are generally out of line. The estimate by Petitioner ranges as high as 42,000, plus visits. Some of the items in that count are not comparable to referrals made out of the hospital at present. Examples of this incomparability are homemaker services, DME and the category listed as general items. Again, prescription service is no longer proposed thereby reducing the numbers. Nonetheless, the estimate is still excessive. This is made the more apparent when taking in account that by annualizing available data 464 patients were referred by Petitioner in 1988. In examining what had been referred out in 1988 in number of patients, the number of visits on average by history and the idea of rotation of referrals, Petitioner cannot achieve the performance level it predicts. Moreover, projections for population in 1990 and 1991, the furtherest years out given by Petitioner in support of its application, don't change this impression because the increases in population will not justify the Petitioner's projections on market share as a function of number of visits. The estimates of visits at 1990 and 1991 based upon 50% retention of referrals projected from Petitioner's hospital for home health services is unrealistic in that retention could be as low as 15% to 20%. Therefore, visits would be much less than 5,693 and 7,950 in 1990 and 1991, respectively. (See Petitioner's Exhibit 22.) The failing in the estimate of performance level means that the revenue projections are inaccurate. Although Petitioner is a not for profit institution, its proposed home health operation is not seen to be financially feasible in the short term or long view. The fact that approximately 80% of costs in a home health operation are variable and that home health delivery is cost-based reimbursed does not relieve the Petitioner from giving a more realistic estimate of those costs, its performance and net financial position. The effect of this failing leaves the record unclear and the trier of fact unconvinced concerning the true facts about this project's financial feasibility. The pro formas as written do not identify employee benefits ranging in costs from 25% to 30%. Transportation costs are not reflected. If other facts were favorable to Petitioner, there would be very little additional costs associated with the start-up of its operation. Only minor "sprucing up" would be necessary before occupying existing space. Excess office furniture is currently available at the hospital. The addition of Petitioner as a provider of home health services will not significantly advance variety or quality of care sufficient to justify the issuance of a CON. At present, existing providers offer a wide variety of home health services and provide quality care. The fact that the Petitioner is a hospital based not for profit institution, does not alter these findings. The addition of Petitioner promotes no positive influence in competition in the market place. The risk is presented that overall cost in the health care system can be increased if the Petitioner is added and the market place becomes overburdened. Based upon past experience, the Intervenor needs to achieve around 8,700 visits a year to be financially viable, and to break even. Petitioner's proposal together with other competitors in the market, some recently arrived, Upjohn, VNA and Gulf Coast Home Health Services jeopardize the ability to remain financially viable. Nothing can be done about the other competitors, but the issue of Petitioner's presence can be dealt with and should be rejected as an outcome. At a minimum the addition of Petitioner does not foster cost containment in that it could cause the existing providers to up requests for reimbursement nearer the caps in the Medicare segment at public expense. While there is a need for homemaker services in Citrus County, that fact doesn't justify the grant of a CON to Petitioner because it is willing to provide them. In home health care delivery there is credible evidence that initial economies of scale occur between 6,000 to 9,000 visits per annum. There is a serious question about the Petitioner's ability to achieve that level of performance under the facts found previously. When initially reviewing the compliance of the application with the 1986 District III Health Plan, in addition to problems of compliance with the need methodology in that plan, Petitioner did not respond to the need for home health services in Hamilton County and expansion of the range of services in Columbia and Suwannee Counties. These counties are within District III. These latter items concerning the other counties do not hinder the Petitioner's attempt to gain a CON because at present the decision to grant or deny a CON is on a district-wide and not county-by-county basis. Therefore, in theory, the Petitioner could serve Hamilton, Columbia and Suwannee Counties. Admittedly, that is unlikely given the proximity of these counties to Citrus County. More importantly, there has been no showing that some other applicant entitled to comparative review with the Petitioner sought to serve the other three counties putting into effect the local planning guidelines on priorities for grant of a CON. Likewise the local planning council methodology is of no moment. It deals with a county-wide analysis, not a district-wide analysis of need. The district-wide concept applies in this case per the change in the method of assessment that was fostered by the agreement to wait for the Respondent to enact a rule methodology and with that delay the tacit acceptance of the idea that approved and licensed home health providers could expand their services throughout the district. By contrast the fact that the local council reported that 148% of need was being met in Citrus County is telling and works against Petitioner. Finally, the support of the application by the local council as advisor to the Respondent is noteworthy but cannot overturn the adverse facts in this hearing which cause the application to be rejected. Petitioner is basically in compliance with the Florida State Health Plan in effect at the time of application except for the question of whether the Petitioner can achieve the aforementioned economies of scale at 6,000 to 9,000 visits per annum and the possible adverse influence on existing providers in maintaining economies of scale. Rule 10-5.0111(1)(d), Florida Administrative Code, supra, is the product of a considerable effort by Respondent to establish a balanced method of measuring the need for additional home health care providers in the various districts throughout the state. Unfortunately, it has limited utility in trying to resolve this controversy. The proponents of the use of the rule point out that nothing in the rule states that it cannot be applied retroactively to the case facts. Intervenor reminds us that nothing says it can be applied in that way. As hinted before, the rule cannot be seen to apply retroactively as it is written to render a defensible projection of need at the theoretical planning horizon of January, 1988. First, the service area in December, 1986 through January, 1988 was in reality Citrus County, not the district. There is no way to postulate who might have taken advantage of the opportunity to serve the overall district and come into Citrus County from outlying counties within the district because that was not allowed as a matter of right back then as it is now in the terms of the rule. The present situation has shown that there is such interest in coming into Citrus County with the addition of Upjohn, VNA and Gulf Coast Home Health Services. Next, the idea of who would have been shown as approved as a home health agency taking into account the January, 1988 planning horizon cannot reasonably be ascertained. The annual fixed need pool publication did not occur such that one could see who had been approved, or held a CON, one month prior to that publication to serve the district. Although one could argue that the identification of the pool can be hypothetically set for the fall of 1986, problems with identifying the 1985 data to establish that pool based upon information that was available to the Respondent at the time to announce the pool or availability of a complete data set about 1985 at the point of hearing persist. Associated with this dilemma is the influence agency expansions into other counties would have on calculation of CEAS. In the area of CEAS the exact nature of that situation cannot be ascertained. It cannot because one doesn't know which existing providers might have determined to go out of the counties in which they had offered their services and into other counties to open new units. This would have some influence on the average agency size within the district, which in turn causes a possible different answer in deriving the number of needed providers by the use of the formula. All this makes the exercise of accurately setting the pool unlikely and it wasn't done in this hearing. In using the district-wide service analysis back in time to fit the Petitioner's situation, an application by VNA in District III, Alachua County, pending and denied in December, 1987, the same month as Petitioner's denial, was not comparatively reviewed with the Petitioner as the law would theoretically require. VNA was subsequently approved and is functioning now. Consequently, comparative review is no longer possible. On the topic of the 1985 data, which is mandated in exercising the rule, what data in this category was available in the fall of 1986 is uncertain. The data about 1985 presently held by the Respondent is incomplete. This incompleteness is in AHAV where visits in all categories cannot be shown for 1985. This tends to understate what the formula derives as an answer. The derived answer for needed agencies is .7, rounded up per terms in the rule is one agency if the other factors that were described are ignored. They should not be. Especially, compelling is the existence of VNA, Alachua County which could use up the net need of one agency. Concerning the applicants who waited for the Respondent to enact a rule who applied for a CON in the period June, 1985 through December, 1987, the Respondent modified the use of the rule. In its thinking to make certain that no applicant along that time continuum was treated unfairly, Respondent picked 1986 data and a July, 1988 planning horizon in deciding the question of need. The result in the Petitioner's case was to use inappropriate data and an inappropriate planning horizon, according to the rule. This produced an answer of 1.1 agencies rounded down to 1. This is the same answer as before and no purpose is served in criticizing the Respondent's choice to deviate from the terms of the rule. On balance the concept of this rule as opposed to the ability to use the rule per se may look appealing as an abstraction, but it is unappealing as a means to resolve the factual dispute. It superimposes a system of district review at a time of county level service. For that reason, it cannot answer the riddle of how many providers would have exercised the right to serve Citrus County from other counties in the district as they have begun to do when the rule took effect in September, 1988. Using the rule retroactively anticipates a planning horizon which is already past. In recognition of this anomaly the parties have spoken to the future in their proof through the years 1990 and 1991. This has been necessitated by the agreement to wait for the Respondent to enact a new home health rule. That future is not conducive to the grant of the CON on the facts in this case which are more instructive about the true need in the district than the exercise of the formula in some past period. Had the Petitioner chosen to reapply and fallen under the clear terms of the rule, the result might be different. It did not, and it must accept the results of that choice.
Recommendation Based upon a consideration of facts found in the conclusions of law reached, it is, RECOMMENDED: That a final order be entered which denies the request for Certificate of Need as applied for by Petitioner. DONE AND ENTERED this 29th day of June, 1989, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Stephen K. Boone, Esquire Boone, Boone, Klingbell Boone & Roberts, P.A. 1001 Avenida Del Circo P. O. Box 1596 Venice, Florida 34284 Stephen M. Presnell, Esquire Macfarlane, Ferguson, Allison & Kelly Post Office Box 82 Tallahassee, Florida 32302 James C. Hauser, Esquire Joy Heath Thomas, Esquire Messer, Vickers, Caparello, French & Madsen, P.A. O. Box 1876 Tallahassee, Florida 32302 CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of June, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-0386 The following discussion is given concerning the proposed facts of the parties. Petitioner's Proposed Finding of Facts The first paragraph and the first sentence to the second paragraph are subordinate to facts found. The remaining sentences within paragraph 2 are not necessary to the resolution of dispute. Paragraph 3 is contrary to facts found. Paragraphs 4-7 are subordinate to facts found with exception the last sentence in paragraph 7 which is contrary to facts found. Paragraph 8 is subordinate to facts found. Paragraph 9 may express the statement of policy by the Respondent, but it is not an acceptable outcome in this instance. Paragraphs 10-12 are subordinate to facts found. Paragraph 13 is an accurate portrayal of the facts as far as its goes; however, it does not account for the problems of imposing the new home health rule over the time period associated with the filing date in this application. Paragraphs 14-16 are subordinate to facts found. Paragraph 17 is contrary to facts found. Paragraph 18 is subordinate to facts found. Paragraph 19 is not necessary to resolution of dispute. Paragraph 20 in all sentences except the latter is subordinate to facts found. The latter sentence is not necessary to the resolution of dispute. Paragraph 21 is subordinate to facts found. Paragraph 22 is contrary to facts found. Paragraph 23 is subordinate to facts found. Paragraph 24 is contrary to facts found. Paragraph 25 is true in that at the time the local health council examined the application there was an indicated need for home health for Medicare and indigent patients. That need is being met at present to the extent that those classes of patients have been made aware of the existence of the home health services. Paragraph 26 is subordinate to facts found. Paragraphs 27 and 28 are contrary to facts found. Suggestions in Paragraph 29 do not comport with the situation in Citrus County at present. Paragraph 30 is subordinate to facts found. Paragraph 31 is contrary to facts found. Paragraphs 32-36 are subordinate to facts found. Paragraphs 37 and 38 are not necessary to the resolution of dispute. Paragraphs 39-43 are subordinate to facts found. Paragraph 44 is not necessary to the resolution of dispute. Paragraphs 45-51 are subordinate to facts found. Paragraph 52 is not necessary to the resolution of dispute. Paragraph 53 is subordinate to facts found. Paragraphs 54-56 are contrary to facts found. Paragraph 57 is subordinate to facts found. As to Paragraph 58 it is uncertain whether the staff levels are adequate given the failure to accurately portray the volume of visits. In a related sense, Paragraph 59 as to salary level made to depicts the cost of those salaries, but it fails to include the benefits. Paragraph 60 is to general in its contention. It does not answer the failure to identify the more reasonable statement of staffing levels. Paragraph 61 is subordinate to facts found. The pro formas were not clear and the complementary proof offered at hearing did not confirm the assertion set out in paragraph 62. Paragraphs 63-65 are contrary to facts found. Paragraph 66 is subordinate to facts found. Paragraph 67 is contrary to facts found. Paragraph 68 is not necessary to the-resolution of dispute. Paragraph 69 depicts a situation that is to speculative to have relevance in this case. Paragraphs 70 and 71 are contrary to facts found. While the Paragraphs 72-74 accurately states the circumstance related to the intervenor in its initial involvement in the market. This situation has changed since that time and if Petitioner were to gain entry into the market the probability is that the intervenor's business would be seriously impacted. Paragraph 75 is contrary to facts found. Paragraphs 76 and 77 are subordinate to facts found. Paragraph 78 is not necessary to the resolution of dispute. Paragraphs 79-82 with exception of the last sentence in 82 are subordinate to facts found. The last sentence in paragraph 82 is not accepted. Paragraph 83 is subordinate to facts found. Paragraphs 84 and 85 are contrary to facts found. Paragraph 86 is true if one fails to take into account the advent of services by the intervenor and additional providers who has come into the market who are willing to undertake service to those patients. Paragraphs 87 and 88 are contrary to facts found. Paragraph 89 is subordinate to facts found. Paragraphs 90 and 91 are contrary to facts found. Paragraph 92 is subordinate to facts found. In Paragraph 93, while it is true that Petitioner has an excellent record of service to the Medicaid population in Citrus County, it is unclear why Medicaid patients are not receiving sufficient home health services, compared to what one would expect the demand to be. Respondent's Proposed Findings of Fact Paragraphs 1-3 are subordinate to facts found. Paragraphs 4-6 are contrary to facts found. Suggestion in Paragraph 7 is not a certainty and is not accepted in the fashion presented in these proposed facts. Paragraphs 8-10 are contrary to facts found. Paragraph 11 is subordinate to facts found. Paragraph 12 is contrary to facts found. Paragraphs 13 and 14 is subordinate to facts found. Paragraph 15 is a true statement if other factors which have been discussed in the recommended order are not taken into account. Paragraph 16 is subordinate to facts found. Paragraph 17-19 are not sufficiently relevant to this case to be reported as facts. Paragraph 20 is contrary to facts found. Paragraph 21 is subordinate to facts found. Paragraphs 22 and 23 may be basically an accurate statement of the Respondent's policies; however, this arrangement is not satisfactory on this occasion. Paragraph 24 is subordinate to facts found. Paragraph 25 is contrary to facts found. Paragraph 26 is subordinate to facts found. Paragraphs 27 and 28 are not necessary to the resolution of dispute. Paragraph 29 is subordinate to facts found. Paragraph 30 is true if the rule was found to be applicable. Paragraph 31 and 32 are not necessary to resolution of dispute. Paragraph 33 may be true in terms of the prospective use of the rule but is not influential in this case. Paragraph 34 is not necessary to the resolution of dispute. Paragraph 35 is speculative and has little relevance absent a showing that the expansion into the other areas within the district offset new providers coming into Citrus County, to include the Petitioner. Paragraphs 36 and 37 are subordinate to facts found. The suggestion in paragraph 38 is a statement of limited value in that there are no other competitors in District III from other batches. Paragraphs 39-43 are subordinate to facts found. The first sentence to paragraph 44 is subordinate to facts found. The remaining sentence is contrary to facts found. Paragraphs 45 and 46 are subordinate to facts found. Paragraph 47 is contrary to facts found. Paragraph 48 is accurate as for as it goes; however, it fails to take into account the fact that the Intervenor began to provide home health care to indigent and Medicaid patients. Paragraph 49 is contrary to facts found. Paragraph 50 is subordinate to facts found. Paragraph 51-53 are contrary to facts found. Paragraph 54 is subordinate to facts found. 35 The suggestion in the first sentence of paragraph 55 is true. Again it fails to take into account the change in circumstances with the advent of the Intervenor's services. The second sentence is subordinate to facts found. Paragraph 56 is not in meaningful contribution to the fact finding in the context of the overall facts reported in the recommended order. Paragraphs 57 and 58 are subordinate to facts found. Intervenor's Proposed Findings of Facts Paragraph 1 is subordinate to facts found. Paragraph 2 is not necessary to the resolution of the dispute. Paragraphs 3-5 are subordinate to facts found. Paragraph 6 is not necessary to the resolution of the dispute. Paragraph 7 is subordinate to facts found. Paragraph 8 is; not necessary to the resolution of the dispute. Paragraphs 9 through the first sentence in paragraph 16 are subordinate to facts found. The remaining sentences in paragraph 16 are not necessary to the resolution in dispute nor is the first and last sentences within paragraph 17. The other sentence within paragraph 17 is subordinate to facts found. The first sentence in paragraph 18 is subordinate to facts found. The remaining sentences are not necessary to the resolution of the dispute. Paragraphs 19 through the first sentence of paragraph 23 are subordinate to facts found. The second sentence in paragraph 23 is not necessary to the resolution of the dispute nor is paragraph 24. Paragraph 25 in all sentences save the last is subordinate to facts found. The last sentence is not necessary to resolution of dispute. Paragraph 26 through all sentences in paragraph 30 except the last sentence are subordinate to facts found. The last sentence is not necessary to the resolution of the dispute. The first sentence of paragraph 31 is subordinate to facts found. The remaining sentence is not necessary to the resolution of dispute. Paragraph 32 and the first sentence to paragraph 33 are subordinate to facts found. The remaining sentence in paragraph 33 is not necessary to the resolution of dispute. Paragraph 34 and the first sentence of paragraph 35 subordinate to facts found. The last sentence in paragraph 35 is not necessary to the resolution of the dispute. Paragraph 36 through the first sentence of paragraph 38 are subordinate to facts found. The remaining sentence in paragraph 38 is not necessary to the resolution of dispute. Paragraph 39 cannot be utilized in that the rule in question was not provided to the Hearing Officer under official recognition and is unavailable to confirm the assertion set out in that paragraph. Paragraphs 40 through 43 are subordinate to facts found. The suggestions in paragraphs 44 through 45 are contrary to the impression of the Hearing Officer. Paragraphs 46 through 48 are subordinate to facts found. Paragraphs 49 and 50 are not necessary to the resolution of dispute. Paragraphs 51 and 52 are subordinate to facts found. Paragraphs 53 through 55 as an approach to resolving factual disputes are rejected. Paragraph 56 is subordinate to facts found. Paragraph 57 is contrary to facts found. Paragraph 58 is not in keeping with the analysis of this case and the facts found in the recommended order nor is paragraph 59. Paragraphs 60 through 65 are subordinate to facts found. Paragraph 66 is not necessary to the resolution of dispute. Paragraph 67 and the first two sentences within paragraph 68 are subordinate to facts found. Remaining sentences within paragraph 68 are not in keeping with the analysis performed in the fact finding within the recommended order. Paragraph 69 is subordinate to facts found. Paragraph 70 is subordinate to facts found. Paragraph 71 is not necessary to the resolution of dispute. Paragraphs 72 through 76 are subordinate to facts found. Paragraph 77 is not necessary to the resolution of dispute. Paragraphs 78 and 79 are subordinate to facts found. Paragraph 80 is not necessary to the resolution of dispute. Paragraphs 81-86 are subordinate to facts found. Paragraph 87 is not necessary to the resolution of dispute. Paragraph 88 is subordinate to facts found. Paragraphs 89-91 are not necessary to the resolution of dispute. Paragraphs 92 through 94 are subordinate to facts found. Paragraph 95 is not necessary to the resolution of dispute. Paragraphs 96 through 101 in the first sentence to that paragraph are subordinate to facts found. The remaining sentences in paragraph 101 are not necessary to the resolution of dispute. Paragraph 102 is subordinate to facts found. Paragraph 103 is not necessary to the resolution of dispute. Paragraphs 104 and 105 are subordinate to facts found. Paragraph 106 is contrary to facts found. Paragraph 107 is not necessary to the resolution of dispute. Paragraphs 108 through 116 are subordinate to facts found. Paragraphs 117 and 118 are not necessary to the resolution of dispute. Paragraphs 119 through 122 are subordinate to facts found. Paragraph 123 is not necessary to the resolution of dispute. Paragraphs 124-126 are subordinate to facts found. Suggestion in paragraph 127 that the rotation system will not be employed is rejected. The remaining contents within that paragraph are subordinate to facts found. Paragraph 128 is not necessary to the resolution of dispute. Paragraphs 129 through 133 are subordinate to facts found. Paragraph 134 is contrary to the facts found. Paragraph 135 is contrary to the facts found. Paragraph 136 is not necessary to the resolution of dispute.
Findings Of Fact Petitioner, a nonprofit corporation, was established in January of 1971 for the express purpose of rendering home health services within the State of Florida. It was approved by the Florida Department of Health and Rehabilitative Services and the then U.S. Department of Health, Education and Welfare (hereinafter "HEW") as a Medicare provider in the spring of 1971. In 1974, Petitioner created a subunit located in Bradenton to provide services in Manatee and Sarasota Counties. In 1975, a subunit was created in Warm Mineral Springs to serve lower Sarasota and Charlotte Counties. Both subunits were duly certified as home health providers by the Department and HEW. Petitioner's Medicare application was accepted as retroactive to October 1, 1975, reflecting the service area of the Warm Mineral Springs subunit to be lower Sarasota and Charlotte Counties. Petitioner has continuously provided home health services to Charlotte County on an ever-increasing basis since 1975, which predates both state licensing authority over home health services and the applicability of the Certificate of Need law to home health agencies. Since the Department has obtained licensure authority over home health services, Petitioner's Warm Mineral Springs subunit is and has been licensed to serve both Sarasota and Charlotte Counties. On September 26, 1979, Petitioner advised the Department that it intended to open an office in Charlotte County out of which it would serve its Charlotte County patients, setting forth the reasons therefor, and requesting the Department's approval far the opening of an office in Punta Gorda, which would be coordinated with Petitioner's subunit in Fort Myers. Subsequent correspondence between the petitioner and the Department revealed that Petitioner's operational costs would most likely be reduced by the opening of the office in Charlotte County and that no change in services provided would occur. Petitioner further indicated that the only change being sought was an organizational change within the geographic areas being served and also indicated that the proposed office in Charlotte County would not be a branch office of any of Petitioner's subunits, but rather would be a full, separate subunit. On December 26, 1979, the Department advised Petitioner that although Petitioner would remain licensed to provide services to both Sarasota and Charlotte Counties from its Warm Mineral Springs subunit, the establishment of a subunit in Charlotte County would not only require a separate license in Charlotte County, but would also require Certificate of Need review. In that same letter, the Department further advised Petitioner that its determination constituted final agency action. To preserve its rights, Petitioner requested a hearing pursuant to Section 120.57, Florida Statutes. Thereafter, Petitioner submitted a letter of intent to the South Central Florida Health Systems Council, the health systems agency geographically responsible for processing Certificate of Need applications. Petitioner requested that agency's assistance in completing a Certificate of Need application, but was advised that that agency would be unable to assist in processing Petitioner's Certificate of Need application, since Petitioner was already providing services in the area for which the need would necessarily be determined. Petitioner accordingly contacted the Department to advise it that the health systems agency was unable to review the need for services when the services were being provided, and the Department advised Petitioner to go back to the health systems agency for a determination of need. Between the time that the Certificate of Need law first became applicable to home health agencies and the time that Petitioner communicated to the Department its intent to open an office in Charlotte County, the Department has approved the applications of several home health agencies to establish a subunit without obtaining a Certificate of Need, since the Department considered those agencies to be "grandfathered." The Department authorized Sun Coast Home Health Care to open a subunit in Venice in 1978 without requiring a Certificate of Need, as it permitted Central Florida Home Health Services to open subunits in Putnam County and in Lake County in 1978 without the necessity for obtaining a Certificate of Need prior to licensure. Further, the Department authorized Gulf Coast Home Health Services to open a subunit in Hernando County in 1978 without the necessity of obtaining a Certificate of Need for the reason that services were being provided by that agency to patients in Hernando County prior to May 1, 1976, although that subunit was not opened until 1979. The "grandfather" concept was again applied in a similar situation in the Department's Final Order in Global Home Health Services, Inc. v. Department of Health and Rehabilitative Services, DOAH Case No. 78-1013. No evidence was presented by the Department herein in support of its argument that these agencies had all expressed an intent to open a subunit prior to the effective date of the Certificate of Need law applicable to home health agencies.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED THAT: A Final Order be entered authorizing petitioner to open a subunit office for home health services in Charlotte County, Florida, and issuing to Petitioner a separate license for that office if one be required. RECOMMENDED this day of October, 1980, in Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Charles T. Collette, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard, Suite 486 Tallahassee, Florida 32301 Richard I. Manas, Esquire Manas and Marcus 804 Greater Miami Federal Building 200 Southeast First Street Miami, Florida 33131 Herbert E. Straughn, Esquire Office of Community Medical Facilities Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building Two, Room 220 Tallahassee, Florida 32301 Ed Houck, Ph.D. Executive Director South Central Florida Health Systems Agency, Inc. 3801 Bee Ridge Road Sarasota, Florida 33582 Mr. Alvin J. Taylor, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32381 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES FLORIDA HOME HEALTH SERVICES, INC., and FLORIDA HOME HEALTH SERVICES-WEST, Petitioners, DOAH CASE NO. 80-206 DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, /
The Issue The issue for determination is whether Petitioner must reimburse Respondent for payments totaling $29,701.19 that Petitioner admittedly received from the Medicaid Program between May 1, 1996, and March 31, 1998, in compensation for the provision of home health services. Respondent contends that Petitioner is not entitled to retain the payments in question, primarily on the allegations that the compensated services were not medically necessary, were improperly documented, or both.
Findings Of Fact The evidence presented at final hearing established the facts that follow. The Agency is responsible for administering the Florida Medicaid Program. As one of its duties, the Agency must recover "overpayments . . . as appropriate," the term "overpayment" being statutorily defined to mean "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." See Section 409.913(1)(d), Florida Statutes. This case arises out of the Agency's attempt to recover alleged overpayments from Monef, a Florida-licensed home health agency. As an enrolled Medicaid provider, Monef is authorized, under a Medicaid Provider Agreement with the Agency, to provide home health services to Medicaid recipients. Under the Medicaid Provider Agreement, Monef assented to comply with “all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, manuals, handbooks and Statements of Policy as they may be amended from time to time.” The home health services at issue consisted of skilled nursing care rendered either by a registered nurse (“RN”) or a licensed practical nurse (“LPN”), as the needs of the recipient required, together with personal care provided by a home health aide. The "audit period" that is the subject of the Agency's recoupment effort is May 1, 1996 to March 31, 1998. During this audit period, the Medicaid Program reimbursed Monef for all of the skilled nursing and home health aide services that are the subject of this dispute. Largely (though not entirely) on the allegation that the home health services in question were not medically necessary, the Agency contends that Monef collected overpayments totaling $29,701.19 in compensation for services rendered to nine separate patients. The following table summarizes the Agency's allegations. PATIENT NAME GROUND(S) FOR DENIAL ALLEGED OVERPAYMENT Louisiana S. No medical necessity $8,498.17 Robert M. No medical necessity $3,615.54 Mario P. No medical necessity $2,403.33 Angel S. No medical necessity $2,089.12 Ana G. No medical necessity $2,015.94 Joann N. No medical necessity $1,705.12 C. Watson No medical necessity $1,268.76 Yvette F. Service refused $122.16 Rosa P. Multiple $7,983.05 Medical Necessity The proof was in conflict concerning the medical necessity of the challenged home health services that Monef provided to the foregoing patients. There were three categories of expert opinion evidence on this issue, described below. The attending physicians' opinions. To be Medicaid compensable, home health services must be provided pursuant to a written treatment plan that is prepared individually for each recipient and approved by his or her attending physician. The treatment plan——called a "plan of care" or "plan of treatment"—— must be reviewed and updated periodically (about every two months) and also as the patient's condition changes. A required component of all plans of care is the attending physician's certification that the services specified in the plan are medically necessary.1 The fact that a treating doctor, by prescribing, recommending, or approving a medical service, has attested to its medical necessity is not sufficient, in itself, to support a finding that the resulting care was medically necessary. See Rule 59G-1.010(166)(c), Florida Administrative Code. Nevertheless, the attending physician's opinion regarding medical necessity is relevant evidence, even if it is not inherently dispositive. In this case, all of the services that the Agency contends were not medically necessary had been determined to be medically necessary by the respective patients' treating physicians. The peer-review organizations' opinions. During the audit period, the Medicaid Program would not reimburse a home health agency for any home visits in excess of 60 visits per recipient per fiscal year unless the provider had obtained authorization to provide such care, in advance, from the Agency or its designee. Such "prior authorization" was required to be based on medical necessity. At times during the audit period the Agency was under contract with a company called Keystone Peer Review Organization ("KePRO"), which acted as the Agency's designee in regard to pre-approving services above the 60-visit limit. At other times this function was performed by Florida Medical Quality Assurance, Inc. ("FMQAI"). In a couple of instances, the Agency itself gave Monef prior authorization to perform services that it now contends were not medically necessary. By statute, a peer-review organization's written findings are admissible in an administrative proceeding as evidence of medical necessity or lack thereof. See Section 409.913(5), Florida Statutes. Monef had obtained prior authorization based on medical necessity for most of the services that the Agency has challenged as medically unnecessary. The opinions of the Agency's designees, KePRO and FMQAI, are relevant evidence of medical necessity. Dr. Sullenburger's opinion. Dr. John Sullenburger is the Agency's Medicaid physician. He would have testified at the final hearing as an expert witness for the Agency, but the parties stipulated that Dr. Sullenburger's ultimate opinion, based on the medical records, was that each of the claims that the Agency alleges was not medically necessary was, in fact, unnecessary. By entering into this stipulation, Monef effectively waived its right to cross-examine Dr. Sullenburger and thereby expose the particular facts upon which his opinion was based. For its part, the Agency relinquished the opportunity to have the doctor explain the reasons why he had concluded that the patients' attending physicians——and also, in many instances, the Agency's designated peer-review organizations——had erred in making their respective determinations that the subject services were medically necessary. As a result of the parties' stipulation concerning Dr. Sullenburger's testimony, the factfinder was left with a naked expert opinion that merely instructed him to decide the ultimate factual issue of medical necessity in the Agency's favor. In making findings regarding medical necessity, the factfinder settled on the following rules of thumb. Greatest weight was accorded the opinions of KePRO and FMQAI. These were deemed to have the highest probative value because the peer- review organizations' determinations of medical necessity were made before the services in question were provided, and neither of the Agency's designees had any discernable motive to stretch the truth one way or the other. Certainly, the peer-review organizations more closely resemble a disinterested, neutral decision-maker than either the patient’s treating physician or the Agency's expert witness (whose opinions were formed after the services had been rendered and the claims paid); indeed, if anything, KePRO and FMQAI might be expected to tilt in the Agency's direction (although there was no evidence of such bias in this case).2 The hearsay opinions of the treating physicians, on the one hand, and Dr. Sullenburger, on the other, were considered to be about equally persuasive——and none was particularly compelling.3 It should be stated that the attending physicians' certifications of medical necessity, each of which lacked analysis that might have connected the facts concerning a patient's medical condition with the need for services, were as conclusory as Dr. Sullenburger's ultimate opinion. Consequently, in those instances where a peer-review organization gave Monef a mandatory prior authorization to render services that the attending physician had certified as being medically necessary, it has been found that, more likely than not, the services in question were medically necessary. In contrast, a closer question arose in those instances where there was no evidence of prior authorization when such was required. The expert opinions——the attending physician's on one side, Dr. Sullenburger's on the other—— essentially canceled each other out. While ordinarily in an evidential tie the party without the burden of proof (here, Monef) would get the nod, in this case the Agency had the slightest edge, on the strength of Rule 59G-1.010(166)(c), Florida Administrative Code. Under this Rule, an attending physician's approval of a service is not, "in itself," sufficient to support a finding of medical necessity.4 Because of the Rule, Monef needed to introduce some additional, persuasive evidence (e.g. the attending doctor's testimony regarding the need for the service) to overcome Dr. Sullenburger's opinion.5 Louisiana S. At the time that the services in question were provided, from May 7, 1997, until December 20, 1997, this patient, an obese woman in her late 60s, was being treated for diabetes, hypertension, and coronary artery disease. She was not able to self-administer the insulin shots that were needed to prevent complications from diabetes. For the period from May 5, 1997, through June 30, 1997, KePRO gave prior authorization to 53 skilled nursing visits and 23 home health aide visits.6 Monef was reimbursed for 42 skilled nursing visits and 23 home health aide visits conducted in this period. From July 1, 1997, until September 1, 1997, Monef provided a total of 66 combined skilled nursing and home health aide visits to Louisiana S. The Medicaid Program paid for 60 of them. Because these were the first 60 visits of the fiscal year, which began on July 1, 1997, prior authorization was neither needed nor obtained. During the period between September 1, 1997, and November 1, 1997, Monef made 96 skilled nursing visits, out of 124 that KePRO had pre-approved, and 20 of 27 authorized home health aide visits. KePRO gave prior authorization for 124 skilled nursing and 27 home health aide visits for the period from November 1, 1997 to January 1, 1998, of which 54 and 18, respectively, were made. Based on the levels of service that KePRO had approved before July 1, 1997, and then after September 1, 1997, it is reasonable to infer, and so found, that the first 60 combined visits to this patient in fiscal year 1997-98 would have been pre-approved had Monef been required to obtain prior authorization. The home health care services that Monef provided to Louisiana S. between May 9, 1997, and December 30, 1997, for which the Medicaid Program paid $8,498.17, were medically necessary. Robert M. Robert M., a man in his mid-40s who received home health care from Monef from November 26, 1997, through March 27, 1998, suffered from arteriosclerosis, hypertension, acute bronchitis, and schizophrenia. His residence was an assisted living facility ("ALF").7 FMQAI gave prior authorization for 61 skilled nursing and 61 home health aide visits to occur between November 26, 1997, and January 26, 1998. Monef provided 55 nursing and 59 home health aide visits during this period. Monef requested prior approval for 25 skilled nursing and 63 home health aide visits for the period from January 26, 1998, and March 26, 1998. Although prior authorization was needed for these services, which exceeded the limit for fiscal year 1997-98, there is no evidence in the record that FMQAI granted Monef's request for approval. FMQAI authorized 23 skilled nursing visits and 30 home health aide visits for the period from March 26, 1998, to May 28, 1998. However, Monef provided just one skilled nursing visit during this time, on March 27, 1998. The home health care services that Monef provided to Robert M. between November 26, 1997, and January 26, 1998, and on March 27, 1998, were medically necessary. Lack of medical necessity was established, however, for the services provided between January 26, 1998, and March 26, 1998. The Medicaid Program paid the following claims, totaling $1,442.49, for this period: One RN visit, $34.04; 21 LPN visits, $549.99; and 51 home health aide visits (35 at $17.46 apiece and 16 at $15.46 each), $858.46. Mario P. From November 25, 1997, through March 28, 1998, Mario P., a septuagenarian who was being treated for acute gastritis, an enlarged prostate, and mental illness, received home health visits at the ALF where he lived, the services provided by Monef. FMQAI approved 43 skilled nursing and 61 home health aide visits for the period from November 26, 1997, through January 26, 1998; 11 skilled nursing and 62 home health aide visits for January 26, 1998, until March 26, 1998; and 25 skilled nursing visits for March 1, 1998, through May 1, 1998 (overlapping the immediately preceding period by about three- and-a-half weeks). The actual number of skilled nursing and home health aide visits for which the Medicaid Program reimbursed Monef was within the pre-approved service levels for each period. The home health care services that Monef provided to Mario P. between November 26, 1997, and March 28, 1998, for which the Medicaid Program paid $2,403.33, were medically necessary. Angel S. Angel S. was a man in his middle 50s who had been diagnosed with gastroduodenitis (an inflammation of the stomach and duodenum) and mental illness. Monef obtained prior authorization from KePRO to provide Angel S. with 34 skilled nursing and 62 home health aide visits between November 25, 1997, and January 25, 1998. During this time, the Medicaid Program reimbursed Monef for 32 skilled nursing and 44 home health aide visits. FMQAI pre-approved 26 skilled nursing and 27 home health aid visits for January 25, 1998, through March 25, 1998. Monef was reimbursed for 20 and 21 such visits, respectively. The home health care services that Monef provided to Angel S. between November 25, 1997, and March 25, 1998, for which the Medicaid Program paid $2,089.12, were medically necessary. Ana G. When she was a client of Monef, Ana G., a woman in her 60s, was suffering from acute gastritis and major depression. She lived in an ALF. FMQAI pre-approved 50 skilled nursing visits and 40 home health aide visits for the period from November 25, 1997, through January 25, 1998. In that time, Monef rendered 28 skilled nursing visits and 42 home health aide visits for which it received compensation from the Medicaid Program. For the period from January 25, 1998, through March 25, 1998, FMQAI gave prior authorization for 9 skilled nursing and no home health aide visits. During this time, Monef provided 15 skilled nursing visits and 15 home health aide visits for which Medicaid paid. The services that Monef rendered to patient A. Garcia between November 25, 1997, and March 23, 1998, were medically necessary except for 17 home health aide visits (at $17.46 apiece) and 6 skilled nursing visits (at $24.19 each), making a total of $441.96 in overpayments. Joann N. In her late 30s at the time of the services in question, Joann N.'s principal diagnosis was major depression. She also suffered from hypertension and a type of diabetes. Because Joann N.'s primary diagnosis was a mental illness, the home health services provided to her may not have been Medicaid-compensable due to an exclusion that bars coverage for mental health and psychiatric services.8 The Agency, however, did not disallow Monef's claims on this basis, relying instead exclusively on the allegation that the services were not medically necessary. None of the skilled nursing and home health aide visits that Monef provide Joann N. between February 16, 1997, and September 1, 1997, was pre-approved. There is evidence that Monef sought KePRO's prior authorization of 26 skilled nursing and ten or 12 home health aide visits for the period from April 16, 1997, to June 16, 1997, but no proof was adduced showing that approval was granted. Based on the number of combined visits that Monef provided both before and after July 1, 1997 (the start of fiscal year 1997-98), it does not appear that prior authorization was required. There are no grounds in the record, however, from which to infer that prior authorization(s) would have been given if needed. Accordingly, lack of medical necessity was established for all of the home health services that Monef provided Joann N, for which the Medicaid Program paid a total of $1,705.12. C. Watson C. Watson was a teenager with cerebral palsy and quadriplegia who received care in her home between May 12, 1997, and March 31, 1998. The Agency alleges that all of the skilled nursing services that Monef provide C. Watson were medically unnecessary but acknowledges that the home health aide visits were appropriate and covered. The Agency itself pre-approved the home health care visits that Monef had requested for the period from May 12, 1997, through June 30, 1997, namely, 24 skilled nursing and 40 home health aide visits. The Medicaid Program reimbursed Monef for 12 skilled nursing and 38 home health aide visits made during this period. The Agency gave prior authorization for home health care to be provided between July 1, 1997, and September 1, 1997. FMQAI also pre-approved the following services for the same period: five skilled nursing visits and 43 home health aide visits. Monef was reimbursed for 17 skilled nursing visits made during this time. For the periods of September 1, 1997 to November 1, 1997; November 1, 1997 until January 1, 1998; and January 1, 1998 through March 1, 1998, KePRO pre-approved levels of skilled nursing services (nine, four, and nine visits, respectively) that were not exceeded by Medicaid-paid claims for these services rendered by Monef during the subject timeframes. FMQAI gave prior authorization for four skilled nursing visits to occur between March 1, 1998 and May 1, 1998, but Monef did not submit any claims for such services rendered during this period. Lack of medical necessity was established for 12 skilled nursing visits made during the period from July 1, 1997 through September 1, 1997. The Medicaid Program paid a total of $319.13 for these visits (One RN visit at $31.04 and 11 LPN visits at $26.19), and this sum constitutes an overpayment subject to recoupment. The rest of the skilled nursing visits that Monef furnished to C. Watson were medically necessary. Yvette F. Yvette F. was a patient in her 30s suffering from complications relating to HIV infection. On Christmas Day, 1997, Yvette F. refused most of the skilled nursing services that had been scheduled, to spend time with her family. The Agency has sought to recoup the $122.16 that the Medicaid Program paid for an RN's visit to Yvette F.'s home on December 25, 1997. This sum reflects four hours of service. The medical records in evidence establish that the patient's refusal of treatment occurred after the RN had arrived at her residence, and that, despite the patient's refusal of service, the RN did perform an assessment on Yvette F. that day. The Agency failed to establish that, under these circumstances, Monef is entitled to no reimbursement. Yet, common sense instructs that the covered claim should not encompass four hours of services when clearly that much time was not spent on this particular visit. Unfortunately, nothing in the record, including the parties' legal arguments, provides guidance for resolving this particular problem. In the absence both of controlling authority and evidence of the actual time spent, the factfinder has determined that the claim should be equitably apportioned to do rough justice, with Monef being compensated for one hour of service and the balance returned to the Medicaid Program. On this basis, then, lack of medical necessity has been shown for three hours of skilled nursing services, making an overpayment of $91.62. Rosa P. Rosa P. was a woman in her late 30s with multiple health problems, including uncontrolled diabetes, recurring infections, renal failure, respiratory insufficiency, and mental illness. Monef rendered home health care to Rosa P. from November 22, 1996, until February 1, 1998, for which the Medicaid Program paid $24,543.27 on 1,012 separate claims. The Agency seeks to recoup a little more than one- third of the amount previously paid to Monef for this patient's home health care, alleging a number of grounds to disallow a number of claims. The following table summarizes the Agency's contentions regarding the challenged claims. ("Doc." is an abbreviation for "documentation." "PC" is an acronym for plan of care. The alphanumeric claim identifiers in the left-hand column were assigned by the Administrative Law Judge for ease of reference.) CLAIM ID DATE(S) SERVICE(S) GROUND(S) FOR DENIAL ALLEGED OVERPAYMENT RP-1 11-22-96 Nursing No doc. $29.04 RP-2 12-9-96, 12- 10-96, 12- 14-96 Aide No doc./POT not followed (x3) $52.38 RP-3 12-25-96 to 1-5-97 Aide No PC rendered (x11) $192.06 RP-4 1-6-97, 1-7- 97, 1-9-97, 1-10-97, 1- 11-97, 1-12- 97 Aide POT not followed (x6) $104.76 RP-5 1-22-97 to 3-22-97 All POT not signed by MD or RN $4,009.37 RP-6 3-24-97 to 5-2-97 Aide No PC rendered (x40) $698.40 RP-7 5-2-97 Nursing No doc. $29.04 RP-8 5-3-97 to 7- 4-97 Aide No PC rendered (x62) $1,032.52 RP-9 7-21-97 to 7-26-97 Aide POT not followed (x6) $87.309 RP-10 8-4-97 to 8- 10-97 Aide PC not rendered (x7) $122.22 RP-11 10-29-97 Nursing Documented only 1 of 2 billed visits $31.04 RP-12 11-3-97 Aide No doc. $17.46 RP-13 11-4-97 Aide No doc. $17.46 RP-14 11-14-97 Aide No doc. $17.46 RP-15 11-15-97 Aide No doc. $17.46 RP-16 11-16-97 Aide No doc. $17.46 RP-17 11-22-97 to 11-26-97 Aide No doc. (x10) (2 billed visits per day) $52.3810 RP-18 12-1-97 Aide No doc. $17.46 RP-19 12-2-97 Aide No doc. $17.4611 RP-20 12-3-97 Aide No doc. $17.46 RP-21 12-28-97 to 2-28-98 Nursing POT not signed by MD or RN $1,724.37 The total of these alleged overpayments, without adjustment for the several minor arithmetic or typographical errors in the Agency’s papers, see endnotes 9 - 11, is $7,983.05. Each claim or claim set will be addressed in turn below. RP-1. The medical records contain a "Time Record Nursing Progress Note" dated November 22, 1997, that documents a skilled nursing visit to the patient on that day. Therefore, the Agency failed to prove its allegation of overpayment regarding RP-1. RP-2. Included in the patient's records is a "Weekly Activity Report and Time Slip" for the week beginning Monday, December 9, 1996, that was filled out by the home health aide who cared for Rosa P. during that seven-day period. To keep track of tasks performed, the form instructed the aide to check boxes in a table that cross-referenced particular duties (e.g. oral hygiene, change linens, turn & position), which are described in the left-hand column, with the days of the week, which are listed, Monday through Sunday, in the top row. For the days in question (December 9, 10, and 14, 1996), the aide checked boxes showing that, among other things, she had given the patient a shower and assisted her in a wheelchair, both of which are Medicaid-covered services. See Paragraphs 133, 137, infra. Handwritten notes inscribed on the Agency's work papers next to each of the three dates at issue state: "only p/c [personal care] [is a] shower —— not following POT [plan of treatment]." The first of these points is incorrect: assistance with a wheelchair, like showering a patient, is a covered home health aide service. The plan of care that covered the subject dates disproves the second assertion. The written treatment plan explains that the home health aide will "provide personal care, asst [assist] [with] ADL's [activities of daily living] including bath, skin/foot care." The aide was following this course of action on December 9, 10, and 14, 1996. The Agency did not prove an overpayment in connection with RP-2. RP-3. The Agency seeks to recoup payments of $17.46 apiece for 11 home health aide visits made between December 25, 1996 and January 5, 1997, on the ground that the aide did not perform any covered personal services. Although a dozen such visits were made during this particular period, the Agency's work papers reveal that the claim for services rendered on December 29, 1996, was approved. The aide's time sheets for the relevant period substantiate the Agency's allegation, with one exception. The aide's entry on December 26, 1996, is identical to that of December 29, 1996, the latter which the Agency correctly deemed sufficient to make Medicaid financially responsible. On both days, the aide helped the patient with a tub bath and shampoo, which are covered personal services. For the other ten days, review of the aide's time sheets reveals that many services were rendered in the category of "light housekeeping" and "meal preparation." These fall within the exclusion for "housekeeping, homemaker, and chore services, including shopping" and hence are not covered services. Handbook, at p. 2-6; see also Rule 59G-4.130(8)(a)2., Florida Administrative Code (1996).12 (Curiously, the Agency did not specifically rely upon this exclusion.) In its Proposed Recommended Order, Monef points out that the aide made a written notation each day concerning the patient's voiding of bowel and bladder. Because the non- exclusive list of covered home health aide services included "toileting and elimination," see Rule 59G-4.130(5)(b)3.b., Florida Administrative Code (1996), it is possible that the aide was providing a compensable service during the period in question. The trouble is, it cannot be determined from the evidence whether the aide actually assisted the patient——or whether the aide merely wrote down on the time sheet what had been observed regarding the patient's use of the bathroom facilities. Although the question is close, it is determined that simply observing and commenting daily about the patient's elimination of bodily wastes is not enough, without more, to constitute a Medicaid-compensable home health aide service.13 Being unable on the present record to find that the aide did more than watch and write, it is determined that covered services in the area of "toileting and elimination" were not persuasively shown to have occurred. Consequently, lack of medical necessity has been established as to 10 home health aide visits. The total overpayment on RP-3 is $174.60. RP-4. For the week from Monday, January 6 through Sunday, January 12, 1997, the Agency alleges that six home health aide visits are not covered because the aide failed to follow the plan of treatment. Notations on the Agency's work papers suggest another basis: "only shower - incomplete," meaning, presumably, that the only covered personal care provided was assistance in the shower. See discussion regarding RP-2, supra. The aide's time sheet for the relevant period contradicts the Agency's contention. First, bathing assistance was not the only covered personal care rendered on the days in question. The aide also helped the patient with her wheelchair, which is a service covered under the rubric of "transfer and ambulation." Rule 59G-4.130(5)(b)3.e., Florida Administrative Code (1996). Second, the aide's entry for January 8, 1997——for which claim the Agency is not seeking to recover——is substantially the same as those for the challenged days. The only material difference is that on January 8 the aide checked the box indicating that she had shampooed the patient's hair. Nothing in the Rule or the Handbook, however, provides that a shower with shampoo is covered but a shower without shampoo is excluded from coverage, and the Agency failed to prove a factual basis, or advance a logical one, for drawing such distinction. Consequently, the Agency did not establish an overpayment with regard to RP-4. RP-5. The medical records in evidence contain a "Home Health Certification and Plan of Care" for Rosa P. that was signed and dated, on January 22, 1997, by the RN and by the patient's attending physician, Dr. John Prior. This plan of care covers the period from January 22, 1997 through March 22, 1997. The Agency did not present any evidence that either the doctor's or the nurse's signature appearing on this form are inauthentic or that either or both failed to sign on January 22, 1997, as recorded. Therefore, the Agency's allegation that the plan of treatment for the period in question is invalid was not proved. RP-6. This claim set encompasses five full weeks plus five days of home health aide service, or 40 visits in all. The Agency alleges that no covered personal care was provided during these visits. The time sheets demonstrate that the aide provided a covered service, namely assistance in the shower, on all days between March 24, 1997 and April 6, 1997, and also on the five days from April 28 through May 2, 1997. The Agency therefore failed to prove its allegation as to these 19 visits. The Agency made its case, however, in connection with the remaining 21 visits from April 7 to April 27, 1997, inclusive. The time sheets for these dates do not adequately document the provision of a covered service.14 Accordingly, lack of medical necessity was established for 21 home health aide visits at $17.46 each, making a total overpayment on RP-6 of $366.66. RP-7. The Agency has sought to recover payment of $29.04 for an RN visit to the patient on May 2, 1997, alleging lack of documentation. The medical records show that on this particular date, an LPN treated the patient from 8:00 a.m. to 8:45 a.m. Later that same day, at 5:00 p.m., an RN arrived to provide care, which she did, afterwards leaving the patient’s residence at 5:45 p.m. These two visits are documented in separate "Time Record Nursing Progress Note" forms. The Agency did not establish that the nursing notes are inauthentic or incredible.15 Thus, the allegation regarding RP-7 was not proved. RP-8. The Agency contends that 62 home health aide visits between May 3, 1997, and July 4, 1997, were not compensable because no covered personal care was provided. The aide's time sheets establish that a covered personal care (assistance in the shower) was given on May 3 through May 17, inclusive (15 visits at $17.46 apiece), and also on June 20 through 22, 1997 (three visits at $17.46 each). Shower assistance was also provided on May 26 through June 1, 1997 (seven visits at $15.46 each). Skin care, a covered service, was provided on June 7, 1997 (one visit, $15.46). And ambulation assistance, a covered personal care service, was rendered on seven visits from June 9, 1997, through June 15, 1997, at $15.46 per visit. For the remaining 29 visits, however, the aide's time sheets fail adequately to document the provision of a covered service. Ten of these visits were billed at $15.46, the others at $17.46 apiece. Thus, with respect to RP-8, the Agency established an overpayment of $486.34. RP-9. This claim set involves six home health aide visits on the dates of July 21 through July 26, 1997, inclusive, during which, the Agency alleges, the plan of treatment was not obeyed. (The Agency did not seek to recoup the payment made for aide services rendered on Sunday, July 27, 1997, even though that date’s visit is included within the same time sheet as the Monday through Saturday visits, and the services rendered on July 27 were identical to those performed earlier in the week.) According to the pertinent time sheet, covered personal care services (bathing and assistance with ambulation) were provided in connection with the challenged claims. Further, the plan of treatment in effect at that time stated that the aide would "assist with personal care, ambulation, prepare meals, grocery shop, wash clothes, [and] straighten bedside unit." The time sheet establishes that the aide complied with these instructions. Accordingly, the Agency failed to prove its allegation regarding RP-9. RP-10. The Agency alleges that none of the home health aide visits from August 4 through August 10, 1997, entailed covered personal care services. The aide's time sheet for that week, however, documents that bathing care, specifically showering, was provided. Because showering the patient is clearly a covered item, the Agency failed to carry its burden of proof in respect of RP-10. The patient's medical records contain two "Time Record Nursing Progress Note" forms dated October 29, 1997, which document separate RN visits on that date, one lasting from 4:30 p.m. to 5:15 p.m., the other from 6:00 p.m. until 7:40 p.m. The Agency therefore did not establish, by a preponderance of evidence, its allegation that Monef had provided documentary support for only of one of two nursing visits on October 29, 1997. RP-12, -13, -14, -15, and -16. The Agency alleges that these five home health aide visits, occurring over a two- week period from November 3, 1997 to November 16, 1997, are not adequately documented. The visits of Monday, November 3, and Tuesday, November 4, 1997, which the Agency challenges, are reported on the same time sheet as those of November 5 through 9, 1997, which the Agency accepts. The duties performed on each of these days, both challenged and unchallenged, were identical, except that on November 4 and 8 the aide shampooed the patient. Numerous covered personal care services were rendered each day during the week, including bathing, oral hygiene, skin care, and assistance with ambulation. The duty descriptions on the aide's time sheet for the week beginning Monday, November 10, 1997——a week that included three challenged visits (November 14 through 16)——are substantially similar to one another (though the Agency accepted claims for November 10 through 13) and nearly identical to those given for the preceding week. Once again, covered personal care services rendered consistently throughout the week of November 10 to 16, 1997, included bathing, oral hygiene, skin care, and ambulation assistance. The evidence, therefore, does not support the Agency's allegation that the services in question were not adequately documented. RP-17. The Agency alleges that home health aide visits made from November 22 through November 26, 1997, were not documented. The medical records demonstrate that one such visit per day was provided, for a total of five. The records show further, however, that Monef was reimbursed for two visits for each of the days in question, receiving double the amount to which it was entitled based on the documented number of visits. The Agency, therefore, has proved an overpayment of $87.30 (five visits at $17.46 apiece). RP-18, -19, and -20. The Agency contends that there is insufficient documentation for home health visits on December 1 through 3, 1997. But the aide's time sheet for the week beginning Monday, December 1, 1997, adequately establishes that such visits actually occurred——and that covered personal care services (bathing, oral hygiene, skin care, and ambulation assistance) were provided during each of them. However, as with RP-17, the records show that Monef was reimbursed for two visits for each of the days in question, receiving double the amount to which it was entitled based on the documented number of visits. The Agency, therefore, has proved an overpayment of $50.38 (two visits at $17.45 apiece and one billed at $15.46) with regard to RP-18, RP-19, and RP-20. RP-21. The Agency seeks to recover payments for all nursing services rendered from December 28, 1997 through February 28, 1998, on the ground that the plan of treatment for the subject period was not signed and dated by the attending physician, as required. In fact, the pertinent treatment plan was signed by a Dr. Roxana Lopez, and by the RN. Neither signature, however, was dated. Thus, the Agency is correct in its assertion that the plan of treatment is deficient. But, the record also contains a letter from KePRO dated December 29, 1997, which grants prior authorization for 124 skilled nursing and 61 home health aide visits for the period from December 28, 1997 through February 28, 1998. According to this letter, Monef's request for pre-approval was made on December 22, 1997. One of the items that must be submitted to the peer- review organization with a request for prior authorization is the written plan of treatment. Thus, it is reasonable to infer, and so found, that KePRO had in its possession the deficient plan of treatment and, in granting prior authorization, overlooked the fact that the doctor had not dated her signature. Monef did not urge that KePRO's pre-approval of the services in question effected a waiver of the Agency's right to disallow the ensuing claims based on what is, in these circumstances, clearly a technicality,16 or that the Agency should be estopped from raising this particular objection, although little imagination is required to perceive the potential merit in either argument. It is not necessary to reach waiver or estoppel issues, however, for KePRO's approval letter establishes persuasively that the doctor and the nurse signed the plan of treatment before December 29, 1997——and hence at or before the start of care and services thereunder. Plainly, in other words, the attending physician timely approved the plan of treatment, even though she failed to date her signature. Under the particular facts of this case, therefore, where the treatment plan is in substantial compliance with the requirements, and neither the Medicaid Program nor the patient suffered any conceivable prejudice as a result of a demonstrably harmless (on these facts) and unintentional deficiency, it is determined that the Agency has failed to prove a sufficient basis to recoup payments totaling $1,724.37 for pre-approved, medically necessary services that were actually provided to an eligible patient. The following table summarizes the foregoing findings relating to claims for services to Rosa P. CLAIM ID DATE(S) SERVICE(S) GROUND(S) FOR DENIAL ACTUAL OVERPAYMENT RP-1 11-22-96 Nursing No doc. $0 RP-2 12-9-96, 12- 10-96, 12- 14-96 Aide No doc./POT not followed (x3) $0 RP-3 12-25-96 to 1-5-97 Aide No PC rendered (x11) $174.60 RP-4 1-6-97, 1-7- 97, 1-9-97, 1-10-97, 1- 11-97, 1-12- 97 Aide POT not followed (x6) $0 RP-5 1-22-97 to 3-22-97 All POT not signed by MD or RN $0 RP-6 3-24-97 to 5-2-97 Aide No PC rendered (x40) $366.66 RP-7 5-2-97 Nursing No doc. $0 RP-8 5-3-97 to 7- 4-97 Aide No PC rendered (x62) $486.34 RP-9 7-21-97 to 7-26-97 Aide POT not followed (x6) $0 RP-10 8-4-97 to 8- 10-97 Aide PC not rendered (x7) $0 RP-11 10-29-97 Nursing Documented only 1 of 2 billed visits $0 RP-12 11-3-97 Aide No doc. $0 RP-13 11-4-97 Aide No doc. $0 RP-14 11-14-97 Aide No doc. $0 RP-15 11-15-97 Aide No doc. $0 RP-16 11-16-97 Aide No doc. $0 RP-17 11-22-97 to 11-26-97 Aide No doc. (x10) (2 billed visits per day) $87.30 RP-18 12-1-97 Aide No doc. $17.46 RP-19 12-2-97 Aide No doc. $15.46 RP-20 12-3-97 Aide No doc. $17.46 RP-21 12-28-97 to 2-28-98 Nursing POT not signed by MD or RN $0 The Agency, in sum, proved overpayments totaling $1,165.28 in relation to Rosa P. The Bottom Line The Agency established that Monef received overpayments in connection with six patients. The following table summarizes these overpayments. PATIENT NAME GROUND(S) FOR DENIAL OVERPAYMENT Robert M. No medical necessity $1,442.49 Ana G. No medical necessity $441.96 Joann N. No medical necessity $1,705.12 C. Watson No medical necessity $319.13 Yvette F. Service refused $91.62 Rosa P. Multiple $1,165.28 Accordingly, the Agency is entitled to recover from Monef the principal sum of $5,165.60.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Monef to repay the Agency the principal amount of $5,165.60. DONE AND ENTERED this 14th day of November, 2001, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 14th day of November, 2001.
Findings Of Fact VNA Healthcare Group of Florida, Inc. is a non- profit parent corporation with four health-related subsidiaries. Visiting Nurse Association, Inc. is a Florida not-for-profit corporation which is licensed and Medicare- certified to provide home health care in the District VII, counties of Orange, Seminole and Osceola. VNA Respite Care, Inc. (hereafter "VNA Respite") is a licensed and non-Medicare certified subsidiary of VNA Healthcare Group which presently Provides private duty nursing services across District borders to residents of Orange, Seminole, Osceola, Lake, Marion, Sumter, Volusia, Polk, and Brevard counties. VNA Respite currently has offices in Orlando, Sanford, Longwood, Kissimmee, and Leesburg. Community Health Services, Inc. d/b/a VNA of Brevard, provides licensed Medicare- certified home health services in Brevard County. VNA of Central Florida, Inc. is the Community Care for the Elderly program provided in Orange and Seminole counties. On or before December 15, 1985, Visiting Nurse Association, Inc. (A) timely filed a CON application to establish a Medicare-certified home health care agency in District III. The application clearly identified Leesburg, Lake County, Florida, which is within District III, as the existing base of operations for the proposed agency. VNA applied for a CON to make its existing local home health agency, VNA Respite, Inc. eligible for Medicare reimbursement. The application, identified as CON number 4356, was denied by the State Agency Action Report (SAAR) of July 16, 1986. VNA's was the sole home health care agency application reviewed in this batching cycle, which contemplated a July, 1987 planning horizon. Since that time, HRS takes the position that it cannot tell what the horizon would be because its rules and policies have been invalidated. (TR 270-271). HRS is the agency responsible for certification and licensure of home health agencies in Florida. A home health agency in Florida must obtain a CON from HRS before it can become eligible to receive Medicare reimbursement. Medicare is a federally funded health program for elderly and disabled persons. Medicare reimbursement of home health agencies is on a cost reimbursement basis with a cap for each specific discipline covered. Home health agency costs in excess of the Medicare caps must be absorbed by the home health agency. This affects financial feasibility of individual applicants. Conversely, it also insures that traditional concepts of price competition have no applicability to home health agencies to the extent they provide Medicare reimbursable services and further establishes that there is negligible impact on competition among these labor (as opposed to capital) intensive providers. On August 15, 1906, VNA timely petitioned for a formal administrative hearing to challenge the denial. The only issue at the final hearing was whether VNA should be granted a CON. Both parties agreed that the only criteria remaining to be litigated were Florida Statutes subsections 381.494(6)(c) 1,2, 3, 4, 9, and 12 and 381.494 (6)(c) 8 as it relates to the extent to which the proposed services will be accessible to all residents of the service district. Presently, HRS has no rule or policy designating a numeric methodology to determine the need for new home health agencies in any given district. Review of CON applications for home health agencies is based upon statutory criteria of Section 384.494(6)(c), the merits of the proposal, and the district need demonstrated by the applicant. At final hearing, VNA, through its expert in need analysis for purposes of CON review, Sharon Gordon-Girvin. Presented two numeric methodologies to calculate need in District III. The method represented as the state's policy or "approach" for determining need was based upon an invalidated proposed rule which is no longer utilized by HRS and which, although pronounced reasonable" by both Ms. Gordon-Girvin and Respondent's spokesman, Reid Jaffee, cannot be legitimately used here as a reasonable methodology. (See Conclusions of Law. The other methodology presented by Gordon-Girvin was the District III Health Council need methodology. Gordon-Girvin and Jaffee each opined that District III's methodology is a very conservative procedure because of its use of a 5 year horizon line to project home health agency need. It is applied on a county by county basis and reveals a need on each of Alachua, Columbia, Hamilton, Lake and Marion counties for 1989. Jaffee concedes these foregoing figures. The plan also reveals a net need in 1987 for an additional agency in Alachua, Lake, Hamilton, and Columbia counties and in 1988 for an additional agency in Alachua, Lake, Hamilton, Columbia, and Marion counties. The District III Health Plan provides for a separate sub-district for each county. However, a county basis for subdistricting District III is not required by statute or rule and no part of the District III Health Plan has been adopted by HRS as a rule. The SAAR addressed the entire district as the service area. Although District III's need methodology does not establish a need for a home health agency for every county within the District, it provides that there are some circumstances in which the local need methodology may be set aside. District III's Review Guidelines provide that additional home health agencies may be granted certificates of need for counties within District III if certain circumstances are documented. The Review Guidelines propose that if residents of a specific area have not had access to home health services for the past calendar year preceding the proposal for new services or residents of a county have not had access to home health services for the past calendar year preceding the proposal for new services due to a patient's ability to pay or source of payment and the CON applicant documents an ability and willingness to accept patients regardless of payment source or ability to pay, the applicant may be approved as an additional home health agency. Although not a rule, this portion of the District III Health Plan is probative of need. In the absence of numeric need, it recommends additional home health agencies based upon a demonstration of unmet need for Medicaid and indigent patients. As of the date of hearing, HRS resisted granting the CON to VNA primarily because of unspecified prior batched applicants still in litigation (TR 232-233). Applicants in litigation are neither approved nor established and their existence, even had it been demonstrated, which it has not, is irrelevant. HRS' post-hearing proposals submit that neither of the proposed need methodologies suggested by VNA is applicable here. HRS urges the determination that VNA has thereby failed to establish numerical need for an additional District-wide home health agency and further submits that there is no compelment substantial evidence of unmet need for Medicaid and indigent patients. However, by a prehearing stipulation ratified at hearing, HRS agreed that, Although DHRS agrees that there is a need in District III for at least 18 other home health agencies, it contends that VNA should be denied its application because of certain other deficiencies in its proposals. (TR 14) VNA's principal office for HRS Service District VII is in Orlando, Orange County, Florida. HRS witness, Reid Jaffee, was the HRS reviewer of VNA's CON application. He candidly admitted that HRS' initial denial was based in part on his Failure to note the existence of VNA's local base of operations for its proposed home health agency. Most of HRS' concerns and reasoning for denial contained within the SAAP were based upon Mr. Jaffe's erroneous cognitive leap that VNA intended to "cover" the entire 16 county geographic area designated as HRS District I II From its corporate headquarters in District VII. Actually, VNA seeks certification of its existing licensed home health agency in District III. VNA Respite, VNA's existing licensed but non-certified home health agency in Leesburg, Lake County, a county within HRS District III, was established in January, 1985, and licensed in July 1986. Its office has continuously been located in and has operated out of Leesburg, Lake County, Florida, and it has continuously provided, without Medicare reimbursement, the same types of home health services as VNA now proposes to provide for Medicare reimbursement if the sought-for CON is granted. If granted a CON, VNA proposes to initially provide medical home health care services to patients in Lake, Citrus, Sumter, Marion, and Alachua counties. Services will initially be coordinated through the existing office of VNA Respite in Leesburg, Lake County, Florida. VNA would later phase in the remaining counties of District III by establishing another base office located in Alachua County. Reid Jaffee stated HRS probably would not have any cause to oppose the CON on the basis of anticipated geographic problems impinging on feasibility or quality of care if the service area were Lake, Sumter, Citrus, and Marion counties serviced from the existing Leesburg, Lake County base. (TR 256-258). In the first year VNA estimates 6,000 visits. In the second year it estimates 12,000 visits. A visit" is defined as the provision of service to meet the needs of a patient at his place of residence. In their Leesburg office, VNA Respite has received an average of 10 calls per week for Medicare reimbursable services which they currently must turn down. VNA submitted corrected financial information because of some inadvertent errors that had been made in the initial application. This was accepted by HRS and permitted by the Hearing Officer because it did not constitute a substantial amendment. It will cost VNA a maximum of $50,000 in start-up costs to operate in District III, although many of these costs have already been met by VNA Respite's previous and existing presence in Lake County. The initial application mistakenly submitted VNA's actual operating budget for a two year period in the place in the application designated for start-up costs. VNA's charges for a visit in the existing service area would be $55 the first year and $60 per visit the second year. The corrected financials reflect a net income projection of $10,442 in the first year and of $19,078 the second year. The project is financially feasible on both a short and a long term basis. Significant economies of scale will be realized by virtue of VNA's size in District VII which affords and will afford VNA Respite in District III the benefits of centralized accounting, billing, personnel services, nurse education services, and quality assurance programs while the use of VNA Respite in Leesburg as a dispatching base will assume quick, quality responsiveness to District III patients' needs. In the past, VNA has never exceeded Medicare cost caps. The projected costs of the VNA application are less than the cost caps in effect for District III. VNA will be operating cost effectively in District III in part because its cost per visit will be less than the Medicare cap. VNA's proposed home health agency will operate with reasonable efficiency if it is phased in as projected by VNA planners and economic experts. VNA proposes to offer the full six-core range of Medicare reimbursable services. It will provide, among other services, skilled nursing and medical supplies, physical therapy, occupational therapy, speech therapy, home health aid, and medical social services to patients in their homes. These are now offered out of VNA Respite's Leesburg office but are not Medicare reimbursable without a CON. VNA currently offers and proposes to offer high-tech home health services including enterostomal therapy, psychiatric nursing, parenteral-enteral therapy, and oncology and pediatric services. Additionally, homemakers and medical supply services are offered and are proposed to be offered. They are now, and if the application is granted, will continue to be made available 24 hours a day, 7 days a week. VNA proposes a voluntary advocacy program. The program anticipates added support to service elderly patients by coordination of volunteers who make daily telephone calls to the elderly or visit them at home. A similar program is working successfully in VNA's District VII operation at the present time. No other similar program is offered by other existing District III providers. By competent, substantial evidence, VNA has demonstrated considerable community and professional health care provider support for approval of its application. VNA Respite has a modest but positive record of community involvement in the areas of citizen education and continuing medical education. It offers health fairs on a regular basis and offers blood pressure clinics and diabetic screening programs weekly. VNA offers special training programs for home health aides which meet the State criteria. Graduates of the program are then employable by any Florida home health agency. The program is taught by VNA's Director of Education and VNA staff members. VNA offers clinical nursing programs ( internships) to students of the nursing schools of the University of Central Florida and University of Florida for nursing, dietary, and medical social worker master level programs. VNA is also a community-based agency, that is, it is governed by a board of directors which is comprised of community members who without pay, serve on the board and set policy. The District Health Plan, Table Home Health 6 entitled "Estimate of Population in Need of Home Health Services District III 1984 and 1989" reveals that: The licensed and approved home health agencies in District III in 1984 were only able to meet 72 percent of the existing need for home health services in District III. In 1984 only 66 percent of the need for home health services was met by licensed and approved home health agencies in Lake County. In 1984 only 59 percent of the need for home health services was met by licensed and approved home health agencies in Marion County. In 1984 only 58 percent of the need for home health services was met by licensed and approved home health agencies in Alachua County. In 1934 only 51 percent of the need for home health services was met by licensed and approved home health agencies in Sumter County. There was no hint that more recent figures (i.e. figures for the calendar year immediately preceding the proposal) are in existence or available. There is no minimum amount of indigent care required by Statute or rule which must be provided by a Medicare-certified home health agency. VNA committed at formal hearing to serve the following mix of patients by payor class from its VNA Respite base in District III if a CON is granted: 37 percent Medicare; 7.2 percent Insurance; 2.5 percent Medicaid; 2.3 percent Indigent. This revised commitment is more than eight times greater than the other District III home health agencies average commitment of .28 percent for indigent and three times their average for Medicaid patients. There was uncontroverted testimony that occasionally in instances when a patient's funding has been depleted or a patient is temporarily off Medicare for some reason, other District III home health agencies have discontinued all or select services even though the patient was still in need of the services. The VNA Respite office in Leesburg has provided indigent care in many past situations despite its lack of Medicare and Medicaid funding. VNA proposes to expand its service area to include District III in part to meet the need it perceives in District III for a nonprofit charitable home health agency. VNA's application states a commitment to provide totally uncompensated care to indigents. This noble ideal has to be taken with a grain of salt, however. A more realistic commitment is contained in VNA's Mission Statement, which reflects the basic philosophy and direction for VNA. It states that based upon the financial ability of the agency through available charity monies, VNA will provide select services to those patients having medical need regardless of their ability to pay. Absent a greater demonstration of guaranteed public and private beneficiary funding than appears in this record, the former lofty goal cannot be accepted as credible. However, the latter Mission Statement may be taken as a credible and valid commitment which is reasonably capable of fulfillment by VNA Respite for the reasons set out in the next Finding of Fact. VNA's dedication to providing indigent care and its Mission Statement policy have been implemented beyond the ramifications set forth in the Mission Statement through a policy of VNA's board of directors which transfers proceeds from other VNA subsidiaries to meet the service requirements of the certified home health agency. This policy allows VNA to provide more charity care than that for which it has been reimbursed by charitable contributions. VNA is one of only two nonprofit licensed home health agencies in District III. Due to VNA's non- profit status, it has opportunities to obtain charity monies to provide care to patients who have no payment source. In District VII, VNA typically receives monies from the public United Way and other private foundations. VNA`s dedication to service of indigents is reflected by its service in District VII. In District VII, in 1985, 70 percent of all charity visits were provided by VNA, although there were five other certified agencies. VNA maintains a professional advisory group which reviews the voluntary board's policy and VNA's provision of services. Such a professional advisory group is mandated under Medicare. It is made up of physicians and social workers but also includes lay members from the counties served. Qualifications for all members, but particularly for lay membership, was not sufficiently explored at hearing to make it possible to determine how "professional" the advisory group is, but it will be expanded to include representatives from District III counties if a CON is granted. VNA has established several internal departments and agency policies to insure a high quality of the home health services it provides. The intent behind VNA's Quality Assurance Department program is to oversee quality review controls and monitor nursing services through utilization and clinical record reviews to assure adherence to professional standards, corporate goals, and statements of policy (including the Mission Statement.) The evidence as to the implementation of each part of this lofty intent in actual practice in the Leesburg office of VNA Respite is hardly overwhelming, however, VNA has adequately demonstrated by competent substantial evidence that each VNA staff member receives a 3-week orientation upon initial employment and that after 3 months each staff member is evaluated by a quality assurance staff member accompanying the newcomer on home visits to review and verify the newcomer's clinical skills. It is also established that VNA's Community and Staff Education Department trains and orients staff and develops continuing medical education programs as discussed above. VNA publishes and provides its contract nurses and therapists with a detailed Policy and Procedure Manual, thereby providing further quality assurance, uniformity of care, and further staff training beyond that already described. The "track record" of its existing home health agency offices elsewhere provides some further insight for predicting the quality of care to be offered if the present CON application is granted. In 1985, VNA, Inc. made 144,000 visits or 48 percent of the total 297,000 visits made by home health agencies in Orange, Osceola, and Seminole counties. VNA, Inc. was formed in 1951 and has been Medicare-certified since 1966. Annual state licensing surveys conducted for VNA operations in Osceola, Orange and Seminole Counties have revealed either no deficiencies in operations or minimum deficiencies, none of which have ever addressed the quality of care provided. VNA demonstrated that accessibility of residents of certain counties within District III to certain types of core home health services is currently limited, particularly as to certain high-tech services and certain non- traditional forms of nursing. VNA has demonstrated that the 19 existing providers within District III have often failed to render certain types of high- tech and specialty nursing services within District III. It has been stipulated that two of the 19 existing providers have home offices located outside District III. They are Central Florida Home Health Service based in Volusia County and Gulf Coast Home Health Service based in Pinellas County. Lakeview Terrace Christian Retirement's CON and license limit it to providing home health care only to its residents, rather than to the general population of District III. Unfortunately, the evidence of record on the inaccessibility of services does not always follow the same county lines and this factor together with the variation of types of service which are sometimes inaccessible renders reaching any determination with regard to inaccessibility and unmet need on a District- wide basis difficult. The evidence is, however, clear that VNA has received a number of pediatric referrals because of the inability of other home health agencies to provide this nursing service. These remain a continuing need. Another continuing need is for long term intermittent visits which are difficult to obtain in District III, particularly11 for the elderly. Referrals to VNA Respite in District III have also been made from HRS in Lake and Marion Counties because of VNA's proven ability to provide otherwise inaccessible and unavailable high-tech services. Some of these latter referrals are somewhat remote in time from the date of hearing but there was no contrary HRS evidence that these situations of unmet need have alleviated. Seasonal fluctuations of population and the inadequacies of competing home health agency staffs put an increased strain on the existing District III home health agencies' ability to meet the current population's needs. VNA provides nurses specially trained and certified in a variety of the high-tech specialties. For example, VNA Respite in Leesburg offers certified enterstomal therapists, as well as certified intravenous (I.V.) therapy nurses with specialized training. From this specialization, it may be inferred that VNA is able to offer a higher level of care, increase the continuity of patient care, and decrease the amount of time necessary for each home visitation with certain patients within counties within a reasonable radius of Leesburg. VNA's application, as modified, satisfies the applicable planning guidelines established by the most recent District III Plan. There is negligible impact on competition in labor intensive providers such as home health agencies.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that HRS enter a Final Order granting VNA a CON to establish a District-wide home health agency as set forth in the proposal and conditioned upon its fulfilling its 2.3 percent indigent and 2. 5 percent Medicaid percentage commitments and upon phasing in its services in two stages, beginning with its first base at VNA Respite in Leesburg, Lake County. DONE and ORDERED this 21st day of May, 1987, at Tallahassee, Florida. ELLA JANE P. DAVIS 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 21st day of May, 1987. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 86-3558 The following constitute rulings pursuant to Section 120.59(2), Florida Statutes, upon the respective proposed findings of fact (FOF): Petitioners proposed FOF: 1-6 Covered in FOF 1. 8-14 Accepted but as stated subordinate to the facts as found. 15-17 Covered in FOF 16. 18 Accepted but subordinate to the facts as found. 19-21 Covered in FOF 17. Rejected as conclusionary and not supported by credible competent substantial evidence. Covered in FOF 18. Covered in FOF 16. Covered in FOF 24. Covered in FOF 14. 27-23 Covered in FOF 24. 29 Covered in FOF 18. 30-35 Covered in FOF 24. 36-37 Covered in FOF 18. 38 Rejected as a conclusion of law of facts as found 25-26. 39-40 Covered in FOF 16, 22 and 25. 41-52 Except as covered in FOF 16, 22, and 25-26, these proposals are subordinate and unnecessary to the facts as found, or to the degree indicated in those FOF, are not supported by direct competent substantial evidence. 53-55 Except as covered in FOF 3, 25-26, these proposals are subordinate to the facts an found and unnecessary. 56-57 Covered in FOF 19. 58 Rejected as stated as not supported by the direct credible evidence as a whole. 59-68 Covered in FOF 22-23. Covered in FOF 21. Covered in FOF 20. 71-74 Subordinate and unnecessary to the facts as found in FOF 21. 75-86 In large part these proposals are irrelevant for the reasons stated in the facts as found; that material which is not irrelevant is CUMULATIVE, subordinate and unnecessary to the facts as found. Additionally these proposals are so unsatisfactorily numbered or otherwise delineated as to be something apart from proposals of findings of ultimate material fact. See FOF 10, 19, and 27. 87-94 Covered in FOF 15. 95-96 Covered in FOF 14. 97-98 Subordinate and unnecessary to the facts as found. 99-101 Covered in FOF 15. 102-105 Rejected in part for the reasons set out in FOF 4 and 28 in part as not supported by the record as a whole and in part as subordinate and unnecessary. 106-110 Except as covered in FOF 7-12, 19, 22, and 25, and the conclusions of law (COL), these proposals are rejected as not supported by the record as a whole. 111. Rejected as not supported by the record as a whole. See FOF 2 and 8. 112-118 Except as covered in FOF COL, these proposals are the record as a whole. 7-12, 19, 22, aid 25, and the rejected as not supported by 119 Covered in FOF 2. 120 Covered in FOF 10-12 and the COL. 121-129 Except as covered in FOF 7-12 and 14, rejected as not 1-131 Supported by the record as a whole. Covered in FOF 22 and 25. 132 Covered in FOF 21-23. 133-134 Rejected as conclusions of law. Respondent's proposed FOF: Covered in FOF 2. Covered in FOF 5. Covered in FOF 6. Covered in FOF 1. Covered in FOF 2-3. Covered in FOF 16. Covered in FOF 17. Covered in FOF 21. Covered in FOF 3. Covered in FOF 2-3. Covered in FOF 4. Covered in FOF 7. Covered in FOF 8-12. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Leo P. Rock, Jr., Esquire Linda D. Schoonover, Esquire Suite 1200 201 East Pine Street Orlando, Florida 32801 John Rodriguez, Esquire, Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
