The Issue The issue to be resolved in this proceeding concerns whether the Respondent, Florida State Hospital, is an "employer" as statutorily defined at Section 760.02(7), Florida Statutes (2007).
Findings Of Fact Behavioral Health Solutions LLC is a private business entity (BHS). The Petitioner was employed by BHS as a clerk- typist beginning on October 6, 2006, and until February 6, 2007, when she was terminated. BHS and the Department of Children and Family Services/Florida State Hospital entered into a contract on September 16, 2006, whereby BHS was to be responsible for providing staff for various positions for the provision of services to residents of Florida State Hospital. One of those positions was that occupied by the Petitioner, at times pertinent to this proceeding. The contract provided that BHS would be responsible for hiring, transferring, promoting, discipline, and discharge/termination of BHS staff. BHS was also responsible for providing its staff with salaries, benefits, compensation packages and training. BHS has its own organizational structure which was not integrated into that of the Respondent Florida State Hospital's organizational structure. The Respondent Florida State Hospital was charged with supervising BHS's staff and with recommendations where required, for disciplinary action or removal from the work site. BHS had the final authority to reassign, discipline or terminate BHS staff, however, by the terms of the contract. The Petitioner was hired by BHS as of October 6, 2006. The offer of employment which she accepted came from BHS. The Petitioner was told later that she was terminated in February 2007 by Angie Burge, the BHS Human Resources Manager. The Petitioner's date of employment were October 6, 2006, through February 6, 2007. The testimony of Angie Burge and Amy Bryant establishes that BHS employees such as the Petitioner, were trained by BHS. Ms. Bryant established through her testimony, as the Operations and Management Consultant for the Department of Children and Families (Department) that neither the Department nor Florida State Hospital had controlling responsibility over employee relations matters regarding BHS's staff/employees, such as the Petitioner. Although she and Florida State Hospital worked in conjunction with Ms. Burge and BHS on employee training requirements, BHS employees, including the Petitioner, were trained by BHS and its staff. BHS and the Respondent Florida State Hospital had a contract for BHS to provide staff for the forensic unit at Florida State Hospital, where the Petitioner was employed by BHS and the contract included the requirement that BHS operate that unit. At orientation, BHS provided its employees or new hires, including the Petitioner, all polices and procedures of BHS and trained them as to such policies and procedures. Ms. Burge, a BHS staff member, provided that training. BHS had authority to hire employees or to terminate them or discipline them and to make final decisions on the performance of the duties of the staff it hired, including the Petitioner. Florida State Hospital and the Department did not have final authority on such matters but could only recommend to BHS. The salary and benefits plan of BHS was very different from that of Florida State Hospital. It was based upon the parent company's pay and benefits scheme, the parent company being Lakeview Center, Inc. The administrators of Florida State Hospital did not have any decision-making authority in employee regulation, discipline, hiring, and termination decisions. Ms. Burge, the BHS Human Resources Manager, made the decision and informed the Petitioner of her termination. The Petitioner has not presented persuasive evidence that Florida State Hospital had sufficient control over the terms and conditions of the Petitioner's employment, or the employment of other BHS staff members, so that such staff members, including the Petitioner, could be deemed employees of the Respondent.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and the arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Florida Commission on Human Relations dismissing the Petition for Relief in its entirety due to lack of jurisdiction. DONE AND ENTERED this 5th day of March, 2008, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 5th day of March, 2008. COPIES FURNISHED: Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Corrine Hamilton 440 South Cone Street Quincy, Florida 32351 Jacqueline H. Smith, Esquire Department of Children and Family Services Post Office Box 1000 Chattahoochee, Florida 32324-1000
The Issue Whether Florida Hospital Medical Center is entitled to reimbursement in the amount preliminarily determined by the Department of Financial Services, Division of Workers’ Compensation, in a reimbursement dispute regarding bills submitted by Florida Hospital Medical Center to Macy’s Claims Services and Amerisure Mutual Insurance Company for medical services provided to two individuals involved in work-related accidents; and Whether Macy’s Claims Services and Amerisure Mutual Insurance Company properly adjusted those bills of Florida Hospital Medical Center in accordance with the requirements of Florida’s Workers’ Compensation law and applicable rules.
Findings Of Fact Florida Hospital is a full-service, not-for-profit hospital system located in Orlando, Florida, that operates a smaller satellite hospital in Winter Park, Florida. Florida Hospital is a “health care provider” within the meaning of Section 440.13(1)(h), Florida Statutes. Macy’s and Amerisure are “carriers” within the meaning of Sections 440.02(4) and 440.02(38), Florida Statutes. The Department has exclusive jurisdiction to resolve disputes between carriers and health care providers regarding payments for services rendered to injured workers, pursuant to Sections 440.13(7) and 440.13(11)(c), Florida Statutes. Qmedtrix is a medical bill review company.3/ Case No. 09-6871 R. P., an employee of Macy’s, slipped and fell at work on May 20, 2009, and presented to Florida Hospital Winter Park for evaluation and treatment where medical personnel documented vomiting, brain attack, and brain trauma. After evaluation and treatment, patient R. P. was diagnosed with a bruise to the head and released the same day. On September 16, 2009, Florida Hospital submitted its bill for services provided to R. P. totaling $5,547.20 to Macy’s for payment, utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. Macy’s forwarded the bill to its workers’ compensation medical bill review agent, Qmedtrix. Qmedtrix reviewed the bill by comparing the procedure codes and diagnosis codes reported by Florida Hospital with examples in the CPT book for billing of emergency department services. Florida Hospital reported ICD diagnosis code 920, which reads “contusion of face, scalp, or neck.” Use of this code means R. P. presented with a bruise or hematoma, but not a concussion. Florida Hospital also reported ICD diagnosis code 959.01 (“head injury, unspecified”) which also means that R. P. did not present with a concussion, loss of consciousness, or intracranial injuries. Florida Hospital’s bill included a charge of $2,417 with CPT code 99285 for emergency department services. The bill also included separate charges for a head CT, and various lab tests, drugs, and IV solutions. According to Mr. von Sydow, the bill was sent through Qmedtrix’s computer program for review, and was flagged for review by a physician. Mr. von Sydow further testified that one of Qmedtrix’s medical director’s suggested that the CPT code of 99285 be reduced. The medical director, who Mr. von Sydow said reviewed the bill, however, did not testify and no documentation of his recommendation was submitted at the final hearing. Qmedtrix determined that Florida Hospital should have used CPT code 99284 when billing for the emergency services rendered instead of CPT code 99285. Qmedtrix found that, while the hospital billed $2,417 with CPT code 99285, its usual charge for an emergency department visit billed with CPT code 99284 is $1,354. Macy’s paid Florida Hospital a total of $2,683.55, which amount included $1,010.24 for the emergency department visit based on [approximately] 75 percent of Florida Hospital’s usual charge for CPT code 99284. The payment was accompanied by an EOBR. The EOBR Macy’s (or its designated entity)4/ issued to Florida Hospital for services rendered to R. P. identifies the amount billed by Florida Hospital as to each line item in a column designated “Billed,” and has columns designated as “BR Red,” “PPO Red,” “Other Red,” and “Allowance,” each containing an amount for each line item in the “Billed” column. There is also a column entitled “Reason Code” which sets forth codes, as required by Florida Administrative Code Rule 69L-7.602(5)(o)3., that are supposed to explain the reason for adjustment of any line item.5/ The “reason code” set forth adjacent to the $2,417.00 billed by Florida Hospital for emergency department services is “82,” which means “Payment adjusted: payment modified pursuant to carrier charge analysis.” There is also another code, “P506” listed in the “Reason Code” column adjacent to the same line item, which, according to the key provided on the EOBR, means “[a]ny questions regarding this Qmedtrix review, please call (800)-833-1993.” “P506,” however, is not a “reason code” listed in Florida Administrative Code Rule 68L- 7.602(5)(o)3. The EOBR does not advise that the bill was adjusted because of a determination that Florida Hospital should have used CPT code 99284 when billing for the emergency services rendered instead of CPT code 99285 as originally billed. Upon receipt of the payment and the EOBR, Florida Hospital timely filed a Petition for Resolution of Reimbursement Dispute with the Department pursuant to Section 440.13(7)(a), Florida Statutes, and Florida Administrative Rule 69L-31, contending that payment should be at 75 percent of its total charges, and citing the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Qmedtrix timely filed a response to Florida Hospital’s petition on behalf of Macy’s pursuant to Section 440.13(7)(b), Florida Statutes, and Florida Administrative Code Rule 69L-31, asserting that correct payment should be determined based on, first, whether the hospital in fact billed its usual charge for the services and, second, whether the hospital’s charges are in line with the charges of other hospitals in the same community, citing One Beacon Insurance v. Agency for Health Care Administration, 958 So. 2d 1127 (Fla. 1st DCA 2007) for the proposition that “SB-50 amended section 440.13 . . . [revealing] legislative intent to eliminate calculation of a “usual and customary charge” based on the fees of any one provider in favor of a calculation based on average fees of all providers in a given geographic area.” Qmedtrix’s response on behalf of Macy’s also contended that “upcoding” and “unbundling” were additional grounds for adjustment or disallowance that were not identified on the EOBR. The response explained that “upcoding” refers to billing with a procedure code that exaggerates the complexity of the service actually provided; that CPT codes 99281 through 99285 describe emergency department services; that the CPT book includes examples of proper billing with these codes; that the hospital billed $2,417 with CPT code 99285; and that the CPT book describes an “emergency department visit for a healthy, young adult patient who sustained a blunt head injury with local swelling and bruising without subsequent confusion, loss of consciousness or memory deficit” as an example of proper billing with CPT code 99283. The response requested a determination by the Department that Macy’s payment equaled or exceeded the amount usual and customary for CPT code 99283. On November 13, 2009, the Department, through its Office of Medical Services (OMS) issued a determination (Determination in 09-6871) which found, in pertinent part: The petitioner asserts that services provided by Florida Hospital Medical Center to the above-referenced injured employee on May 20, 2009, were incorrectly reimbursed. Florida Hospital Medical Center billed $5,547.20 and the carrier reimbursed $2,683.55. The petition does not address a contract and does not reflect a contract discount in the calculation of requested reimbursement. The Carrier Response to Petition for Resolution of Reimbursement Dispute disputes the reasonableness of the hospital’s “usual and customary charges”, maintains the petitioners’ charges should be based on the average fee of other hospitals in the same geographic area, references a manual not incorporated by rule, and provides CPT codes that the respondent alleges are correct. There are no rules or regulations within Florida’s Workers’ Compensation program prohibiting a provider from separately billing for individual revenue codes. The carrier did not dispute that the charges listed on the Form DFS-F5-DWC-90 (UB-92) or the charges listed on the itemized statement did not conform to the hospital’s Charge Master. Nor did the carrier submit the hospital’s Charge Master in the response or assert that the carrier performed an audit of the Charge Master to verify the accuracy of the billed charges. Therefore, since no evidence was presented to dispute the accuracy of the Form DFS-F5-DWC-90 or the itemized statement as not being representative of the Charge Master, the OMS finds that the charges billed by the hospital are the hospital’s usual and customary charges. Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier’s reasons for disallowance or adjustment. The EOBR submitted with the petition conforms to the EOBR code requirements of Rule 69L-7.602(5)(q), F.A.C. Only through an EOBR is the carrier to communicate to the health care provider the carrier’s reasons for disallowance or adjustment of the provider’s bill. Pursuant to s. 440.13(12), F.S., a three member panel was established to determine statewide reimbursement allowances for treatment and care of injured workers. Rule 69L-7.501, F.A.C., incorporates, by reference, the applicable reimbursement schedule created by the panel. Section 440.13(7)(c), F.S., requires the OMS to utilize this schedule in rendering its determination for this reimbursement dispute. No established authority exists to permit alternative schedules or other methodologies to be utilized for hospital reimbursement other than those adopted by Rule 69L-7.501, F.A.C., unless the provider and the carrier have entered into a mutually agreeable contract. Rule 69L-7.501, F.A.C., incorporates, by reference, the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Since the carrier failed to indicate any of the services are not medically necessary, the OMS determined proper reimbursement applying the above referenced reimbursement guidelines. Therefore, the OMS has determined that the carrier improperly adjusted reimbursement to Florida Medical Center for services rendered to the above- referenced injured employee on May 20, 2009. Based on the above analysis, the OMS has determined that correct reimbursement equals $4,160.40 ($5,547.20 x 75% [Hospital Manual]=$4,160.40). The carrier shall reimburse Florida Hospital Medical Center $4,160.40 for services rendered to the above-referenced employee; and submit proof of reimbursement of the amount determined by the OMS within thirty days of the date the Determination is received. . . . The difference between what Petitioner Macy’s paid Florida Hospital for services rendered to R. P., and the amount the Department determined that Petitioner Macy’s is required to pay for such services, equals $1,476.85. The Determination in 09-6871 did not directly address Macy’s allegation of the alleged billing error of “upcoding.” The Determination in 09-6871 provided a 21-day notice for request of an administrative hearing and, as noted in the Preliminary Statement above, Macy’s timely requested a hearing. Case No. 09-6872 J. L., an employee of Major League Aluminum, was injured in a work-related accident on the evening of May 3, 2009, and visited the emergency department of Florida Hospital Orlando. After evaluation and treatment, J. L. was diagnosed with a bruise to the knee and released the next morning. On September 23, 2009, Florida Hospital submitted its bill for services provided to J. L. totaling $2,851 to Amerisure, Major League Aluminum’s workers’ compensation insurer, for payment, utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. Amerisure forwarded the hospital bill to its medical bill review agent, Qmedtrix for review. Qmedtrix’s medical bill review in this case, as in the companion case, entailed comparing the procedure codes and diagnosis codes reported by the hospital with examples in the CPT book. The hospital reported ICD diagnosis code 924.11, which reads “contusion of . . . knee.” The hospital also reported ICD diagnosis codes 724.2 (“lumbago”), E888.1 (“fall on or from ladders or scaffolding”) and 959.7 (“injury, other and unspecified . . . knee, leg, ankle, and foot.”). Florida Hospital billed $1,354 with CPT code 9924 for emergency department services and also billed for X-rays and various drugs and IV solutions. Comparing procedure codes and diagnosis codes reported by the hospital with examples in the CPT book, Qmedtrix concluded that billing with CPT code 99284 was not appropriate, but that billing with CPT code 99282 was. Qmedtrix also found that, while the hospital billed $1,354 with CPT code 99284, the average charge in the community for a visit to the emergency department billed with CPT code 99282 is $721. Qmedtrix determined the “usual and customary charge” in the community from its own database compiled by entering all of particular hospital bills into Qmedtrix’s database, along with data from the American Hospital Directory. Qmedtrix derives the average charge in the community based upon zip codes of the hospitals. Amerisure paid Florida Hospital a total of $1,257.15, which amount included $524.70 for the emergency department visit codes based on 75 percent of what Qmedtrix determined to be the average charge in the community for CPT code 99282. The payment was accompanied by an EOBR. The EOBR Petitioner Amerisure (or its designated entity)6/ issued to Florida Hospital for services rendered to J. L. identifies the amount billed by Florida Hospital as to each line item in a column designated “Billed Charges,” and has columns designated as “FS/UCR Reductions,” “Audit Reductions,” “Network Reductions,” and “Allowance,” each containing an amount for each line item in the “Billed Charges” column. There is also a column entitled “Qualify Code” which sets forth reason codes that are supposed to explain the reason for adjustment of any line item.7/ The code set forth adjacent to the $1,354.00 billed by Florida Hospital for emergency department services is “82,” which means “Payment adjusted: payment modified pursuant to carrier charge analysis.” The EOBR does not advise that the bill was adjusted because of a determination that Florida Hospital should have used CPT code 99282 when billing for the emergency services rendered instead of CPT code 99284 as originally billed. Upon receipt of the payment and the EOBR, Florida Hospital timely filed a Petition for Resolution of Reimbursement Dispute with the Department pursuant to Section 440.13(7)(a), Florida Statutes, and Florida Administrative Code Rule 69L-31, contending that payment should be at 75 percent of its total charges, and citing the Hospital Manual. Qmedtrix timely filed a response to Florida Hospital’s petition on behalf of Amerisure pursuant to Section 440.13(7)(b), Florida Statutes, and Florida Administrative Code Rule 69L-31, asserting that correct payment should be determined based on, first, whether the hospital, in fact, billed its usual charge for the services and, second, whether the hospital’s charges are in line with the charges of other hospitals in the same community, citing One Beacon, supra. Qmedtrix’s response on behalf of Amerisure contended “upcoding” as an additional ground for adjustment or disallowance that was not identified on the EOBR. As in the companion case, the response explained “upcoding,” that CPT codes 99281 through 99285 describe emergency department services, and that the CPT book includes examples of proper billing with these codes. The response further stated that the hospital billed $1,354 with CPT code 99284, and that the CPT book describes an “emergency department visit for a patient with a minor traumatic injury of an extremity with localized pain, swelling, and bruising” as an example of proper billing with CPT code 99282. The response requested a determination by the Department that Amerisure’s payment equaled or exceeded the usual and customary charge for CPT code 99282. On October 20, 2009, the Department’s OMS issued a determination (Determination in 09-6872) which found, in pertinent part: The petitioner asserts that services provided by Florida Hospital Medical Center to the above-referenced injured employee on May 3, 2009, and May 4, 2009, were incorrectly reimbursed. Florida Hospital Medical Center billed $2,851.00 and the carrier reimbursed $1,257.15. The petition does not address a contract and does not reflect a contract discount in the calculation of requested reimbursement. The Carrier Response to Petition for Resolution of Reimbursement Dispute disputes the reasonableness of the hospital’s “usual and customary charges”, maintains the petitioners’ charges should be based on the average fee of other hospitals in the same geographic area, and references a manual not incorporated by rule. There are no rules or regulations within Florida’s Workers’ Compensation program prohibiting a provider from separately billing for individual revenue codes. Therefore, the charges, as billed by the hospital, did not constitute billing errors. The carrier did not dispute that the charges listed on the Form DFS-F5- DWC-90 (UB-92) or the charges listed on the itemized statement did not conform to the hospital’s Charge Master. Nor did the carrier submit the hospital’s Charge Master in the response or assert that the carrier performed an audit of the Charge Master to verify the accuracy of the billed charges. Therefore, since no evidence was presented to dispute the accuracy of the Form DFS-F5- DWC-90 or the itemized statement as not being representative of the Charge Master, the OMS finds that the charges billed by the hospital are the hospital’s usual and customary charges. Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier’s reasons for disallowance or adjustment. The EOBR submitted with the petition conforms to the EOBR code requirements of Rule 69L-7.602(5)(q), F.A.C. Only through an EOBR is the carrier to communicate to the health care provider the carrier’s reasons for disallowance or adjustment of the provider’s bill. Pursuant to s. 440.13(12), F.S., a three member panel was established to determine statewide reimbursement allowances for treatment and care of injured workers. Rule 69L-7.501, F.A.C., incorporates, by reference, the applicable reimbursement schedule created by the panel. Section 440.13(7)(c), F.S., requires the OMS to utilize this schedule in rendering its determination for this reimbursement dispute. No established authority exists to permit alternative schedules or other methodologies to be utilized for hospital reimbursement other than those adopted by Rule 69L-7.501, F.A.C., unless the provider and the carrier have entered into a mutually agreeable contract. Rule 69L-7.501, F.A.C., incorporates, by reference, the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Since the carrier failed to indicate any of the services are not medically necessary, the OMS determined proper reimbursement applying the above referenced reimbursement guidelines. Therefore, the OMS has determined that the carrier improperly adjusted reimbursement to Florida Medical Center for services rendered to the above- referenced injured employee on May 3, 2009, and May 4, 2009. Based on the above analysis, the OMS has determined that correct reimbursement equals $2,138.25 ($2,851.00 x 75% [Hospital Manual]=$2,138.25). The carrier shall reimburse Florida Hospital Medical Center $2,138.25 for services rendered to the above-referenced employee; and submit proof of reimbursement of the amount determined by the OMS within thirty days of the date the Determination is received. . . . The difference between what Petitioner Amerisure paid Florida Hospital for services rendered to J. L. and the amount the Department determined that Petitioner Amerisure is required to pay for such services equals $881.10. The Determination in 09-6872 did not directly address Amerisure’s allegation of the alleged billing error of “upcoding.” The Determination in 09-6872 provided a 21-day notice for request of an administrative hearing and, as noted in the Preliminary Statement above, Amerisure timely requested a hearing. Alleged “Upcoding” for Emergency Department Services The Petitioners’ responses in both cases allege that Florida Hospital “upcoded” its bill for emergency department evaluation and management services. Neither EOBR submitted to Florida Hospital, however, reported alleged “upcoding” as an explanation for the Petitioners’ adjustment or disallowance of reimbursement. While the Dispute Determinations by the Department do not directly address the carrier’s allegation of the alleged billing error of “upcoding” raised in the Petitioners’ responses, they found that “Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier’s reasons for disallowance or adjustment[, and that] [o]nly through an EOBR is the carrier to communicate to the health care provider the carrier’s reasons for disallowance or adjustment of the provider’s bill.” According to Mr. von Sydow, who was offered by Petitioners as an expert in billing, coding, reimbursement, and payment issues,8/ the “reason codes” that workers’ compensation carriers are to use pursuant to Florida Administrative Code Rule 69L-7.602, do not mention “upcoding,” and therefore an EOBR could not be generated with a reason code explaining reduction or disallowance based on “upcoding.” The following reason codes, however, are included in Florida Administrative Code Rule 69L-7.602: 23 – Payment disallowed: medical necessity: diagnosis does not support the services rendered. – Payment disallowed: insufficient documentation: documentation does not substantiate the service billed was rendered. – Payment disallowed: insufficient documentation: level of evaluation and management service not supported by documentation. Neither EOBR submitted to Florida Hospital includes reason code 23, 40, or 41. And neither EOBR explains or otherwise suggests that that Florida Hospital’s level of billing was not supported by medical necessity, services rendered, or sufficient documentation. In fact, Petitioners did not disallow reimbursement and do not contend that reimbursement should be denied for any services rendered by Florida Hospital to R. P. and J. L. on the grounds that the billed services were not medically necessary for the injured employees’ compensable injuries. In addition, Petitioners did not adjust or disallow payment for any of the billed procedures on the grounds that the procedures were not provided. In sum, the EOBR’s did not give Florida Hospital notice that alleged “upcoding” was an issue. Even if Petitioner’s EOBR’s gave Florida Hospital notice that it was asserting “upcoding” as a reason to reduce or adjust the hospital’s bill, the evidence does not support a finding that Florida Hospital utilized the wrong code in its billing for emergency department evaluation and management services. The CPT® 2009 Current Procedural Terminology Professional Edition, (Copyright 2008), (CPT book), is adopted by reference in Florida Administrative Code Rule 69L-7.602(3)(d) and Florida Administrative Code Rule 60L-7.020(2). The CPT book sets forth the procedure codes for billing and reporting by hospitals and physicians. The CPT book sets forth CPT codes ranging from 99281 through 99285 used to report evaluation and management services provided in a hospital’s emergency department, described as follows: 99281: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: A problem focused history; A problem focused examination; and Straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are self limited or minor. 99282: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: An expanded problem focused history; An expanded problem focused examination; and Medical decision making of low complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are of low to moderate severity. 99283: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: An expanded problem focused history; An expanded problem focused examination; and Medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are of moderate severity. 99284: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: A detailed history; A detailed examination; and Medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are of high severity, and require urgent evaluation by the physician but do not pose an immediate significant threat to life or physiologic function. 99285: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: A comprehensive history; A comprehensive examination; and Medical decision making of high complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are of high severity and pose an immediate significant threat to life or physiologic function. Mr. von Sydow testified that a Qmedtrix “medical director,” reviewed Florida Hospital’s bill for services rendered to R. P., but not the medical records, and recommended that the hospital’s charge for emergency department services under CPT 99285 be “re-priced” to Qmedtrix’s determination of the “usual and customary charge” for CPT 99284. Mr. von Sydow acknowledged the need for physician review for some cases (as opposed to review by non-physician coders) by testifying, “The more complicated the medicine, the more likely it is that he [a medical director at Qmedtrix] wants to see it.” Despite Qmedtrix’s original determination to “reprice” the bill from CPT code 99285 to CPT code 99284 (reflected in the reduced payment but not explained in the EOBR), Mr. von Sydow opined that the correct CPT code for emergency department services provided to patient R. P. was 99283, as opposed to 99285 billed by the hospital. Mr. von Sydow testified that his opinion was based upon his own review of the medical records, without the assistance of a medical director or medical expert, and review of examples for the CPT codes for emergency department services from the CPT book, and various provisions of ICD-9 and CPT book coding resources. Aside from the fact that Mr. von Sydow’s opinion differed from the purported recommendation of a Qmedtrix “medical director,” Mr. von Sydow is not a physician. Moreover, Qmedtrix failed to provide the testimony of the medical director, or anyone else with medical expertise to evaluate the medical records and services provided or to validate either the opinion of Mr. von Sydow or the original recommendation to “re- price” Florida Hospital’s use of CPT Code 99285 in its bill for emergency department services rendered to patient R. P. Mr. von Sydow offered similar testimony and examples to explain Qmedtrix’s “re-pricing” of Florida Hospital’s bill from CPT code 99284 to CPT code 99282 for emergency services rendered to patient J. L. on behalf of Amerisure. According to Mr. von Sydow, an internal Qmedtrix coder (not a medical director) reviewed the bill for emergency services rendered to J. L. and determined it should be re-priced to the usual and customary charge, as determined by Qmedtrix, using that CPT code 99282. While knowledgeable of the various codes and their uses, given the manner in which preliminary diagnostics under emergency circumstances drives Florida Hospital’s determination of the appropriate CPT code for billing emergency department services, without the testimony of a medical expert familiar with the medical records generated in these cases in light of the facts and circumstances surrounding the emergency care rendered to patients R. P. and J. L., Mr. von Sydow’s testimony was unpersuasive. Ross Edmundson, M.D., an employee, vice-president, and medical manager for Florida Hospital, explained that, unlike other settings, hospitals generally do not have the medical histories of patients presenting for emergency hospital services. When a patient comes to Florida Hospital for emergency services, they are triaged by a nurse to determine the level of urgency, then a doctor sees the patient, conducts a differential diagnosis to rule out possible causes, obtains the patient’s history, and then performs a physical examination. While emergency room physicians at Florida Hospital do not decide which CPT code is utilized for the evaluation and management services provided by its emergency department, the various tests and procedures they undertake to evaluate and treat emergency department patients do. James English, the director of revenue management for Florida Hospital explained the process through his deposition testimony. Florida Hospital, like over 400 other hospitals, uses the “Lynx System” – a proprietary system for creating and maintaining medical records electronically. The program captures each medical service, supply, and physician order that is inputted into the electronic medical record. The hospital’s emergency evaluation and management CPT code is generated from the electronic record. A “point collection system” in the Lynx System translates physician-ordered services, supplies it to a point system, and then assigns the CPT code that is billed based upon the total number of “points” that are in the system at the time the patient is discharged from the emergency department. The level of the evaluation and management CPT code (99281 to 99285) that is reported on Florida Hospital’s bill is a direct reflection of the number and types of medical services that a patient receives from his or her arrival through discharge. In light of evidence showing the manner in which emergency services are provided and the importance of medical records in generating the appropriate billing code for emergency evaluation and management services, it is found that Petitioners failed to provide an adequate analysis of the medical records of either R. P. or J. L. to show that the appropriate CPT codes were not utilized by Florida Hospital in billing for those services. On the other hand, both Petitions for Resolution of Reimbursement Dispute filed by Florida Hospital with the Department attached appropriately itemized bills utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. In addition, medical records for the evaluation and treatment provided by Florida Hospital for both patients R. B. and J. L. supporting the itemized bills were submitted to the Department. These documents were also received into evidence at the final hearing. Florida Hospital’s bills at issue correctly identified the hospital’s usual charges for each individual and separately chargeable item, service or supply, with the corresponding code assigned to such billable items as maintained in Florida Hospital’s “charge master.” In addition, Petitioners concede the compensability of both patients’ work-related injuries and do not dispute whether any service or supply rendered and billed by Florida Hospital for these two cases were “medically necessary.”9/ Unbundling As noted above, in Case No. 09-6871, Qmedtrix’s response to Florida Hospital’s petition for resolution of reimbursement dispute contended “unbundling” as a ground for adjustment or disallowance of reimbursement. At the final hearing, Arlene Cotton, the nurse who issued the Dispute Determinations, explained that reason code 63 regarding “unbundling” is inapplicable to hospital billing, as there is no rule that requires hospitals to bundle bill for its services. Mr. von Sydow agreed that reason code 63 was inapplicable. In addition, footnote 2 of Petitioners’ Proposed Recommended Order states, “they did not pursue the allegations of unbundling.” Therefore, it is found that Petitioners did not prove and otherwise abandoned their claim of “unbundling” as a ground to adjust or disallow reimbursement to Florida Hospital. Usual and Customary Charges The Dispute Determinations issued by the Department found that correct payment in both cases equaled 75% of billed charges, citing “Rule 69L-7.501, F.A.C., [which] incorporates, by reference, the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Both Section 440.13(12)(a), Florida Statutes, and the Hospital Manual provide that hospital services provided to patients under the workers’ compensation law “shall be reimbursed at 75 percent of usual and customary charges.” The Department interprets the term “usual and customary charges” as set forth in the Hospital Manual and Section 440.13(12)(a), Florida Statutes, quoted above, to mean a hospital’s usual charges of the hospital, whereas Petitioners contend that “usual and customary charges” means the average fee of all providers in a given geographical area. While apparently not contending that Petitioners failed to raise the issue of “usual and customary” charges in their EOBR’s,10/ at the final hearing, the Department argued that “nowhere in [either Macy’s or Amerisure’s] response is the issue of customary charges raised.” A review of the responses filed by Qmedtrix to Florida Hospital’s reimbursement dispute petitions filed with the Department reveal that both raise the issue of “usual and customary charges.” Paragraphs 3 and 4 of Mr. von Sydow’s letter attached to both responses state: As you may know, the proposed adoption of Medicare’s Outpatient Prospective Payment System as a methodology for reimbursing hospitals 60% and 75% of “usual and customary charges” follows from the decision of the First District Court of Appeals in One Beacon Insurance v. Agency for Health Care Administration, No. 1D05-5459 (Fla. 1st DCA 2007) (SB-50 amended section 440.13 to remove all reference to the charges of any individual service provider; this amendment reveals the legislative intent to eliminate calculation of a “usual and customary charge” based on the fees of any one provider in favor of a calculation based on average fees of all providers in a given geographical area). This court decision requires DFS to define payment rates for out patient service that are uniformly applicable to all hospitals in a given geographic area. In addition, at the final hearing, the Department argued that the petitions for administrative hearing did “not raise as a disputed issue of fact or law whether or not usual and customary charges should apply in this case.” Indeed, a review of the request for relief set forth in the petitions for administrative hearings filed by Petitioners do not mention the issue of “usual and customary charges.” Rather, the relief requested by both petitions for administrative review of the Dispute Determinations, as summarized in the Joint Prehearing Stipulation, is: Petitioner[s] seeks reversal of OMS’ Determination(s) and the matters remanded for the Department to: direct payment based upon the actual treatment required/provided and pursuant to the correct CPT code; find that the hospital upcoded and that Petitioner properly reimbursed (or exceeded amount due); and determine that the hospital has the burden of proof to substantiate its billing and the use of the chosen CPT code. Contrary to the Department’s argument, however, both petitions for administrative hearing raise the issue of “usual and customary charges.” Page 9 of Macy’s petition, in pertinent part states: Petitioner submits that in issuing the above findings OMS failed to consider the holding in One Beacon Insurance v. Agency for Health Care Administration (wherein the Court determined that reimbursement should not be based solely upon a mathematical equation [as found within the Reimbursement Manual] and applying it to the fee charged by a particular provider; and that by eliminating the reference to any one facility’s charges, the legislature intended that the charges be based on average fees of all providers in a geographical area as opposed to the fees of the particular provider in question). Likewise, review of Amerisure’s petition for administrative hearing reveals that the issue of “usual and customary charges” was raised. Pages 7 and 8 of Amerisure’s petition state, in pertinent part: Further, if the Hospital is permitted to utilize incorrect revenue codes it would be impossible to determine whether the charges are consistent with the Hospital’s own [usual and customary] charges for the service, procedure or supplies in question and, further, whether such charges are consistent with charges by other like facilities (in the same geographical area) for the same services, procedures, or supplies. See One Beacon Insurance, supra. In addition, Amerisure’s petition on page 12 states with regard to the Department’s determination: Such finding was issued without consideration of . . . the amounts charged for the same services in the Orlando area where this hospital is located. Petitioners further preserved the issue of “usual and customary charges” in the first paragraph of their statement of position on page 3 of the Joint Prehearing Statement, as follows: Petitioners, Macy’s and Amerisure, take the position that the Determinations must be reversed as the Department has the duty to scrutinize the bills in question in order to determine, first, whether the hospital, in fact, charged its usual charge for the services provided, and second, whether the billed charges are in line with the customary charges of other facilities in the same community (for the same or similar services) and that the Department failed to do so. As such, Petitioners contend that payment for services provided by Florida Hospital should have been based upon 75% of usual and customary charges, not 75% of billed charges. Therefore, it is found that Petitioners have preserved the issue of “usual and customary charges” for consideration in this administrative proceeding. Although preserved, Petitioners failed to demonstrate that their interpretation of “usual and customary charges” should prevail. The Department has consistently interpreted the term “usual and customary charges” as used in the Hospital Manual, Section 440.13(12)(a), Florida Statutes, and rules related to hospital reimbursement under the workers’ compensation law as the “usual and customary charges” of the hospital reflected on the hospital’s “charge master.” The Hospital Manual requires each hospital to maintain a charge master and to produce it “when requested for the purpose of verifying its usual charges. . . .” (Emphasis added). Petitioners did not conduct or request to conduct an audit to verify whether the charges billed by Florida Hospital corresponded with the Florida Hospital’s charge master. In fact, Mr. von Sydow conceded at the final hearing that Florida Hospital’s bills at issue were charged in accordance with Florida Hospital’s charge master. Nor did Petitioners institute rule challenge proceedings against the Department regarding the Hospital Manual, incorporated by reference into Florida Administrative Code Rule 38F-7.501. Instead, Petitioners assert that they should be able to reduce Florida Hospital bills based upon a different interpretation of the phrase “usual and customary charges” to mean the average charge in the community as determined by Qmedtrix. Qmedtrix is not registered with the Florida Department of State, Division of Corporations, and does not employ any Florida-licensed insurance adjuster, physician, or registered nurse. Qmedtrix earns 12 to 15 percent of “savings” realized by carriers utilizing their bill review services. For example, if a bill is reduced by $100, Qmedtrix is paid $12.11/ Qmedtrix uses a proprietary bill review system called “BillChek.” According to Qmedtrix’s website: BillChek reviews out-of-network medical charges for all bill types in all lines of coverage, including group health, auto, medical, and workers’ compensation. BillChek is a unique specialty cost- containment service that determines an accurate and reasonable reimbursement amount for non-network facility and ancillary medical charges. BillChek incorporates historical data to help determine reasonable payment recommendations across all sectors of the health care industry. All BillCheck recommendations are backed by extensive medical and legal expertise, and supported by Qmedtrix’s experienced Provider Relations and Dispute Resolution teams. According to the testimony of Mr. von Sydow, Qmedtrix collects and maintains data from various sources, including Florida’s Agency for Health Care Administration (AHCA), the American Hospital Directory (AHD.com), and HCFA 2552’s (data reported to the Centers of Medicare and Medicaid Services on HCFA 2522) in order to construct a database of health care providers’ usual charges. Mr. von Sydow advised that AHD.com data was a principle source for constructing the database. He also advised that AHCA data was included in the database even though Qmedtrix found the AHCA data defective. Examples of data downloaded from AHD.com for Florida Hospital showing a profile of the facility was received into evidence as P-5. The data did not, however, show usual charges for the CPT codes for emergency department services at issue in this case. Petitioners also introduced into evidence Exhibits P-6 and P-7, which contained AHD.com data showing average charges for Florida Regional Medical Center and Florida Hospital, respectively, for Level 1 through Level 5 emergency room visits (corresponding to CPT codes 99281 through 99285). Mr. von Sydow explained that the data was part of the information Qmedtrix used to construct the average charge in the community. Petitioners failed to provide similar AHD.com data for other hospitals in the area Qmedtrix determined to be the “community.” In addition, Petitioners introduced AHCA’s Florida Health Finder Web-site, as Exhibit P-8, which ostensibly included average charges for all hospitals in Florida for the subject emergency department CPT codes (99281 through 99285). Mr. von Sydow explained, however, “[w]e find that [the AHCA data] is not refreshed very often, unfortunately, and some other defects in the scrubbing of the data by the agency, which they know, I will say. But this is incorporated in our database to a large extent.” The exhibit was received into evidence for the purpose of helping to explain how Qmedtrix constructed its database, with the recognition that it was largely composed of hearsay. In sum, while Petitioners showed their methodology of constructing the database, other than the AHD.com data for Orlando Regional Medical Center and Florida Hospital, Petitioners failed to introduce reliable evidence sufficient to show the “usual and customary charge” of all providers in a given geographical area as determined by Qmedtrix. In addition, the AHCA data, though characterized by Mr. von Sydow as unreliable, indicates that there is a wide range of differences in emergency room charges between hospitals in Florida. Petitioners’ interpretation of “usual and customary charge” to mean the average fee of all providers in a given geographical area does not take into account an individual hospital’s indigent care, cost of labor, overhead, number of beds, size, age, or various other differences between facilities that could affect amounts each hospital charges for emergency department and other services; the Department’s interpretation does.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a Final Order consistent with this Recommended Order that: Directs Macy’s Claims Services to reimburse Florida Hospital Medical Center $4,160.40 for services rendered to patient R. P., and to submit proof of reimbursement of that amount within 30 days from the date the Final Order is received; Directs Amerisure Mutual Insurance Company to reimburse Florida Hospital Medical Center $2,138.25 for services rendered to patient J. L., and submit proof of reimbursement of that amount to the Department within 30 days from the date the Final Order is received. DONE AND ENTERED this 17th day of June, 2010, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of June, 2010.
The Issue The issue in this cause is whether the prerequisites of Section 154.314, Florida Statutes, have been met. That section governs withholding of funds due to the county under revenue sharing or tax-sharing in order to forward said funds to a regional referral hospital to compensate the hospital for services rendered to an out-of-county indigent patient. Specifically, the parties stipulated and agreed that all prerequisites had been met except whether Tallahassee Memorial Regional Medical Center exhausted its administrative and legal remedies, as provided in Chapter 120, prior to certifying to the Comptroller's Office the amount due from Suwannee County. Suwannee County presented the testimony of Frank C. Davis and had one exhibit admitted in evidence. The Department of Banking and Finance (Department) had one exhibit admitted into evidence. Tallahassee Memorial Regional Medical Center (TMRMC) had six exhibits admitted into evidence. The Department waived the filing of a proposed order. Suwannee County and TMRMC submitted proposed findings of fact and conclusions of law. All proposed findings of fact and conclusions of law have been considered. A ruling has been made on each proposed finding of act in the Appendix attached hereto and made a part of this Recommended Order.
Findings Of Fact TMRMC is a regional referral hospital located in Tallahassee, Leon County, Florida. From May 15, 1985, to July 2, 1985, TMRMC provided medical care to Doris M. Cherry. The total bill for these services was $68,182.75. On July 10, 1985, TMRMC wrote to Suwannee County and requested reimbursement in the amount of $3,827.83 for the treatment rendered to Doris M. Cherry. This amount represented the maximum reimbursement which can be sought under Section 154.306, Florida Statutes. Reimbursement is limited to payment for 12 days of services at the per diem reimbursement rate currently in effect for the regional referral hospital under the medical assistance program to the needy under Title XIX of the Social Security Act. On July 23, 1985, Suwannee County, through its county coordinator, Frank C. Davis, refused TMRMC's request for payment and disputed whether the patient was entitled to the benefits under Chapter 154, Part IV. The letter from Suwannee County did not advise TMRMC of its right to request a formal hearing pursuant to Chapter 120 and it did not provide a point of entry as required in Rule 28-5.111(1), Florida Administrative Code. On December 20, 1985, TMRMC wrote to Suwannee County requesting an administrative proceeding to determine the issues and liability of Suwannee County to TMRMC for the claimed services. TMRMC also filed a formal Request for Hearing. TMRMC requested that the matter be referred to the Division of Administrative Hearings for a hearing to be conducted according to Section 120.57(1), Florida Statutes. Suwannee County failed to take any action on TMRMC's Request for Hearing. In an abundance of caution, TMRMC again wrote to Suwannee County on January 17, 1986, pointing out that no response had been received to the Request for Hearing and again requesting a hearing. TMRMC attached a copy of the Request for Hearing to this letter. As evidenced by the return receipt, the Board of County Commissioners received this letter on January 22, 1986. Suwannee County neither granted nor denied TMRMC's Request for Hearing. Instead, Suwannee County chose to ignore the request. The February 4, 1986, meeting of the Suwannee County Board of Commissioners shows that the Board voted unanimously to wait before responding to the request. No response was ever made. Suwannee county did not give written notice to TMRMC of their decision to ignore the request for hearing. TMRMC took no judicial action by mandamus or certiorari to enforce its right to a hearing. Further, TMRMC did not petition the District Court of Appeal for review of this matter. After waiting several months for a response from Suwannee County, on August 13, 1986, TMRMC certified to the Division of Accounting and Auditing, Comptroller's Office, the sum of $3,827.83 to be withheld from revenue-sharing or tax- sharing funds allocated to Suwannee County. The Department of Banking and Finance sent Its Notice of Intent to Withhold Funds to the Board of County Commissioners of Suwannee County on August 29, 1986. It was only in response to this action by the Comptroller's Office, acting through the Department of Banking and Finance, that Suwannee County requested a formal hearing. By its Request for Formal Hearing, Suwannee County attempted to raise and litigate the eligibility of Doris M. Cherry to the benefits of Chapter 154, Part IV. However, it is undisputed that these disputed issues the fact cannot be litigated in this proceeding because this hearing is limited in scope to determine only, if the prerequisites of Section 154.314, Florida Statutes, have been satisfied. Tallahassee Memorial Regional Medical Center, et al., v. Lewis, 399 So.2d 106 (Fla. 1st DCA 1981).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Banking and Finance enter a final order determining that all prerequisites to Section 154.314, Florida Statutes, had been met and forward the amount certified to the Tallahassee Memorial Regional Medical Center from the revenue-sharing or tax-sharing funds due to Suwannee County. DONE AND ENTERED this 12th day of March, 1987, in Tallahassee, Florida. DIANE K. KIESLING 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 12th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3901 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner Suwannee County Proposed findings of fact 1, 3, and 4 are rejected as unnecessary. Proposed finding of fact 11 is rejected as being unsupported by the competent, substantial evidence. Each of the following proposed findings of fact are adopted in substance or as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed findings of fact: 2(11); 5(1); 6(2); 7(3); 8(4); 9(5); 10(6); 12(9); and 13(10). Specific Rulings on Proposed Findings of Fact Submitted by Intervenor, TMC Proposed finding of fact 8 is rejected as being argumentative and conclusory. Each of the following proposed findings of fact are adopted in substance or as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(3); 2(4); 3(4); 4(4); 5(5 and 6); 6(7); 7(8); 9(10); and 10(9). COPIES FURNISHED: Walter W. Wood, Esquire Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301 Jesse F. Suber, Esquire Post Office Box 1049 Tallahassee, Florida 32302 Ernest A. Sellers, Esquire James W. Prevatt, Jr., Esquire Post Office Box 8 Live Oak, Florida 32060 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301
Conclusions Having reviewed the four Notices of Intent to Deny Application issued May 13-18, 2010, attached hereto and incorporated herein (Ex. 1, 2, 3, and 4), and all other matters of record, the Agency for Health Care Administration (“Agency”) has entered into a Settlement Agreement (Ex. 5) with the other party to these proceedings, and being otherwise well-advised in the premises, finds and concludes as follows: ORDERED: 1. The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. 2. The Petitioner shall remit to the Agency, within thirty (30) days of the entry of a Final Order adopting this agreement, an administrative fee in the sum of thirty thousand dollars ($30,000.00) to resolve the Agency's allegations of unlicensed activity, in the interest of expediently resolving these matters and in recognition of the expense and uncertainty of litigation. 3. Checks should be made payable to the “Agency for Health Care Administration.” The check, along with a reference to this case number, should be sent directly to: Filed January 10, 2012 1:47 PM Division of Administrative Hearings Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS# 14 Tallahassee, Florida 32308 4. Unpaid amounts pursuant to this Order will be subject to statutory interest and may be collected by all methods legally available. 5. Any requests for an administrative hearing are withdrawn. The parties shall bear their own costs and attorney’s fees. This matter is closed. DONE and ORDERED this [0 day of ~ Bettie: ; 20/2, in Tallahassee, Leon County, Florida. — Ds we { izabeth Dudek, retary fey ir wacked 0. th€are Administration A PARTY WHO JS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW OF PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Lance P. Cohen, Esquire Warren J. Bird, Asst. General Counsel Cohen & Thurston, P.A. Office of the General Counsel 1723 Blanding Boulevard, Suite # 102 Agency for Health Care Administration Jacksonville, Florida 32310 2727 Mahan Drive, Bldg #3, MS #3 (U. S. Mail) Tallahassee, Florida 32308 (Interoffice Mail) Jan Mills Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 (Interoffice Mail) Roger Bell Health Care Clinic Unit Manager Agency for Health Care Administration 2727 Mahan Drive, MS #53 Tallahassee, Florida 32308 (Interoffice Mail) Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS# 14 Tallahassee, Florida 32308 (Interoffice Mail) Suzanne F. Hood Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399 (U.S. Mail) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this Final Order was served on the oa above-named person(s) and entities by U.S. Mail, or the method designated, on this the 10 day of aaa » 2012" Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 412-3630 Certified Article Number , ?bbO 390) Y5778 8971 SEMDERS RECORD i", Certified Article Number (?160 3901 9846 7935 1337 SENDERS RECORD One Nofice $1149/1° CHARLIE CRIST FIORDAAGENCY FOR HEATH CARE ADMINS TRATION Better Health Care for ail Floridians THOMAS W. ARNOLD GOVERNOR SECRETARY May 12, 2010 Physicians Medical Centers - Jax Inc File Number: 8428 1680 Dunn Ave Case #: 2010004935 Ste 39 Jacksonville, FL 32218 F INTENT TO DENY APP TION It Is the decision of this Agency that the application for certificate of exemption from health care clinic licensure for Physicians Medical Centers - Jax Inc, located at 1680 DUNN AVE, STE 39, JACKSONVILLE, FL, 32218, be DENIED. The specific basis for this determination is based on the fact that: Requested information was not complete or timely received by the Agency pursuant to Section 408.806(3)(b), Florida Statutes. You were notified by correspondence dated April 9, 2010 to provide further Information addressing identified apparent errors or omissions within twenty-one days (21) from the receipt of the Agency's correspondence. Our records indicate you received this correspondence by certified mail on April 15, 2010. The outstanding issues remaining are: A copy of the closing documents, stock or similar certificates signed and dated by both the buyer and seller is required, In addition, the Agency received information that the facility does not meet exemption requirements as it is not wholly owned by a Florida licensed health care practitioner, pursuant to Section 400.9905(4)(g). EXPLANATION OF RIGH Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. ce: Agency Clerk, Mail Stop 3 ; Legal Intake Unit, Mall Stop 3. EXHIBIT 14 Visit AHCA online at http://ahca.myflorida.com 2727 Mahan Drive,MS-53 Tallahassee, Florida 32308 " Certified Article Number , 7260 3901 9648 57748 8995 SENDERS RECORD FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION CHARLIE CRIST THOMAS W. ARNOLD GOVERNOR Better Health Care for all Floridians SECRETARY May 12, 2010 Physicians Medical Centers - Jax Inc File Number: 8430 9826 San Jose Blvd Case #: 2010004881 Jacksonville, FL 32257 .. : NOTICE OF INTENT TO DENY APPLICATION It is the decision of this Agency that the application for certificate of exemption from health care clinic licensure for Physicians Medical Centers - Jax Inc, located at 9826 San Jose Bivd, Jacksonville, FL, 32257, be DENIED. The specific basis for this determination is based on the fact that: Requested information was not complete or timely received by the Agency pursuant to Section 408.806(3)(b), Florida Statutes. You were notified by correspondence dated March 27, 2010 to provide further information addressing identified apparent errors or omissions within twenty- one days (21) from the receipt of the Agency's correspondence. Our records indicate you received this correspondence by certified mail on April 8, 2010, The outstanding issues remaining are: Subpart 1.B, Name-of.Applicant: The name of the applicant must be the corporation or legal entity as it is registered with. the Division of Corporations, it must also match-the FEIN indicated in section 1.C. This subpart was submitted as a response to the omissions, but the. applicant's name indicated does not match the FEIN# listed in section 1.C. of the application. : As this facility did a change of ownership, provide a copy of the closing documents signed and dated by both the buyer (new owner) and seller (previous owner). Acceptable documentation may include any one of the following: Copy of final sale/transfer documents showing date of final transfer and signatures of buyer(s) and seller(s), or a signed, written statement from an attorney, on letterhead, that confirms sale/transfer completion and provides the date of final action. : In addition, the Agency received information that the facility does not meet exemption requirements as it is not wholly owned by a Florida licensed health care practitioner, pursuant to Section 400.9905(4)(g). TION OF HT! Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing, In order to obtain a formal proceeding before -the Division of Administrative Hearings under Section 120,57(1), F.S., your request for an administrative hearing-must conform to the - requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. ; : : Visit AHCA online at http://ahca.myflorida,com 2727 Mahan Drive,MS-53 Tallahassee, Florida 32308 EXHIBIT 2 Physicians Medical Centers -. . Inc Page 2 : May 12, 2010 SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 Te thictee-Va thet [9 Number fd60 3901 9848 7495 a2, SENDERS RECORD FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION CHARLIE CRIST THOMAS W. ARNOLD GOVERNOR Better Health Care for all Floridians SECRETARY May 13, 2010 Physicians Medical Centers - Jax Inc File #8427 5960 Beach Blvd : Case #2010004956 Ste3 ; Jacksonville, FL 32207 NOTICE OF INTENT TQ DENY APPLICATION It is the decision of this Agency that the application for certificate of exemption from health care clinic licensure for Physicians Medical Centers - Jax Inc, located at 5960 Beach Bivd., Ste 3, Jacksonville, FL, 32207, be DENIED. The specific basis for this determination is based on the fact that: Requested information was not complete or timely received by the Agency pursuant to Section 408.806(3)(b), Florida Statutes. You were notified by correspondence dated April 7, 2010 to provide further information addressing identified apparent errors or omissions within twenty- one days (21) from the receipt of the Agency's correspondence. Our records indicate you received this correspondence by certified mail on Apri! 9, 2010. The outstanding issues remaining are: As this facility did a change of ownership, provide a copy of the closing documents signed and dated by both the buyer (new owner) and seller (previous owner). Acceptable documentation may include any one of the following: Copy of final sale/transfer documents showing date of final transfer and signatures of buyer(s) and seller(s), or a signed, written statement from an attorney, on letterhéad, that confirms sale/transfer completion and provides the date of final action. ; In addition, the Agency received information that the facility does not meet exemption requirements as it is not wholly owned by a Florida licensed health care practitioner, pursuant to Section 400.9905(4)(g). EXPLANATION OF RIGHTS Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. EXHIBIT 3 Visit AHCA online at http://ahca.myflorida.com 2727 Mahan Drive,MS-53 Tallahassee, Florida 32308 Physicians Medical Centers - Jax Page 2 May 13, 2010 SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Health Cae Clinic Unit ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 RTE ecm 3901 94a 7935 yy74 SENDERS RECORD FLORIDA AGENCY TOR HEALTH CARE ADMINISTRATION oe ERNGS Better Health Care for all Floridians THOMAS W. ARNOLD May 18, 2010 CERTIFIED MAIL / RETURN RECEIPT REQUESTED File Number: 8429 Physicians Medical Centers - Jax, Inc 2020 Kingsley Ave Case #: 2010005135 Suite A Orange Park, FL 32073 NOTICE OF INTENT TO DENY APPLICATION It is the decision of this Agency that the application for certificate of exemption from health care clinic licensure for Physicians Medical Centers - Jax Inc, located at 2020 Kingsley Avenue, Suite A, Orange Park, Florida, 32073 be DENIED. The specific basis for this determination is based on the fact that: Requested information was not complete or timely received by the Agency pursuant to Section 408.806(3)(b), Florida Statutes, You were notified by correspondence dated April 9, 2010 to provide further information addressing identified apparent errors or omissions within twenty-one days (21) from the receipt of the Agency’s correspondence, Our records indicate you received this correspondence by certified mail on April 12, 2010, The outstanding issues remaining are: Evidence of Ownership — Information received by the Agency states that Victoria Critzer is the owner of Physicians Medical Centers-Jax Inc. Provide the following documentation as evidence of ownership: * A copy of the final closing documents such as a bill of sale or stock purchase agreement. signed and dated by both the buyer and seller including the effective date sale or transfer. The closing documents should contain the signature of Gordon Garver DC, previous owner of Physicians Medical Center-Jax Inc and Joseph Thomas MD, new owner of Physicians Medical Center-Jax Inc. ¢ A copy of the cancelled and reissued stock certificates transferring shared to Joseph Thomas MD. ¢ Acopy of the lease agreement that includes the name(s) of the owner(s). e Acopy of the business tax receipt that includes the name of the corporation and owner. In addition, the Agency received information indicating that the facility does not meet exemption requirements as it is not wholly owned by a Florida licensed health care practitioner, pursuant to Section 400.9905(4)(g). EXHIBIT 2727 Mahan Drive,MS-53 Tallahassee, Florida 32308 Visit AHCA online at http://ahca.myflorida.com . Physicians Medical Centers - Ja... .nc Page 2 May 18, 2010 EXPLANATION OF RIGHTS Pursuant to Section 120,569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S. your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. ey SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS, For questions regarding this notice, please contact Ruby Schmigel, Health Services & Facilities Consultant with the Health Care Clinic Unit at (850) 412-4413. oger Bgl, Mandger Health Care Clinic Unit ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS PHYSICIANS MEDICAL CENTERS-JAX, INC., Petitioner, DOAH Case Nos. 10-3202, 10-3203, 10-3204 and 10-3205 vs. AHCA CASE Nos.: 2010004881, 2010004956 AGENCY FOR HEALTH CARE 2010004935 and 2010005135, ADMINISTRATION, Respondent. / SETTLEMENT AGREEMENT Respondent, State of Florida, Agency for Health Care Administration (hereinafter the “Agency”), through its undersigned representatives, and Petitioner, Physicians Medical Centers- Jax, Inc. (hereinafter “Petitioner”), pursuant to Section 120.57(4), Florida Statutes, each individually, a “party,” collectively as “parties,” hereby enter into this Settlement Agreement (“Agreement”) and agree as follows: WHEREAS, the Petitioner applied for four certificates of exemption from licensure pursuant to Section 400.9935(6), Florida Statutes and Chapter 59A-33, Florida Administrative Code; and WHEREAS, Victoria Critzer has applied for four initial health care clinic licenses, expressly intending to purchase the interest of Dr. Joseph Thomas in Petitioner upon issuance by the Agency of those licenses; and WHEREAS, the Agency has jurisdiction of the license and exemption applications described in the foregoing paragraphs, by virtue of being the regulatory and licensing authority over the said licenses and exemptions; and EXHIBIT 5 WHEREAS, the Agency served the Petitioner with four Notices of Intent to Deny Application on or about May 13, 2010, notifying the Petitioner of the Agency’s intent to deny the certificates of exemption for the reasons stated thereon, in Agency cases numbered 2010004881, 2010004956, 2010004935 and 2010005135; and WHEREAS, Petitioner timely requested a formal hearing pursuant to Section 120.57(2), Florida Statutes, and in response to said request the matters were forwarded to the Division of Administrative Hearings (DOAH), and were designated as cases numbered 10-3202, 10-3203, 10-3204 and 10-3205 in that tribunal; and subsequently the parties agreed to, and did abate those cases in DOAH, for the purpose of discussing settlement; and WHEREAS, the Agency alleges, and Petitioner denies, that during the period of processing of the aforementioned applications, Petitioner operated one or more unlicensed health care clinics in violation of Florida law as to which no formal administrative, civil or criminal action has thus far been brought; and WHEREAS, the parties have agreed that a fair, efficient, and cost effective resolution of this dispute would avoid the expenditure of substantial sums to litigate the dispute; and WHEREAS, the parties stipulate to the adequacy of consideration exchanged; and WHEREAS, the parties have negotiated in good faith and agreed that the best interest of all the parties will be served by a settlement of these proceedings; and NOW THEREFORE, in consideration of the mutual promises and recitals herein, the parties intending to be legally bound, agree as follows: 1. All recitals are true and correct and are expressly incorporated herein. 2. Both parties agree that the “whereas” clauses incorporated herein are binding findings of the parties. 3. Joseph Thomas, M.D. hereby acknowledges, affirms and certifies that, at the time this agreement is executed by him, he is the sole owner of the Florida corporation Physicians Medical Center-Jax, Inc. 4, Victoria Critzer hereby acknowledges, affirms and certifies that, at the time this agreement is executed by her, she is the sole owner of the Florida corporation Physicians Medical Center, Inc. 5. Upon full execution of this Agreement, Petitioner agrees to waive any and all proceedings and appeals to which it may be entitled including, but not limited to, an informal proceeding under Subsection 120.57(2), a formal proceeding under Subsection 120.57(1), appeals under Section 120.68, Florida Statutes; and declaratory and all writs of relief in any court or quasi-court (DOAH) of competent jurisdiction; and further agrees to waive compliance with the form of the Final Order (findings of fact and conclusions of law) to which it may be entitled. Provided, however, that no Agreement herein, shall be deemed a waiver by either party of its right to judicial enforcement of this Agreement. 6. Upon full execution of this Agreement, the parties agree to the following: a. Petitioner's four (4) applications for exemption from licensure are hereby withdrawn, and Petitioner expressly waives its right to challenge or appeal, or both, in DOAH or elsewhere, the denial by the Agency of the exemptions. b. The Agency will resume processing the four initial licensure applications submitted by Victoria Critzer as intended future 100% owner of Physicians Medical Centers-Jax, Inc., now pending, and if the applications are complete and the applicant qualified under applicable law, the Agency will issue the licenses upon full payment by Petitioner of an agreed upon sum, as set forth below, to resolve the Agency's claim of unlicensed activity against Physicians Medical Center, Inc. Ms. Critzer agrees to use reasonable diligence to timely remedy any omissions from the applications cited by the Agency, to make the facilities available as required by law for all inspections required in connection with the licensure of the facilities, and to otherwise comply with all requirements of the application process, and all statutes and administrative rules thereunto appertaining, including background screening as may be applicable. c. The Agency agrees to use all reasonable diligence to process the initial license applications, and to issue the initial licenses as expeditiously as reasonably possible, provided that Ms. Critzer timely complies with all reasonable requests for additional information to which the Agency is entitled as a component of the application and licensure process, and provided that Victoria Critzer, and the applications she presented, are qualified for the licenses under all applicable statutes and administrative rules. d. Victoria Critzer will maintain the health care clinic license #HCC6732 currently held by Physicians Medical Center Inc. (PMC), for purposes of billing health care services provided solely at the licensed location, 9826 San Jose Boulevard, Suite B, Jacksonville, Florida. Whereas, Ms. Critzer, through counsel, has advised the Agency of a change of address for the license from 9826 San Jose Boulevard, to 9826 San Jose Boulevard, Suite B, PMC will submit a change of address application to the Agency together with the appropriate fee, within 10 days of execution of this agreement, and prior to resumption by the Agency of processing of the subject licensure applications. The license will be maintained 7. under a different federal employer identification number from any other licenses issued to Victoria Critzer or any entity in which she has a controlling interest. A separate health care clinic license must be obtained for any other location at which any health care services will be provided and third-party reimbursement sought for on behalf of Physicians Medical Centers Inc. e. Physicians Medical Centers, Inc. agrees to pay the sum of thirty thousand and no/100s dollars ($30,000.00) to the Agency, to resolve the Agency's allegations of unlicensed activity, in the interest of expediently resolving these matters and in recognition of the expense and uncertainty of litigation. The sum will be paid in lump sum at the time that the initial licenses referenced in paragraph b., above, are issued, or within 30 days following rendition of a Final Order by the Agency that incorporates this Agreement, whichever occurs first. f. Nothing in this Agreement shall prohibit the Agency from denying Petitioner’s application for licensure based upon any statutory and/or regulatory provision, including, but not limited to, the failure of Petitioner to satisfactorily complete a survey reflecting compliance with all statutory and rule provisions as required by law. By executing this Agreement, the Petitioner neither admits nor denies the allegations raised in the Notices of Intent to Deny referenced herein. 8. Upon full execution of this Agreement, the Agency shall enter a Final Order adopting and incorporating this Agreement in its entirety, and closing the above-styled case(s). The cases resident in DOAH, referenced above as DOAH cases numbered 10-3202, 10-3203, 10- 3204 and 10-3205, are currently closed by Order entered in that tribunal on October 7, 2010. The parties hereby further agree that those cases shall remain closed permanently, and each party hereby waives its right to seek to have any of those cases re-opened. 9. Each party shall bear its own costs and attorney’s fees. 10. This Agreement shall become effective on the date upon which it is fully executed by all the parties. 11. The Petitioner for itself and for its related or resulting organizations, its successors or transferees, attorneys, heirs, and executors or administrators, does hereby discharge the Agency and its agents, representatives, and attorneys of all claims, demands, actions, causes of action, suits, damages, losses, and expenses, of any and every nature whatsoever, arising out of or in any way related to this matter and the Agency’s actions, including, but not limited to, any claims that were or may be asserted in any federal or state court or administrative forum, including any claims arising out of this Agreement, by or on behalf of the Petitioner or related or resulting organizations. 12. This Agreement is binding upon all parties herein and those identified as a party, or a beneficiary, of the provisions of this Agreement, and each signatory acknowledges same and the adequacy of consideration therefor. 13. In the event that Petitioner is or was a Medicaid provider, this settlement does not prevent the Agency from seeking Medicaid overpayments or from imposing any sanctions pursuant to Rule 59G-9.070, Florida Administrative Code. This Agreement does not prohibit the Agency from taking action regarding Petitioner’s Medicaid provider status, conditions, requirements or contract. 14. The undersigned have read and understand this Agreement and have authority to bind their respective principals to it. Both parties have been represented by counsel in the negotiation and execution of this Agreement. The Petitioner fully understands that counsel for the Agency represents solely the Agency and Agency counsel has not provided legal advice to or influenced the Petitioner in its decision to enter into this Agreement. 15. This Agreement contains the entire understandings and Agreements of the parties. 16. | This Agreement supersedes any prior oral or written Agreements between the parties. This Agreement may not be amended except in writing. Any attempted assignment of this Agreement shall be void. 17. Venue for any action brought to interpret, challenge or enforce the terms of this Agreement or the Final Order entered pursuant hereto shall lie solely in the Circuit Court in Leon County, Florida. 18. ‘Ifa court of competent jurisdiction finds any part of this Agreement to be void, voidable, or unenforceable, then the remainder of the contract shall remain in full force and effect. 19. All parties agree that a facsimile signature suffices fe 20. The following representatives and beneficiaries hereby ae duly S. to enter into this Agreement. Molly McKéns eputy Secretary {_ panes P. Céhen, Esquire Health Quality ance Cohen & Thurston, P.A. Agency for Health Care Administration 1723 Blanding Boulevard, Suite 102 2727 Mahan Drive, Bldg #3 Jacksonville, Florida 32310 Tallahassee, Florida 32308 Counsel to Petitioner DATED: (frolir DATED: 1-1 U~ aye William R. Roberts Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308 DATED: /7 [(3l 4 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308 DATED: Uf (5) WH Physicians Medical Centers-Jax, Inc. 9826 San Jose Boulevard Jacksonville, Florida 32257 patep: _})-14~!/ ~~ x. 1 _f- Victoria Critzer as president, sole director and 100% Owner Physicians Medical Center, Inc. 9826-B San Jose Boulevard Jacksonville, Florida 32257 DATED: _|1- (4-//
Findings Of Fact The Petitioner, Florida Hospital, is a tertiary care hospital located in Orange County, Florida, and consisting of three different campuses, with a total of 1,075 licensed beds. It is the second busiest and biggest hospital in Florida. T2. 9,20. Florida Hospital submitted its original FY 1984 budget to the Hospital Cost Containment Board (HCCB) on October 31, 1983. Petitioner's Exhibit 5. The FY 1984 budget was revised at least once through informal negotiation with HCCB staff before it was considered by the HCCB, and these revisions were accepted by the staff of the HCCB. T1. 54, 104. These changes were not placed in evidence. The HCCB reviewed Petitioner's FY 1984 budget at its meeting on April 19, 1984. T1. 54; Petitioner's Exhibit 4. The budget was accepted and not selected for public hearing, and the HCCB found that Petitioner's hospital had one of the top three highest case mixes in the state. Petitioner's Exhibit 4. Petitioner's 1984 fiscal year ran from January 1, 1984 to December 31, 1984. T1. 52. Although the budget was not considered by the HCCB until April, 1984, the budget was effective for all of fiscal year 1984. T1. 54. By letter dated October 11, 1984, but received October 15, 1984, Florida Hospital submitted an amended FY 1984 budget to the Hospital Cost Containment Board. T1. 54; T2. 51; Petitioner's Exhibit 6. The amendment thus was submitted 289 days after the beginning of Petitioner's 1984 fiscal year, using the date of receipt as the date of submission, and 77 days from the end of the fiscal year. By letter dated February 11, 1985, the HCCB staff notified Florida Hospital that its amended 1984 budget would not be accepted because it was received less than 90 days before the end of Florida Hospital's 1984 fiscal year. T1. 54-55; Petitioner's Exhibit 2. Florida Hospital is not aware of any analysis made by the staff of the HCCB with respect to the merits of the proposed amendment. T1. 56. In the fall of 1984, the HCCB applied the 90 day policy to all hospitals which submitted proposed budget amendments. T1. 7, 13. The policy was initiated in late summer or early fall, 1984. T1. 6,7. The HCCB did not provide the Petitioner with any other reason for the proposed denial of its amendment. T1. 23. The HCCB has now abandoned its policy of refusing to accept budget amendments within the last 90 days of the fiscal year, and that issue is not present in this case because the HCCB does not rely upon it to deny the amendment proposed by the Petitioner. T1. 11, 27. Effective May 18, 1984, the Legislature substantially amended the Health Care Cost Containment Act of 1979, section 395.501, et seq., Fla. Stat. Chapter 84-35, Laws of Florida (1984). Historically, there was no practice or policy of the HCCB or its staff to either encourage or discourage amendment of budgets after submission to the HCCB, and although such amendments were not required by law, amendments were routinely allowed. T1. Under prior law, the HCCB had no regulatory authority over hospital budgets, and could not require a hospital to revise its budget or to abide by its budget. T1. 40. The HCCB only had the power to subject the hospital to a public hearing. Id. It often occurred that hospitals would revise a budget under the former law, after preliminary staff analysis and recommendation, and it is inferred that often such amendments were prompted by the possibility that the unrevised budget would trigger a public hearing. T1. 39. In fiscal year 1984, ninety-nine hospitals submitted amendments or other changes to their budgets after initial budget Submission to the HCCB. Petitioner's Exhibit 1. Sixty-five of those amendments were accepted by the staff of the HCCB or the HCCB and became a part of the hospital's 1984 budget. Id. At least fifteen or twenty of the attempts to amend the FY 1984 budget set forth above were filed after the particular fiscal year had already begun. T1. 70. The majority of these fifteen or twenty were changes or amendments submitted prior to the time that the particular budget was submitted to the board of the HCCB. Id. In most eases, these fifteen or twenty amendments were accepted by the HCCB. T1. 71. Thus, it was common for the HCCB to accept amendments to the FY 1984 budget after the beginning of that fiscal year. There is no evidence, however, that any of these amendments accepted by the HCCB had the effect, under the amended 1984 law, of reducing the variance between a 1984 budget as originally filed and 1984 audited actual experience to diminish or entirely avoid the base year adjustment required by section 395.509(11), Fla. Stat. (1985). On March 6, 1984, Kissimmee Memorial Hospital submitted an amendment to its FY 1984 budget after the beginning of that fiscal year. Its fiscal year was calendar year 1984. This amendment was accepted by the HCCB in April, 1984, and was effective retroactively and prospectively, for the entire fiscal year. T1. 71-77; Petitioner's exhibit 7, worksheets C-3, C-4 and X-4. Of the fifty FY 1984 files reviewed at the HCCB by Scott Miller, witness for the Petitioner, one contained an amendment to a budget which was accepted by the HCCB after the HCCB had approved the budget. T1. 77. That hospital was Central Florida Regional Hospital. Id. The fiscal year for Central Florida Regional Hospital was calendar year 1984. T1. 79. The HCCB accepted the budget during their June, 1984, meeting. T1. 79; Petitioner's Exhibit 8. Subsequently, by letter dated September 21, 1984, Central Florida Regional Hospital submitted a proposed amendment to its FY 1984 budget. T1. 79-80. The proposed amendment was received by the HCCB on September 24, 1984, and sought an amendment due to receipt of favorable prior year Medicare settlements. Petitioner's Exhibit 8, letter of September 21, 1984, and worksheets C-2 and X-4; T1. 81. This was 22 days before the HCCB received the amendment proposed by the Petitioner in this case, and was more than 90 days from the end of the 1984 fiscal year. Apparently the amendment proposed by Central Florida Regional Hospital was subjected to the same 90 day amendment policy as Petitioner's amendment, but since the amendment of Central Florida Regional Hospital was submitted with more than 90 days left in the fiscal year, the amendment was not precluded by application of that policy. T1. 7, 13. The amendment proposed by Central Florida Regional Hospital related to past and future periods, and was proposed to be effective for the entire fiscal year. T1. 136, 81. The amendment was concerned solely with actual experience, the receipt of a Medicare settlement, which was a single unusual revenue event. The HCCB accepted the amendment, T2. 69, and the amendment became effective for the entire 1984 fiscal year. T1. 80-81; T2.69. (Specifically, staff of the HCCB accepted the amendments, the amendments were entered into the HCCB computer, this was deemed to be acceptance by the HCCB itself, and the amendments were averaged on the computer for the entire 12 month period. T2. 67, 69-70.) The effect of the amendment was to increase net revenue per adjusted admission by about $180, and this increase was too small to have any impact upon the issue of whether Central Florida Regional Hospital would be subject to a base year adjustment pursuant to section 395.509(11), Fla. Stat. (1984). T1. 61-62. The policy described in finding of fact 8 above was never promulgated by the HCCB as a rule. T1. 9, 12. No general written notice was given to hospitals potentially affected by the policy. T1. 13. The first notice given to hospitals of the existence of the policy was when staff of the HCCB notified a particular hospital in response to proposed fiscal year 1984 budget amendments. Id. Florida Hospital first learned of the existence of the policy when its attempted budget amendment was rejected by the HCCB staff on February 11, 1985. T1. 54-55. The amendment proposed by the Petitioner to its FY 1984 budget included a reduction of about 21,000 patient days, and a reduction of about 1900 admissions from the original budget. T1. Additionally, the amendment sought to increase revenue amounts which resulted primarily from a change in case mix. Id. Finally, there were increases in expenses for malpractice insurance and data processing software. Id. Revenues respond quite directly to increases or decreases in case mix. T1. 68. Case mix is a mathematical expression of the intensity of services provided to the patient, T2. 16, which correlates to the degree of illness of the patient. Id. The average case mix is 1.0. T2. 17. In the summer and early fall of 1983, when the Petitioner prepared its original budget for 1984, case mix standards did not exist, T1. 61, and the 1984 budget was not based upon a case mix. Id. Case mix data for fiscal years 1982 and 1983 became available in January, 1984. T1. 135. Florida Hospital's case mix, and its revenues, increased in fiscal year 1984 primarily due to the introduction of the Medicare prospective payment system on October 1, 1983. T1. 59, 65, 96. Additionally, in the market served by Florida hospital there was increased activity from health maintenance organizations and preferred provider organizations. T1. 59. The Medicare prospective payment system was a major change in the reimbursement system. T1. 119. These changes in the health care market caused Florida Hospital to experience a decrease in length of stay and an increase in the intensity of services rendered to sicker patients. This occurred because the new Medicare System, as well as HMO's and PPO's, were intended to reduce hospital stays and treat less sick patients outside the hospital. T1. 59. The budget of Florida Hospital was initially prepared and submitted in October, 1983, with virtually no actual experience under the new Medicare prospective payment system. T1. 95-96. See also findings of fact 2 and 19, supra. Florida Hospital hired two consultants to assist it in trying to predict the impact of the new Medicare program. T1. 95. Florida Hospital receives many of its patients on referral from other hospitals which cannot provide services to such patients. T2. 18, 33-34. Thus, Florida Hospital is relied upon by the surrounding area to treat sicker patients. T2. 25. It is hard to predict trends in such referrals, and consequently, it is difficult to predict the impact of other market changes, such as the Medicare changes and the success of health maintenance organizations described above, since Florida Hospital must rely on referrals. Health maintenance organizations in the first year of operation in the surrounding community were able to substantially reduce days of care, and this success was not predictable by Florida Hospital when it formulated its FY 1984 budget. T2. 14- Additionally, the Orlando area in the last two years has experienced significant unpredictable increases in population, which added to the foreseeability problems of Florida Hospital. T2. 18-20. Over the several years preceding fiscal year 1984, Florida Hospital experienced a trend of increasing open heart surgical procedures. T1. 60. In 1984, Florida Hospital originally budgeted for a significant increase over 1983, to its maximum capacity using a 5 day week. Id. But the demand continued, and in 1984, Florida Hospital began doing open heart surgery on weekends. T1. 61. This decision, coupled with a decrease in length of stay per surgery, resulted in an increase in open heart surgeries greater than originally predicted in the 1984 budget. Id; T1. 110-111. Florida Hospital might have anticipated using weekends when it prepared its 1984 budget, but did not do so because weekend work is not a normal practice. T1. 112. In the fall of 1983, the national trend for open heart surgery was showing a decrease in such procedures. T1. 135-36. Additionally, Florida Hospital experienced a shift of less complicated surgeries, such as cataract surgeries, from inpatient to outpatient procedures, resulting in an overall increase in intensity of the remaining surgical procedures. T1. 62-63. The Hospital has no control over this choice, since it is made by physician and patient and is affected by reimbursement policies of insurance and governmental programs. Id. Florida Hospital monitors its budget on a monthly basis, but does not have specific criteria for evaluating the meaning of trends. T1. 86-87. A change of 5 percent would cause concern to Florida Hospital but other circumstances would be evaluated. T1. 87. In the first two months of the first quarter of FY 1984, Florida Hospital experienced a slight increase of admissions over budget estimates. T1. 85-88. In a letter to the HCCB dated March 23, 1984, Florida Hospital noted that the intensity of its case mix for Medicare patients had increased about 50 percent since 1979, and that the length of stay had dropped 0.2 days from 1983 to 1984. Intervenor's Exhibit I. At the time the letter was prepared, the Hospital had no way of knowing if the non-Medicare case mix was the same. T1. 109. The data further showed a trend away from psychiatric patient days, which produce less revenue per day, toward more intense forms of care, which produce more revenue per day. Id. The letter was sent to provide information requested by staff of the HCCB, and to explain changes to the budget as originally submitted. Id.; T1. 104. While March and April of 1984 showed some signs of a change from predictions in the budget, it was not until June, 1984, that Florida Hospital experienced a significant decline in patient days. T1. 97-98. Even then, it was determined that the June, 1984, experience was not a good trend indicator, but was an anomaly. Id. This was shown to be the case when June, 1984, was compared to June, 1985. Id. Moreover, these were only gross trends in patient days and admissions, and were not specific for case mix. T1. 99. In fact, Florida Hospital finished the fiscal year at about the gross revenue level it had predicted in its 1984 budget; the problem was an increase in intensity of case mix, with lower patient days generating higher revenue per adjusted admission. Id. In June, 1984, Florida Hospital received a Medicare settlement for two or three prior years. The settlement was $10 million, and the timing of the receipt of such settlements was not within the control of Florida Hospital. T1. 63, 93. Significant variances were first noticed by Florida Hospital in revenue per adjusted admission in July, 1984. T1. The variances were cumulative from April, 1984. T1. 100. The vice president for finance at Florida Hospital, Scott Miller, was first aware of the amendments to the Hospital Cost Containment law, chapter 84-35, Laws of Florida (1984), establishing a base year adjustment for fiscal year 1984 based upon actual experience in 1984, in June, 1984. T1. 100. Section 395.509(11), Fla. Stat. (1984), requires comparison of the 1984 budget for net revenues per adjusted admission filed with the HCCB with the audited actual experience of each hospital for such revenues. The bulk of the work in preparation of the proposed amendment to its FY 1984 budget, Petitioner's Exhibit 6, was done in August, 1984, based upon data to June 30, 1984. T1. 92, 83. One of the reasons for submitting the amended budget was to diminish the base year adjustment described in finding of fact 30 above. T1. 100. Since the potential loss to Florida Hospital is over $10,000,000, it is likely that this was a major cause for the amendment. Additionally, the proposed amendment was submitted to more honestly reflect changes in the predicted budget. T1. 102. From a purely fiscal point of view, without consideration of regulatory consequences, there is an incentive to underestimate revenues and overestimate expenses. T2. 26-27. During the preparation of the proposed budget amendment, Florida Hospital did not consult the Florida Hospital Reporting System Manual, and did not talk with any employee of the HCCB for advice with respect to the proposed amendments. T1. 130. The proposed budget amendment submitted in October, 1984, dealt with the entire fiscal year 1984, and did not distinguish between portions of the year which already had been completed and the remainder of the fiscal year. T1. 131-132. As set forth in finding of fact 16, the basis of the proposed amendment was actual experience in fiscal year 1984, T1. 139-140, and contained revenues actually received that were substantially greater than originally predicated. With respect to future periods, the budget was a projection. Due to seasonal variances, unpredictable receipt of lump sum payments, and variations in changes in admissions for various types of cases, it is not practicable to prorate the budget of Florida Hospital, as proposed to be amended, in daily, monthly, or quarterly segments, T1. 133, and the proposed amended budget does not contain a method for such proration. A budget can be defined as a projection for a future time of expenditure and revenue, and it reflects anticipated goals. T1. 127, 131. There is no evidence in the record to suggest that Florida Hospital has ever attempted to avoid a public hearing by underestimating revenue, and there is no evidence in the record to suggest that Florida Hospital's original FY 1984 budget contained intentional underestimations of revenue or intentional overestimations of reductions from gross revenue. As found in findings of fact 18 through 31, Florida Hospital's original FY 1984 budget was based upon the best information then available. It took six months to prepare, T. 127, and was reasonable at the time submitted. Florida Hospital submitted amendments to its budgets in FY 1982 and 1983. Petitioner's Exhibit 1. In years prior to 1984, Florida Hospital had submitted amendments to budgets after the beginning of its fiscal year. T1. 134. Florida Hospital has claimed in previous years that it offers services not offered by other hospitals in its group. T2. 72-73. Through discussions with the staff of the HCCB, it was agreed between Florida Hospital and the staff of the HCCB that Florida Hospital could delete from its FY 1984 budget revenues and expenses associated with kidney transplant, employee housing, pathologist laboratory fees, sales of gasoline to employees, and a laundry. T2. 73-74. See Petitioner's Exhibit 10, attachment 2 and 3. The effect of deletion of these items from the FY 1984 budget was to delete a predicted $3,231,000 in revenue. Petitioner's Exhibit 10, attachment 1. When Florida Hospital filed its audited actual experience for 1984, the HCCB had a new staff analyst assigned to review the budget of Florida Hospital, and the new analyst concluded that the items described in finding of fact 40 should be included in the actual report initially, Petitioner's Exhibit 10, attachment 4, but that these items would be "pulled back out" for purposes of analysis later. T2. 75. However, Respondent's Exhibit 1 did not implement this agreement. Instead, the items described above were deleted from the FY 1984 budget but were included in the FY 1984 actual experience figures on this exhibit. Id. The total amount of revenue actually received for these items in FY 1984, which should be deleted from the FY 1984 actual experience of Florida Hospital pursuant to the understanding with staff of the HCCB, is $4,074,415. If this amount is not deleted, Florida Hospital's base year adjustment pursuant to section 395.509(11), Fla. Stat. is larger by nearly $3 million. T2. 76. Respondent's Exhibit 1 computes the FY 1984 net revenue per adjusted admission for Florida Hospital for the following: FY 1984 original budget; FY 1984 budget as proposed to be amended; FY 1984 budget if the proposed amendment is allowed for only the last 77 days of the fiscal year; and the 1984 actual experience. T2. 51-53. As discussed in finding of fact 41, the figure for 1984 actual experience does not delete the items discussed in that finding. Respondent's Exhibit 2 computes the adjustment to base year if the proposed amendment is not accepted, and if the items described above in findings of fact 40 and 41 are not deleted from actual experience. T2. 56-58. The amount of this adjustment would be $13,771,310 which is $344.52 per adjusted admission for FY 1986. Respondent's Exhibit 2. Respondent's Exhibit 3 computes the adjustment to base year if the proposed amendment is accepted for the 77 days remaining in the fiscal year, and if the items described above in findings of fact 40 and 41 are not deleted from actual experience. T2. 59-60. The amount of this adjustment would be $10,476,400, which is $262.09 per adjusted admission for FY 1986. Respondent's Exhibit 3. If the proposed amendment is not accepted, but the items described in findings of fact 40 and 41 are deleted from actual experience, the adjustment to base year would be $10,871,303, which is $271.97 per adjusted admission for FY 1986. Petitioner's Exhibit 9. If the proposed amendment is accepted for the 77 days remaining in the fiscal year, and if the items described in findings of fact 40 and 41 are deleted from actual experience, the adjustment to base year would be $7,760,747, which is $190.15 per adjusted admission for FY 1986. Petitioner's Exhibit 9. If the proposed amendment is accepted by the HCCB to be effective for the entire FY 1984, the budgeted net revenue per adjusted admission for Florida Hospital is $4,008.70. Respondent's Exhibit 1. Assuming that the deductions from actual experience in 1984 are not made (see findings of fact 40 and 41), the net revenue per adjusted admission actually experienced by Florida Hospital in 1984 was $4,346.66. Id. Since the difference between these two figures is less than 10 percent above the budgeted amount, $4,008.70, the base year of Florida Hospital would not be adjusted pursuant to section 395.509(11), Fla. Stat., if the proposed amendment were accepted for the entire fiscal year. This result would occur even though the deductions from revenue described above are not made.
Recommendation It is therefore recommended that the Hospital Cost Containment Board enter its Final Order approving the proposed amendment to the FY 1984 budget of Florida Hospital only for the last 77 days, and, as a result, calculating the adjustment pursuant to section 395.509(11), Fla. Stat. (1985), in the following amounts: subtraction of a total of $7,760,747 net revenues from FY 1986 budget, which is subtraction of $190.15 net revenues per adjusted admission for the FY 1986 budget. DONE and ENTERED this 7th day of February, 1986, in Tallahassee, Florida WILLIAM C. SHERRILL, JR. 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 7th day of February, 1986. APPENDIX TO RECOMMENDED ORDER, CASE NO. 85-0747H Rulings upon Proposed Findings of Fact. Pursuant to section 120.59(2), Fla. Stat., the following are specific rulings upon all proposed findings of fact submitted by the parties. The numbers herein correspond to the numbers of each proposed finding by party. Findings of fact in this recommended order are indicated by the abbreviation "FF". Findings of Fact Proposed by the PETITIONER, Florida Hospital. Adopted, FF 1. Adopted, FF 2. law. law. Adopted, FF 3. Adopted, FF 4. Adopted, FF 6. Adopted, FF 7. Adopted, FF 8. Adopted, FF 9. Rejected because the proposed finding is a question of Rejected because the proposed finding is a question of Adopted, FF 10. Adopted, FF 11. Adopted, FF 12. Rejected because of insufficiency of evidence that this categorical, all inclusive finding of fact can be mode. There is a marked distinction between amendments submitted by Hospitals before acceptance of the budget by the HCCB, and amendments submitted after the budget has been accepted by the HCCB. See FF 10, 11, 12, 13, and 14. Further, of the ninety-nine instances of amendment, the Petitioner presented only one occasion when an amendment was accepted after the budget had been approved by the HCCB and was accepted for the entire fiscal year, some of which had already been executed. See FF 14. Through 19. Adopted, FF 13. 20. Through 28. Adopted, FF 14. Adopted, FF 8 and 14. Adopted, FF 15. Adopted, FF 8. Adopted, FF 15. Adopted, FF 15. Adopted to the extent found in FF 11 end 12, and the remainder rejected for lack of evidence. Adopted, FF 8. Rejected because irrelevant since the basis for the 90 day incipient policy is not at issue because the policy is not at issue. Adopted, FF 7 and 8. Adopted, FF 8. Adopted, FF 15. Adopted, FF 8. True, but irrelevant and therefore rejected. Rejected because not supported by the evidence. As found in FF 17 through 31, Florida Hospital was aware of the amended law, effective May 18, 1984, that subjected hospitals to a potential base year adjustment resulting from FY 1984 budget data, but as also found in those findings, Florida Hospital could not prepare its proposed amendment any sooner due to lack of data. The delay in filing the amendment, on this record, occurred due to lack of data, not lack of notice concerning the 90 day policy. Adopted, FF 39. Adopted in part, FF 39. However, the purpose of prior year amendments cannot be a portion of this finding of fact because there is insufficient evidence. Without evidence as to the nature of such prior year amendments, and given the reverse incentive in those years to understate revenues to avoid public hearing, it cannot be concluded that the motives for such amendments were to "present a fair document to the HCCB." Adopted, FF 8. and 48. Adopted, FF 16. and 49. through 51. Adopted, FF 17. 52. and 53. Adopted, FF 18. 54. and 55. Adopted, FF 19. 56. and 57. Adopted, FF 20. 58. and 59. Adopted, FF 21. 60. and 61. Adopted, FF 22. Adopted, FF 21. Rejected. It is unclear from the evidence whether volume of patient days and admissions "magnifies" the impact of changes in market conditions. It could be statistically true that a greater volume produces more reliable predictions due to a larger base pool of data, which averages out small anomalies in data. Adopted, FF 19. through 69. Adopted, FF 23. 70. and 71. Adopted, FF 24. Adopted, FF 38. Adopted, FF 29. Adopted, FF 31. Adopted, FF 28. and 77. Adopted to the extent modified in FF 38. To the extent not adopted in the modified language, it is rejected for lack of evidence. Adopted, FF 33. Since there were no other definitions given in the record, adoption of this finding as proposed would be misleading. T1. 127-128. Thus, it is rejected as phrased. Adopted, FF 37, except this is the same definition, not "another" definition. Rejected as phrased. There is not evidence in the record that the budget which is the subject of testimony at T1. 129 was prepared or used in any manner with respect to past time in the budget year. Adopted in the introduction, but not, strictly speaking, a finding of fact. Adopted, FF 42. and 86. Adopted, FF 43. and 87. Adopted, FF 44. 88. and 89. Adopted, FF 14. Adopted to the extent relevant in the introduction. Adopted, FF 40. Rejected as unnecessary and cumulative to FF 40. Adopted, FF 40. through 96. Adopted, FF 41. Adopted, FF 45. Adopted, FF 46. Findings of Fact Proposed by the RESPONDENT, HCCB. The first sentence is adopted, FF 9. The next two sentences are rejected as issues of law, not fact. The next sentence is adopted, FF 7 and 9. The last sentence, also a matter of law, is rejected because not fact. Adopted only to the extent in FF 8, and remainder is rejected as unnecessary and irrelevant since the policy is not used by the HCCB to deny amendment in this ease. Adopted, FF 5 and 7. Adopted, FF 8, except the last sentence, which is not relevant as discussed above. The first two sentences are adopted as modified in FF The next sentence is adopted in FF 16. The next sentence is adopted as modified in FF 26. The last sentence is adopted as modified in FF 27 and 29. The first sentence is adopted in FF 16, the second sentence is adopted in FF 19, the last two sentences are adopted in FF 23. The first sentence is adopted in FF 3. The last sentence is true, T2. 51, but not relevant. Adopted, FF 32 and 34. Adopted, FF 35. Adopted, FF 40. The first sentence is rejected for the reasons stated in FF 40 and 41. The second sentence is rejected as an issue of law, and also rejected because irrelevant: there does not appear to be any statute allowing or prohibiting the HCCB to "disregard" any portion of a budget. But as found in FF 10, there is apparently some discretion afforded the HCCB, discretion that is exercised frequently. Adopted, FF 14 and 8. Findings of Fact Proposed by the INTERVENOR, The Public Counsel. Adopted, FF 1. Adopted, FF 9. Adopted, FF 2. Adopted, FF 2, 3, and 4. Adopted as modified in FF 16. and 7. Adopted as modified in FF 16, but there is not enough evidence to show a "trend." Adopted, FF 3 and 4. Adopted, FF 7. Adopted, FF 16. Adopted, FF 31. Adopted, FF 19. Adopted, as modified in FF 27 and 29. Adopted, FF 30. Adopted, FF 30. Adopted, FF 32. The record contains no evidence that the subject matter of the proposed amendment is incorrect, or false, and thus the motive for such amendment is largely irrelevant. For this reason, this finding is rejected. Adopted, FF 34. Rejected because the record citation does not support the proposed finding. Rejected because misleading. The proposed amendment does not relate to a specific future time, but in fact relates to the remaining days of the fiscal year, since that was all that was left of the budget year when the amendment was filed. Adopted, FF 35. Adopted as modified, FF 35. Adopted as modified, FF 36. Adopted as modified, FF 36. Adopted as modified, FF 35. Adopted, FF 36. Adopted, FF 26 and 36. Adopted as modified, FF 35 and 36. Adopted as modified, FF 35 and 36. Adopted, FF 19 and 20, except the last sentence, which is cumulative and unnecessary. Rejected because irrelevant. Rejected as irrelevant and cumulative to FF 20. Adopted, FF 20. Rejected as irrelevant and cumulative to FF 20. Adopted, FF 19. Rejected as irrelevant. See FF 18 and 20. The record supports only one conclusion regarding the prospective payment system: no one knew what massive changes would occur in the market place prior to actual implementation of that system for a number of months. Awareness that PPS was on the way, without knowing what it would do, is irrelevant. Adopted as modified, FF 30. Rejected as irrelevant. See FF 15 through 31, which conclude that the Petitioner acted in a timely manner to prepare and submit its proposed amendment. Adopted, FF 37. Adopted, FF 38. Adopted, FF 10. Adopted, FF 3 and 10. Adopted, FF 12. Adopted as modified, FF 12. Adopted as modified, FF 12. Further, the point is irrelevant. Rejected because the proposed finding is an issue of law. Rejected because inextricably mixed with the issue of law contained in proposed finding 46. Rejected because inextricably mixed with the issue of law contained in proposed finding 46. COPIES FURNISHED: Curtis Ashley Billingsly, Esquire Hospital Cost Containment Board 325 John Knox Road Building L, Suite 101 Tallahassee, Florida 32303 David Watkins, Esquire Oertel & Hoffman, P.A. 2700 Blairstone Road, Suite C Tallahassee, Florida 32301 Jack Shreve, Public Counsel Office of Public Counsel 202 Blount Street Tallahassee, Florida 32301 T. L. Trimble, Esquire 2400 Bedford Road Orlando, Florida 32803 James Bracher, Executive Director Hospital Cost Containment Board 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether the Florida Medical Association, Inc. and Florida Association of Physicians Assistants have standing to initiate this challenge to an existing rule. (See Section 120.56(3), Florida Statutes.) Whether Rule 64B1-3.001(6), Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority because it exceeds the Board of Acupuncture's rulemaking authority contained in Section 457.104, Florida Statutes. (See Section 120.52(8)(b), Florida Statutes). Whether Rule 64B1-3.001(6), Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority because it enlarges, modifies, or contravenes the provisions of Section 457.102, Florida Statutes. (See Section 120.52(8)(c), Florida Statutes).
Findings Of Fact It was stipulated that Petitioner FMA is organized and maintained for the benefit of approximately 16,000 licensed allopathic and osteopathic Florida physicians. FMA's standing in this proceeding has always been at issue. The foregoing stipulation encompasses all of the factual allegations about the Petitioner contained in the Petition. It was stipulated that there is only one Respondent, the Board of Acupuncture, created by the Florida Legislature and placed within the Florida Department of Health. It is axiomatic that the Respondent has standing herein. There were no stipulations as to the standing of either Intervenor, and both the Board and FSOMA have asserted in their respective Proposed Final Orders that FAPA, as well as FMA, is without standing to bring this rule challenge. However, no party has contested the veracity of the factual statements concerning standing in either Petition to Intervene, and no party opposed intervention. The Petitions to Intervene of FAPA and FSOMA were granted, subject to proving-up standing at hearing. Even stipulations as to standing do not preclude consideration of standing as a matter of law. Florida Medical Ass'n., Inc., et al. v. Dept. of Health, Florida Bd. of Nursing, et al., DOAH Case No. 99-5337RP (Final Order March 13, 2000), per curiam affirmed Bd. of Nursing, et al. v. Florida Medical Ass'n. Inc., So. 2d (Fla. 1st DCA 2001). Therefore, under these circumstances, and applying that case, the Intervenors' factual allegations for purposes of standing may be taken as true for findings of fact, but each Intervenor's status still depends upon that of the respective party upon whose behalf each Intervenor entered this case. Therefore, with regard to the status of FAPA, it is found that: FAPA is organized and maintained for the benefit of the licensed Florida physicians assistants who compromise [sic] its membership and has as one of its primary functions to represent the interests of its members before various governmental entities of the State of Florida, including the Department of Health and its boards. (FAPA Petition to Intervene) Therefore, with regard to the status of FSOMA, it is found that: FSOMA is a Florida nonprofit corporation comprised of over one-third of the doctors of oriental medicine and licensed acupuncturists under the regulatory aegis of the Board of Acupuncture, State of Florida Department of Health, Chapter 457, F.S., with a mission to represent the acupuncture and oriental medicine practitioner interests of its members in judicial administrative, legislative and other proceedings. (FSOMA Petition to Intervene) Existing Rule 64B1-3.001(6), Florida Administrative Code, was promulgated by the Board of Acupuncture. The challenged rule provides: (6) Acupuncture physician means any person certified as provided in this Chapter to practice acupuncture as a primary health care provider. The rule was adopted on August 13, 1984. It was most recently amended on February 27, 1992. The "authority" cited by the Board for the challenged rule is Section 457.104, Florida Statutes. The Board cites the "law implemented" for the challenged rule as Section 457.102, Florida Statutes. Section 457.104, Florida Statutes, currently provides: The board has authority to adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of this chapter conferring duties upon it. Section 457.102, Florida Statutes, currently provides: "Acupuncture" means a form of primary health care, based on traditional Chinese medical concepts and modern oriental medical techniques, that employs acupuncture diagnosis and treatment, as well as adjunctive therapies and diagnostic techniques, for the promotion, maintenance, and restoration of health and the prevention of disease. Acupuncture shall include, but not be limited to, the insertion of acupuncture needles and the application of moxibustion to specific areas of the human body and the use of electroacupuncture, Qi Gong, oriental massage, herbal therapy, dietary guidelines, and other adjunctive therapies, as defined by board rule. "Acupuncturist" means any person licensed as provided in this chapter to practice acupuncture as a primary health care provider. "Board" means the Board of Acupuncture. "License" means the document of authorization issued by the department for a person to engage in the practice of acupuncture. "Department" means the Department of Health. "Oriental medicine" means the use of acupuncture, electroacupuncture, Qi Gong, oriental massage, herbal therapy, dietary guidelines, and other adjunctive therapies. "Prescriptive rights" means the prescription, administration, and use of needles and devices, restricted devices, and prescription devices that are used in the practice of acupuncture and oriental medicine. (Emphasis supplied) Section 457.116(1)(b), Florida Statutes, provides: A person may not: (b) Use, in connection with his or her name or place of business, any title or description of services which incorporates the words "acupuncture," "acupuncturist," "certified acupuncturist," "licensed acupuncturist," "oriental medical practitioner"; the letters "L.Ac.," "R.Ac.," "A.P.," or "D.O.M."; or any other words, letters, abbreviations, or insignia indicating or implying that he or she practices acupuncture unless he or she is a holder of a valid license issued pursuant to ss. 457.101-457.118; (Emphasis supplied) It was stipulated that witnesses for the Respondent Board of Acupuncture would testify that "A.P." as employed in Section 457.116 (1) (b), Florida Statutes, means "acupuncture physician."1
The Issue Whether proposed rule 64B16-27.830 of the Board of Pharmacy (Board) is an invalid exercise of delegated authority pursuant to Section 120.52(8), Florida Statutes?
Findings Of Fact Respondent, Board of Pharmacy is the state entity charged with regulating the practice of pharmacy in the State of Florida pursuant to Section 20.43 and Chapters 456 and 465, Florida Statutes. Petitioner, the FMA, is organized and maintained for the benefit of the approximately 16,000 licensed Florida physicians who comprise its membership. One of the primary purposes of the FMA is to act on behalf of its members by representing their common interests before various governmental entities in the State of Florida, including the Department of Health and its Boards. Intervenors comprise 33 medical societies representing physicians licensed pursuant to Chapters 458 and 459, Florida Statutes. The membership totals for each of the Intervenors is listed in Petitioner's Exhibit 1. A primary purpose of each of the Intervenors is to act on behalf of its membership by representing their common interests before the various governmental entities of the State of Florida, including the Department of Health and its Boards. The Proposed Rule The text of the proposed rule is as follows: 64B16-27.830 Standards of Practice - Drug Therapy Management. through (3) No change A pharmacist may dispense a drug pursuant to a prescription where the practitioner indicates on the prescription "formulary compliance approval" either in the practitioner's own handwriting or preprinted with a box where the practitioner indicates approval by checking the box when: The pharmacist receives a formulary change as a consequence of the patient's third party plan or Medicaid. The product that the third party formulary designates as its preferred product is a therapeutic equivalent for the prescribed product. A therapeutic equivalent is a product that is in the same therapeutic class as the prescribed drug. The pharmacist, within 24 hours of the formulary compliance substitution, shall provide to the practitioner either in writing or by facsimile a statement indicating that the pharmacist engaged in formulary compliance and the therapeutic equivalent that the pharmacist dispensed. The pharmacist has complied with the requirements of Rule 64B16-27.530 with regard to the notification to the patient. The pharmacist may make adjustments in the quantity and directions to provide for an equivalent dose of the preferred formulary therapeutic alternative. (5)(4) No change. Specific authority 465.005, 465.0155 F.S. Law implemented 465.003(13), 465.0155, 465.022(1)(b) F.S. Section 465.005, Florida Statutes, listed as specific authority, provides the Board's general rulemaking authority. Section 465.0155, Florida Statutes, listed as both specific authority and law implemented, directs the Board to adopt by rule standards of practice relating to the practice of pharmacy. Section 465.003(13), Florida Statutes, listed as law implemented, defines the practice of pharmacy. Section 465.022(1)(b), Florida Statutes, listed as law implemented, provides: The board shall adopt rules pursuant to ss. 120.536(1) and 120.54 to implement the provisions of this chapter. Such rules shall include, but shall not be limited to, rules relating to: . . . . (b) Minimum standards for the physical facilities of pharmacies. The Rulemaking Process On October 22, 2004, in Volume 30, Number 43, Florida Administrative Weekly, the Board published its Notice of Development of Proposed Rule 64B16-27.830, entitled "Standards of Practice - Drug Therapy Management." On October 29, 2004, the FMA requested a rule workshop. On November, 19, 2004, in Volume 30, Number 47, Florida Administrative Weekly, the Board published a notice of a rule workshop on the proposed rule to be held December 7, 2004, in Jacksonville, Florida. On December 7, 2004, the Board held a rule workshop on the proposed rule. On December 17, 2004, in Volume 30, Number 51, Florida Administrative Weekly, the Board published a notice of withdrawal of the proposed rule. On April 29, 2005, in Volume 31, Number 17, Florida Administrative Weekly, the Board published the same rule language again, this time as a proposed rule. On April 29, 2005, the FMA requested a rule hearing. On May 12, 2005, Suzanne G. Printy, Chief Attorney for the Joint Administrative Procedures Committee (JAPC), sent to Ann Cocheu, Assistant Attorney General for the Board of Pharmacy, a letter indicating that she had "completed a review" of the rule and questioning the Board's authority to promulgate the rule. On May 20, 2005, in Volume 31, Number 20, Florida Administrative Weekly, the Board published a notice of a rule hearing on the proposed rule to be held June 14, 2005, in Tampa, Florida. On June 14, 2005, the rule hearing was held before the Board. At that time, several individuals spoke in opposition to the proposed rule. The Board voted to conduct a further public meeting with respect to the proposed language. On July 14, 2005, F. Scott Boyd, Executive Director and General Counsel for JAPC sent to Ann Cocheu a letter advising her of the deadlines applicable to the rulemaking process. Specifically, Mr. Boyd's letter stated: According to our records, the above-styled rule was noticed in the Florida Administrative Weekly on April 29, 2005. Paragraph 120.54(3)(e), F.S., requires that rules be filed for adoption not more than 90 days from the date of the original notice unless specified circumstances prevail. The 90-day period for filing the rule expires on July 28, 2005. If you intend to adopt the rule, we remind you that paragraph 120.54(3)(d), F.S., requires that if the rule has not been changed since the rule was filed with the Committee, or if the rule contains only technical changes, you must file a notice to that effect with this Committee at least 7 days prior to filing the rule for adoption. If any change has been made in the rule, other than a technical change, you must publish a notice, and file a copy with the committee, at least 21 days prior to filing the rule for adoption. If the rule is not filed within 90 days, and if an exception is not applicable, you must notice withdrawal of the rule. Any further action to adopt the rule must comply with the rulemaking procedures of § 120.54, F.S. Please advise us of any exceptions which apply to the rule so that we may keep our records current. On July 21, 2005, a paralegal from the Office of the Attorney General wrote to Suzanne Printy at JAPC and requested to "toll" the proposed rule. The July 21, 2005, letter advised that the Board had scheduled a review of the rule at a committee meeting to be held on August 15, 2005. While the July 21, 2005, letter refers to a copy of the meeting notice for August 15, 2006, no notice for the meeting is included in the record. At no time did JAPC notify the Board that an objection to the proposed rule was being considered. On August 15, 2005, the Board's Rules Committee met again to review the proposed rule. Minutes from the committee meeting reflect that the Rules Committee reviewed letters from the Florida Medical Association and the Chair of the Osteopathic Board of Medicine in opposition to the rule. These written materials, however, are not included in Respondent's Exhibit 1, which purports to be the Board's entire record with respect to the rulemaking proceedings for amendments to Rule 64B16-27.830. The Executive Director of the Board acknowledged receiving letters from Laurie Davies, M.D., Chair of the Board of Medicine and from the Coalition to Protect Health Care Access, representing several patient advocacy organizations expressing opposition to the proposed rule. These documents, likewise, are not in the Board's rulemaking record. The minutes of the August 15, 2005, meeting indicate that the Committee voted to hold the rule until statutory authority was obtained to enact it. Ms. Poston, the Board's Executive Director, was to send a letter to the Attorney General's office asking for a formal opinion regarding the Board's statutory authority. There is no indication in the record of any activity with respect to the proposed rule from August 15, 2005, until April 26, 2006, when Suzanne Printy wrote to Reginald Dixon, Assistant Attorney General, regarding its status. Her letter states in part: On July 21, 2005, the Office of the Attorney General, Administrative Law Bureau, notified this office that the board was tolling the 90 day time limit for adoption of those amendments in order to accommodate review of the amendments by this Committee. That original 90 day time limit would have expired on July 28, 2005. As of this date, we have not received any proposed revisions or notices of change in response to my concerns. Please be aware that if I have not received a notice of change or a notice of additional public hearing on the amendments within the next two weeks, I will have to conclude that my review of the rule is complete. The tolling of the adoption will then come to an end, and the board will have 7 days within which to change, adopt or withdraw the amendments. On May 19, 2006, in Volume 32, Number 20, Florida Administrative Weekly, the Board noticed an additional public meeting on the proposed rule to be held June 6, 2006, in Fort Lauderdale. A copy of the notice was provided to Suzanne Printy on May 11, 2006, one day after the two-week period set out in her letter of April 26, 2006, expired. Nothing in the Notice of Public Hearing for the June 6, 2006, public hearing gives any indication that this will be the final public hearing related to proposed amendments to Rule 64B16-27.830. On May 22, 2006, Suzanne Printy acknowledged receipt of the Notice of Public Hearing published May 19, 2006. In a letter addressed to Reginald Dixon, she stated: Please be advised that at the conclusion of the hearing, presumably June 6, 2006, the Board of Pharmacy will have 45 days from the conclusion of the hearing, or until July 21, 2006, within which to either publish a notice of change, publish another notice of public hearing, or to adopt the rules. On June 6, 2006, the rule hearing was held. The Board did not publish a notice of change, publish another notice of public hearing or adopt the proposed rule by July 21, 2006. Nor did the Board publish any notice that would indicate the June 6, 2006, hearing was intended to be the last public hearing on the proposed rule. However, Rebecca Poston, Executive Director for the Board of Pharmacy, testified that the Board voted to "move forward" with the rule. On July 20, 2006, Reginald Dixon advised Suzanne Printy of the Board's consideration of JAPC's concerns regarding the proposed amendments to Rule 64B16-27.830, and stated that the Board believed the amendment to the rule was authorized by the 1999 change to Section 465.003(15), adding "other pharmaceutical services" to the definition of the practice of the profession of pharmacy. Mr. Dixon stated that "The Board believes that this explanation addresses JAPC's concerns regarding the 64B16- 27.830(4), F.A.C., and has voted to go forward with the promulgation of the rule." On August 11, 2006, Ms. Printy again wrote to Mr. Dixon, reiterating JAPC's concerns about the rule: This rule authorizes pharmacists to dispense drugs from the same therapeutic class as the prescribed drug, pursuant to a prescription where the practitioner authorizes on the prescription "formulary compliance approval." Please explain whether a "therapeutic equivalent" of a prescribed drug which is in the same "therapeutic class" constitutes a generic equivalent. If a "therapeutic equivalent" of a prescribed medication does not constitute a general generic equivalent, please explain why changing the practitioner's prescription does not violate the following prohibition in s. 465.003(13), F.S.: However, nothing in this subsection may be interpreted to permit an alteration of a prescriber's directions, the diagnosis or treatment of any disease, the initiation of any drug therapy, the practice of medicine, or the practice of osteopathic medicine, unless otherwise permitted by law. On August 14, 2006, the FMA filed its petition to challenge the proposed rule. On August 30, 2006, Mr. Dixon wrote to Ms. Printy advising that a "therapeutic equivalent" is not a "generic" equivalent." He advised that the Board was relying on the "other pharmaceutical services" portion of Section 465.003(13) as authority for the proposed rule. The Contents of the Rule There is no generally accepted definition of "therapeutic equivalent" or "therapeutic class." The proposed rule simply states: "The product that the third party formulary designates as its preferred product is a therapeutic equivalent for the prescribed product. A therapeutic equivalent is a product that is in the same therapeutic class as the prescribed drug." The Board of Pharmacy did not conduct any research or determine whether any studies existed that examined the safety, benefits or detriments of following the course of conduct permitted by the proposed rule. Likewise, no studies were conducted regarding the definition of "therapeutic equivalent." A "generically equivalent drug product" is defined by statute as "a drug product with the same active ingredient, finished dosage form, and strength." § 465.025, Fla. Stat. Section 465.025(6) allows the Boards of Pharmacy and Medicine to establish a formulary of generic drug type and brand name products which the boards determine "demonstrate clinically significant biological or therapeutic inequivalence and which, if substituted, would pose a threat to the health and safety of patients receiving prescription medication." No pharmacist may substitute a generically equivalent drug product for a prescribed name brand product, if the brand name drug or generic drug is included in the formulary established by the Boards of Medicine and Pharmacy. § 465.025(6)(b), Fla. Stat. Thus, there are instances where even drugs having the same active ingredient, finished dosage form, and strength cannot be substituted for a brand name drug prescribed by a health care practitioner. According to John O'Brien, The United States Food and Drug Administration defines "therapeutic equivalent" to mean drugs that contain the same active ingredients and route of administration and strength; and they are assigned by the FDA the same therapeutic equivalence codes starting with the letter "A." There is no indication on the record presented that the Board's definition of therapeutic equivalent, i.e., a product in the same therapeutic class, is tied to or consistent with the Food and Drug Administration's use of that term. Formularies differ based upon the third party entity developing the formulary. As a consequence, a drug may be designated as part of different therapeutic classes, depending on the persons making up the formulary. For example, the drug Digoxin is listed on the Capital Health Plan formulary as an anti-eurhythmic, while it is listed under Blue Cross Blue Shield's formulary as a cardiac glycoside. The drug can be used for both purposes. Similarly, drugs with different side effects and contra-indications may be listed under the same class under a particular formulary. There is a group of blood pressure drugs known as angiotensin receptor blockers (ARBs). These drugs have a low side effect profile. There is another group of blood pressure medications called ACE inhibitors. These drugs have a higher side effect profile than ARBs. Under Florida's Medicaid formulary, ACE inhibitors and ARBs are both in the hypotensive category of drugs, as are beta blockers. Some studies suggest that beta-blockers may either mask the symptoms of or cause diabetes. Likewise, beta blockers should not be taken by patients who have asthma. It is possible, should the proposed rule be adopted, that a physician would prescribe a drug with the chemical make-up of an ARB and check the formulary compliance box thinking only another ARB could be substituted. Florida's Medicaid formulary, however, would allow a pharmacist to substitute either an ACE inhibitor or a beta-blocker for the originally prescribed ARB. This substitution could have significant negative effects on patient care. The proposed rule also removes any requirement the pharmacist currently has to speak to the prescribing physician before substituting a drug on the compliance formulary for the drug specified by the physician. Instead, the pharmacist need only notify the physician, in writing or by facsimile, within 24 hours after the substitution, that the pharmacist has engaged in formulary compliance and what "therapeutic equivalent" has been dispensed to the patient. While pharmacies keep records regarding drugs already prescribed to patients, those records are limited to those medications dispensed by that pharmacy. They would not necessarily have access to patient records indicating problems with another drug. By the time the physician knows of a substitution made by a pharmacist, the patient may have already received, and used, a medication that is not consistent with that person's particular needs.
