Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the parties' stipulated facts, the following facts relevant to this rule-challenge proceeding are found: Upjohn operates a number of home health agencies throughout the State of Florida, as well as in other states. Prior to 1975, a patient served by a proprietary home health agency could not obtain reimbursement under the Medicare program. Such agencies were not able to obtain a Medicare "provider number" unless they were licensed under State law. In 1975, the Legislature enacted the Home Health Services Act, Chapter 400, Part III, Florida Statutes, providing for the licensure of proprietary home health agencies. On July 1, 1977, the "establishment of a new home health agency" became one of the projects subject to Certificate of Need review. HRS's rules pertaining to Certificate of Need review were amended in October of 1977, to include the "establishment of a new home health agency or a new subunit of an agency" as projects subject to review. During the rule adoption process, HRS specifically considered the suggestion that expansions of service areas by existing home health agencies without new facilities be subject to Certificate of Need review. This suggestion was rejected on the belief that such a requirement was not statutorily authorized. Prior to 1982, officials within the Office of Community Medical Facilities (OCMF), the office responsible for the Certificate of Need program, generally took the position that the mere geographical expansion of services by an existing certificated and licensed home health agency did not require further Certificate of Need review as long as additional physical facilities were not contemplated. The Office of Licensure and Certification (OLC) did, on occasion, require home health agencies to build new offices if it was found that an agency was geographically overextending itself in terms of appropriate supervision or quality of care concerns. In January of 1980, the Director of the OLC took the position that petitioner's licensed Marion County home health agency could not provide services to Citrus County residents without applying for and obtaining a Certificate of Need, and thereafter having its license extended to operate in Citrus County. In September of 1981, Upjohn was informed by the OCMF that a Certificate of Need was not required for the provision of home health services from its Jacksonville, Duval County, office to patients residing in Nassau, Baker or St. Johns Counties, as long as subunits or other physical facilities were not opened in those counties. The above four counties were all located within the same health service area. Thereafter, in October of 1981, Upjohn requested advice from the OLC as to whether it could provide services from its Broward County office to patients in Palm Beach County. Noting that it was the understanding of the OLC that a Certificate of Need would be required to authorize any expansion of home health services, the OLC referred Upjohn's request to the OCMF. The matter was thereafter referred to the HRS legal staff. James M. Barclay, an attorney with the Office of Health Planning and Development, issued Legal Opinion 82-2 on the issue of whether a Certificate of Need was required before a home health agency, licensed to operate in certain counties within a health service area, could provide services to additional counties within the same health service area. It was Mr. Barclay's opinion that a licensed home health agency could provide services to additional counties within the same health service area without an additional Certificate of Need. (See Attachment A) Based on this opinion, the OLC informed Upjohn that it could not expand its Broward County services to Palm Beach County without Certificate of Need review since the two counties were located in separate health service areas. The Deputy Assistant Secretary' for Health Planning and Development, Gary J. Clarke, disseminated the Barclay opinion to the directors of the Health Systems Agencies. In his cover letter, dated April 7, 1982, Mr. Clarke noted that "the memorandum clarifies existing law; namely, that a home health agency in one county may offer services in an adjoining county without obtaining a CON." It is further noted that ". . .this office and perhaps many HSAs have proceeded under the mistaken assumption that a CON was required in every case where an existing home health acency desired to provide services in a county it was not pre viously providing services in. . . It appears that the legal result of this question is due to inartful drafting in both the statutes and the rules. Nonetheless, this opinion -- while neither preferable nor what we had assumed to be correct -- appears to accurately state the applicable law.". . . (See Attachment B) Based upon the Barclay opinion and the Clarke cover letter, Upjohn informed its various Florida office managers that its existing home health agencies, though licensed only for a particular county, could deliver services in additional counties within the home health service area without the need for further Certificate of Need review. Subsequent to the Barclay opinion and the Clarke distribution letter, there were changes in the Certificate of Need law, as well as leadership changes within HRS. The former Health Systems Agencies were abolished and replaced with District Councils, local involvement with the Certificate of Need process was virtually eliminated and the "health service areas" were changed to "districts." some with different boundaries. These changes prompted the Director of the OLC, Jay Kassack, to request of the new Deputy Assistant Secretary a clarification of the policy regarding Certificate of Need review for expansion of home health agency service areas. In order to be consistent with regard to home health agencies and to make clearer to HRS officials, applicants and the public how HRS would be applying the statutes and rules, HRS developed a "home health agency review matrix." (See Attachment C). Basically, the review matrix limited geographical expansion of services (without Certificate of Need review) to those counties in which the applicant could demonstrate that the criteria for review had been applied by the appropriate reviewing bodies, either the OCMF or the former local Health Systems Agencies. The matrix was developed in February or March of 1983, and was distributed internally within HRS. Upjohn had several license applications for geographical expansion of services in early 1983. While advised in late March that a "revised ruling" was going into effect, Upjohn had no knowledge of the development of the review matrix. By letter dated April 8, 1983, Upjohn was advised that its license application to expand services from its Pinellas County office to the Counties of Hillsborough, Manatee and Pasco was denied for failure to obtain a Certificate of Need or exemption from review. By "OPLC Policy Letter No. 33-83" dated April 8, 1983, addressed to "All Home Health Agencies" and "Home Health Agency Association," the Director of the OLC, Jay Kassack, gave notice of the OLC position with regard to expansion of services in counties other than those noted on a home health agency license. The addressees were advised that "it is illegal to provide services in any area not covered under your current license." (See Attachment D). This policy letter was written in direct response to the review matrix. It was not until May, 1983, that Upjohn became aware of the existence of the review matrix. By letter dated May 5, 1983, the Medical Facilities Consultant Supervisor, Nathaniel ,Ward, advised counsel for Upjohn that, "we have a matrix which we must apply (Exhibit 1) when determining whether a Certificate of Need is required for expansion into the service area." In reliance upon the Barclay opinion and the Clarke memorandum, Upjohn extended the provision of home health services from its Marion County office into Citrus, Lake and Sumter Counties from and after August, 1982. Prior to August 1, 1983, Upjohn requested the OLC to add to its Marion County home health agency license the Counties of Citrus, Lake and Sumter. This request was denied by the OLC on the ground that Upjohn had failed to obtain a Certificate of Need or exemption from review for those counties. On August 30, 1983, HRS issued an Administrative Complaint seeking to revoke Upjohn's Marion County license, or impose other penalties, on the ground that the Marion County home health agency had been providing home health services in Citrus and/or Lake Counties without a license that lists those counties on its face.
The Issue Whether Respondent committed the violations alleged in the Amended Administrative Complaint, and, if so, what penalty should be imposed.
Findings Of Fact At all times material hereto, Faith Home operated as a home health agency with its principal place of business located at 3202 North Howard Avenue, Tampa, Florida. Faith Home's license number is 299991078. Joni Miller is a registered nurse (RN) surveyor for AHCA. Ms. Miller holds an associate of arts degree in nursing and practiced as an RN for almost 30 years. She practiced as an RN in the areas of coronary care, research, home health, cardiology, and sports medicine. Ms. Miller has completed the requisite classes in surveyor training and is a certified home health surveyor. Ms. Miller was received without objection as an expert in nursing. Jeanette Peabody is an RN who worked for AHCA as an RN specialist. Ms. Peabody obtained an associate of arts degree in applied science with a major in nursing. In 1995, Ms. Peabody was licensed as an RN in Pennsylvania. Thereafter, she worked for various health-related entities, including (but not limited to) two home health agencies and the Pennsylvania Department of Health. She became licensed as an RN in Florida in 2004. Ms. Peabody became a certified surveyor after receiving the appropriate training. While working for AHCA, Ms. Peabody conducted surveys of health care facilities and agencies for compliance with the applicable rules and regulations. Ms. Peabody was received as an expert in nursing. Beverly Eubanks is the chief operating officer for Faith Home, a position she has held for 15 years. Ms. Eubanks is an RN, who received her associate's degree in nursing from Manatee Community College in 1990. Faith Home primarily serves the underprivileged, low-income families, and public housing residents. Celina Okpaleke is the sole owner of Faith Home and has been its owner since 1997. Ms. Okpaleke is a licensed physician assistant, having been licensed in 1996. Her duties at Faith Home are to oversee its day-to-day management. Prior to the February 2011 survey, Ms. Okpaleke had not been going to the Faith Home office every day.2/ The methodology for any survey includes the following: the team arrives at the location; the team is introduced to the survey entity's staff members; the team explains to the entity's staff members the nature of the survey, including a list of items required for the team to conduct the survey; and there is a request for work space. Upon receipt of the required items, the team reviews the material, conducts interviews, conducts visits with patients at their various locations, interviews staff, and reviews the accumulated information. In the event the surveyors have any questions, the surveyors will make requests to the appropriate entity staff, and additional materials may be provided to the surveyors. The survey findings are reviewed with the staff, and, at the end of the survey, the team conducts an exit conference with the appropriate staff. Any entity staff is welcomed to be present. In the event any documentation is missing, the entity is allowed to provide that material after the surveyors have left the facility. In those instances when an agency is out of compliance, AHCA will make a return visit to ensure the agency has corrected the deficiencies. There was credible testimony that this survey procedure was the same procedure used during the Faith Home survey and follow-up survey. It is recognized as a good nursing practice to document in a patient's record or chart the care, treatment or other services being provided to a patient. This includes all medical and medically-related support services. Faith Home has numerous policies that govern how it is to be run. A few of the pertinent policies are set forth below. "Patient Visits," last revised on December 1, 2010, provides: All patients will be seen according to physician's orders and in compliance with the plan of treatment. At each visit, a progress or visit note will be completed. On the visit note (progress not [sic]/visit note) the patient's progress toward meeting established goals shall be documented. In addition, the patient's response to treatment will be documented as well as any other pertinent assessment information. All patient visits will be performed according to a pre-established schedule. If there is [sic] any changes in visit schedule, time or staff, the patient will be consulted prior to the change. "Initial Assessment Process for Medicare [P]atients," last revised on December 1, 2010, reflects in pertinent part: Upon admission, each patient will receive initial assessment in order to determine patient's needs. To achieve this goal, the following important processes must be performed: * * * More in depth functional assessments performed by a qualified PT [physical therapist] or OT [occupational therapist] are available to those patients who need one. These assessments are documented on the appropriate PT/OT Evaluation form. * * * Initial assessments will be performed within 48 hours of referral or within 48 hours of a patient's return home from an impatient [sic] stay, or on the physician-ordered start of care [SOC] date. MSW will make assessments within one (1) week of referral based on the patient's priority level as determined by RN and/or MD, PT, ST, and OT will make evaluations within one (1) week of referral based on the patient's priority level as determined by the RN and/or MD. Administration/start of care assessment data must be completed within five (5) calendar days of the SOC date. The agency then has seven (7) calendar days from the SOC date to encode the data, check for errors and lock the data for transmission. The data will than [sic] be transmitted on a monthly basis; data minimum no later than the month[.] "Oasis Data Set," last revised on December 1, 2010, reflects in pertinent part: The agency has implemented the OASIS data set and is actively collecting data as of March 15, 1999. Current assessment data and notes utilized by the agency have been incorporated into the OASIS core data. OASIS requirements apply to all patients . . The only exclusions are as follows: Patients under the age of 18 Patients receiving maternity services Patients receiving ONLY no skilled services such as personal care, homemaker, chore, or companion services. OASIS data are collected at the following points: Start of Care * * * Resumption of Care following impatient [sic] stay * * * Follow-up/Recertification * * * 4. Follow-up/SCIC * * * 5. Discharges and Death * * * Do not administer OASIS data set as an interview. Questions are meant to be part of the professional opinion of the staff member performing the assessment, based upon the evaluation of the patient. Be sure to incorporate agency assessment material (Discharge Summary, etc.) with the OASIS data set. The OASIS data set does not constitute a complete assessment. "Policies & Procedures for Accectance [sic] of Patients/Cases" last revised on December 1, 2010, reflects in pertinent part: B) Qualifying Criteria for Accepting a Patient * * * 7) Client must have a telephone or use of phone in close distance for emergency situation. Running water and electricity are also important factors for providing adequate care in the home. * * * D) Criteria for Acceptance of Skilled Nursing Clients * * * A copy of MD orders may accompany Skilled Nursing Admission. If nurse [is] able to receive a faxed copy of orders, Faith Home Health will fax them. If not, a copy of the order will be sent to patient's residence with supplies. "Policies & Procedures for Admissions," last revised on December 1, 2010, reflects in pertinent part: Admission & Assessment Policies & Procedures * * * 7) All documentation will be kept in the patient's Faith Home Health folder. "Caregiver Job Descriptions," last revised on December 1, 2010, reflects in pertinent part: Registered Nurses * * * Activities may include: * * * 11. Recording pertinent information. * * * LICENSED PRACTICAL NURSE * * * Activities may include: * * * 7. Recording all pertinent observations and treatments[.] * * * Certified Nurse Aide * * * Activities may include: * * * 22. Keeping a record of observations and care given[.] Home Health Aide * * * Activities may include: * * * 10. Maintaining a proper record of activities. The February 2011 Survey In early February 2011, Ms. Peabody was the lead surveyor in the annual Florida licensure recertification survey conducted at Faith Home (FH survey). Ms. Miller was also a member of the FH survey team. This FH survey team conducted reviews, interviews, home visits, and conferences over the course of three days. During the February 2011 FH survey, Ms. Peabody requested and was provided Faith Home's records for patient 5. The home health certification and plan of care (HHC/POC) for patient 5 provided the SOC date as December 14, 2010. The HHC/POC ordered skilled nursing visits to occur one to two times a week for nine weeks. According to the HHC/POC, at each visit, the skilled nurse was to perform various treatments with respect to patient 5's multiple medical issues, including assessing vital signs, cleaning a toe wound and applying a dressing, instructing the patient on diet and nutrition, and reporting any changes to the "MD [medical doctor] & supervisor ASAP [as soon as possible]." Patient 5 did not receive skilled nursing visits during the weeks of December 19 or 26, 2010. During the following skilled nursing visits, patient 5 did not receive wound care treatment: December 13, 2010, and January 6, 13, 18, and 21, 2011. Additionally the HHC/POC called for a PT to evaluate and treat patient 5. There were orders that the PT was to administer therapeutic home care exercises in order to increase patient 5's functional abilities. Patient 5 did not have the physical therapy evaluation or treatment as directed. There was no PT evaluation or treatment documentation for patient 5, and there was no documentation that the MD or supervisor was notified that the treatments did not take place. Following the review of the documentation provided, Ms. Peabody afforded Faith Home the opportunity to provide any additional documentation they had with respect to the care and treatment provided to patient 5. No additional documentation was forthcoming to the surveyors. Ms. Eubanks contended that patient 5 was seen by a nurse during the week of December 18, 2010. She testified that there was no wound care treatment necessary for patient 5 because the wound had healed. Ms. Eubanks "believe[d]" the wound had resolved by December 9, 2010, and that no PT was ordered because patient 5 was still "refusing it." Ms. Eubanks also testified that no wound care treatment was required because it was not on the OASIS data collection sheet. Ms. Eubanks's testimony is not credible as the HHC/POC is clear as to the physician's order regarding patient 5's toe wound care and the PT evaluation and treatment. The OASIS data form may be the methodology "to track your [Faith Home] benchmarks and your progression to see how you rank" among other home health agencies, but it does not take the place of a HHC/POC executed by a physician. Further, although a patient always has the right to decline a health care service, that response does not preclude the physician from ordering the particular care to be provided. Based on the violations observed and documented during the February 2011 survey, Ms. Miller went back to Faith Home in June 2011 to follow up on the areas of concern. Ms. Miller reviewed five patients at the June 2011 revisit, one of whom was part of the February 2011 survey, patient 5.3/ Patient 5J's HHC/POC, signed on April 16, 2011, ordered skilled nursing visits to occur one to two times a week for nine weeks. According to the HHC/POC, at each visit, the skilled nurse was to perform various treatments with respect to patient 5J's multiple medical issues. The HHC/POC included an assessment of patient 5J's vital signs including the endocrine, cardiac, and neuro, with instructions regarding the disease process and management; fall prevention; diet and nutrition; and skin, nail, and foot care. It also included an order to report "any changes or concerns to [the] MD & supervisor ASAP." This April 16, 2011, HHC/POC also ordered a home health aide (HHA) to provide services two to three times a week for nine weeks for patient 5J. The HHA was to assist patient 5J with the activities of daily living (ADL). During the follow-up survey, Ms. Miller was unable to find documentation of any nurse's treatment for patient 5J during three of the nine-week certification period. The skilled nursing visit notes on April 21 and May 5, 2011, failed to reflect any assessment of patient 5J's vital signs, including the cardiovascular system. The lines drawn through certain boxes do not indicate review or assessment of patient 5J. Further, there was no evidence of any HHA visits during the seventh week through the ninth week of the certification period for patient 5J. This totaled six missed HHA visits for patient 5J. With respect to patient 7, the HHC/POC, with a SOC date of December 18, 2010, ordered a PT to evaluate and treat patient 7. The PT was to administer a therapeutic home care exercise program to patient 7 to increase strengthening.4/ The HHC/POC also ordered the skilled nurse to "report any changes and or concerns to the MD & RN ASAP." Patient 7 did not receive the physical therapy evaluation until December 29, 2010, 11 days after it was ordered. The PT's care plan for patient 7 involved physical therapy two times a week for three weeks. At the time of the FH survey, there was no documentation that the physician was notified of the delay or the reason for the delay in performing the PT evaluation on patient 7. Ms. Eubanks provided a "Communication/Status Report" (C/SR) pertaining to patient 7, dated January 3, 2011. Although this C/SR purports to put Faith Home services (including the PT) on hold until the patient returns from being with the "daughter and family for a couple of weeks," it is at odds with the credible evidence presented by AHCA. The physical therapy documentation reflects that patient 7 was provided PT services twice during the week of January 9, 2011, just one week after Faith Home was "notified" the patient would be gone "for a couple of weeks." Additional physical therapy documentation reflects that service was also provided twice during the week of January 17, 2011.5/ Ms. Eubanks's contention that this C/SR was faxed to patient 7's physician to notify him/her of the change in plans is not credible. There was no testimony or documentation of the physician's actual fax number or the actual number to which this C/SR was purportedly faxed, nor did the person who actually faxed the C/SR testify. Patient 11's HHC/POC, signed December 15, 2010, ordered skilled nursing care two to three times a week for nine weeks. At the end of the HHC/POC orders, there is an order to "Report any changes and or concerns to MD & supervisor ASAP." Although it is noted on the HHC/POC that the "Certification period [was] extended due to [a] procedure on [the] left second toe," there was no actual doctor's order to provide wound care to patient 11's left second toe. There is, however, a "60 Day Summary" notation which states: Wound to [the] right great toe healed without complication. Skilled nurse currently caring for left second toe. No S&S of infection noted. Blood pressure and blood sugar has remained stable through out [sic]. This summary statement is not an order for care to patient 11's left second toe. When a nurse observes a new wound in need of care, the nurse should immediately document the toe wound and contact the physician. The burden then falls to the physician to decide what, if any, order is appropriate for the wound care. This recording/reporting process was not followed, and there was no documentation of patient 11's wound to the left second toe. However, the skilled nursing visits record that wound care was provided to patient 11's left second toe. Ms. Eubanks testified that patient 11's podiatrist, Dr. Rappaport, wrote an order to discontinue wound care to the right great toe because it had healed. Other than the 60-day summary note found in the HHC/POC signed December 15, 2010, there was no order signed by Dr. Rappaport that discontinued care to the right great toe, and no order for care to patient 11's left second toe was introduced at hearing. Although Ms. Eubanks testified that patient 11 had the left second toe nail bed removed, she never testified that she was present when that nail bed was removed or that she was the attending skilled nurse who provided the post nail bed removal care. Her testimony is at odds with the credible evidence presented by AHCA. Patient 13's HHC/POC, with a SOC date of December 21, 2010, ordered skilled nursing care one to two times a week for six weeks with specific skilled nursing tasks to be performed. There was no documentation that a skilled nurse provided care during the weeks of December 26, 2010, or January 9, 2011. Patient 13's HHC/POC also ordered a physical therapy evaluation. As part of the HHC/POC, the PT was to administer therapeutic home care exercises to increase functional strength, range of motion (ROM), balance and endurance, and transfers and to report "any changes and or concerns to [the] MD & RN CM [case manager] ASAP." Patient 13's physical therapy evaluation was not conducted until January 5, 2011, roughly two weeks after it was ordered. The physical therapy care plan directed that patient 13 was to be seen two times a week for the first week and three times a week for the next four weeks. Although there are "missed visit reports" that document a PT's attempt to see the patient on six different January 2011 dates, there is no credible evidence that patient 13's physician was notified of those six missed visits as soon as possible. Ms. Eubanks points to a January 24, 2011, C/S Report (January note) for the reason the PT missed the visits with patient 13. This January note reflects that patient 13 had gone to Georgia to be with her daughter and would return the end of January 2011 or the first Tuesday in February. This January note prompts more questions than answers because it does not reflect exactly when patient 13 went to Georgia and only asks that the "nursing services" not the physical therapy services be held until patient 13's return. The missed visit reports indicate that a PT went to the residence and knocked on patient 13's door, but no one came to the door. Although the missed visit reports provide space for the patient's name (appropriately redacted), the date (of service), the discipline (in this case "PT" was checked), the reason (for the missed service; in this case phrases to the effect: drove by, no one answered door, etc.), and who completed the missed visit report (the PT's signature is illegible), none of these missed visit reports have a checkmark (or any indication) next to the "Y," which signifies that the physician was notified. Ms. Eubanks's posturing that these missed visit reports were left in an inbox at a public housing building facility so that the physician was notified is not credible. Ms. Eubanks also testified that patient 13 did not have a telephone, and "so there was no other way to contact [her] but actual face to face." This statement is in direct contradiction to Faith Home's policy that a client must have a telephone or that a phone be close by for communication purposes. Further, there was evidence that two skilled nursing visits took place: one on January 26, 2011, and the other on January 29, 2011, just two and five days, respectively, after the January note stating patient 13 would be gone until the end of January or the first of February. Patient 2's HHC/POC, signed September 13, 2010, ordered skilled nursing visits to occur up to seven days a week, and the nurse was to provide a complete assessment with each shift. According to the HHC/POC, the skilled nurse was to, among other things, monitor patient 2's GI status and provide G-tube care every shift, weigh the child weekly on Mondays when scales became available, and document it in the mom's notebook. Based on patient 2's condition, care had to be taken that the patient did not become dehydrated or lose a lot of weight. There was no documentation of patient 2's weight being recorded by the Faith Home skilled nurses during the scheduled Monday visits. Patient 2's records provided to the surveyors during the February 2011 FH survey failed to reflect documentation as to any G-tube care being provided on every shift. Ms. Eubanks testified that patient 2 was weighed weekly at his school. Based on the phrase in the HHC/POC "when a scale becomes available," Faith Home took the position it was not obligated to secure a scale to ensure it weighed the patient per the HHC/POC. Rather, Faith Home unilaterally decided that, because the Department of Children and Families (DCF) was having patient 2 weighed weekly at school, Faith Home was meeting its obligation. However, this position flies in the face of the physician's order for patient 2. Patient 2's record does not reflect where patient 2's weight was being recorded, either at home or school, nor does it reflect that the physician was being made aware of patient 2's weight on a regular basis. Faith Home did not document the lack of a scale, did not inform the physician that the weight was being monitored by DCF at patient 2's school and did not ensure that the physician was aware of patient 2's weekly weight status. Patient 3's HHC/POC, signed November 30, 2011, ordered an RN to be present 20 hours a day up to seven days per week. Additionally, the skilled nurse was to assess the patient and perform other specific care. One specific task was for patient 3's tracheotomy care to be performed twice a day and as needed.7/ Documentation for patient 3 failed to reflect the tracheotomy care twice a day or as needed between December 20, 2010, and January 22, 2011. Ms. Eubanks testified to patient 3's medical circumstances. Although Ms. Eubanks understood that AHCA's surveyors had patient 3's pediatric notes, she only pulled "random notes" for the "period because they had already copied everything that they wanted to take." Of Faith Home's documents that she discussed, Ms. Eubanks only presented two dates (out of the 34 days alleged in the AAC) that recorded some type of tracheotomy care for patient 3. Hence, her testimony lacks credibility in light of the overwhelming evidence AHCA provided. Patient 6's HHC/POC for the certification period of October 14, 2010, to December 12, 2010, ordered skilled nursing care three to four times a week for nine weeks and also provided for specific disciplines and treatments to be performed. There was evidence that a skilled nurse provided one visit to patient 6 on October 15, 2010; yet, there was no evidence that a skilled nurse provided the minimum number of visits to patient 6 during the remainder of the nine-week certification period. It was noted that two skilled nursing visits were made during the week of November 14, 2010. However, the HHC/POC ordered a minimum of three, up to four skilled nursing visits to be made. Patient 6's HHC/POC also ordered HHA services to be provided two to three times a week for nine weeks. The HHA was to assist patient 6 with ADLs. The HHA failed to provide patient 6 the minimum number of visits during weeks one, two, or three of the certification period. Ms. Eubanks testified that Faith Home could not provide services to patient 6 after October 14, 2010, as patient 6 was admitted to a local hospital. Further, Ms. Eubanks testified that the HHA documentation "has to be incorrect," although she also testified that the Faith Home documents were "true. There has been an error."8/ Ms. Eubanks's testimony is at odds with the credible evidence presented by AHCA. Patient 14's HHC/POC dated January 20, 2011, ordered skilled nursing services to be provided one to two times a week for four weeks then every other week (EOW) for nine weeks. The HHC/POC also ordered that a HHA was to assist patient 14 with ADLs, a PT was to evaluate and treat patient 14, a speech therapist was to evaluate and treat patient 14, and an occupational therapist was to evaluate and treat patient 14. On January 25, 2011, patient 14's medical doctor again ordered the physical therapy and directed the HHA to provide services three times a week for nine weeks. The evidence regarding patient 14 documented two skilled nursing visits missed during the first two weeks of the certification period (January 16, 2011, to March 16, 2011), and there was no evidence of any HHA service visits for the first two weeks of patient 14's certification period. Additionally, patient 14 did not receive three physical therapy visits. Ms. Eubanks testified that patient 14 was in an adult day care setting and that Faith Home missed no less than four skilled nursing visits. The "Missed Visit" reports (MVR) provided by Faith Home purport that patient 14 was in an adult day care setting; yet, that same MVR documentation fails to record that patient 14's physician was notified of the lack of services being provided. Further, the MVR dated (Wednesday) January 26, 2011, reflects that patient 14's daughter "made arrangements to have [patient 14] home next on Thursday by 3 p.m. Understands nurse do [sic] not go to day care." This MVP reflects that the date of the next Faith Home service visit will be February 4, 2011, a Friday, not a Thursday. Also, within the material provided by Faith Home, there is a C/SR dated January 20, 2011. That C/SR records that patient 14 is "requesting a hold on home health aide visit. Daughter will be able to provide service for the next few weeks." Yet, there is also a HHA note dated January 22 or 23, 2011,9/ detailing HHA services provided to patient 14 on that date. The inconsistencies in Faith Home's documentation presented during the hearing are damaging to its credibility as a whole. Patient 15's HHC/POC, dated December 15, 2010, ordered skilled nursing services to be provided two to three times a week for nine weeks. As part of the skilled nursing services, patient 15 was to have her vital signs assessed along with other specific assessments. The HHC/POC also contained an order to "Report any changes or concerns to [the] MD & supervisor ASAP." The evidence presented regarding the skilled nursing visits for November 3 and 5, 2010, failed to reflect patient 15's neurological assessments or any observations by the nurse and also failed to provide the "nursing diagnosis/problem." Other portions to these specific records contain words or phrases to provide information, a number with a percentage sign, a zero (Ø), or simple checkmarks indicating a system was observed or treated. These written words or markings provide clarity to patient 15's completed assessments or status. Patient 15's skilled nursing records for December 29 and 31, 2010, and January 2, 12, and 14, 2011, failed to document one or more of the patient's systems: cardiovascular, genitourinary, neurological, or musculoskeletal. Ms. Eubanks testified that certain portions of patient 15's skilled nursing notes were completed using a method called "charting by exception." According to this method, when the professional leaves an area of the chart blank, it indicates that nothing is wrong with the patient. A review of patient 15's skilled nursing notes simply does not support the use of this methodology. Specifically as an example, on the November 5, 2010, skilled nursing visit note, nothing is checked or notated in the neuro-sensory section; yet, at the "PAIN" section, there is a "Ø" marked through all five lines. If the "charting by exception" method was being used, this area should have been left blank as there was no pain. It is impossible to determine when charting by exception is in place when one area of a record has check marks or specific notations regarding an assessment or status and another section (or sections) is left blank even though the HHC/POC specifically ordered that assessment. There is no base line by which the next skilled nurse would know if there had been a change in patient 15's assessment or status such that her attending physician or the supervisor should be appropriately notified. Ms. Eubanks's testimony is not credible in light of the evidence presented by AHCA. The June 2011 Follow up Survey Both parties presented medical records for Patient 2J. Patient 2J's two HHC/POCs appear to be identical in scope; yet, one was signed on April 25, 2011, while the other was signed on April 27, 2011. Within the HHC/POCs, the doctor ordered skilled nursing services to be provided once in the first week, then one to two times a week for eight weeks. As part of the skilled nursing services, patient 2J was to have her vital signs assessed and other specific assessments completed. The HHC/POCs also ordered a PT to evaluate and treat patient 2J. Ms. Eubanks testified that the PT evaluation was ordered on April 8, 2011, when it "came upon [sic] assessment." However, the HHC/POCs ordering the PT evaluation were not signed until April 25 or April 27, 2011. Patient 2J's actual physical therapy evaluation occurred on April 21, 2011, either four or six days before it was ordered. Faith Home either delayed 13 days in having the physical therapy evaluation completed, or Faith Home obtained a physical therapy evaluation prior to having a physician's order to provide the service. In either instance, Faith Home did not follow its own policies for providing services. Although the PT created a care plan for patient 2J, there is no physician's order directing the physical therapy care plan be used. Further, the physical therapy services were actually performed by a physical therapist assistant (PTA) and provided to patient 2J during weeks four, five, six, and seven of the certification period. An extra PTA visit was noted in week seven. Again, Faith Home provided services that were not in compliance with their own policies. Patient 3J had an April 5, 2011, order for physical therapy to be provided three times a week for six weeks based on her gait instability, her osteoarthritis in her knees, and her degenerative spinal joint disease. There was no evidence of any physical therapy being provided to patient 3J during the applicable certification period. Ms. Eubanks testified that patient 3J's actual care started in February 2011, despite the HHC/POC documentation that it started on March 24, 2011. Ms. Eubanks blamed a nursing supervisor for the wrong start date (March 24, 2011) and confirmed that the difference in start dates would make a difference in the dates of Faith Home services. Even if one were to accept the February 2011, order for physical therapy services, that order is incomplete because it fails to enumerate how many times a week and how many weeks the physical therapy services were needed. It is an incomplete order. Ms. Eubanks's testimony is not credible in light of the evidence presented by AHCA. Patient 4J's HHC/POC contained a SOC date of April 8, 2011. Therein it ordered skilled nursing services to be provided two to three times a week for nine weeks. As part of the skilled nursing services, patient 4J was to have her vital signs assessed along with other specific assessments. Additionally, the HHC/POC contained an order for a PT to evaluate and treat. Ms. Miller was unable to locate any documentation of home health services provided to patient 4J after May 5, 2011 (four missed visits), and there was no evidence that any physical therapy services were provided to patient 4J. Ms. Eubanks testified that patient 4J was in the hospital when Faith Home services were not provided to patient 4J. Although Ms. Eubanks relied on a discharge instruction sheet to make the claim, there is no date on the discharge instruction sheet, and no one testified as to the exact date that patient 4J was admitted to or discharged from the hospital. Ms. Eubanks's testimony is not credible as it relied on an undated discharge instruction sheet. Further, although the physical therapy referral for patient 4J was faxed to the physical therapy agency, that agency never received the referral and never provided the service. Faith Home failed to have a system in place to ensure services ordered by the physician were obtained. Ms. Okpaleke, as the owner of Faith Home, engaged an expert to help Faith Home "correct all the cites . . . and implement a plan of correction . . . to make sure that we were in compliance." Ms. Okpaleke terminated the expert's employment after the summer. Ms. Okpaleke then started monitoring Faith Home's practices and ensured that Faith Home returned to compliance with AHCA's regulations. Ms. Miller's salary at the time of the FH survey was $20.15. Ms. Miller expended approximately 30 hours in conducting the recertification survey of Faith Home. Based on her rate of pay, AHCA expended $1,370.20 for Ms. Miller's services. Ms. Peabody's salary while employed by AHCA during the FH survey was $21.07 an hour. Ms. Peabody expended approximately 42 hours preparing for, conducting, and completing the FH survey. Based on her rate of pay, AHCA expended $1,048.23 for Ms. Peabody's services. Mr. Bronson Sievers is the health facility evaluator supervisor for AHCA. His salary is $19.87 an hour. Mr. Sievers expended approximately ten hours reviewing the statement of deficiencies to determine if the appropriate citations had been used and the appropriate penalty assessed. Based on his rate of pay, AHCA expended $198.70 for Mr. Sieivers services. Mr. Sievers responsibility included the supervision of several AHCA programs and included the home health agencies. Mr. Sievers determined that the repeated violation warranted a Class III violation, which resulted in a $1,000.00 fine because it may affect the clients' well-being and health. Mr. Sievers provided AHCA's interpretation of the fine imposed when a home health agency demonstrates a pattern of failing to provide the specified services to its clients or patients.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Agency for Health Care Administration, enter a final order finding that Faith Home: Violated section 400.484 by committing a Class III violation as identified during the February 2011 survey and found again during the June 2011 survey and imposing an $1,000.00 administrative fine; Violated section 400.474(5) as found in no less than 107 instances when Faith Home failed to provide services ordered by an appropriate authority and imposing a $45,000.00 administrative fine; and Pursuant to section 400.484(3), AHCA shall assess and receive $2,617.13 for the investigation costs associated with this case as evidenced by the time expended by the three agency witnesses. DONE AND ENTERED this 19th day of April, 2012, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 19th day of April, 2012.
Findings Of Fact Lakeview Terrace Christian Retirement Center is a licensed adult congregate living facility located in Altoona, Lake County, Florida (hereafter referred to as Lakeview Terrace) Lakeview Terrace is also licensed to operate a 20-bed skilled nursing facility at the same location. In February, 1982, Lakeview Terrace applied for a license to operate a home health agency to serve only the residents of its facility. The application was referred to the North Central Florida Health Planning Council, Inc., for review and comment pursuant to Sections 381.493-499, Florida Statutes. The North Central Florida Health Planning Council supported Lakeview Terrace's application and recommended a certificate of need be issued by the Department of Health and Rehabilitative Services (hereafter the Department). The staff report of the council contained the following recommended findings of fact: The proposed project is reasonably consistent with the Health Systems Plan. The proposed project would improve continuity of care to residents of Lakeview Terrace and provide a cost-effective alternative to nursing home care at the Center. The proposed project would have no impact on existing home health agencies in Lake County. The proposed project would be financially feasible without altering life care contract charges or levying additional charges. Staff recommends issuance of a Certificate of Need with the following conditions: The council recommended that the certificate of need be issued with the following conditions: The applicant will restrict the proposed service to residents of Lakeview Terrace "Christian Retirement Center" under the life care contract. The applicant will not seek third party financing of the proposed service. The applicant will not levy a separate charge for home health services. On July 14, 1982, the Department, by letter, notified Lakeview Terrace that its proposal to establish a home health care agency was denied. The sole basis for the denial was that the proposed home health agency did not satisfy the requirements of the "Rule of 300" set forth in Subsection (14) of Rule 10- 5.11, Florida Administrative Code, in that existing home health agencies in the area were operating below the 300 average daily census level specified by that rule. The Department also determined that the proposal did not meet the requirements set forth in Rule 10-5.11(14)(b), Florida Administrative Code. (Section 10-5.11(14)(h) sets forth two exceptions to the "Rule of 300"). Lakeview Terrace is presently licensed for 400 residents. It anticipates having between 600 and 700 residents by 1985. The residents are retired individuals and couples. The vast majority of the residents lived outside of Florida prior to retiring and moving to Lakeview Terrace. Ninety- five (95 percent) percent of the residents are over 65 years of age. The residents live in apartment units for which they pay an initial fee or endowment and a monthly maintenance fee. As a part of the agreement entered into between Lakeview Terrace and its residents, each resident receives a full range of services including medical care at a skilled nursing facility. Lakeview Terrace is located in a rural area approximately 15 miles from the nearest home health agency. A home health agency on site would permit many residents who must now be moved to the skilled nursing facility for treatment to remain in their homes with their spouses while receiving treatment. This is beneficial to the patients in that it is not necessary to remove them from their family and familiar surroundings. The patients are then better able to cope with their particular disease. Medically, it is beneficial to an elderly patient to keep them in their homes as long as possible during treatment. There are presently three (3) home health agencies serving Lake County. They are: Central Florida Home Health Agency, Inc. Leesburg Office Park, Suite 406 Leesburg, Florida 32748; Home Health Professional Service, Inc. Post Office Box 750 Leesburg, Florida 32748; Waterman Memorial Hospital 116 MacDonald Avenue Post Office Box 1836 Eustis, Florida 32726. Waterman Memorial Hospital has served less than 12 persons at Lakeview Terrace over the past five to six years. The minimum charge for a one hour visit is $45.00. Over 90 percent of the patients served by Waterman are recipients of Medicare. Waterman's average daily census over the past year has been between 70 and 80 patients. Waterman has no objection to the issuance of a conditional certificate of need to Lakeview Terrace for home health services. Home Health Professional Service has not provided services to any residents at Lakeview Terrace over the past year. Home Health charges $50.00 per visit and 96 percent of its patients receive Medicare. Its average daily census is presently approximately 102. Home Health Professional Service, Inc., does not feel a conditional certificate of need issued to Lakeview Terrace would have any impact on it and does not object to the issuance of such a conditional certificate of need. The third home health agency providing services to Lake County is Central Florida Home Health Agency, Inc. (hereafter Central Florida). Over 90 percent of its patients receive Medicare and its charge per visit is $,40.00. Central Florida has never cared for a patient at Lakeview Terrace and its average daily census for the last calendar quarter preceding the hearing was slightly less than 100. Central Florida opposes the application of Lakeview Terrace for a conditional certificate of need. The three existing home health agencies described above have the present capacity and ability to provide home health services to the residents of Lakeview Terrace. Lakeview Terrace proposes to provide the full range of home health services on site at no additional cost to the residents of Lakeview Terrace. The cost of the services would be funded from the endowments paid by residents at the time they enter Lakeview Terrace. Lakeview Terrace would not be reimbursed by Medicare or Medicaid for the cost of the services and the certificate of need sought would be conditioned upon Lakeview Terrace not applying for a Medicare or Medicaid provider number. This means that no state or federal funds will be involved in bearing the cost of the home health services at Lakeview Terrace. Although the residents of Lakeview Terrace are aware of the services available from the other three home health service providers in Lake County, they have utilized these services very rarely. Many of the residents who would be treated under the conditional certificate of need sought by Lakeview Terrace would not qualify for the service offered by the other three providers in that these persons are not homebound. Only two or three of the residents of Lakeview Terrace are homebound. The existing providers provide home health services only to homebound patients. The issuance of the conditional certificate of need would have no adverse financial impact on the existing providers in the service area and will reduce the number of patients potentially utilizing Medicare and Medicaid benefits in the service area in the future. The staff report of the North Central Florida Health Planning Council concludes that Rule 10-5.11(14), Florida Administrative Code, is not intended for nor relevant to this application for the following reasons: Home health services would be provided as part of a life care contract and would be limited to residents of the life care center. No third party financing would be involved. There would be no impact on existing home health agencies in Lake County. Residents of the life care center currently obtain inpatient nursing care at the center, rather than purchase services from existing agencies.
Recommendation Based upon the above Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department grant the Petitioner's application and issue a certificate of need upon the following conditions: The area serviced by this home health agency be limited to the geographical area of Lakeview Terrace. There would be no additional charge to the patients for services rendered directly by the Lakeview Terrace staff. All charges would be covered by the endowment fee. Lakeview Terrace will not apply for a Medicare or Medicaid provider number. DONE and ENTERED this 4th day of August, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS 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 4th day of August, 1983. COPIES FURNISHED: Karen L. Goldsmith, Esquire 605 East Robinson Street Suite 610 Orlando, Florida 32801 James M. Barclay, Esquire 1317 Winewood Boulevard Building 2, Suite 256 Tallahassee, Florida 32301 Mr. David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue The issue is whether the application of A Professional Nurse, Inc., (APN) for Certificate of Need No. 4636 to operate a home health agency in HRS District IX should be granted. STIPULATION CONCERNING APPLICABLE STATUTES In the prehearing stipulation, the parties agreed that the issues to be litigated are only those relating to the need for an additional home health agency in the HRS service district. The other criteria found in Section 381.494(6)(c), Florida Statutes, which the Department is required to take into consideration in granting certificates of need, are not in dispute. The only portions of the statute and rules which must be examined here are Section 381.494(6)(c)1., 2. and 12, Florida Statutes, and Rule 10.5.011(1)(b)1., Florida Administrative Code.
Findings Of Fact APN's Applications This case arises from the application by APN for Certificate of Need No. 4636, filed in June, 1986. In 1983, APN had filed another application for a certificate of need when the Department had imposed an administrative moratorium on applications. HRS originally denied the application but during the pendency of formal proceedings, reconsidered and would have granted the application, but other parties intervened. APN failed to respond to certain discovery (it did not have an attorney) and at the final hearing therefore was not allowed to present evidence. As a result, APN's 1983 application was denied. With respect to the current application, based upon its June, 1986, filing, under Rule 10.5.008, Florida Administrative Code, a decision would have been due in October of 1986. On September 16, 1986, an employee of the Department requested an extension of time for the Department's decision until January, 1987, because the Department had no rule methodology for determining need for home health agencies, but hoped to have one by January, 1987. APN agreed to a three-week extension but did not agree to defer a decision until January, 1987. In November, 1986, the Department issued a state agency action report proposing to deny the application. At no time during the application process was APN told how need for an additional home health agency would be determined during departmental review in the absence of any need methodology adopted by departmental rule. There were no other applications in HRS District IX filed in the same batch as this application, and there have been no petitions to intervene in this proceeding. APN And Its Related Companies APN is an existing, licensed home health agency which has operated in District IX for nine years. It has applied for a certificate of need in order to qualify as a Medicare and Medicaid provider. Without the certificate of need, it cannot receive Medicare or Medicaid reimbursement for its services. Due to the recent opening of psychiatric hospitals in District IX and the need for follow-up care after such hospitalization, there is a need in District IX for psychiatric home health services. APN has particular expertise in psychiatric nursing. The requirements APN met for licensure are nearly identical to those for certification. There is no capital expenditure necessary for the Medicare and Medicaid certification. APN also started a related company, Professional Staffing Services, which provides nurses for hospitals, nursing homes and other home health agencies. These clients have called upon Professional Staffing Services when they are short of staff. APN currently receives referrals of persons who need home health services which come from hospitals, social service departments, hospital discharge planners. It also has a plan with hospitals for providing indigent care called "Patient Care Partnership Plan" under which it provides two hours of indigent care for each 40 hours of private duty care obtained through a hospital. There are people who could benefit from home health services who are unaware that they qualify to be reimbursed by Medicare for home health services. There are even some physicians who are not familiar with the availability of home health services. Because of the relatively low level of public awareness of the availability of home health services, patients are sometimes placed in nursing homes rather than deceiving health services at home, which would be less expensive and more cost-effective than nursing home care. Method For Determining Need For Home Health Services in District IX Because there is no rule methodology for determining the need for home health services, the method for determining need used by the Department is subject to de novo review in this proceeding. Section 120.57(1), Florida Statutes (1985). The Department presented no evidence of the number of home health agencies it believes are needed in District IX. In the absence of a rule it has no way of quantifying need. The Department has had difficulty in developing a methodology for determining need for home health agencies. Its first rule promulgated in 1977 was known as the Rule of Three Hundred. That rule is determined to be invalid. See Johnson and Johnson Home Health v. Department of Health and Rehabilitative Services, Final Order, DOAH Case 83-2170R, affirmed 447 So.2d 361 (Fla. 1st DCA 1984). Thereafter, the Department used a nonrule policy requiring an applicant to prove that people were not being served in order to justify a certificate of need for a new home health agency. That policy was applied by the Department at the time of the hearing in Upjohn v. Department of Health and Rehabilitative Services, 496 So.2d 147 (Fla. 1st DCA 1986) and was criticized by the court. The Department's current policy of requiring applicants to show that people are not being served is unreasonable. Existing home health agencies have the ability to expand their staff as demand increases. This would preclude the entry of any new competitor into the market if the rule for determining need for additional agencies is that there must be current potential users who are unserved. The Department's assertion that additional need can be shown by surveys of doctors or hospital discharge planners which indicate an inability to obtain home health services places an unreasonable, unattainable burden on an applicant. The expert retained by the Department to help it develop a rule methodology attempted to survey discharge planners and received only a 25 percent response rate, which is unreliable. The Department's assertion that the applicant could show a waiting list as an indication of need is also unreasonable. Those in need of home health services who cannot obtain them do not wait, they obtain alternate services, by such means as entering a nursing home. Finally, to the extent that patients or even physicians are unaware of the availability of home health services, it is not possible to structure any survey to quantify that pool of unmet need. APN's Need Methodology The testimony of the health planning expert presented by APN, Eugene Nelson, was generally persuasive. He advocated an assessment of need based upon a use rate formula. Nelson found that the patients used home health services at varying rates throughout the state, with greater use in the southeast, less use in the mid-portion of the state, and lower use in north Florida. He therefore suggested the use of different use rates in north, central and south Florida. District IX is in the southern area. The data on the use of home health services by patients is not reported to the Department or to local health councils, and is therefore not readily available. It can be obtained, however, from Medicare financial intermediaries based on reimbursement reports those intermediaries process on behalf of the federal government. Only the Department can obtain this data. Intermediaries will not supply it to CON applicants on request. The most recent data which is complete is 1984 data. When this use rate is applied to the population over age 65, one can derive the expected number of Medicare home health visits for 1987. An HRS service district is the appropriate planning unit. By multiplying the use rate in south Florida times the District IX population over 65 (2.4446 x 268,056) the total expected visits for 1987 are 655,290. Even using the lower, and therefore more conservative, statewide average use rate yields 508,154 visits (1.8957 x 268,056). Nelson then converted the number of visits to a reasonable number of agencies based upon the number of visits each agency ought to be able to perform. There is little economy of scale in home health agencies and it is therefore difficult to determine an optimum agency size. Nelson discussed data showing reasonable agency size ranges from 9,000 to 15,000 visits per year. This range of agency size is accepted as reasonable. Using 15,000 visits as the appropriate agency size (which is conservative), there would be a need for 44 agencies in District IX if the south Florida use rate is applied, and 34 agencies needed if the statewide use rate is applied to the appropriate population. There are currently 25 existing home health agencies which have certificates of need in District IX. This methodology shows a net need for between nine and 19 new home health agencies. APN's use rate formula for determining the number of home health agencies is consistent with the goals and priorities found in the State Health Plan and the Local Health Plan. In this case, one of the significant objectives of the State Health Plan is Objective 1.5 which is To assure that the number of home health agencies in each service area promote the greatest extent of competition consistent with reasonable economies of scale by 1987. RECOMMENDED ACTION: 1.5a: Develop a need methodology based on historic cost data for Florida Home Health Agencies. Because it currently has no rule methodology for determining need for home health agencies, the Department has contracted with Dr. Elton Scott to draft a formula for determining need. The preliminary report of Dr. Scott recommends a methodology based on the historical Medicare use rate and is generally similar to one presented by APN. Until it adopts a new methodology by rule, the current policy of the Department is to request extensions of time for CON review from applicants rather than process the applications. This results in a de facto moratorium. No applications have been approved under the current policy of requiring the applicant to prove unmet need. In the record of this case the Department has failed to present any qualified health care expert to give any opinion about appropriate health care planning for home health agencies or to justify its current policy of requiring applicants to present evidence of need on an anecdotal basis. The policy is unreasonable for reasons stated in Finding of Fact 15.
The Issue Whether any or all of the applications for certificates of need to establish medicare-certified home health agencies in Broward County (AHCA District 10) by Petitioners Allstar Care, Inc.; Medicorp Home Health Care Services; and Medshares of Florida, Inc., should be approved by the Agency for Health Care Administration.
Findings Of Fact The Parties Allstar Allstar Care, Inc., with its offices in Miami, is a Florida corporation that operates a licensed Medicare-certified home health care agency in Dade County. It serves, principally, patients aged 65 and over who are Medicare- and Medicaid-eligible by providing them at home: skilled nursing; physical therapy; occupational therapy; speech therapy; and the services of home health aides, when provided physician's order to do so. It also serves at-home indigents with like services when provided appropriate physician's orders. In 1996, Allstar provided a total of 122,000 visits. Fifty percent of them were by home health aides providing assistance with the patients' daily living needs, such as bathing, oral care, dressing, and assistance with meals. Forty- five percent of the visits were by skilled nurses. In addition, licensed social workers employed by Allstar provided social and emotional support for the patient and the patient's family. From 1994 to date, Allstar has provided Medicare- certified home health services in Dade County. It is reasonable to expect that Allstar will provide the same range of services that are described in its application for Broward County that Allstar currently provides in Dade. Medicorp A sister home health agency to Medcorp Home Health Services, Medicorp Home Health Services is a home health agency that serves patients in Wilton Manors and Oakland Park in Broward County, Florida. Although not Medicare-certified, it is Medicaid-certified. Medicorp was founded primarily to bring services to unserved and underserved areas, particularly "the projects," (Tr. 13,) in Broward County, that is areas of low-income housing the building of which was financed by the federal government's Department of Housing and Urban Development. Commencing operations in 1991 with an initial investment of $8,000 and as its only employee, current owner and administrator Beverly Cardozo, LPN and certified respiratory therapist, Medicorp has experienced rapid growth. Last year it grossed $1.8 million. Medshares Medshares of Florida, Inc., is a member of the family of Medshares companies commonly referred to as "Medshares." Medshares provides various home health services, such as Medicare-certified home health services; private nursing services; management services for home health agencies; infusion services; and consulting services. Medshares began in Tennessee in 1985 and since that time has expanded to operation in nine states with 52 locations. In 1996, Medshares provided approximately one million visits through its Medicare-certified home health agencies and approximately 1.7 million visits through its non-Medicare-certified and managed home health agencies. Medshares' long-range plan includes development of Medicare-certified agencies through the southeast. Development of such an agency is a logical step for Medshares, since Medshares currently operates in several other southeastern states. Medshares experiences a low-employee turnover rate of approximately 50 percent, which is less than half of the national average for home health operations. Medshares attribute this low turnover rate to its participatory management style as well as its employee benefits packages. For example, Medshares offers educational packages to any of its employees who wish to further his or her education. For its nurses, Medshares funds the cost of nursing certification by the American Nurses Association. AHCA The Agency for Health Care Administration is the "single state agency [designated by statute] to issue, revoke or deny certificates of need . . . in accordance with the district plans, the statewide health plan, and present and future federal and state statutes." Section 408.034(1), Florida Statutes. Petitioners: Non-competitors The Petitioners each claimed in the hearing that there is sufficient need in the District to support the granting of all three applications. They do not, therefore, view each other as competitors in this proceeding. Filing of the Applications and Preliminary Action by AHCA All three petitioners, Allstar, Medicorp, and Medshares, submitted timely applications for certificates of need to establish Medicare-certified home health agencies in Broward County, AHCA District 10: CON 8448 (Allstar), CON 8418 (Medicorp), and CON 8419 (Medshares). The applications were deemed complete by AHCA. Following preliminary review, however, the agency denied the applications. The State Agency Action Report ("SAAR") sets forth AHCA's findings of fact and determinations upon which the decisions were based. Allstar, Medicorp, and Medshares each filed a timely petition for hearing. The District AHCA District 10 is composed of Broward County, alone and in its entirety. The service area for review of CON applications for Medicare-certified home health agencies is the district. In this case, therefore, the service area is Broward County. In Broward County, there are roughly 190 home health agencies. Of these, however, only 35 are licensed Medicare- certified home health agencies (34 providers hold the 35 licenses). Three are approved Medicare-certified home health agencies, and another three are exempt Medicare-certified home health agencies. Need for Additional Medicare-certified home health agencies in District 10 No AHCA Methodology AHCA did not publish a fixed need pool for Medicare certified home health agencies for the July 1997 planning horizon in Florida because, at the time the Letters of Intent were filed (and when the Formal Hearing was conducted, as well), AHCA did not have any methodology pursuant to rule for projecting need for additional Medicare-certified home health agencies. Reasonable Methodologies of the Petitioners In the absence of AHCA methodology, expert health planners for each of the three petitioners developed reasonable methodologies which, when applied to data relevant in time by demographics to the case, show a need for at least a number in excess of three. Changes in the Health Care Marketplace The methodologies developed by the petitioners recognize ongoing changes in the health care marketplace that began with the implementation of the Medicare prospective payment system. The changes have progressively encouraged the use of less intensive, less costly settings for the provision of health care services. The least intensive and least costly health care service is home health care service. The tremendous demand for non-Medicare and Medicare-certified home health services beyond what would be expected due to simple population growth is the result. Use rates, therefore, are escalating beyond escalation due to population growth alone. AHCA recognizes that there has been a significant trend toward increased use of home health services. Not surprisingly, therefore, AHCA did not criticize the use of compound rates of increase to compute use rates in the need methodologies developed by any of the three petitioners. Allstar's Methodology and Determination of Numeric Need Allstar's health planner determined a need for at least six additional Medicare-certified home health agencies in Broward County for the appropriate planning horizon. The methodology used by Allstar in its application was conceptually identical to that approved in the Recommended and Final Orders in Shands Teaching Hospital and Clinics, Inc. v. AHCA, DOAH Case No. 96-4075 (Recommended Order issued 3/20/97, Final Order 5/12/97). The source of the data used by Allstar to develop its need methodology was the Medicare cost reports that existing providers file with the Federal Health Care Financing Administration, ("HCFA"). Data from 1995 was not available in the spring of 1996 when Allstar's application was filed, so Allstar used a 1994 data base period. The 1994 base period used by Allstar is the last for which data on visits was available from AHCA before the deadline for filing applications in this case. Allstar selected 1997 as the planning horizon because it usually takes one year from the date the application is submitted to get a home health care service in place. The planning horizon selected by Allstar is reasonable. Allstar relied on population estimates published by AHCA in January 1996, the most currently available populations statistics when the application was filed. Allstar received February 1996 population data from AHCA after the application was filed, but before the omissions response was due. When Allstar's methodology is replicated using the February 1996 population data, it does not substantially alter the projected numeric need. Allstar calculated a 1994 District 10 use rate by dividing the total patient visits in 1994 by the 1994 District 10 population 65 years of age and older. Use of the 65-and-older cohort is reasonable since Medicare eligibility begins at age 65 and, historically, 98 percent of all Medicare-certified home health care visits are delivered to that age group. The calculation yields a historic use rate of 6.83 visits per capita. Most use rates developed by health care planners for acute care services are constant. They assume conditions that are found in the base period will remain unchanged. Constant use rates are inappropriate in the instance of Medicare-certified home health care agencies. District 10 historical data from Medicare cost reports for the period 1989 through 1994 show use rates, ranging from 2.82 per capita in 1989 to 6.83 per capita in 1994. This dramatic increase is consistent with the increase in use rates in other AHCA districts. The combination of managed care and Medicare's prospective pay system is producing care for patients in less costly non-institutional settings like the home of the patient. Hence, home health care use rates have increased. The historical use rate trend line developed by Allstar, when extrapolated to 1997, yields 10.47 visits per capita in 1997. Consistent with conservative planning, and in an attempt to avoid either overstating or understating the horizon year use rate, Allstar averaged the trended and constant use rates for 1997, yielding a use rate of 8.65. Since a use rate of 8.65 represents the result of averaging two numbers, the 1997 projected rate is both a median and a mean. It is also both conservative and reasonable. When AHCA's population projection for 1997 is multiplied by the 8.65 use rate, the result is a projection of 2,365,443 Medicare-certified visits in July 1997. The mean agency size in 1994, measured by number of visits, was 54,101. The median number of visits in 1994 was 54,803. Dividing the average agency size of 54,101 visits into the number of projected visits in 1997 yields a gross need for 44 Medicare-certified home health care agencies in 1997. Allstar then subtracted the number 35 (representing the licensed Medicare-certified home health agencies) and another 3 (representing the approved agencies) from 44, yielding the need for 6 new Medicare-certified home health agencies. AHCA criticized Allstar's methodology on two bases. First, Allstar used population estimates published in January 1996, instead of more recent population estimates for February 1996, estimates available to Allstar at the time it filed its omissions response. Second, Allstar calculated its average or mean number of visits by using the total number of licensed Medicare-certified home health agencies in District 10, as opposed to only those licensed agencies which actually reported visits. As to the first criticism, Allstar's health planner explained on rebuttal that the January 1996 population estimates were all that were available when it prepared the application. It is true that the February 1996 population estimates became available prior to the filing of the omissions response and although "there was no . . . formal notification," (Tr. 650), Allstar became aware of their availability before it filed the response. Allstar's health planning expert examined the February 1996 data and concluded that "while different, [the data] . . . weren't significantly different." (Tr. 651). In light of the lack of any significant difference, Allstar's expert summed up the company's analysis of the problem and its approach at that moment in time this way: We had already invested a lot of energy in running the need [with the January 1996 data] and simply made the decision not to go back and redo all of that work based on the February document. (Tr. 650-651.) Since there was no "significant difference," between the January and February data, it does not seem appropriate to require the effort needed to project need based on a calculation employing the more up-to-date data, an effort that would not alter the result of Allstar's projected numeric need. In point of fact, after filing the omissions response, Allstar's expert did the analysis with the more current data and determined that the February population estimates, "had no affect on the conclusion of how many net agencies were needed." (Tr. 652.) As for the second criticism, Allstar's health planner appreciated that there was a choice to be made in its methodology between visits as to total number of licensed Medicare-certified home health agencies in District 10 and the subset of that group consisting of only like agencies which reported visits. Allstar rejected the use of only those who reported visits. By doing so, it assumed that non-reporters did not provide any visits. To do otherwise, that is, to exclude non- reporters, results in the assumption, when using an average number of visits as a component in the methodology, that the non- reporting agencies, on average, had just as many visits as the reporting agencies. Such an assumption is much more likely to be incorrect than the assumption that Allstar made. The law requires Medicare-certified home health agencies to report. In all likelihood, therefore, the non-reporting agencies did not report precisely because, being new agencies, they had no visits to report. Allstar's approach is thus the more valid approach. In short, AHCA's criticism of Allstar's methodology in this regard does nothing to alter the conclusion that Allstar's methodology is reasonable. Medshares' Methodology and Determination Although Medshares used a somewhat different methodology to determine projected need, its methodology was also reasonable. Medshares’ methodology, too, yielded projected need in 1997 for Medicare-certified home health agencies in AHCA District 10 in a number greater than three, the number of applicants involved in this proceeding. Medicorp's Methodology Medicorp's application did not contain a need methodology. At hearing, over AHCA's objection, Medicorp's expert in health planning testified as to the reasonableness of its methodology which also yielded a numeric need in excess of three. The objection of AHCA was treated as a Motion to Strike, and the testimony was allowed. As explained in the Conclusions of Law, the objection is now moot since AHCA did not provide a methodology of its own when it presented its case in chief, and since reasonable methodologies yielding numeric need in excess of the number of petitioners were proven by both Allstar and Medshares. Aside from numeric need, in the case of Medicorp, there is a special need. Special Need for Medicorp Medicorp presented evidence in its application showing the need for an agency, like Medicorp, located among and willing to focus on serving the needs of the District's underserved and, in some cases, unserved, minority and low-income residents. Medicorp's primary service area includes zip code 33311, a federally-designated area of restricted health care. As one might expect from this designation, residents of this zip code have the lowest income per capita, the highest rate of unemployment, and highest rate of Medicaid eligibility in Broward County. A large proportion of the residents of zip code 33311 live in HUD housing. And, the zip code has the highest concentration of HIV/AIDS sufferers in the county. Medicorp's Administrator, Beverly Cardozo, testified that her existing, non-certified agency, Medicorp Home Health Services, currently is providing substantially free care to up to 400 Medicare-eligible patients living in government-subsidized housing within Medicorp's primary service area. Ms. Cardozo and Medicorp have been providing this care since approximately 1994, when Medicorp instituted its "Slice of Life" program consisting of the establishment of health fairs at these housing projects. Since 1994, Ms. Cardozo has been attempting to make arrangements with a Medicare-certified agency to provide the necessary care to Medicare-eligible residents in the projects to provide care, in some cases, desperately necessary. Only one agency agreed to go into the projects. Eventually, it ceased conducting business, leaving Medicorp to provide free health care. In addition to providing this care, Ms. Cardozo has recruited other local providers and business people to donate time and goods for the care of these Medicare-eligible patients. She also has arranged for the provision of care by a wound specialist. Ms. Cardozo's testimony, together with Medicorp's Exhibits 3 and 4, show that a significant portion of the District 10 Medicare-eligible population is underserved. In particular, many of the low-income residents of Wilton Manor and Oakland Park, areas targeted for care by Medicorp's application, are not receiving much-needed care. This care would be made available on a continuous basis by Medicorp's trained and dedicated staff. Notwithstanding numeric need, therefore, there is a special need in District 10 for the Medicorp proposal. Local Health Plan "The District 10, August 1994 CON Allocation Factors Report [used by AHCA in the SAAR for these three applicants] provides [six] . . . preferences in the review of applications pertaining to Medicare certified home health agencies." AHCA No. 5, p. 5. The First Preference AHCA maintains that "Medicorp-[sic] and Medshares do not meet preference one of the [local plan] due to their lack of demonstration that there are identifiable subgroups who are Medicare-eligible and are currently being denied access to Medicare-certified home health agency services." AHCA PRO, p. 5. There is, however, no requirement expressed in the preference that denial of access be shown in order to meet the preference. With regard to Allstar, AHCA makes the same argument related to access denial in relationship to the Hispanic population identified by Allstar as an identifiable subgroup of the District's population to which it will provide service. Again, the preference does not expressly require a showing of denial of access. Allstar demonstrated that Broward County is 8.26 percent Hispanic; that Allstar has bilingual, indeed, multilingual capabilities in Dade County available for use in Broward should the CON be granted; and that it will locate its offices close to south central Broward near the largest Hispanic population. Allstar meets the express requirements of the preference. As explained above, Medicorp proposes to provide care concentrated in the most severely depressed area of District 10, geographically centered in zip codes 33311 and 33312. The proposed agency will provide care to the subgroup of predominantly black residents of the inner city HUD housing projects. It is true that this area may have "the highest concentration and number of Medicaid eligibles as well as the highest percentage of HIV and AIDS cases in the District . . .," and that "this population [is] . . . predominantly 'Medicaid eligibles,' and finally, that these patients could be served through a non-Medicare certified home health agency," AHCA No. 5, p. 6, (e.s.). But these factors do nothing to defeat Medicorp's satisfaction of the preference. Medicorp has demonstrated that it will provide service to an identifiable subgroup of District 10 Medicare-eligible patients based on "ethnicity" and "geographic location." It clearly meets the preference. Medshares meets the priority as well. Based upon geographic analyses contained in its application, Medshares identified lower-income Hispanics and African-Americans, including lower-income females, and persons afflicted with HIV/AIDS as groups in District 10 that it would serve. Medshares’ patient material will be provided in both English and Spanish. It plans to provide a full range of home health care services to these groups with special emphasis on low-income females who typically receive little or no prenatal care, and low-income families in need of pediatric services. And, it will locate in Fort Lauderdale, the urban area in Broward County with the highest number of AIDS cases. Medshares meets the preference. Preference Two All three of the applicants have committed to serve Medicaid and indigents, promoted by Preference Two, as follows: Allstar: 1 percent Medicaid, 0.5 percent indigent; Medicorp 10 percent Medicaid, 2 percent indigent; and Medshares 1.4 percent Medicaid, 2 percent indigent. Preference Three All three of the applicants state they will provide for the provision of maintenance services, as called for by Preference Three of the Local Plan, to Medicaid and indigent patients. Preference Four AHCA agrees that Medicorp and Medshares meet preference four which gives priority to those applications that show reasonable expectations for reaching a patient load of at least 21,000 visits by the end of the first year of operation. As to Allstar, it reasonably projected only 13,265 visits in its first operational year. Allstar's projection, however, includes a rate of 2,000 visits per month by the end of the first year, a monthly rate that leads to 21,000 per year when annualized. None of the Medicare-certified home health agencies opening in Broward County since 1992 have met the 21,000 "priority" threshold. In light of this reality and the reasonableness, in Allstar's view, of interpreting the preference as requiring only a demonstration of capacity to reach 21,000 visits rather than a projection that it actually reach 21,000, Allstar argues that it meets Preference Four of the Local Plan. There may be some room in the wording of the preference to interpret it as allowing a demonstration of capacity by the end of the first year to have achieved 21,000 visits rather than actually reaching the 21,000 visits, but there was no evidence that AHCA has ever made such an interpretation. For its part, AHCA flatly asserts, "Allstar does not meet this preference." AHCA PRO, p. 6. In the absence of an authoritative interpretation in Allstar's favor, Allstar must be considered as not meeting the preference. Preference Five There is no question that all three applicants meet Preference Five. The application of each demonstrates the development of patient transfer and referral services with other health provider agencies as a means of ensuring continuity of care. Preference Six The applications of Medicorp and Medshares demonstrate that they will participate in the data collection activities of the local health council. Allstar has agreed to report data to the regional health planning council but not to the local health council. Medicorp and Medshares meet preference six; Allstar does not. State Health Plan Preference Just as the District 10 Health Plan, the Florida State Health Plan establishes certain preferences for applicants for Medicare-certified home health services certificates of need. The State Health Plan, too, contains six preferences. Preference One Among the three applicants, only Medicorp demonstrated a willingness to commit a specific percentage of total annual visits to AIDS/HIV patients. The State Health Plan in its first allocation factor, however, does not contain a "percentage" requirement in order for preference to be given. All that is required is that the applicant "propos[e] to serve AIDS patients." AHCA Exhibit 10. Consistent with this requirement, all three applicants propose to serve AIDS patients; Medshares proposes to condition its application on such service and Medicorp, additionally, has in place policies and procedures for quality assurance and safety precautions in caring for the HIV/AIDS patient. All three applicants, therefore, meet the preference. Preference Two Although there does not appear to be a universally accepted definition of what "high technology services" means in the home health arena, and although AHCA does not define them, all three applicants have reasonably identified them in their application and have proved sufficient intent to provide them. For example, Medshares proposes to provide a full range of nursing and therapy services, including cardiac care; continuous IV therapy; diabetes care; oncology services; pediatrics; rehabilitation; pain therapy; total parenteral nutrition; speech therapy; physical therapy; occupational therapy; enterostomal therapy; respiratory therapy; audiology therapy; and infusion therapy. Several of these services are unquestionably "high tech." AHCA answers that none of the three showed that the full range of services, including those that are "high tech," were not sufficiently available and accessible in the same service area. Neither, of course, did AHCA. In the context of a litigated case, the wording of the preference is awkward for achievement of the result AHCA seeks: Preference shall be given to an applicant proposing to provide a full range of ser- vices, including high technology services, unless these services are sufficiently avail- able and accessible in the same service area. AHCA No. 5, p., 10. All three applicants receive preference under this part of the State Health Plan. Preference Three There is no definition of "disproportionate share" of Medicaid and indigent patients in AHCA. Nor was there any evidence of such a definition provided in this proceeding by AHCA by way of testimony or in any other way. The term, as used in acute services, contemplates and necessitates the use of Medicaid utilization data of the type that AHCA has never collected for Medicare-certified home health agencies. Nonetheless, both Medicorp and Medshares are entitled to the benefit of this preference. Medicorp's principals have demonstrated a commitment to serving what would constitute a disproportionate share of Medicaid and indigent patients by any common understanding of the term "disproportionate share." Medicorp, as a new entity, is entitled to the benefit that flows from the history of service of its principals and predecessors. Medshares, too, has a history of providing home health services to Medicaid eligible persons and indigents, and Medshares plans to serve all patients in need regardless of ability to pay. Allstar is excused from complying with this preference given the absence of a meaningful definition. Preference Four The preference is not applicable in this case, since it can only apply to multi-county districts. It is worth noting, however, that home health care has been cited as an area of critical need in Broward County by the Broward Regional Health Planning Council. It is also worth re-iterating that several zip code areas within Medicorp's primary service area have been designated by the Federal government as currently and historically medically underserved. Medicorp can fill the needs of the underserved in the Broward County HUD housing projects as a Medicare-certified home health agency should its application be granted. Preference Five Medshares has made an unqualified commitment to provide consumer survey data measuring patient satisfaction to AHCA. Without doubt, it fully meets the preference. Allstar currently collects patient satisfaction data, as well as family and physician satisfaction data. Allstar further stated in its application that, "though there is currently no systematic effort by the department to collect such data, [Allstar] will make this data available to the department, or its designated representative, upon development and implementation of an appropriate data collection and reporting system." AHCA No. 5, p. 13. Likewise, Medicorp indicated willingness to participate in an HRS consumer satisfaction data collection effort "upon the State's development and implementation of an appropriate system." Id., at 12, (e.s.) Medicorp, moreover, is willing to make survey results available to the AHCA, HCFA, the District 10 local planning council, and the Office of Comprehensive Health Planning. Allstar and Medicorp, at least, are entitled to partial credit under this preference. Preference Six Each of the three applicants is entitled to this preference; each proposes a quality-assurance program and JCAHO accreditation. Increase in Availability and Access; Improvement in Quality of Care, Efficiency, Appropriateness, and Adequacy of the Service Assuming existing providers are available, efficient, appropriate, accessible, giving quality care, and are adequately utilized, adding three new Medicare-certified home health agencies is still justified when cost-effective agency size is taken into consideration. The cost-effective size of an agency can be determined using Medicare cost reports. In Florida, the cost-effective size of an Medicare-certified home health agency ranges from 30,000 visits to 95,000 visits annually. Allstar's regression analysis of a cost-effective Medicare-certified home health agency size, measured in terms of visits, took into consideration the type of visits performed, AHCA's geographic price index, and the affects of population density on costs. Adding new Medicare-certified home health agencies is appropriate when the mix of services is taken into account, and when as in this case, adding three such agencies into the marketplace will not reduce the cost-effective size of existing agencies below 30,000 annual visits. Medicorp, moreover, has proven the restricted access to services experienced by Medicare patients residing in inner city HUD housing projects in North Broward County and has established that all payer groups in these areas, including Medicare and Medicaid, are underserved. It was established by Medicorp that the predominantly minority residents of Fort Lauderdale's public housing and surrounding areas of Wilton Manors and Oakland Park are woefully underserved. The already-established role of Medicorp as the accepted and known provider in these areas demonstrates how access to these home health services will improve by Medicorp entering areas that other providers will not serve. Financial Feasibility Short Term It was stipulated that Medshares’ application is financially feasible in the short term, that is, able to obtain the capital for start-up (including any construction costs, if necessary) as well as sufficient working capital to sustain a business until it becomes self-sufficient. While Medicorp's financial feasibility remained an issue going into hearing, it appears from AHCA's proposed recommended order that it continues to challenge only Allstar's short-term financial feasibility. See AHCA PRO, p. 8. In any event, Medicorp proved that adequate funding is available from outside sources to fund the start-up costs and early operations. Its project is therefore financially feasible in the short term. The total project costs for Allstar's proposed project is $102,903, based on reasonable historical data typical of the start-up equipment and expenses for similar Medicare-certified home health agencies in the same geographic area. Allstar's projected start-up costs of $24,956 are reasonable. To fund the proposed project, Allstar has established and maintains an escrow account with Republic Bank in the amount of $150,000 (almost $50,000 more that the projected total project cost). Allstar has adequately demonstrated its ability to fund the project; the project is financially feasible in the short term. b. Long term AHCA maintains that none of the applicants demonstrated long-term financial feasibility for one reason alone: lack of need for the proposals. Contrary to this assertion, there will remain need in Broward County for Medicare-certified home health agencies even if these three applicants receive the applied-for CONs. The projects of all three applicants are financially feasible in the long term. Allstar's and Medicorp's Reliance Solely on Independent Contractors AHCA contends the HCFA interpretation of the federal condition of participation found in 42 CFR s.484.14(a) requires full-time salaried employees to staff at least one qualifying service. Even if the interpretation is correct, it is no impediment to either the Allstar or the Medicorp application. Medical social work is a qualifying service under the federal regulation. Allstar presently staffs its medical social worker in its Dade County office exclusively with a full-time salaried employee for whom an Internal Revenue Service W-2 form must be maintained. Allstar intends to staff its Broward County office in the same manner. (Even if the social medical worker position were staffed with a part-time employee, Allstar would comply with the federal regulation so long as the part-time employee were salaried and received a W-2 form.) Up until hearing, AHCA legitimately maintained that Medicorp violates the federal regulation because of Assumption 11 to the pro forma in its application which stated that, "[i]t is assumed that all caregiving nurses are independent contractors." At hearing, however, Medicorp witnesses testified that nursing staff and CNA staff will be employed. Ms. Cardozo testified that she currently employs these staff and, if awarded a CON, would continue to do so. Similarly, the application repeatedly refers to Medicorp's staff consisting of the same employees working for Medicorp's sister agency, Medcorp. Any inconsistency between the testimony elicited by Medicorp at hearing and the assumption in its pro forma is of no moment in this case. With regard to financial feasibility, the assumption, even if incorrect in part, is not necessarily fatal to the application. (AHCA's finding of financial infeasibility, in the case of Medicorp was not based on the incorrectness of Assumption 11. Moreover, while one would usually expect full- time employees to cost more than less-than full-time independent contractors as to total cost, the direct hourly rate cost of independent contractors is usually higher than the direct hourly rate cost of employees.) Probable Impact on the Cost of Services Only Medshares demonstrated that it would foster competition which would promote quality assurance and cost effectiveness. In the case of Medicorp, eliminating the subcontract arrangements through which it, Medicorp, now provides services to Medicare patients will eliminate an unnecessary level of administrative costs. Other benefits flow from eliminating the need for Medicorp to subcontract with an authorized entity. For example, AHCA discourages such arrangements because removal of direct control of patient care from the authorized entity raises not just quality assurance issues but also the potential for fraud. In any event, granting all three applications should not reduce the cost effectiveness of any providers of Medicare- certified home health care services in Broward County in the future. Past and Proposed Provision of Services to Medicaid and Indigent Patients As detailed above, Allstar is committed to provide home health care services to Medicaid eligible and indigent patients. This commitment, in the absence of any data to the contrary, is an adequate one. That Allstar will make good on this commitment is supported by indicia aside from the express commitment contained in the application. Allstar has a relationship with Jackson Memorial to increase the number of indigent patients Allstar serves. Its brochures and business cards state that it accepts Medicaid patients. This acceptance is confirmed by Allstar at its public presentations and in conversations with referring physicians. Finally, the majority of Allstar's staff is bilingual, and it has nurses who speak as many as five languages. It has the capacity and intent to make a multilingual staff available in Broward County. Medicorp clearly has a history of providing health services to Medicaid patients and the medically indigent. This commitment has been demonstrated through operation of Medicorp's sister agency by Medicorp's principals. If anything, as discussed above, Medicorp's principals have shown a singular dedication to the medically indigent population through operation of health fairs and other charities. Consistent with this dedication, Medicorp has conditioned its application on provision of at least 10 percent of its total visits to Medicaid patients and at least 2 percent of its visits to the medically indigent. Medshares, too, has a history of providing services to Medicaid patients and the medically indigent. In 1995, it provided over $650,000 in uncompensated care. It participates in Medicaid waiver programs in two states which have them. Its application describes its indigent care plan. The pro forma projections of revenue and expense in the application describe the levels of indigent and Medicaid eligible persons that Medshares expects to serve. Medshares offers a CON condition that 1.4 percent of total patients will be Medicaid patients and 2 percent of total patients will be indigent patients.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter a final order granting CON Nos. 8418, 8419, and 8448 to Medicorp Home Health Care Services, Medshares of Florida, Inc., and Allstar Care, Inc., respectively. DONE AND ENTERED this 3rd day of September, 1997, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of September, 1997. COPIES FURNISHED: Robert J. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303 Michael Manthei, Esquire Broad & Cassell Broward Financial Centre, Suite 1130 500 East Broward Boulevard Fort Lauderdale, Florida 33394 Alfred J. Clark, Esquire Suite 201 117 South Gadsden Street Tallahassee, Florida 32301 Richard Patterson, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
Findings Of Fact The Applicants And Their Applications Petitioner, Medical Personnel Pool of Southwest Florida, Inc. (Medical Personnel Pool), is a wholly-owned subsidiary of Medical Personnel Pool, Inc., an operating division of Personnel Pool of America, Inc., a wholly-owned subsidiary of H & R Block, Inc. Personnel Pool of America, Inc., operates 215 home health agency offices in 42 states and in Canada, 145 of which are Medicare-certified. In Florida, Medical Personnel Pool, Inc., operates 27 offices, 5 of which are Medicare-certified. Medical Personnel Pool's corporate headquarters are in Fort Lauderdale, Florida. Medical Personnel Pool has applied for a Certificate of Need for Medicare-certified home health services in Lee, Collier and Charlotte counties in HRS District VIII. The services are proposed to be provided out of Personnel Pool's existing Fort Myers office which has been in operation over ten years. Medical Personnel Pool's existing operations out of Fort Myers are not Medicare-certified and do not serve Medicare patients. Medical Personnel Pool has represented in its application that it will commit 2% of its total visits to Medicaid patients and one hour of uncompensated visits to indigent patients for every 20 hours of visits to Medicare patients for which it is reimbursed. The indigent commitment would be recorded and accumulated until the commitment reaches the approximately 10 to 20 visits necessary to start and finish a case for an indigent patient. Medical Personnel Pool also represents that it will operate all of its home health services out of the same corporate entity out of which it operates Medicare-certified home health services. In this way, Medical Personnel Pool is committing to charge its Medicare-certified patients no more than it charges its private pay patients. Petitioner, DeSoto Memorial Hospital (DeSoto Memorial), is a private, not-for-profit acute care community hospital located in HRS District VIII in Arcadia, DeSoto County, Florida. DeSoto Memorial has provided health care services to DeSoto County since 1968. It is the only acute care general hospital located in DeSoto County. It provides services to patients regardless of ability to pay and commits in its application to provide 10% of its home health services to Medicaid patients and 8% to indigent patients. DeSoto Memorial has applied for a Certificate of Need to provide home health services in DeSoto County. Its proposed home health agency would be located at the existing hospital facility. Criterion Section 381.494(6)(c)1. (The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan adopted pursuant to Title XV of the Public Health Service Act, except in emergency circumstances which pose a threat to the public health.) 1985-87 State Health Plan. The 1985-87 State Health Plan states in part: "Policy makers are increasingly concerned about providers' willingness to serve Medicaid recipients and medically indigent Floridians." The State Health Plan references efforts by the Medicaid program since 1981 to increase Medicaid reimbursement for home health services and to increase medically indigent access to home health services. However, the State Health Plan concludes: "Rather than attempt to establish unrealistic performance expectations for private providers, the Legislature will either have to increase resources available to reimburse those providers for home health services to the indigent or provide support to the county health units." The State Health Plan also cites as an objective: "To assure that the number of home health agencies in each service area promote the greatest extent of competition consistent with reasonable economies of scale by 1987." It recommends: "Develop a need methodology based on historic cost data for Florida home health agencies." However, the evidence in this case was that additional Medicare-certified home health agencies will not significantly contribute to price competition. To the contrary, the evidence was that additional Medicare-certified home health agencies actually will cause a relatively small increase in the cost of Medicare-certified home health services. This cost increase will be small because home health services are not capital intensive, and duplication of services and under-utilization of home health services will not require as much of a price increase to cover costs as would duplication of services and under-utilization of capital intensive hospital services.(Only 2% of a home health agency's costs are capital costs while 15 to 20% of a hospital's costs are capital costs.) In addition, the price for Medicare- certified home health services is subject to a cap which most home health services already are close to. Additional numbers of home health agencies would foster competition in the quality of services and responsiveness of services to the needs and wants of the patients in an area. Additional Medicare-certified home health agencies that serve a significant percentage of Medicaid recipients and medically-indigent patients would have a competitive advantage in getting referrals over Medicare-certified home health agencies that do not serve Medicaid recipients and the medically-indigent. To compete, existing Medicare-certified home health agencies probably would initiate comparable service for Medicaid and medically-indigent patients. This desirable effect of competition would help alleviate the policy makers' concerns referred to in Finding Of Fact 7 above. But see Conclusion Of Law 1 below. (ii.) District VIII Local Health Council Health Plan. The 1985 District VIII Local Health Council Health Plan adopted August 21, 1985 states: "Home health care services are generally available to all residents within District Eight." However, this conclusion drawn by the local health council is based upon an application of HRS proposed rule 10-5.11(14), Florida Administrative Code. This rule has been held invalid. See, Final Order, Home Health Services and Staffing Association, et al. v. Department of Health and Rehabilitative Services, Case No. 85-1377R, March 12, 1986. In addition, based upon the evidence in this case, the proposed rule does not accurately assess the need for the home health agencies proposed by Medical Personnel Pool and DeSoto Memorial. See Findings Of Fact 27 through 70 below. The District Health Plan also establishes sub- districts. Pertinent to this case, Charlotte County, Collier County, DeSoto County and Lee County are established as separate sub-districts. Sarasota County also is established as a separate sub-district. Glades and Hendry counties are combined as the last sub-district. The District Health Plan's sub-district designations were established on the basis that they: (1) have a geographic size which meets reasonable travel distances and travel times; (2) have a population size adequate to support at least one agency; (3) are geo-politically consistent; and (4) have available population, socio-economic and health statistics to document use rates and projections. The District Health Plan also recommends: "Sub- districts without a home health agency office in one or more of its principle [sic] communities should be identified as a priority area for the expansion or new establishment of a home health agency." In addition, the District Health Plan establishes the policy: "Continuity of patient care should be assured through the establishment of formal coordination arrangements between home health agencies, and physicians, hospitals, nursing homes, and community social service agencies and organizations." Finally, as another policy, the District Health Plan states: "Home health care should be accessible to all persons in need, regardless of ability to pay or source of payment." But see Conclusions Of Law 1 below. Criterion Section 381.494(6)(c)2. (The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant.) There are 19 existing licensed Medicare-certified home health agencies (sometimes referred to simply as home health agencies) with home offices in District VIII. This number excludes Home Care Services of Hendry County which ceased operations as of March 22, 1985. In addition, one home health agency in District VIII has been approved, but is not yet licensed and operating. (Homecare of Glades and Hendry Counties, approved in a later batching cycle is now on administrative appeal in Division of Administrative Hearings Case No. 85-4308, should not be counted as available for purposes of assessing the need for the Medical Personnel Pool or DeSoto Memorial proposals.) In addition, three home health agencies with home offices outside District VIII in Manatee County hold licenses enabling them to operate within District VIII. But one of them Visiting Nurses Association of Hardee County ceased operations in District VIII (DeSoto County) approximately six months before the final hearing in this case. These home health agencies are referred to in HRS proposed rule 10-5.11(14) as multi-district agencies. They also are commonly referred to as cross-over agencies. The total number of available home health agencies in District VIII is 22. This total excludes Home Care Services of Hendry County, Visiting Nurses Association of Hardee County and Home Care of Glades and Hendry Counties. Medical Personnel Pool and DeSoto Memorial did not prove that any other of the licensed and approved home health agencies in District VIII should be excluded from the total number of available home health agencies. Five of the 22 available home health agencies are in Lee County. Four of the available home health agencies are in Charlotte County. Three additional home health agencies have home offices in other counties, but are licensed to operate in Charlotte County. Three of the 22 available home health agencies have home offices in Collier County. In addition, three have home offices in other counties, but are licensed to operate in Collier County. One of the 22 available home health agencies has a home office in Arcadia in DeSoto County. In addition, another home health agency is licensed to operate in DeSoto County, but has its home office in another county. Neither Medical Personnel Pool nor DeSoto Memorial proved or disproved the quality of care, efficiency, appropriateness or extent of utilization of the 22 available home health agencies in District VIII. The accessibility and adequacy of the 22 available home health agencies in District VIII actually is addressed by an analysis of the need for the Medical Personnel Pool and DeSoto Memorial proposals. See Findings Of Fact 27 through 70 below. Analysis of Need for the Proposed Home Health Agencies. (i) HRS proposed Rule 10-5.11(14), Florida Administrative Code. The basic approach of the invalid HRS proposed Rule 10- 5.11(14) was to apply historical use rates for specific age cohorts of the population to the projected population within those age cohorts in a given district in a future year, or "planning horizon." This widely-accepted type of approach to projecting need is referred to by health planners as a "utilization-based methodology." There were five steps included in the methodology of the proposed rule. The first step was to project the number of elderly Medicare recipients who would utilize home health services. This number is denoted by the letter "A". To calculate "A", one multiplied the projected population aged 65 and over in the district by a constant which was intended to represent a percentage of the elderly who have historically used home health services. The proposed rule included a number, or a constant, to be used for this purpose. The value of the constant presented in the proposed rule, .0496, purportedly represented the percentage of elderly Medicare enrollees who actually used home health services in Florida in 1982. This percentage for'.. 1982 was misstated in the proposed rule and should have been 5.06% (.0506), rather than 4.96% (.0496). HRS has now acknowledged this error and agrees that .0506 (5.06%) was the appropriate 1982 age 65-and-over utilization rate. According to the proposed rule, then, to calculate the number of elderly people projected to need home health services, the population aged 65 years-and-over two years in the future was to be multiplied by the 1982 use rate for this group, .0506 (5.06%). The second step in the methodology of the proposed rule was to project the number of disabled under-65 Medicare recipients ("B") who will utilize home health services. To calculate "B", one first multiplied the projected district population two years in the future under the age of 65 by the percentage of that population estimated to be disabled. In the proposed rule, HRS used constants for both the proportion of the population under 65 years of age which was projected to be disabled (.01755), and the portion of those disabled persons who would be expected to use home health services (.0297). As in the first step, these values were taken from 1982 Medicare utilization data for Florida. Thus, in the second step of the formula under the proposed rule, the number of under-65 disabled persons who were projected to need Medicare home health services equaled the number of persons in the district under the age of 65 two years in the future, multiplied by .017555, the result of which was then multiplied by .0297. The third step of the proposed rule's formula projected the number of Medicare home health visits (as opposed to persons) needed in the district two years in the future, by multiplying the total projected number of people needing Medicare home health services by the historical number of average visits per person for Florida in 1982. The average number of visits per person in 1982 was 31.5, also derived from 1982 Medicare data. The total number of home health visits was projected as being equal to "A" plus "B", or the sum of the first two steps, multiplied by 31.5. The fourth step of the formula of the proposed rule calculated the number of needed Medicare home health agencies, given the number of projected Medicare visits calculated in the third step. The gross number of Medicare agencies projected as needed in the planning horizon ("G") was calculated by dividing the number of projected total Medicare visits per agency per year ("S"). "S" was determined through another calculation, and varied, depending upon the total number of projected Medicare visits in the district and the calendar year in which a CON application was filed. "S" was obtained by adding to a presumed base agency size of 9,000 Medicare visits per year, an additional adjusted number of visits (the so-called "additive factor"). This adjusted number of visits equaled the total projected number of Medicare visits divided by 9,000, then multiplied by what was called the "C" factor. The "C" factor varied with the calendar year in which an application was filed. For applications which were filed in 1984 and 1985, "C" was equal to 270. For applications to be filed in 1986 and 1987, "C" was equal to 225. For applications to be filed in 1988 or later, "C" was equal to 180. If the calculation of "S" resulted in a number which was larger than 21,000, then "S" was to be assigned a value equal to 21,000. This meant that the divisor "S", or the number of visits an agency was expected to provide, would range from 9,000 visits to 21,000 visits. Thus, districts would have different values for "S", and even within a district, the value of "S" would vary from year to year. The fifth and last step of the formula was to calculate the net number of Medicare-certified home health agencies needed ("N"). "N" was calculated by subtracting the number of "licensed and approved" agencies currently located in a district from the gross number of agencies projected as needed in the planning horizon, "G". The number of "licensed and approved" agencies, denoted as "L" in the proposed rule, included a count of all licensed agencies located within a district and all approved agencies that are not yet licensed. As of the date of the final hearing in this case, HRS was applying proposed Rule 10-5.11(14) to its review of home health agency CON applications, as though the rule were in full force and effect, with several significant modifications to the express language of the proposed rule. First, as noted above, HRS had agreed that its use of the value .0496 in Factor "A" of the published proposed rule was the result of an erroneous reading of the published 1982 Health Care Financing Administration ("HCFA") home health utilization rates for over-65 persons in Florida, and that the correct 1982 value was .0506. Second, HRS had abandoned the requirement of the published version of the proposed rule that decimal values of "G" always be rounded down to the next lower whole number and had modified its application of the proposed rule to conventional rounding of value "G", i.e., decimal values of .5 or greater were rounded up to the next larger whole number, and decimal values less than .5 were rounded down to the next lower whole number. In applying proposed Rule 10-5.11(14) in its review of Medical Personnel Pool's CON application, HRS included in the inventory of licensed and approved agencies ("L") three (3) agencies located in other districts, which although licensed to serve individual counties in District VIII, were not licensed to serve any of the counties in Medical Personnel Pool's proposed service area, and which had not yet applied for nor been approved to set up new agencies or sub-units in District XI under the now defunct paragraph (e) of the former proposed rule. The "additive factor" is the term which has been used to refer to everything appearing to the right of the first appearance of the figure 9,000 in the definition of the divisor, factor "S," of the methodology found in paragraph (a) of the former proposed rule. As previously discussed, the purpose of the divisor in the formula of paragraph (a) of the former proposed rule was to convert the expected number of Medicare visits needed in the appropriate planning horizon to a gross number of Medicare home health agencies needed. In order to accomplish this, an agency size of some sort had to be used, defined by number of visits, for the denominator in the formula. One intent of the value in the denominator in the methodology of the former proposed rule was to represent an optimal minimum efficient economic operating size. The premise for this concept of optimal minimum efficient economic operating size was a health planning concept that below a certain minimum range of agency size in number of visits, fixed start-up costs result in a relatively high cost per visit ratio for new small agencies. All of the available data indicates that there is a range of "economies of scale" in costs per visit for new start-up home health agencies, breaking somewhere between 6,000 and 9,000 or 10,000 visits. Once this breaking point is reached, the relatively small level of fixed costs in home health level off, and the data do not show any further significant points of economies of scale. Specifically, a distinction must be drawn between the theoretical economies of scale argument and what the actual available reported data show to be the experience of the home health industry in Florida. Using a sample of over 85% of the home health agencies in Florida (all of the agencies cost reporting through the State's Medicare fiscal intermediary), and plotting their actual reported 1984 number of visits and cost per visit, it is clearly seen that there is no predictable relationship between actual reported agency size in visits and actual reported cost per visit. A statistical regression analysis performed on this same data for three years experience, i.e., 1982, 1983 and 1984, confirms this absolute lack of any significant relationship between reported agency size and reported agency cost per visit in Florida's existing Medicare home health agencies. For example, in the most recent reporting year, the largest agency in Hillsborough County also reported the highest cost per visit in Hillsborough County. Further, whatever argument these may be as to economies of scale and start-up costs for a new home health agency, the undisputed evidence is that an existing, fully-staffed, fully- equipped home health agency has all of its necessary patient referral sources in place and functioning. Thus, the economies of scale argument relating to start-up costs of new home health agencies is not applicable to existing agencies. Nevertheless, to accomplish the goals of translating gross number of visits projected as needed in the appropriate planning horizon to gross number of Medicare agencies needed, HRS proposed in the methodology of its former proposed rule to use a denominator of 9,000 visits, inflated by the so-called additive factor in two ways, i.e., (1) by incorporating an additive factor of total Medicare visits in the district, divided by 9,000, and (2) by then multiplying this ratio by the so-called "C" factor, which consists of three different arbitrary values, 3% of 9,000 (270), 2 1/2% of 9,000 (225), and 2% of 9,000 (180), depending on the filing year of the application being reviewed. This entire value was then added to 9,000 visits. The effect of including "MV" divided by 9,000 in the additive factor was to yield a final value for this factor, with or without the "C" multiplier, which varied in size from one HRS Local Health Planning District to any other. This occurred because "MV" would differ from district to district, driven as it was by district population in the given planning horizon. For the same reason, this ratio within the additive factor would also vary from year to year. Absolutely no rationale or purpose has been offered for thus varying the "target agency size" from district to district and year to year. This result of including MV/9,000 in the additive factor is, therefore, totally arbitrary in its own right. As previously noted, the "additive factor" contained its own internal additive factor; a multiplier referred to as "C". The arbitrary values which were substituted for "C" are set forth above. In its first value, "C" caused the methodology of the proposed rule to yield a statewide average district net need under the formula as proposed of only two (2) new agencies, the closest whole value possible to the existing number of Medicare home health agencies as of the date of the proposed rule's publication. The only evidence tending to explain the derivation of "C" is testimony that HRS files contained several computer "runs," each with a different value and showing different net need results, and that the value chosen by HRS for the first two years (270) yielded the overall statewide average district net need which closest approximated the status quo. No evidence was introduced to show how either the values attributed to "C" or the existence of "C" itself were empirically justified or served a valid health planning purpose. Proposed Rule 10-5.11(14) provided for annual updating of the projected population data to be used therein, but froze as "standards" the 1982 Medicare Florida home health agency utilization rates which appeared in factors "A," "B," and "C". More recent use rates, i.e., 1983 values for each of these use rates, are, and have been, readily available. This data, published by HCFA, is released at least annually, and is readily available to anyone requesting it, with a minimum of effort. It is unreasonable not to update these utilization rates to the most recent available data. In addition, there are several specific health planning reasons why refusal to consider the readily available updated 1983 use rates would be unreasonable in this case. First, since at least 1978, when such records became available, HCFA data has shown a steady and consistent trend of increases in all three of these utilization rates, both in Florida and in the nation as a whole. There are several reasons explaining this trend: there have been ever-increasing pressures in the health care delivery system to "deinstitutionalize" patient services, with an emphasis on outpatient and home health services a major part of the reason for this emphasis is budgetary restraints home health services are far less expensive than comparable inpatient services; there has been an increase in the need for home health services for younger populations for things such as post-surgical care; there have been innovative technological developments in home health care, including the so-called hi-tech services which in the recent past, if available at all, were only available in inpatient settings; there has been a demonstrated increased awareness of home health services and their advantages, both in the physician community and among the public at large; and there have also been significant changes and expansions in Medicare reimbursement of home health services which have encouraged increased utilization. The 1982 Medicare utilization reporting period pre- dated the October, 1983, implementation of the Medicare prospective payment system for hospitals, which has been identified as a specific cause of increased home utilization. Furthermore, most of the previously discussed innovative hi-tech home health services were not in use in home health in 1982, and that reporting year's data ignores their effect on home health utilization. The proposed rule, in paragraph (e), provided that home health agencies shall be restricted to providing services within a single departmental district. The proposed rule further provided that any multi-district or cross-over agency should be included in the inventory of the home health agencies in the district into which it crosses over. As reflected in Findings Of Fact 19 and 20 above, multi-district or cross-over agencies should logically be taken into account in determining the adequacy of existing home health agencies to serve the needs of a particular district. Multi-district or cross-over agencies are licensed to operate in some of District VIII and must be presumed to be operating in parts of the district absent a showing that they are not. In this case, the evidence was that one of the three multi-district or cross-over agencies Visiting Nurses Association of Hardee County is not operating in District VIII, but there was no similar evidence as to the other two multi- district or cross-over agencies. Those two should be counted in District VIII's inventory of home health agencies. HRS did not prove by the evidence in this case that proposed Rule 10-5.11(14), if proposed as non-rule policy, is reasonable. (ii.) Quantification of Need. As mentioned, the utilization method of quantifying need for Medicare-certified home health agencies is a reasonable approach. As also mentioned, it is most reasonable and accurate to use the most recent available utilization data for 1983 in quantifying need for Medicare-certified home health agencies. According to the 1983 data: (1) 5.78% of elderly Medicare enrollees receive home health services; (2) 0.058% of the population under 65 receive Medicare home health services and (3) recipients average 33.3 home health visits each. The next element of quantifying need is determining the planning horizon on which the need is to be projected. The evidence in this case was persuasive that it is reasonable to project need two years into the future from the date of the final hearing. The date of the final hearing itself would roughly coincide with a planning horizon two years from the date the applications were deemed complete. This would leave no lead time for start-up. While the evidence was that start-up time is relatively minimal in home health, it cannot be assumed that start-up would begin at or near the time of the final hearing. The Recommended Order has just now been entered, and an additional period of time can be expected to elapse before final agency action. Finally, placing the planning horizon two years from the date of the final hearing is consistent with past agency policy before the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 10 FLW 1983 (Fla. 1st DCA, August 20, 1985); clarified on rehearing, 11 FLW 437 (February 14, 1986). Using the 1983 utilization data, the gross number of visits projected for 1988 can be obtained by multiplying the projected district population of persons 65 years of age or older times the 5.78% utilization rate and adding that number to the product of the projected district population of persons aged O to times 0.058%, the percentage of persons 0 to 64 estimated to be using Medicare home health services. Using this method, the total number of visits projected in District VIII for 1988 is 449,483. Having determined the estimated number of total visits, this number must then be translated into number of home health agencies by dividing the total by a number of visits per home health agency. Because of economies of scale, this number must be at least in the range between 6,000 and 10,000 visits per agency. The evidence is that, beyond the minimum size for a home health agency, there is no causal and predictable relationship between number of visits per agency and the cost; efficiency of a home health agency. Some of the evidence has suggested that total number of visits in a district should therefore be divided by the minimum agency size. But this would change the analysis from the analysis of the need for an additional home health agency to an analysis whether the market could bear an additional home health agency. Whether certificate of need regulation in the area of home health makes sense on the evidence of this case, the rationality of the law in effect must be presumed. Under the law in effect, the analysis must measure the need for an additional home health agency, not the ability of the market to absorb an additional home health agency. See Conclusion Of Law 3 below. Throughout the state, the number of Medicare visits per home health agency varies broadly from the minimum size agency to almost 80,000 visits per year. In District VIII, Redi-care operated in 1984 at 34,641 visits, while another agency in the district operated at only approximately a tenth of those visits. The District VIII average in 1984 was 19,206 per year. Since there are no apparent economies of scale above six to ten thousand visits per year, there is no general optimum size for a home health agency. The volume at which a home health agency can efficiently operate is instead a function of demographics. The size of a home health agency will vary in relationship to the size and composition of the population within reach of the agency and the number of other agencies actively competing for the same market. For this reason, the most appropriate available number to use as the visits per agency per year for planning purposes is the number of visits per year agencies are now making. The only evidence of this nature in the record is the average size of home health agencies in District VIII in 198419,206 visits per year or, approximately, 19,000 visits per year. 449,483 visits divided by 19,000 visits per year results in 23.7 or, rounding, 24 Medicare-certified home health agencies needed in District VIII. As previously discussed, there are for planning purposes 22 licensed and approved Medicare-certified home health agencies in District VIII, resulting in a net need in District VIII in 1988 for 24 minus 22, or 2 Medicare-certified home health agencies. However, the evidence in this case is that Medicare- certified home health agencies are limited by federal regulations and practical considerations to a range of approximately 50 miles and by HRS to the counties of their licensure. (HRS proposed Rule 10-5.11(14), Florida Administrative Code, would have expanded licensees' authority to operate throughout the district, but it has been held invalid and is not in effect.) Therefore, it is not rational for planning purposes to end a home health need analysis at the district level. If, for example, the two agencies needed in District VIII are needed in the southern part of the district, it would serve no health planning purpose to authorize two additional agencies in the northern part of the district. There are two ways of analyzing home health need on a sub-district basis: First, using the utilization method, and secondly, allocating district-wide need by percentage of the elderly population in each sub-district. Under the utilization method, Lee County is projected to require 147,686 Medicare home health visits in 1988. Dividing the total visits by the district average-sized agency (their being no evidence of the average size per agency on a county basis), Lee County would need 7.8 or, rounding, 8 Medicare- certified home health agencies. Since Lee County only has five existing or approved Medicare-certified home health agencies at this time, it has a net need of three agencies. On the other hand, using the same analysis, the Charlotte, Collier and DeSoto Counties have no need projected for 1988. For Charlotte County: 64,735 visits divided by 19,000 per agency per year equals 3.4 or, roughly, three Medicare-certified agencies needed in 1988. Charlotte County now has four Medicare- certified home health agencies with home offices in Charlotte County, and three others are licensed to operate in Charlotte County. Collier County is projected to have 57,909 visits divided by 19,000 visits per agency per year equals a need for three agencies projected for 1988. Collier now has three agencies based in Collier County and three others licensed to operate there. In DeSoto County, only 7,659 visits are projected for 1988. This is less than the average-sized agency in District VIII, but it is assumed that there is a need for one home health agency in DeSoto County in 1988. There is one based in DeSoto County now, and another is authorized to operate there. Multiplying the total district-wide need of 22 Medicare-certified home health agencies projected for 1988 by the pertinent county's percentage of the elderly population of District VIII results in the following allocation: Lee County 32.785% x 22 = 7.2 Collier County 12.77% x 22 = 2.8 Charlotte County 14.54% x 22 = 3.2 DeSoto County 1.67% x 22 = .4 As a result of this sub-district analysis, it becomes apparent that there is a need for at least two additional Medicare-certified home health agencies in Lee County, but there is no quantifiable need elsewhere in District VIII projected for 1988. (iii.) Other Need Considerations. Since 1978, utilization of home health services in Florida has consistently increased in all categories for which utilization rates are kept the number of persons over the age of using home health services, the number and percent of disabled persons under the age of 65 using home health services, and the average number of visits provided per patient per spell of illness. In recent years, there also have been significant innovations and reimbursement changes in health care, both in home health and elsewhere in the health care industry, which have significantly increased the utilization of home health services. In October, 1983, hospitals came under the new Medicare prospective payment system whereby they no longer are reimbursed for services to Medicare patients on a reported cost basis, but rather are reimbursed on a fixed-fee-for-service basis, known as Diagnostic Related Groupings, or "DRGs". Hospitals are now reimbursed a fixed amount for each defined DRG service or procedure, regardless of the costs incurred by the hospitals in delivering that service. The effect of this new reimbursement methodology has been to encourage hospitals to find ways to deliver services at lower costs, and thus maximize reimbursement. One obvious way to accomplish this is to shorten the length of the patient's stay in the hospital. Another is to defer several services, previously performed in an inpatient setting, to home health providers for provision in the patient's home, or on an outpatient basis with subsequent follow-up care in the patient's home. In either event, the experience of the industry has been that since the implementation of DRGs, many patients are being discharged by hospitals sooner, in a sicker or more acute condition, and in greater need of home health services. At the same time, the industry has experienced the recent development of several so-called hi-tech home health services more advanced treatment and care procedures now being widely provided in the home, which a very short time ago were only provided in inpatient settings. These services include such procedures as chemotherapy, hyper-alimentation, and various other forms of indirect tube feeding. In addition, the industry has seen the development of new modernized equipment which has enabled many of these and other advanced procedures to be provided more inexpensively in the home. Complicating matters further, Florida's nursing homes have, for some time now, been operating at very full levels. Often the physician is left with only two choices - very expensive hospitalization or home health care. Some of these other need considerations already have been taken into account in the quantification of need just analyzed. The analysis does not, however, take into account continued increases in utilization after 1983 which, while not exactly speculative, are not certain and are not quantifiable. DeSoto Memorial's proposal for a hospital-based home health agency affords some advantages in enabling DeSoto Memorial to utilize currently under-utilized hospital facilities and services. It also increases the likelihood that patients will benefit from better continuity of care. However, the evidence did not prove or disprove the extent of continuity of care which can now be achieved without the DeSoto Memorial proposal as a result of efforts to coordinate care of patients among the hospital, the existing home health agencies and the physicians. In other words, while continuity of care using existing home health providers may take more effort, there is no evidence that it cannot be provided. Criterion Section 381.494(6)(c)3. (The ability of the applicant to provide quality of care.) The parties have stipulated to the ability of both Medical Personnel Pool and DeSoto Memorial to provide quality care. Both applicants have the ability to provide socalled "hi-tech" home health services such as chemotherapy and indirect tube feeding. As previously mentioned, the DeSoto Memorial proposal will facilitate continuity of care. Criterion Section 381.494(6)(c)8. (The availability of resources, including health manpower, management of personnel, and funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service district the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities the availability of alternative uses of such resources for the provision of other health services and the extent to which the proposed services will be accessible to all residents of the service district.) Both Medical Personnel Pool and DeSoto Memorial have available the resources, including health manpower, management personnel, and funds for capital and operating expenditures necessary to accomplish and operate the project. There was no evidence of the effects of either project on clinical needs of health professional training programs. There was no evidence that the services proposed by either Medical Personnel Pool or DeSoto Memorial will be available to schools for health professions in the service district for training purposes, or that such services are available in a limited number of facilities. As proposed home health agencies, both the Medical Personnel Pool and the DeSoto Memorial applications will use resources largely only to extent necessary. Capital investment is relatively minimal, and nurses and other personnel providing home health services to patients can be hired on an hourly basis as needed. To the extent not needed, those resources would be available for the provision of other health services that might be needed. The DeSoto Memorial proposal for a hospital-based home health agency would be particularly capable of using such resources for alternative uses. The Medicare-certified home health services proposed by both Medical Personnel Pool and DeSoto Memorial will be accessible to all residents of the service district within approximately 50 miles of the proposed agencies. As previously mentioned, there is a geographic limit to the economic delivery of home health services from any one agency. However, except for Lee County, all residents of District VIII will have access to Medicare-certified home health services without either of the proposals. There is a demonstrated lack of access to Medicaid reimbursable home health services and to home health services for the indigent. However, those services are not the subject of this proceeding. See Conclusions Of Law 1. Criterion Section 381.494(6)(c)9. (The immediate and long- term financial feasibility of the proposal.) The parties have stipulated to the immediate and long- term financial feasibility of both the Medical Personnel Pool and the DeSoto Memorial proposal. Criterion Section 381.494(6)(c)12. (The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services, which foster competition and service to promote quality assurance and cost-effectiveness.) As previously mentioned, additional competition in Medicare-certified home health services probably would tend to improve the quality of the services provided, give providers incentive to meet the needs and desires of the patients in the service area and foster innovations in the home health area. As to price competition, there was no evidence that competition in Medicare-certified home health services will have any positive effect on the cost of home health services in the service district. Actually, the evidence was that additional home health agencies would be likely to increase slightly the charges for home health services. These increases would be subject to the Medicare cap which most agencies' charges already are approaching. I. Balanced Consideration of the Criteria. Balancing all the criteria that have been considered as applicable in light of the parties' stipulations, it is found that there is need and sufficient justification to grant the Medical Personnel Pool application, but only as to Lee County. There is no need for or sufficient justification to authorize Medical Personnel Pool to operate in Charlotte or Collier Counties or to grant the DeSoto Memorial application. (If need for Medicare-certified home health agencies could be based upon the needs of Medicaid and indigent patients, the evidence would support the need for both proposals as applied for.)
Recommendation Based on the foregoing Findings Of Fact and Conclusions of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, enter a final order: (a) granting the application of Petitioner, Personnel Pool of Southwest Florida, Inc., for a certificate of need for Medicare home health services but only for Lee County and only on the conditions (1) that Personnel Pool provide 2% of its total visits to Medicaid patients and one hour of uncompensated visits to indigent patients for every 20 hours of visits to Medicare patients for which it is reimbursed and (2) that it will operate all of its home health services out of the same corporate entity out of which it operates Medicare-certified home health services: (b) denying the Personnel Pool application as to Collier and Charlotte counties; and (c) denying the application of Petitioner, DeSoto Memorial Hospital. RECOMMENDED this 7th day of May, 1986 in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1986.
Conclusions Having reviewed the Notice of Intent to Impose Fine dated March 3, 2009, attached hereto and incorporated herein (Ex. 1), and all other matters of record, the Agency for Health Care Administration ("the Agency") has entered into a Settlement Agreement (Ex. 2) with the Respondent and being otherwise well-advised in the premises, finds and concludes as follows: ORDERED: 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. Each party shall bear its own costs and attorney's fees. The Respondent shall remit to the Agency, within ninety (90) days of this Final Order, the sum of Two Thousand Dollars ($2,000.00). A check should be made payable to the "Agency for Health Care 1 Filed November 9, 2009 11:58 AM Division of Administrative Hearings. Administration." The check, along with a reference to this case number, should be sent directly to: Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS # 14 Tallahassee, Florida 32308 Unpaid amounts will be subject to statutory interest and may be collected by all methods legally available. The above-styled case is hereby closed. DONE and ORDERED this s3 day o tJ-?t?<: ,2009, in Tallahassee, Leon County, Florida. Care Administrat1 A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY, ALONG WITH 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: Ann Lisenby Parmer Lisenby Home Care, Inc. 412 North Cove Blvd. Panama City, Florida 32401 (U. S. Mail) Shaddrick A. Haston Assistant General Counsel Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 (Interoffice Mail) Jan Mills Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 (Interoffice Mail) Finance & Accounting Agency for Health Care Administration 2727 Mahan Drive, Bldg #2 Mail Stop Code #14 Tallahassee, Florida 32308 (Interoffice Mail) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this Final Order was served on the above-named person(s) and entities by U.S. Mail, or the method designated, on this _6ay of /}6 , 2009. Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 922-5873 Ce1t1f1ecl Article Number SENDERS RECORD CHARLIE CRIST GOVERNOR March 3, 2009 ANN LISENBY PARMER LISENBY HOME CARE, INC. 412 N COVE BLVD PANAMA CITY, FL 32401 JFlORl AAGENCY F,OR HIcAl.lCH CARE AOMAINISlllATION Better Health Care for all Floridians oqJ521 CASE #: 2009002407 NOTICE OF INTENT TO IMPOSE FINE Pursuant to Section 400.474 (6) (f), Florida Statutes (F.S.), a fine of $5,000 is hereby imposed for failure to submit the home health agency quarterly report within 15 days after the quarter ending September 30. As required in section 400.474(6) (f), F.S., the agency shall impose a fine of$ 5,000. TO PAY NOW, PAYMENT SHOULD BE MADE WITHIN 21 DAYS AND MAil.ED WITH A COPY OF THIS NOTICE OF INTENT TO: Agency for Health Care Administration Finance and Accounting, Revenue Section OMCManager 2727 Mahan Drive, MS #14 Tallahassee, FL 32308 Include License Number: 20651096 and Case Number: 2009002407 in check memo field. 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. SEE ATTACHED ELECTION OF RIGHTS FORM. Agency for Health Care Administration By: Anne Menard, Manager Home Care Unit cc: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 2727 Mahan Drive,MS#34 Tallahassee. Florida 32308 Visit AHCA online at http://ahca.myfl · • I EXHIBIT I No Theme Page 1 ofl HOME HEALTH AGENCY QUARTERLY REPORT For the Quarter July 1 to September 30, 2008 Send an e-mail with this information to home.ti_ alth@ahca.myflorida.com by 5 p.m. on Wednesday, October 15, 2008 to avoid a $5,000 fme. NAME OF HOME HEALTH AGENCY Lisenby home Care, Inc LICENSE# 20651096 STREET ADDRESS & CITY: 412 N. Cove Blvd, Panama City, Fl 32401 On September 30, 2008, there were _3_ insulin-dependent diabetic patients receiving insulin injection services from my home health agency. On September 30, 2008 there were _36_ patients receiving home health services from my home health agency AND licensed hospice services. On September 30, 2008, there were a total of_77_ patients receiving home health services from my home health agency. The following professional nurses (RNs or LPNs), whose primary job responsibility is to provide home health services to patients, received remuneration from my home health agency in excess of $25,000 between July 1, 2008 and September 30, 2008. NONE Name Florida License Number Insert additional names and license numbers if necessary. http://webmail.att.net/wm/en-US/toolbar/advnotheme.html 10/2/2008 psPS - Track & Confirm Page 1 of 1 • !:fQ!DtltltlJllSlgn.J.n Track & Confirm Search Results Label/Receipt Number: 7160 3901984813801355 Status: Delivered Your item was delivered at 9:48 AM on March 19, 2009 in PANAMA CITY, FL 32401. Track &Confirm Enter Label/Receipt Number. N..-o---t-i--f-i-·c-··d·-·o·-·n- - -Q. rn·t·i01J$------- ---- Track & Confirm by email Get current event information or updates for your item sent to you or others by email. (Bo>) Return Receipt (Electronic) Verify who signed for your item by email. ( tJo>) Copyright© 1999-2007 USPS. All Rights Reserved. No FEAR Act EEO Data FOIA '\:,_· J-i t;.-,pe ; :;•,· • l.\!!.'-'l·/•. ;- t' ip!;,,; http://trkcnfrm1.smi.usps.com/PTSinternetWeb/InterLabellnquiry.do 03/24/2009 STATE OF FLORIDA
The Issue Whether the applications for certificate of need numbers 8380, 8381, 8382 and 8383, filed by Petitioners RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., ("IHS of Florida,") and Putnam Home Health Services, Inc., meet, on balance, the statutory and rule criteria required for approval?
Findings Of Fact Care First The Proposal Care First, the holder of a non-Medicare-certified home health agency license, was established in March of 1996. Owned by Mr. Freddie L. Franklin, Care First is the successor to another non-Medicare-certified home health agency also owned by Mr. Franklin: D. G. Anthony Home Health Agency ("D. G. Anthony"). Established in May of 1995, D. G. Anthony provided over 10,000 visits in its first 10 months of operation mostly in Leon and Wakulla Counties, pursuant to a contract with Calhoun-Liberty Hospital Association, Inc. Very few of the 10,000 patients were referred to D. G. Anthony by Calhoun-Liberty; they became D. G. Anthony's patients through community-based networks, including physicians, created through the efforts of Mr. Franklin and D. G. Anthony itself. D. G. Anthony was dissolved in 1996. Both its patient census and its staff of 45 were absorbed by Care First. D. G. Anthony's contract with Calhoun-Liberty was substantially assumed by Care First so that it provided service to Medicare patients as Calhoun-Liberty's subcontractor. From the point of view of the federal government, the Medicare patients served by Care First were Calhoun-Liberty's patients, even those who had not been referred to Care First by Calhoun Liberty and who had been referred from other community sources. Care First, therefore, was simply a sub- contractor providing the services on Calhoun-Liberty's behalf. The contract was terminated effective December 1, 1996. Calhoun-Liberty was free to terminate Care First with 30 days notice, a peril that motivated Mr. Franklin to seek the CON applied for in this proceeding. With the termination of the contract, Care First ceased serving Medicare patients, "because Mr. Franklin did not want to enter into another subcontractor arrangement because of all the issues and problems," (Tr. 934,) associated with such an arrangement. Mr. Franklin is involved with nursing homes as the administrator at Miracle Hill Nursing Home in Tallahassee. He is an owner of Wakulla Manor Nursing Home in Wakulla County, and he owns a 24 bed CLF, Greenlin Villa, also in Wakulla County. Miracle Hill has the highest Medicaid utilization of any nursing home in District 2. Both Miracle Hill and Wakulla Manor are superior rated facilities. On the strength of Mr. Franklin's extensive experience with community-based organizations and health care services, as well as Care First's succession to D. G. Anthony and other historical information and data. Care First decided to proceed with its application. In the application, Care First proposes to establish a home health agency that, at first, will serve primarily Franklin, Gadsden, Jefferson, Leon, Liberty and Wakulla Counties. It plans to expand into Madison and Taylor Counties in its second year of operation. Five of these eight counties have high levels of poverty; six of the eight are very rural, with the population spread widely throughout the county. Ninety-six percent of Care First's patients are over age Minority owned, approximately 65% of the patients are members of minorities. Many of the patients live in rural areas and are Medicaid recipients or are uninsured low income persons who do not qualify for Medicaid but cannot afford home health care. Since it will be serving the same patient base as a Medicare-certified agency, Care First has committed to the provision of 7% of its visits to Medicaid patients and 1% of its visits to patients requiring charity/uncompensated care. Care First projects 18,080 visits in its first year and 29,070 in its second year. Care First will promote efficiency through the use of a case management approach. Each patient will be assigned a case manager who will act as the patient advocate to provide care required and to identify and assist the patient with access to other "quality of life" enhancing services. Care First proposes an appropriate mix of services, including skilled nursing, physical therapy, speech and language therapy, occupational therapy, home health aide services and social services. Care First estimates its total project cost at $25,808. Of this amount, $2,000 is indicated as "start-up cost", with nothing allocated to salaries. Care First indicates no "capital projects" other than its proposal for the home health agency in District 2. Care First's proposal would be funded from a $60,000 bank line of credit. Projected Utilization Potential patients will be able to gain access to Care First through several avenues, including physician referral, hospital referral, nursing home discharge, assisted living referrals from community agencies and organizations such as Big Bend Hospice and through private referral. In addition, there are several natural linkages to the community for Care First. Wakulla Manor and Miracle nursing facilities offer Care First's services to discharged residents in need. Very often, residents and families choose Mr. Franklin's agency because they are familiar with him, staff or the quality of care provided. Residents of Greenlin Villa, owned by Mr. Franklin, frequently chose Care First when in need of home health agency services. Mr. Franklin's civic, church, and community involvement is impressive. He is president of the Florida Health Care Association, chairman of the board of the Tallahassee Urban League, superintendent of the Wakulla County Union Church Group, and serves on the advisory board for the Allied Health Department for Florida A&M University. In the past, he has served on the Board of Trustees of Tallahassee Community College. He was accepted as an expert in long-term care administration in this proceeding based in part on his service on the Governor's Long Term Care Commission. Miracle Hill has held a "Superior" licensure rating for the last ten consecutive years. It is the highest rating awarded by the AHCA licensure office and is intended to blazon the high quality of care provided by the facility. Although reported through Calhoun-Liberty, very few of D. Anthony's and Care First's past referrals have been generated through that affiliation. Rather, they have come through community contacts and getting the referrals from "talking with physicians," (Tr. 922), in Tallahassee and the surrounding areas, many of whom Mr. Franklin has gotten to know through his post as Administrator of Miracle Hill Nursing Home. By far, it is through physician referrals that Care First receives most of its patients. Care First's physician referral list includes 47 doctors who referred patients to D. G. Anthony since May, 1995. These doctors practice in urban areas and some have rural clinic offices which they staff on certain days of the week. Physicians are willing to refer patients to Care First because of the quality of care which has been provided by Care First, as well as the reputation of its owners. The Care First application included letters of support from eight physicians who have referred patients to Care First in the past and state that they will continue to support Care First with referrals in the future. Among the letters included are those from Dr. Earl Britt, a practitioner of internal medicine and cardiology in Tallahassee, and Dr. Joseph Webster, who practices internal medicine and gastroenterolgy in Tallahassee. Many of the patients of these two physicians are elderly. Dr. Britt's patients often have chronic hypertension or heart disease, are diabetic or suffer strokes. These two physicians provided over half the total number of patient referrals to D.B. Anthony and Care First. Dr. Britt and Dr. Webster established through testimony that Freddie Franklin and Care First have an excellent reputation for provision of quality of care and enjoy significant support among physicians within the service area. Moreover, Dr. Britt, although based in Tallahassee, stressed the importance of Care First's proven ability to provide home health services in the rural setting both from the standpoint of understanding the needs of the rural patient and from being able to travel over rural terrain in order to deliver services. (Tr. 1151, 1152, 1154). Approximately 11,500 visits were performed by D. G. Anthony staff from the period of May 1995, through April 1996, before they became the staff of Care First. Since the agency has established a presence in the district and has physician and other referral mechanisms in place, it is reasonable to project that Care First will continue to grow and will experience between 18,000 and 20,000 visits in its first year and 28,000 to 31,000 visits in year two as a Medicare-certified home health agency. These projections stem from the historical and very recent monthly growth of D. G. Anthony, as well as demand it is experiencing from Franklin and Jefferson Counties, two counties it does not serve regularly at present but plans to serve regularly in the future. The reasonableness of Care First's projections is bolstered by the conservative number of visits per patient the projections assume, 35, when typically Medicare-certified agencies average at least 35 visits and as many as 60 visits per patient. Care First's utilization projections are reasonable. It enjoys an excellent reputation for quality of care and ability to deliver services. Together with its predecessor, D. G. Anthony, it has a proven track record and has benefited from a referral network that remains in place. These factors, together with the conservative assumptions upon which its projected utilization is based demonstrate that its projected utilization is reasonable. Financial Feasibility of Care First The total project cost for the Care First agency is projected to be $25,808. The majority of the costs are reasonable for this type of health care project. The majority of the project development costs, the application fee and much of the cost of the consultant and legal fees, have already been paid by Care First. Care First's Schedule 2 was prepared in conformance with the requirements of the agency and accurately lists all anticipated capital projects of Care First. The necessary funding for the Care First project will come from Care First's existing $60,000 line of credit with Premier Bank, in Tallahassee. This method of funding the project is reasonable, appropriate, and adequate. Care First has demonstrated the short term financial feasibility of its project. Care First's schedule 6 presents the anticipated staffing requirements for its home health agency. The staffing projections are based upon the historical experience of D. G. Anthony and Care First, taking into consideration the projected start-up and utilization of the agency. The projected salaries are based upon current wages being paid to Care First employees, adjusted for future inflation. Care First's schedule 6 assumptions and projections are reasonable, and adequate for the provision of high quality care. The staffing proposed by Care First is sufficient to provide an RN or an LPN and an aide in each of the eight counties Care First proposes to serve in District 2. Care First's schedule 7 includes the payor mix assumptions and projected revenue for the first two years of operation. Medicare reimburses for home health agency services based upon the allowable cost for providing services, with certain caps. The Care First revenues by payor type were based upon the historical experience of D. G. Anthony and Care First, as well as the preparation of an actual Medicare cost report. The Care First payor mix assumptions and revenue assumptions are reasonable. Care First's projection of operating expenses in Schedule 8A is also based on the historical experience of D. G. Anthony and Care First, as modified for the mix of services to be offered and the projected staffing requirements. The use of historical data to project future expenses adds credibility to the projections. Care First's projected expenses for the project are reasonable. The Care First application presents a reasonable projection of the revenues and expenses likely to be experienced by the project. Care First has reasonably projected a profit of $8,315 for the first two year of operation. Care First's proposal is financially feasible in the long term. As the result of its community contacts, Care First has been offered the use of donated office space in Franklin, Jefferson, Wakulla, and Gadsden counties. The use of donated office space will decrease the cost of establishing a physical presence and providing services in those counties since Care First will not have a lease cost for a business office and a place to keep supplies. Quality of Care Through the experience of D. G. Anthony, Care First has identified the particular needs of the community it served. This experience has been carried over into Care First's provision of services. In the 9 months of Care First's existence at the time of hearing, it provided quality of care. Its predecessor, D. G. Anthony, also provided quality of care. While Care First's experience is relatively limited, there is no reason to expect, based on the experience of both Care First and its predecessor D. G. Anthony, that quality of care will not continue should its application be granted. IHS of Florida The Application IHS of Florida is a wholly-owned subsidiary of Integrated Health Services, Inc. ("IHS") formed for the specific purpose of filing CON applications. IHS operates other home health agencies under other subsidiary names. Pernille Ostberg is a senior vice president of the Eastern Home Care Division of Symphony Home Care Services, Integrated Health Services. In that capacity she oversees nearly 195 operations in six states, including Florida. Her operations include home health agencies, durable and medical equipment distributions, and infusion therapy offered by pharmacists. Under Ms. Ostberg's guidance, IHS has grown to its current roster of 195 agencies in only three years, from a beginning of only five agencies. IHS first acquired Central Park Lodges, primarily a nursing home company which also owned five home health agencies. Once these agencies became Medicare certified, IHS made a corporate decision to acquire additional Medicare certified home health agencies. Beginning approximately three years ago, IHS undertook a series of acquisitions which included Central Health Services, Care Team, ProCare/ProMed, and Partners Home Health. More recently, IHS has acquired the Signature Home Health and Century Home Health Companies. And, immediately prior to the final hearing in this matter, IHS acquired First American Home Health Care, making IHS the fourth largest provider of home health services in America. Of all the home health agencies overseen by IHS, 95% are Medicare certified, and 62-63 are located in Florida. IHS now has a presence in all districts except District 1 and 2. IHS personnel also have extensive experience in starting up new home health agencies. IHS personnel have opened over 40 locations across the United States. IHS employees have extensive experience bringing new home health agencies through successful surveys by the Joint Commission on the Accreditation of Hospital Organizations ("JCAHO") recommendations. Of 18 branches personally taken through initial survey by IHS's Pernille Ostberg, none were recommended to change their operations and none were cited for a deficiency. IHS has recently opened, licensed, and certified new home health agencies in AHCA Service District 5, 6, and 10. They have also received licensure in District 7, 8, and 11. Based on the extensive expensive of IHS personnel, a start up home health agency typically experiences 8,000 - 15,000 visits per first year. Opening a new program requires two months for licensure. It will require a registered nurse for three months to make certain all manuals are in place and that quality personnel are recruited. After achieving licensure, one must wait for a certification survey, which may take as long as six months. The three IHS home health agencies that became certified recently have experienced 200 visits in the first month, a good sign of growth. IHS' umbrella organization for home health organizations is Symphony. Most of their home health companies retained their original names. Other IHS home health companies include ProCare, Central Health Services, Partners Home Health, Nurse Registry, and First American. IHS of Florida has applied for applications in other districts. This applicant filed applications in District 7, 8 and 10 and each were approved. IHS of Florida's CON application number 8382 was prepared by Patti Greenberg with the significant input of IHS and IHS of Florida's operational experts. Ms. Greenberg has prepared 75-100 CON applications, 20-25 of which sought approval for Medicare Certified Home Health Agencies. Each of these prior applications had been approved or otherwise reached settlement before litigation. The Proposed Project Once the needs analysis was complete, IHS examined geographic issues within the 14 county district. IHS examined where the populations required home health agencies and what niche of the market IHS could expect to achieve. Projected visits were determined by examining month by month, how this agency would grow. This projected utilization was subdivided among sub-visit types. Existing IHS home health agencies visit mix (skilled nursing as opposed to home health aide or therapy visits) was used to estimate skill type of the projected total volume. The projected utilization was also subdivided by payor class. This payor class projection was derived specifically for District 2, its poverty levels and its managed care penetration. In the aggregate, IHS projects 7,650 visits in year one and 17,100 visits in year two. This projection is reasonable and achievable. Witnesses for the Agency agreed that IHS of Florida's projected number of visits was "definitely attainable". Past and Proposed Service to Medicaid Patients and for Medically Indigent The payor class analysis allowed IHS to conclude it should condition its approval of its application under the performance of 5% Medicaid and 1% charity care. The balance of the population served by an IHS Medicare Certified Home Health agency would be covered by Medicare. The condition is important as it is a requirement which, if not achieved, will subject IHS of Florida to fines and penalties by the agency. Improved Accessibility The applicant will improve the efficacy, appropriateness, accessibility, effectiveness and efficiency of home health services in District 2 if approved. IHS of Florida will provide good quality of care, should its application be granted. Quality of Care Through competitive forces, the applicant's approval will also improve the quality of care offered by home health agencies in District 2. The approval of IHS of Florida's application will also comply with the need evidenced by the extent of utilization of like and existing services in District 2. Economies from Joint Operations Certain economies derived from the operation of joint projects are achieved by IHS of Florida's proposal. IHS has a home office and corporate umbrella which oversees all of its operations for home health services. This master office offers economies of sale by sharing resources across a wide array of home health agencies in Florida and other states. Thus, the incremental expense for corporate overhead is reduced as compared to a free-standing home health agency. Additionally, this national oversight provides better economies to provide the most recent policies and procedures, billing systems, and other systems of business operation. Financial Feasibility IHS of Florida has the resources to accomplish the proposed project. As demonstrated on schedule 1, and schedule 3 of IHS exhibit 1, the budget for the project is only $144,000. This budget includes all appropriate equipment for both the initial and satellite offices. Budgeted amounts include all required lease expenses, equipment costs and even start-up costs such as salaries for the recruitment of training and staff prior to opening. In total, $52,000 of pre-opening expenses are projected, which is reasonable. IHS of Florida filed applications for other home health agency start-ups in three different districts. The applicant had more than $180,000 in cash on hand and an additional $226,000 assured from a commitment letter from IHS which was also contained in the application. A letter of commitment from Mark Levine, a director and executive vice president of IHS, indicated IHS will provide $250,000 in capital for this specific project. Additionally, IHS will provide up to $1 million in working capital loan to assure no cash flow problems ever arise. A similar letter of commitment appears in each of the CON applications which IHS of Florida has filed. IHS has committed to fund each of the CON applications applied for by IHS of Florida. Each of these letters of commitment for the various CON applications sought by this applicant are on file with the AHCA. In total, the applicant projects $600,000 in capital commitments assured. IHS' balance sheet, reveals access to $60 million in cash and cash equivalent. The record clearly demonstrates an ability of IHS to fund all capital contributions required by the applicant. The current assets of IHS approximate $240 million. In addition to having cash in the bank, IHS is a growing concern and is, in fact, a Fortune 500 company that is publicly traded on the New York Stock Exchange. IHS generates revenues which exceed its annual expenses. In the last year, IHS derived $30 million more than it experienced in expenses. The application is financially feasible in the short- term. IHS' application is also feasible in the long-term. IHS of Florida's utilization projections are reasonable. Budgeted staffing and salaries are reasonable. The cost limit calculation and reimbursement calculation by payor source, which is provided in great detail in Schedule 5 of IHS of Florida's application, is reasonable. Projected expenses associated with this project were reasonably calculated based on the actual experience of other IHS Home Health operations. The reasonableness of these costs are also demonstrated when compared with the cost per visit by existing agencies in District 2. In fact, IHS of Florida predicted it would be a lower cost provider than the expected cost of existing agencies at the time IHS of Florida's operations would begin. IHS of Florida's proposal will have a healthy, competitive effect on the cost of providing services by other providers. Putnam The Proposal Putnam proposes to establish a Medicare-certified home health agency with its primary office located in Bay County. Bay County was selected as the primary office based upon the locations of existing and approved agencies in District 2, the aggregate utilization of each, and the number of individuals aged 65 and over distributed among the existing District 2 counties and agencies. Mr. Alan Anderson is Putnam's sole stockholder, Director, and President. Under the ownership and administration of Alan Anderson, Putnam has provided Medicare-certified home health services in AHCA District 3 continuously since 1986. Mr. Anderson is also the sole owner, director, and president of Anderson Home Health, Inc., a Medicare-certified home health agency serving AHCA District 4 since 1992. Anderson Home Health's CON was obtained by Putnam through the same process undertaken by the prospective applicants in this proceeding. Putnam's District 3 agency has successfully served District 3 residents since 1986 at first through its Palatka office, then growing to its current size of four offices. In District 4, Anderson Home Health, Inc. has also experienced successful operations having grown from its principal office in Duval County to a total of four offices. Putnam's District 3 home health agency began with the original office located in Palatka, followed by offices opened in Gainesville, Ocala and Crystal River. Anderson Home Health, Inc.'s District 4 operation began with the original office located in Jacksonville; the second office was opened in Daytona Beach, followed by the opening of the third office in Orange Park; and the fourth office was opened in Macclenny. Putnam's District 3 agency is JCAHO accredited "with commendation." As part of CON application No. 8383, Putnam has agreed to certain conditions upon award. First, the proposed project will locate its primary office in Bay County. Putnam also conditions its approval with the provision that 0.25% of its admissions will be persons infected with the HIV virus. Four percent of its patients will be Medicaid or indigent patients. Finally, Putnam has conditioned its approval upon the provision of various special programs such as high tech home health services, a volunteer program, and the establishment of a rural health care clinic. History or Commitment to Provide Services to Medicaid and Indigent Patients For Medicare reimbursement purposes, Putnam proposes to maintain a Medicare-only agency and private sister agency which provides services to non-Medicare patients. The private sister agency will provide service to the Medicaid and indigent patients. The costs of providing services to these non-paying or partial paying patients will be absorbed by the agency as a contribution to the community. The establishment of a private sister agency to handle the non-Medicare patients is common in the home health industry. As a condition in the application, Putnam will accept up to 3.0% Medicaid patients. Although it stated in its application that it would accept between .5%-1.0% indigent patients, its conditioning of the application on 4.0% Medicaid and indigent patients would necessitate that it accept at least 1.0% indigent (if not more, should the Medicaid patients fall below 3%) in order to meet the 4.0% Medicaid and indigent care condition. The percentages proposed by Putnam are consistent with the statewide average (approximately 95% Medicare) and the District average (approximately 92.1% Medicare). Bay County's average of Medicare patients is approximately 96.4% Medicare. To meet the 4.0% Medicaid and indigent condition, Putnam's average of Medicare patients might have to be less than the Bay County average but not by much. Certainly, meeting the condition is achievable. The agency's position is that Putnam's Medicaid/indigent commitment is not a ground for denial of the application. Quality of Care Putnam has continuously owned and operated a licensed Medicare-certified home health agency in District 3 since 1986 and has been JCAHO accredited with commendation status since 1994. In an effort to continuously provide quality care, Putnam has developed a comprehensive set of policies and procedures to guide its staff, its physicians, volunteers, patients, as well as patients families. No evidence was presented to suggest that Putnam does not have a history or ability to provide quality care. Availability of Resources, Including Health Manpower, Management Personnel and Funds for Capital and Operating Expenditures Putnam has provided Medicare-certified home health service to the residents of District 3 for ten years. Putnam will be able to share its existing personnel and operations expertise with the proposed District 2 agency. Administrative, Managerial, and Operational Personnel Putnam intends to utilize existing administrative personnel in the start up and overall operation of the proposed agency. These management personnel include the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Data Processing Director, Director of Volunteers, Personnel Director. These experienced personnel will be available to provide valuable management support to the proposed agency. The proposed agency will be operated by an administrator who will report directly to Putnam's CEO, Alan Anderson. The agency's administrator will be actively involved in budget preparation, physician relations, community education, and preparation for regulatory agency surveys. The proposed agency will rely upon the demonstrated experience of key personnel in its initiation. Ms. Nora Rowsey, experienced in the start-up phases of home health agencies, will personally supervise and implement the start up phase of the proposed District 2 agency. Putnam intends to hire individuals to work within the proposed agency who already have experience in the provision of the necessary services. Current employees of Putnam's as well as contract personnel of the District 3 agency have indicated a willingness to provide services in Bay County once the application is approve. Funding and Capital Resources Putnam projects the total costs of initiating the proposed agency to be approximately $70,000. Putnam has simultaneously applied for two other Medicare-certified home health agencies, in Districts 6 and 7. Each of these projects area also projected to cost approximately $70,000. Putnam, therefore, has projected costs associated with all three projects of approximately $210,000. Additionally, there is a $10,000 contingency cost related to the District 3 offices bringing the total expenditure for all capital projects of $220,000. Putnam's application includes two letters from First Union National Bank of Florida which substantiate that there are funds on hand to finance all of Putnam's capital expenditures, including the District 2 proposed agency. As of April 18, 1996, Putnam's bank account had a twelve month average balance of $245,949.02. As of April 18, 1996 the accounts of both Putnam and Anderson Home Care Inc., had a combined twelve month average balance of $676,656.93. The evidence established that these funds exist and are available for all proposed capital projects. In the two years prior to hearing, Putnam showed sound management, significant growth, and a strong financial position. It continues to do so. In an interoffice memorandum dated May 28, 1996, from Roger L. Bell to Richard Kelly, Health Services and Facilities Consultant, Putnams' financial position was described as follows: The current ratio of .62 indicates the current assets are not adequate to cover short term liabilities. The long term debt to equity and equity to assets ratios are very weak. This, along with the negative equity make a weak financial position. The profit margin at .1% is also very weak, and raises some concern with the applicant's ability to cover operating expenses . Putnam Ex. No. 4. This criticism was answered by Putnam. The agency may not have considered certain factors applicable to a predominantly Medicare-reimbursed home health agency. Putnam's current liabilities are payable in a longer term than the receivables are collectible. Furthermore, with provision of 98% Medicare services, which is solely cost reimbursed, there remains only two percent of the operation left to make a profit. A .1% profit from the small amount of insurance and private pay patients indicated financial health. Putnam, moreover, is a viable operation because of its historical success, its knowledge of the industry, its expansion to six locations, its growth in staff, and its growth in patient visits. Putnam has the resources available to provide the necessary administrative, managerial, and operational manpower needed by the proposed home health agency. AHCA's financial criticisms are unfounded; Putnam has on hand the capital necessary for the accomplishment of the proposed project. Putnam has the experience and know-how to make the proposed project work in District 2's rural areas. Financial Feasibility Putnam has the resources to implement this project if approved. Putnam has the same capability that existed when three offices were opened during the period from April 1992 through February 1993, and the same resources when four offices were opened in 1995. In every instance, the new offices were started up with cash on hand from operation. Mr. Anderson, Putnam's President and sole shareholder and director, testified that he spends much time in the financial area of the operations. As of November 29, 1996, after deducting all accounts payable, Putnam has a cash balance of approximately $390,000. Anderson Home Health, Inc. had a balance of approximately $425,000. Mr. Anderson testified that the First Union letters in the application at pages 231 and 232 were correct and that Putnam is in even better shape now than when the letters were written. Putnam is financially feasible in the short term. AHCA contends Putnam's project is not financially feasible in the long term because the projected visits stay the same in the second year and because it does not project a profit in year two of operation. This fails to take into account Putnam's performance over the past ten years which, as the agency conceded at hearing, is an important consideration . Mr. Anderson purchased Putnam in 1986. At that time the agency had a single office in Palatka doing 4,000 visits. Following Mr. Anderson's purchase of the agency it had grown to over 55,000 visits and close to a hundred employees. After the success experienced by Mr. Anderson in Palatka, Putnam filed a CON application for District 4, with a proposed principle site in Jacksonville. The District 4 CON was approved by the agency--without any concerns for financial feasibility nor with any concerns for Putnam's cash flows. Without having any experience or referral sources in Jacksonville, Putnam began doing approximately 7,000 visits. The number of visits jumped to 45,000 in the second fiscal year, 123,000 in the third fiscal year, and as of September 30, 1996 the Jacksonville office performed 158,000 visits. Aside from the extraordinary growth experienced in the Palatka and Jacksonville offices, already discussed, Putnam has opened rural offices also doing very well. The Macclenny office in rural Baker County had over 15,000 visits in the first twelve months and is currently averaging over 1800 visits. The Crystal River office in rural Citrus County made over 12,000 visits in its first year and is currently doing approximately 1400 visits a month. Every new office opened by Putnam or Anderson Home Health since 1991 has been break even or better. Putnam has a proven track record for the successful and profitable operation of new Medicare-certified home health agencies. Putnam's project is financially feasible in the long term. Utilization Projections The application sets forth reasonable utilization projections. Based on Putnam's utilization in the past, there is no reason to believe the projections set forth in the application are or unreasonable or will not be achieved. Impact on Costs Putnam is a high tech provider of home health services and will provide some services not currently available or available only in a limited number of agencies. The impact of approval of Putnam's application on costs in the District will be minimal due to the reimbursement issues associated with Medicare which is cost based. RHA A Not-for-Profit Corporation in District II RHA is not-for-profit corporation whose purpose is to provide a continuum of care to the community. All profits are returned to its nursing homes or agencies as a way of continuing to build the programs. RHA owns two nursing homes in AHCA District II; Riverchase Care Center in Gadsden County and Brynwood Center in Jefferson County. If approved, RHA is proposing to locate its Medicare certified home health agency in existing space within the Riverchase and Brynwood nursing facilities. Both of these facilities are managed and operated by HealthPrime, Inc., a company which operates approximately 40 facilities in 13 states. While RHA is technically the owner and therefore applicant for this CON, HealthPrime would operate the proposed Medicare certified home health agency within the nursing homes. RHA's home health agency would have two offices. The office located in the Riverchase facility would serve Gadsden, Liberty, Franklin, Gulf, Wakulla, Jackson, Calhoun, Washington, Holmes and Bay Counties. The office located in the Brynwood facility would serve Leon, Jefferson, Madison and Taylor Counties. Financial Feasibility The only questions raised by AHCA concerning RHA's financial feasibility went to the ability of RHA to fund this project in conjunction with other CON projects listed on Schedule 2 of its CON application. The largest project on Schedule 2 of RHA's application was a CON application for a 20 bed addition to Riverchase Care Center. At hearing it was determined that since the filing of the instant home health CON application, the 20 bed application had been withdrawn, was no longer viable, and was not being pursued by RHA. Once AHCA's financial expert learned that the 20 bed addition to the Riverchase Care Center had been administratively withdrawn and that its costs should therefore no longer appear on Schedule 2, questions about the financial feasibility of the project were resolved. RHA's project was shown to be financially feasible in the short term based upon the financing commitment of HealthPrime. RHA proved that its assumptions and projections made in its financial analysis are reasonable. These assumptions were based on actual experience in the operation of similar skilled nursing facility based home health agencies, as well as prior experience of other home health agencies in their first two years of operation. RHA's proposed project shows a net income in years one and two and is financially feasible in both the short and long term. Availability and Access of Services To the extent that the number of people needing home health care will increase in the future, there is need for new providers of home health services to provide such availability and access. RHA's willingness to condition its application on service to AIDS, indigent and Medicaid patients can only improve the availability and access to services in the district. In addition, RHA's approval to provide nursing home based home health services is unique to the provision of home health services in District II. Efficiency RHA's proposal, which would place its home health agency within its nursing homes, is unique among the applicants in this proceeding. Such an arrangement provides not only an efficient continuum of care to the patients, it also provides efficiencies and cost savings in the sharing of resources. RHA's proposed project is cost effective because it utilizes existing space and equipment in its nursing homes. Skilled nursing home based Medicare certified home health agencies are specifically recognized by the Federal Medicare program in their cost reports. Home health reports are filed as a part of the nursing home cost report and there is an allocation of the nursing home's cost to the home health agency. This benefits both the provider and the Medicare program through cost savings. RHA's cost per visit to the Medicare program of $48 will be substantially less than the District II average of $66 per visit projected for the time RHA will be operational under the applied- for CON. RHA's proposed project will have no impact on its costs of providing other health care services. Appropriateness and Adequacy RHA proposes to provide the entire range of home health services throughout the district. Given the project need in the planning horizon, RHA's proposal is more than adequate to meet the demand for such services. Quality of Care An applicant's ability to provide quality care is another important factor in statutory and rule criteria. RHA and HealthPrime have shown, through operation of their nursing homes in Florida, all of which have superior ratings, that they have the ability to provide quality health care. In addition, HealthPrime, which will actually operate the home health agency, has experience operating four other nursing home based home health agencies. HealthPrime will utilize its quality assurance programs already in place in its other home health agencies and will seek JCAHO accreditation of this proposed agency. By combining a home health agency with its existing nursing homes, RHA will improve the case management of its patients by providing vertical integration of its services in a continuum of care. Such continuum of care provides a stability in personnel and providers that are working with the patient. Economies and Improvements from Joint or Shared Services As previously discussed, RHA's unique proposal to operate a nursing home based home health agency not only offers a continuum of care for the patient, it also provides fiscal economies to the agency as well as the Medicare program. Resource Availability Based on RHA's experience of hiring personnel for its existing nursing homes in the district, there will be no problem in hiring sufficient personnel for RHA's agency. Fostering Competition The addition of other Medicare certified home health agencies in a district consisting of 10 counties and only 23 providers will promote increased competition and more options for patients. Findings Applicable to All Four Applicants No Fixed Need Pool The agency has no rule methodology to determine the need for Medicare-certified home health agencies. The agency's most recent home health need methodology was invalidated in Principal Nursing vs. Agency for Health Care Administration, DOAH Case No. 93-5711RX, reversed in part, 650 So.2d 1113 (Fla. 1st DCA 1995). There is, therefore, no numeric need determination, or "fixed need pool", established by the agency applicable in this proceeding. District 2 AHCA District 2 is composed of 14 counties. The applicants propose to concentrate their service in various, different parts of the district. Local and State Health Plan Preferences District 2 Health Plan Services to Medicaid and Medically Indigent The first preference under the District 2 Health Plan provides a preference to applicants with a history of providing services to Medicaid or medically indigent patients or commitment to provide such services in the future. Mr. Franklin of Care First has such a history. He is an owner of Wakulla Manor, which had a Medicaid occupancy rate of 88.09% for the period of July-December, and the administrator of Miracle Hill Nursing Home which had a Medicaid occupancy rate of 95.74% for the same period. In the face of such a record, Care First’s commitment of 7% Medicaid and 1% uncompensated/charity patients might seem to pale. But it is a significant commitment, given the nature of the home health agency business, and one upon which Care First agrees its application should be conditioned. IHS conditioned its application on 5% Medicaid and 1% charity care. Putnam conditioned its application on an “Indigent and Medicaid participation equal[ling] 4.0%.” Putnam Ex. No. 1, pg. 51. Putnam, moreover, proposes a Medicare-only agency. Establishment of a private sister agency, a practice common in the home health care industry, will allow Putnam to provide service to the Medicaid and indigent patients separate from its Medicare-only agency. RHA has provided a high percentage of Medicaid/charity days at its Riverchase facility (92.10%) and at its Brynwood facility (90.24%). In addition, RHA is willing to condition its CON on the provision of a minimum of 1% of annual visits to indigent care and 5% to Medicaid. Service to Unserved Counties. Preference 2 states that “[p]reference should be given to any home health services CON applicant seeking to provide home health care services in any county within the District which is not presently served by a home health agency.” There are no counties within District 2 that are not presently served by a home health agency. Service Through a County Public Health Unit Preference 3 states that “[p]reference should be given to a home health services CON applicant seeking to develop home health care services to be provided through a county public health unit in the district in order to more adequately serve the elderly and medically indigent patients who are isolated or unable to travel to permanent health care sites." Of the four applicants, only IHS of Florida’s application is conditioned on working with public health units. IHS has experience working with public health units, working with them currently in Martin County, Manatee County and Broward County. Nonetheless, IHS of Florida will not be providing its services “through” a public health unit. Public Marketing Program Preference 4 states, “[p]reference should be given to a home health services applicant who has a history of providing, or will commit to provide, a public marketing program for services which included pamphlets, public service announcements, and various other community awareness activities. These commitments should be included on the granted CON as a condition of that CON.” Care First currently markets its services to the community and commits to a public marketing program in the future as a condition of its CON. IHS of Florida committed to performing at least one community awareness activity per calendar quarter as a condition of its application. It also indicated, moreover, that it would work to develop public service announcements and marketing programs with the help of public health units or any other appropriate vehicle. The latter indication, however, was not made a condition of the application. Putnam provides educational services to the community, its employees, patients and patients’ families, including the provision of pamphlets, and presenting audio and video tapes as appropriate to the patient and their families. Putnam, however, did not condition its application on a commitment to a public marketing program or commit to such a program in any other way in its application. RHA stated it would accept a condition on its CON to provide a public marketing program for services, including pamphlets, public service announcements and other community awareness activities. It did not reflect such a condition on the “Conditions” page of the application, but, given its statement that it would accept such a condition, there is nothing to prevent the agency from imposing such a condition should it grant RHA’s application. Access Requirements Preference 5 is, “[p]reference should be given to a home health services CON applicant who agrees, as a condition of the CON, to meet the following access requirements for each county in which services are provided: 1) 24 hour local telephone call (or toll-free) contact. 2) 24 hour call/response capability. 3) Maximum on one (1) hour response time following call. Care First currently meets the requirements of Preference 5 in the counties in which it now provides services, and has committed to continue to meet these requirements as a Medicare certified home health agency in all counties in which it will provide services. Care First has made as conditions of its CON, provision for 24-hour accessibility by answering service and installation of a toll-free access line and maintenance of a log of calls during the hours the agency is closed, including documenting of response time to each call. IHS of Florida conditioned grant of its CON on a 30 minute response time, and 24-hour phone availability on a toll-free hot line. Putnam presently provides the services in this preference in its District 3 Medicare certified home health agency and agrees to meet this preference within 90 days of initiating services. It did not, however, make a commitment to meet this preference on the “conditions,” page of its application. There is nothing to prevent the agency from making Putnam’s CON, if granted, conditional upon compliance with this preference. RHA has agreed to have its CON conditioned to meet the access requirements of Preference 5. 2. State Health Plan Service to Patients with AIDS The first preference under the State Health Plan is that “[p]reference shall be given to an applicant proposing to serve AIDS patients.” All four applicants are committed to serving AIDS patients. Full Range of Services. Preference 2 of the State Health Plan is “[p]reference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area." There are currently 11 hospital-based Medicare certified home health agencies in District 2. Several of them provide the high tech services which are sometimes needed by discharged hospital patients. Very few referrals for high tech care have been received by D. G. Anthony or Care First since May, 1995, and there is no indication such services are not available in District 2. Care First has identified, however, an unmet need for the pediatric and pre-hospice home health agency services and has conditioned its application on the provision of those services to the community. IHS of Florida proposes, among other high tech services, infusion therapies, pain management therapies and chemotherapy. There is no evidence, however, that these therapies are not available in District 2. The same is true of Putnam as to the high tech therapies it proposes to provide. There is no evidence that they are not available in District 2. Although RHA indicated in its application that it intended to provide the entire range of services that a home health agency can provide, again, there is not evidence that they are not available in District 2. Disproportionate Share Provider History Preference 3 is “[p]reference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same AHCA service district and proposing to serve such patients within its market area." Care First, having been formed in March, 1996, did not have a history of providing Medicaid and indigent patients. Care First has committed to 7% of its visits to Medicaid patients, well above the average of existing District 2 agencies of 2-3% Medicaid. Care First has committed to 1% of its visits to charity/uncompensated care. IHS of Florida has committed to 5% Medicaid and 1% charity care. Like Care First, IHS of Florida, as a newly formed corporation, does not have a history of serving a disproportionate share of Medicaid/indigent care patients. Putnam’s commitment is 3% to Medicaid and 1% to charity care. This commitment will be met through its sister home health agency and not the Medicare-certified home health agency for which the CON is sought. RHA has committed to set aside 5% total annual visits to Medicaid patients and 1% of annual visits to indigent care. It has a history of providing a disproportionate share of services to Medicaid patients at its two skilled nursing facilities in District 2, Riverchase Care Center in Quincy and Brynwood Center in Monticello. Underserved Counties Preference 4 is [p]reference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies. The rural areas of District 2 are traditionally underserved. Putnam will serve Bay County, an underserved county; the three other applicants will serve rural areas of more than one county in District 2. Consumer Survey Data Preference 5 is "[p]reference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction." Care First has committed to providing such data to the agency. IHS of Florida will maintain a data base of results of patient satisfaction surveys and make them available to the agency, just as it already does. Putnam will make available to the agency the results of surveys similar to surveys measuring patient satisfaction Putnam has already developed. Putnam has conditioned its application on providing these surveys to the agencies as well as surveys measuring physician satisfaction. RHA has cited on its “Conditions” page, “. . . (it) will provide the Agency for Health Care Administration with consumer survey data.” Quality Assurance Program and Accreditation The State Health Plan’s Sixth Preference is “[p]reference shall be given to an applicant proposing a comprehensive quality-assurance program and proposing to be accredited by either the National League for Nursing or the Joint Commission on Accreditation of Healthcare Organizations." Care First included in its application a copy of its Quality Assurance Program which has been in use since May, 1995. The program meets the state and federal licensure and certification requirement and the stringent requirements of JCAHO. Moreover, Care First has conditioned its application upon JCAHO accreditation. IHS of Florida submitted documentation regarding its Quality Assurance Program through initiatives such as Total Quality Management and Continuous Quality Improvement. It will seek accreditation from JCAHO within one year of receiving its CON. Putnam, an existing home health agency in District 3 since 1986, has over the years developed and refined a comprehensive quality assurance program which is above the industry standard. The District 3 agency, using its quality assurance program, has attained its JCAHO accreditation “with commendation,” a distinction received by less than 4% of all applicants. Putnam will seek accreditation from JCAHO for its District 2 operation within one year of receiving its CON. RHA is willing to condition its CON on the provision of a comprehensive quality assurance program and accreditation by the JCAHO. Need 1. Numeric Need Since there is no published fixed need pool applicable to this proceeding, the parties, other than the agency, developed their own methodologies for determining numeric need. Each of the methodologies employed by the parties was reasonable. After taking note of the statistics for actual patient visit growth in District 2 from 1991 to 1994, Michael Schwartz began with a conservative number of 60,000 new patient visits per year, a number half of the growth for the lowest growth year of that time period. Multiplying that number times the three horizon years of 1994-97 equals 180,000 new patient visits from 1994 which yields a need for 5.2 agencies. The reasonableness of numeric need in excess of four is supported by other factors. After the filing of the four applications at issue in this proceeding, there are two fewer Medicare-certified home health agencies with certificates of need in District 2. At the same time, home health care visits have been on the increase not only in the district as discussed, above, but in the state as well. Statewide, home health care visits grew from 18 million to 22 million between 1991 and 1994. The utilization of home health care agencies is increasing because of population growth and an increase in the number of visits per patient. The amount of time spent by patients in the hospital is decreasing. The decrease translates into increased need by patients for visits from home health agencies. The need for home health is going to continue to increase because it is a cost-effective alternative to nursing home placement and hospital care. From 1991 to 1994, the number of home health visits more than doubled: from 369,396 to 869,893. This trend continued in 1995. The recent significant growth in the utilization of home health agencies in District 2 is expected to continue. The growth is attributable not only to a population increase in the district but to increase in the use rate for home health agency services as well. The growth in use rates can be explained, in part, by the increase in the senior population (65 and older) and the pressure exerted by managed care for earlier hospital discharges and home health agency services as a viable alternative in some cases to inpatient treatment. The senior population in District 2 is reasonably expected to grow approximately 8% in the five years after 1996, with 15% growth expected reasonably in the 75 to 84 year old population and even higher growth, 25%, in the population over 84 years old. 2. Other Indications of Need Local physicians have experienced difficulty arranging for the existing home health agencies to provide services to patients located in remote areas of District 2. Specialized groups, such as AIDS patients, would, in all likelihood, benefit from additional home health agencies in District 2. Furthermore, a study conducted by IHS of Florida showed that the district has an unusually high rate of diabetes and in four counties has a diabetes death rate 100% greater than the statewide average. Well Springs home health agency is one of the two Medicare-certified home health agencies to cease providing Medicare-certified home health services after the four applicants in this proceeding filed the applications at issue here. Well Springs was licensed in all 14 counties of District 2 and had physical locations in Franklin, Gadsden, Bay, Leon, Liberty, Taylor and Madison Counties. It had a significant share of the District 2 Medicare certified home health agency market with 13.1% of the 1994 visits, the second highest in the District. With Well Springs discontinuing Medicare-certified home health agency services, a void was left for such services in District 2, particularly in those counties in which Well Springs had a physical presence.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter its final order granting CON Nos. 8380, 8381, 8382 and 8384 to RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., and Putnam Home Health Services, Inc., respectively. DONE AND ENTERED this 9th day of June, 1997, in Tallahassee, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1997. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5408 Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5403 Richard Ellis, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5408 W. David Watkins, Esquire Watkins, Tomasello & Caleen, P.A. 1315 East Lafayette Street, Suite B Tallahassee, Florida 32301 Mark Emanuel, Esquire Panza, Maurer, Maynard & Neel NationsBank Building, Third Floor 3600 North Federal Highway Fort Lauderdale, Florida 33308 Paul Amundsen, Esquire Amundsen & Moore 502 East Park Avenue Tallahassee, Florida 32301 Theodore E. Mack, Esquire Cobb Cole & Bell 131 North Gadsden Street Tallahassee, Florida 32301
Findings Of Fact 1. The initial action of HRS in regard to the application of Home Health Care of Bay's application for a CON, as set forth in the State Agency Action Report (SAAR), was to deny the application. 2. The SAAR, dated April 29, 1987, together with a cover letter dated April 30, 1987, advised Home Health Care of Bay that its application has been denied because "[t]here was no need demonstrated by Home Health Care of Bay for an additional home health agency in Bay County." These two documents further advised Home Health Care of Bay of its point of entry into Chapter 120, Florida Statutes. 3. Home Health Care of Bay availed itself of this point of entry by filing a reguest for a formal hearing pursuant to Section 120.57(1) on the initial decision to deny its application. 4. Home Health Care of Bay is a for-profit corporation under the laws of Florida, having been incorporated on December 10, 1986, prior to the SAAR and the initial denial letter. 5. Home Health Care of Bay has had its principal office in the State of Florida since its incorporation. 6. Home Health Care of Bay does not have and has never had more than 25 full-time employees. 7. At the time of its CON application and of the initial denial by HRS, Home Health Care of Bay had assets of $1,000, which was received from issuance of 1,000 shares of stock at $1.00 per share, and a note receivable of $21,600. The total net worth of Home Health Care of Bay at the time this action was initiated was $22,600. 8. By its response to Request for Admission 1 and its stipulation at hearing, HRS has stipulated that Home Health Care of Bay incurred attorneys' fees and associated costs in DOAH Case No. 87-2151 equal to $15,000 and that said fees and costs are reasonable. It is so found. 9. Following a formal hearing in DOAH Case No. 87- 2151, a Recommended Order was entered on December 17, 1987, recommending granting of the CON. A Final Order was entered by HRS on February 15, 1988. HRS adopted all of the Findings of Fact in the Recommended Order. HRS granted certain exceptions to the Conclusions of Law. Specifically, HRS granted exceptions as to the conclusions that its reliance on the statutory criteria is "nebulous," that its failure to establish a need methodology is arbitrary and capricious, that it was requiring applicants to prove "unmet need," and that the Hearing Officer relied in part on a need methodology abandoned by HRS. 10. HRS granted the requested CON to Home Health Care of Bay by this Final Order. 11. Findings of Fact in that Recommended Order, which were adopted by HRS, included findings that: A. HRS abandoned its "interim policy" regarding use of a need methodology in home health agency applications in late 1986. (Finding of Fact 56). B. HRS informed applicants that it had abandoned the interim policy only after applications were filed in the second batching cycle of 1986. (Finding of Fact 57). C. Applicants in this December, 1986, batching cycle, including Home Health Care of Bay, were asked for an unlimited extension of time within which HRS could render a decision. (Finding of Fact 58). D. Applicants who refuse to agree to an extension were evaluated on the basis of the "statutory need criteria." Applicants who did not agree to an extension were denied. (Finding of Fact 59). E. The new "policy" used by HRS to evaluate these applications (the ones who refused to grant extensions) put the burden of proof on the applicant to demonstrate an unmet need. Such a demonstration would be difficult to make. (Finding of Fact 62). F. HRS reviewed Home Health Care of Bay's application using the new "policy" based on the "thirteen statutory criteria." Such a review required Home Health Care of Bay to prove need by demonstrating an unmet need. (Finding of Fact 63). G. As evidenced by HRS' review of Home Health Care of Bay's application, a policy requiring an applicant to meet a negative burden of proof is unreasonable. It imposes a standard which is e for an applicant to meet. (Finding of Fact). 12. Fig in the Recommended Order set forth extensive the standard used by HRS to review the application Health Care of Bay and the reasons why the review was deficient and the determination to deny the application was flawed. 13. One Conclusion of Law which HRS did not reverse is that found on page 35 of the Recommended Order in the second full paragraph: Further, DHRS' preliminary decision had no reasonable basis in law or fact at the time it was made. It is this same preliminary decision which was set forth in the SAAR and which constituted the initial decision from which Home Health Care of Bay had a point of entry into Chapter 120 proceedings. 14. In attempting to justify its actions, HRS presented the testimony of Sharon Gordon-Girvin. Ms. Gordon-Girvin had no part in or knowledge of the initial decision of HRS to deny this application. Instead, shortly before and in preparation for the formal hearing in DOAH Case No. 87-2151, Ms. Gordon- Girvin reviewed the SAAR and the initial decision and agreed with HRS' counsel not to enter into a settlement with Home Health Care of Bay. Her testimony regarding the basis for and correctness of the initial denial is rejected as being irrelevant to the question of whether HRS had a reasonable basis in law and in fact at the time it initially denied the application. Additional, such after-the-fact rationalization and justification for HRS' actions is so self- serving as to merit little weight. 15. HRS failed to prove that its initial denial was reasonable in DOAH Case No. 87-2151 and it failed to prove in this case that there was any reasonable basis for its initial denial. 16. HRS did present evidence that Home Health Care of Bay may be able to recover some of its fees and costs through Medicare reimbursements amortized over at least five (5) years. However, the evidence was speculative and uncertain, and HRS did not offer evidence that Home Health Care of Bay will recover any or all of its fees and costs through Medicare reimbursements.
