The Issue The issues to be determined are: whether Petitioners have standing; whether the petition of Automated HealthCare Solutions, Inc. (AHCS), was timely filed1/; and whether Respondent’s proposed rules 69L-31.005(2)(d), 69L-31.016(1), and 69L-31.016(2) are invalid exercises of delegated legislative authority on the grounds raised by Petitioners.
Findings Of Fact The Challenged Proposed Rules At issue in the proposed rule challenge proceeding are three provisions that are part of an overall rulemaking exercise by Respondent Department of Financial Services, Division of Workers’ Compensation (Respondent, Department, or Division), to amend Florida Administrative Code Chapter 69L-31. That rule chapter bears the misnomer “Utilization and Reimbursement Dispute Rule”--a misnomer because, rather than a single rule, the chapter currently contains 12 rules, with a history note of one additional rule that was repealed. The existing 12 rules in chapter 69L-31, in effect without amendment since November 2006, carry out the Department’s statutory authority to receive, review, and resolve reimbursement disputes between workers’ compensation insurance carriers (carriers) and providers of health care services, medication, and supplies to injured workers. See § 440.13(7), Fla. Stat. A “reimbursement dispute” is “any disagreement” between a provider and carrier “concerning payment for medical treatment.” § 440.13(1)(q), Fla. Stat. The proposed amendments to chapter 69L-31 include revisions to existing rules, the repeal of one existing rule, and the addition of two new rules. The challenges at issue here are directed to both paragraphs of a newly proposed rule which would become rule 69L-31.016, if adopted. One challenge is also directed to an amendment of an existing rule. Proposed rule 69L-31.016, entitled “Reimbursement Disputes Involving a Contract or Workers’ Compensation Managed Care Arrangement or Involving Compensability or Medical Necessity,” would provide as follows, if adopted: When either the health care provider or carrier asserts that a contract between them establishes the amount of reimbursement to the health care provider, or where the carrier provided health care services to the injured worker through a workers’ compensation managed care arrangement pursuant to Section 440.134, F.S., the Department will not issue a finding that there has been any improper disallowance or adjustment. Instead, the determination will only indicate the reimbursement amount for the treatment established by the appropriate reimbursement schedules, practice parameters, and protocols of treatment in Chapter 440, F.S., to assist the health care provider and carrier in their independent application of the provisions of the contract or workers’ compensation managed care arrangement to resolve the dispute. When the carrier asserts the treatment is not compensable or medically necessary and as a result does not reimburse, the determination will only address line items not related to compensability or medical necessity. If the petitioner has submitted documentation demonstrating the carrier authorized the treatment, the Department will issue a finding of improper disallowance or adjustment. Although these rules were not proposed for adoption until December 2016, Respondent has been implementing an unadopted policy that is consistent with paragraph (1) since August 2015. Respondent also has been implementing an unadopted policy that is similar to paragraph (2) since November 2015. The other object of challenge is the proposed deletion of rule 69L-31.005(2)(d), which currently provides: If the answer to question 5 on the Petition for Resolution of Reimbursement Dispute Form [asking if reimbursement is pursuant to a contract or rate agreement] is yes, [submit] a copy of all applicable provision(s) of the reimbursement contract. Although the evidence was less than clear, it does not appear that Respondent is already implementing this proposed change. The Parties Petitioners and Intervenors all are regular participants (or, in the case of FSASC, an association whose members are regular participants) in provider-carrier reimbursement disputes pursuant to section 440.13(7), Florida Statutes, before the Division. Petitioners represent the provider side of these reimbursement disputes, while Intervenors represent the carrier side of the reimbursement disputes. Petitioner Oak Hill is a private, for-profit hospital that cares for thousands of Florida patients each year, including injured workers. Petitioner Parallon provides revenue cycle services for HCA-affiliated Florida hospitals, including Oak Hill. Among other things, Parallon acts on behalf of the HCA-affiliated hospitals in workers’ compensation claim disputes. Parallon acts on the hospitals’ behalf to resolve reimbursement disputes with carriers, including: acting for the hospitals to resolve reimbursement disputes under chapter 69L-31; coordinating any resultant administrative litigation before DOAH; and taking steps necessary to collect amounts owed following receipt of the Division’s determination. Parallon is expressly authorized to participate in reimbursement disputes as a “petitioner,” as defined in proposed rule 69L-31.003, on behalf of Oak Hill and other HCA-affiliated hospitals. Oak Hill and Parallon are regulated by, and must comply, with the requirements of chapter 69L-31 (which will include the proposed rules, if adopted) in reimbursement disputes with carriers. Petitioner FSASC is the primary organization of ambulatory surgical centers (ASCs) in Florida. Among the purposes of the FSASC is to advance the ASC industry, and its member centers’ interests, through governmental advocacy. To that extent, the FSASC maintains close contact with state agencies to monitor and provide input into legislation and regulations that govern or affect ASC operations. In furtherance of this role, the FSASC has been an active participant in all phases of Respondent’s rulemaking efforts with regard to the proposed rules. Another purpose of the FSASC is to promote, assist, and enhance its members’ ability to provide ambulatory surgical services to injured workers efficiently and cost effectively throughout Florida and, in so doing, promote and protect the interests of the public, patients, and FSASC members. FSASC’s participation in this proceeding is consistent with its purposes, and the relief sought--invalidation of the challenged proposed rules (with possible attorney’s fees incurred in connection with this proceeding)--is appropriate for an organization to pursue in a representative capacity. A substantial number of FSASC’s members provide health care services to patients who are injured workers in Florida and who receive workers’ compensation benefits in accordance with chapter 440. These health care services are reimbursable by the patients’ employers’ carriers. FSASC’s members are participants in reimbursement disputes with carriers and are regulated by, and must comply with, the requirements of chapter 69L-31 (which will include the proposed rules, if adopted). Petitioner AHCS is a technology and prescription medication claims processing company. Many physicians who dispense medication from their offices to injured workers assign their rights, title, and interest to the prescription medication claims to AHCS. Prescription Partners, LLC, is wholly-owned and operated by AHCS and is the billing entity of AHCS. In some instances, AHCS contracts with physicians, while Prescription Partners, LLC, pursues the billing and reimbursement disputes on behalf of the physicians under the contract of assignment. AHCS is authorized to participate in reimbursement disputes as a “petitioner,” as defined in proposed rule 69L-31.003. As a participant in reimbursement disputes, AHCS is regulated by, and must comply with, the requirements of chapter 69L-31 (which will include the proposed rules, if adopted). Respondent is the state agency tasked with administering chapter 440 in a way that promotes “an efficient and self-executing” workers’ compensation system “which is not an economic or administrative burden” and ensures “a prompt and cost-effective delivery of payments.” § 440.015, Fla. Stat. The Division’s medical services section administers the provider-carrier reimbursement dispute process and issues the required determinations pursuant to section 440.13(7). The determinations are made in accordance with chapter 440 and the applicable reimbursement manuals, which are codified as rules. Intervenor Zenith is a foreign, for-profit corporation licensed by the Department to provide workers’ compensation insurance to employers throughout Florida. As a carrier, and in the normal course of its workers’ compensation claim-handling responsibilities, Zenith regularly authorizes, adjusts, and pays for medical benefits for injured workers for causally-related and medically necessary treatment, including treatment rendered by physicians, hospitals, ASCs, pharmacies and prescription drug vendors, physical therapists, and other licensed health care providers, such as Petitioners. As a carrier, Zenith is regulated by chapter 440 and the related rules of the Division, including chapter 69L-31 (which will include the proposed rules, if adopted). All parties stipulated that the challenged proposed rules directly and immediately affect the rights and obligations of Zenith, and directly impact the financial obligations of Zenith in medical bill payment, as well as in any statutory reimbursement dispute between a health care provider and Zenith under section 440.13(7). The proposed rules dictate which processes will govern reimbursement disputes involving Zenith, and whether Zenith may rely fully on the provisions of reimbursement contracts. Intervenors, the Summit Companies, are Florida- licensed monoline workers’ compensation insurance companies that are managed by a managing general agent, Summit Consulting LLC, and regulated by the Department. Pursuant to their workers’ compensation insurance policies, the Summit Companies pay workers’ compensation claims for injured workers, including payment of medical benefits for care provided to injured workers by health care providers who have filed petitions for reimbursement dispute resolution under chapter 69L-31. Also, the Summit Companies have a workers’ compensation managed care arrangement authorized by the Agency for Health Care Administration (AHCA) pursuant to section 440.134. Their delegated managed care entity, Heritage Summit HealthCare, LLC, has its own proprietary PPO network. The Summit Companies, either corporately or through their delegated managed care entity, regularly authorize, adjust, and pay medical benefits for injured workers for causally- related and medically necessary treatment, including payment for treatment rendered by physicians, hospitals, ASCs, pharmacies and prescription drug vendors, physical therapists, and other licensed health care providers, such as Petitioners. All parties stipulated that the challenged proposed rules directly and immediately affect the rights and obligations of the Summit Companies, and directly impact their financial obligations in medical bill payment, as well as in reimbursement disputes under section 440.13(7) and chapter 69L-31. The proposed rules dictate which processes will govern reimbursement disputes involving the Summit Companies, including whether the Summit Companies may rely on their managed care arrangements and contracts regulated under the authority of AHCA. To the same extent that all Intervenors are directly and immediately impacted by the challenged proposed rules, Petitioners Oak Hill, Parallon, and AHCS, as well as the members of Petitioner FSASC, are also directly and immediately impacted by the proposed challenged rules, which govern reimbursement disputes under section 440.13(7). Just as the challenged proposed rules directly and immediately impact Intervenors’ financial obligations in medical bill payment to providers, such as Petitioners, the challenged proposed rules also directly and immediately impact Petitioners’ financial rights in having medical bills paid by carriers, such as Intervenors. The challenged proposed rules dictate what processes will be available in reimbursement disputes, not only for Intervenors, but for Petitioners. The challenged proposed rules dictate when the cost-efficient reimbursement dispute process will be, and will not be, fully available to Petitioners and FSASC’s members, and when the prompt delivery of payment envisioned as the end result of the reimbursement dispute process will, or will not be, available to them. The parties also stipulated that the Division’s challenged proposed rules immediately and substantially affect Intervenors because prior authorization, the managed care defense, provider contract disputes, and medical necessity all have been raised as issues in prior chapter 69L-31 provider disputes with these carriers. It stands to reason that the providers who are on the other side of these disputes with carriers are just as immediately and substantially impacted by the proposed rules in this regard. Reason aside, Respondent readily stipulated to the direct, immediate, and substantial impacts to Intervenors, but steadfastly disputed that Petitioners (or the members of Petitioner FSASC) must necessarily be impacted to the same degree. Yet they are, after all, the other side of the reimbursement dispute coin. It is difficult to understand how one side of a dispute could be directly, immediately, and substantially impacted by proposed rules regulating the dispute process, while the other side of the dispute would not be equally impacted. At hearing, the undersigned raised this seeming incongruity, and suggested that Respondent would need to explain its different positions with regard to the factual predicates for standing for Intervenors and for Petitioners, besides the obvious difference that Intervenors were supporting Respondent’s proposed rules while Petitioners were challenging them. Respondent offered no explanation for its incongruous positions, either at hearing or in its PFO. Respondent’s agreement that Intervenors are immediately, directly, and substantially affected by the challenged proposed rules serves as an admission that Petitioners (or Petitioner FSASC’s members) are also immediately, directly, and substantially affected by the challenged proposed rules. Specific examples were offered in evidence of the Division’s refusal to resolve reimbursement disputes because contracts and managed care arrangements were involved, or because payment was adjusted or disallowed due to compensability or medical necessity issues. FSASC provided a concrete example of the application of the unadopted policies to one of its members, resulting in immediate injury when the Division refused to resolve a reimbursement dispute because a contract was involved. Petitioner Oak Hill identified a single reimbursement dispute over a $49,000 underpayment that remained unresolved because of the Division’s refusal to resolve the dispute because either a contract or managed care arrangement was involved. Petitioner Parallon’s income is based, in part, on paid claims by carriers, so it loses income when these reimbursement disputes are not resolved and the carriers are not ordered to promptly pay an amount. Petitioner AHCS offered examples of reimbursement disputes that the Division refused to resolve because the carrier disallowed or adjusted payment due to compensability or medical necessity issues. AHCS also noted that the incidence of carrier disallowances and adjustments of payment for compensability and medical necessity reasons has increased since the Division stopped making determinations to resolve reimbursement disputes on those issues. At the very least, Petitioners have already been harmed in these ways: by the delay in resolving reimbursement disputes, which includes lost cash flow and the time value of the money that carriers are not ordered to pay; by the increased personnel costs necessary to try some other way to pursue these claims; and by the prospect of court filing fees and attorney’s fees to try to litigate their right to payment when deprived of the statutory mechanism for cost-efficient resolution of reimbursement disputes. Conceivably, providers will not have recourse in court to contest disallowance or adjustment of payment, given Respondent’s exclusive jurisdiction to decide any matters concerning reimbursement. § 440.13(11)(c), Fla. Stat. Meanwhile, carriers immediately benefit from delay, by not being ordered to promptly pay claims. In an annual report addressing reimbursement dispute determinations for the fiscal year from July 1, 2015, through June 30, 2016, the Division reported that in 85.5 percent of its reimbursement dispute determinations, it determined that the health care providers had been underpaid. Overview of Workers’ Compensation Reimbursement Dispute Process Under Florida’s statutory workers’ compensation system, injured workers report their injury to the employer and/or the carrier. With an exception for emergency care, a health care provider must receive authorization for treatment from the carrier prior to providing treatment. After providing treatment, health care providers, including hospitals and physicians, must submit their bills to employers’ carriers; they are prohibited from billing the injured employees who received the treatment. These bills typically have multiple line items, such as for pharmaceutical prescriptions, diagnostic tests, and other services rendered. Carriers are required to review all bills submitted by health care providers to identify overutilization and billing errors, and to determine whether the providers have complied with practice parameters and protocols of treatment established in accordance with chapter 440. § 440.13(6), Fla. Stat. Mr. Sabolic explained that the “protocols of treatment” are the standards of care in section 440.13(15). These include criteria for “[r]easonable necessary medical care of injured employees.” § 440.13(15)(c), Fla. Stat. The carrier review of provider bills must culminate in a determination of whether the bill reflects overutilization of medical services, whether there are billing errors, and whether the bill reflects any violations of the practice parameters and protocols of treatment (standards of care). If a carrier finds any of these to be the case, the carrier is required by statute to disallow or adjust payment accordingly. The carrier is expressly authorized to make this determination “without order of a judge of compensation claims or the department,” if the carrier makes its determination in compliance with section 440.13 and Department rules. § 440.13(6), Fla. Stat. The Department’s rules require carriers to communicate to providers the carriers’ decisions under section 440.13(6) to pay or to deny, disallow, or adjust payment, with reasons for their decisions, in an “explanation of bill review” (EOBR).5/ If a carrier contests or disputes certain line items on a medical bill, the EOBR must identify the line items disputed and the reasons for the dispute, using EOBR codes and code descriptor. The EOBR code list, with 98 codes and descriptors, is set forth in Florida Administrative Code Rule 69L-7.740(13)(b). All but two of the codes describe reasons for disallowing or adjusting payment. EOBR Code 10 means payment denial of the entire bill, when the injury or illness is not compensable. EOBR Code 11 is used for partial denial of payment, where, although there is a compensable injury or illness, a diagnosis or procedure code for a particular line item service is determined by the carrier to be unrelated to the compensable condition. The EOBR coding rule provides that up to three codes can be assigned to each line item to “describe the basis for the claim administrator’s reimbursement decision in descending order of importance[.]” In addition, there is a “free-form” box in which additional notes of explanation may be given. The carrier’s determination to disallow or adjust payment of a health care provider’s bill, made pursuant to section 440.13(6), and explained to the health care provider by means of an EOBR, is the action that sets up a potential reimbursement dispute pursuant to section 440.13(7). “Any health care provider who elects to contest the disallowance or adjustment of payment by a carrier under subsection (6) must, within 45 days after receipt of notice of disallowance or adjustment of payment, petition the department to resolve the dispute.” § 440.13(7)(a), Fla. Stat. (emphasis added). The petition must be accompanied by “all documents and records that support the allegations in the petition.” Id. The carrier whose EOBR is disputed “must” then submit to the Department within 30 days of receipt of the petition all documentation substantiating the carrier’s disallowance or adjustment. § 440.13(7)(b), Fla. Stat. Section 440.13(7)(c) and (d) provide for the culmination of the reimbursement dispute process, as follows: Within 120 days after receipt of all documentation, the department must provide to the petitioner, the carrier, and the affected parties a written determination of whether the carrier properly adjusted or disallowed payment. The department must be guided by standards and policies set forth in this chapter, including all applicable reimbursement schedules, practice parameters, and protocols of treatment, in rendering its determination. If the department finds an improper disallowance or improper adjustment of payment by an insurer, the insurer shall reimburse the health care provider, facility, insurer, or employer within 30 days, subject to the penalties provided in this subsection. (emphasis added). Section 440.13(7)(e) provides that the Department “shall adopt rules to carry out this subsection,” i.e., the reimbursement dispute process. As noted, the Department did so in 2006, in promulgating chapter 69L-31. The rules were transferred from AHCA, which was the state agency vested with the statutory authority to determine reimbursement disputes between providers and carriers until the Department took over those functions in 2005.6/ Evolution of the Policies in the Challenged Proposed Rules Reimbursement Pursuant to a Provider-Carrier Contract or Managed Care Arrangement For approximately a decade, the Division accepted petitions to resolve reimbursement disputes when the reimbursement amount was determined by a contract between the provider and carrier. The Division resolved these disputes by issuing written determinations of whether the carrier properly adjusted or disallowed payment, and if the Division determined the carrier improperly adjusted or disallowed payment, the Division would specify the contract reimbursement amount that the carrier was required to pay within 30 days. That is because section 440.13(12) expressly recognizes that reimbursement to providers shall be either an amount set as the maximum reimbursement allowance (MRA) in fee schedules (or other amount set by a statutory formula), or the agreed-upon contract price.7/ Health care network reimbursement contracts typically do not (but may) include prices stated in dollar amounts. Instead, they frequently establish the price for reimbursement as a percentage of the MRA, or a percentage of allowable charges for services rendered. The Division’s reimbursement manuals in effect today, adopted as rules, recognize in a variety of contexts that the amount a provider is to be reimbursed is the contract amount, when there is a contract between the provider and carrier. The Workers’ Compensation Health Care Provider Reimbursement Manual currently in effect provides this introductory statement: Reimbursement will be made to a Florida health care provider after applying the appropriate reimbursement policies contained in this Manual. A carrier will reimburse a health care provider either the MRA in the appropriate reimbursement schedule or a mutually agreed upon contract price. (emphasis added). Florida Workers’ Compensation Health Care Provider Reimbursement Manual (2016 edition) at 15, adopted and incorporated by reference in rule 69L-7.020, effective July 1, 2017. The manual has dozens of references to reimbursing at the contract price, such as this example for reimbursement for multiple surgeries: Reimbursement for the primary surgical procedure will be the MRA listed in Chapter 3, Part B of this Manual or the agreed upon contract price. Reimbursement for additional surgical procedure(s) will be fifty percent (50%) of the listed MRA in Chapter 3, Part B of this Manual or the agreed upon contract price. * * * Note: If there is an agreed upon contract between the health care provider and the carrier, the contract establishes the reimbursement at a specified contract price. (emphasis added). Id. at 63. Similarly, the ASC reimbursement manual in effect has multiple references to reimbursement at the contract price or contract amount, such as this example for surgical services: For each billed CPT® code listed in Chapter 6 of this Manual, the ASC shall be reimbursed either: The MRA if listed in Chapter 6 of this Manual; or The agreed upon contract price. For each billed CPT® code not listed in Chapter 6 of this Manual, the ASC shall be reimbursed: Sixty percent (60%) of the ASC’s billed charge; or The agreed upon contract price. * * * Note: If there is an agreed upon contract between the ASC and the carrier, the contract establishes the reimbursement at the specified contract price. (emphasis added). Florida Workers’ Compensation Ambulatory Surgical Center Reimbursement Manual (2015 edition) at 17, incorporated by reference in rule 69L-7.020, effective January 1, 2016. See also ASC Manual App. A at 1 (surgical implant MRA is “50% above acquisition cost; amount certified or contract amount.”). The reimbursement manual for hospitals has similar references, including this directive for inpatient services: Except as otherwise provided in this Manual, charges for hospital inpatient services shall be reimbursed according to the Per Diem Fee Schedule provided in this Chapter or according to a mutually agreed upon contract reimbursement agreement between the hospital and the insurer. (emphasis added). Florida Workers’ Compensation Reimbursement Manual for Hospitals (2014 edition) at 15, adopted and incorporated by reference in rule 69L-7.501, effective January 1, 2015. In 2013, the Division submitted a legislative proposal for the Department to consider including in its proposed bill. The Division requested an amendment to section 440.13 to “[r]emove contracted reimbursement from [reimbursement dispute] resolution authority of [the] department.” Jt. Ex. 51 at 1. That proposal did not lead to a statutory change. An example of how the Division resolved reimbursement disputes involving contracts before its recent policy is shown in Exhibit FS1, a “Resolution of Reimbursement Dispute Determination.” According to the document, at issue was a reimbursement dispute regarding a bill for one service, for which the carrier issued an EOBR disallowing payment. The Division’s finding regarding reimbursement was that the contract at issue “provides for reimbursement at the lesser of 90% of billed charges or 90% of the fee schedule.” The Division calculated the contract price and determined that the “total correct reimbursement amount” per the contract was $2,334.60. The determination, issued June 30, 2015, was: The Department of Financial Services, Division of Workers’ Compensation has determined that the petitioner substantiated entitlement to additional reimbursement of disputed services based upon the documentation in evidence and in accordance with the provisions of the Florida Workers’ Compensation Reimbursement Manual [for ASCs], 2011 Edition, Chapter 3, page 26. The respondent shall remit the petitioner the amount of $2,334.60 and provide the Division proof of reimbursement to the petitioner within thirty (30) days of receipt of this notice[.] Ex. FS1 at 2. The evolution was a little different for reimbursement disputes involving workers’ compensation managed care arrangements. Rule 69L-31.015, adopted by the Department in 2006, provided as follows: A health care provider may not elect to contest under Section 440.13(7), F.S., disallowance or adjustment of payment by a carrier for services rendered pursuant to a managed care arrangement. Mr. Sabolic explained that while this rule was in effect, the Division would dismiss petitions that disclosed managed care arrangements. But the rule was repealed in response to a challenge to the rule’s validity. As Mr. Sabolic recalled it, the challenger was Parallon or an individual HCA-affiliated hospital. According to Mr. Sabolic, the Division agreed that it did not have the authority to simply dismiss petitions. The rule history note states that the rule repeal was effective May 22, 2014.8/ For the 15-month period from late May 2014 through late August 2015, the Division accepted reimbursement dispute petitions and resolved the reimbursement disputes, even though a workers’ compensation managed care arrangement was involved, just as it had been doing for years for reimbursement disputes involving contracts. On or about August 24, 2015, the Division changed its policy on issuing determinations when a contract (including a managed care arrangement) was alleged in the petition. In all determinations of reimbursement disputes issued after August 24, 2015, if a contract or managed care arrangement was alleged, the Division stopped making findings regarding the contracted-for reimbursement amount. Instead, the Division started reciting the fee schedule/MRA amount or applicable statutory formula amount, making no determination regarding whether the carrier properly adjusted or disallowed payment, or, if an improper adjustment or disallowance, how much the reimbursement should have been under the contract and how much the carrier was required to reimburse the provider within 30 days. The Division changed the name of the form it used from “Resolution of Reimbursement Dispute Determination” to just “Reimbursement Dispute Determination,” signaling that the Division would no longer be resolving reimbursement disputes involving contracts. Instead, the following language appeared in each such determination: The amount listed above does not apply to any contractual arrangement. If a contractual arrangement exists between the parties, reimbursement should be made pursuant to such contractual arrangement. Exhibit FS3 is an example showing a Division “determination” applying its new policy to a reimbursement dispute petition filed by an ASC member of FSASC. Part IV of the form, “Reimbursement Dispute Policies and Guidelines,” reflects (as did prior determinations) that the reimbursement manual for ASCs, adopted by rule, “sets the policies and reimbursement amounts for medical bills.” As previously noted, the reimbursement manuals set reimbursement amounts at either the MRA/statutory formula or the agreed-upon contract price, consistent with the policy in section 440.13(12)(a). Nonetheless, the Division added a note to the end of part IV: NOTE: This reimbursement determination is limited in scope to standards and policies set forth in chapter 440, Florida Statutes, including all applicable reimbursement schedules, practice parameters, and protocols of treatment. It does not interpret, apply or otherwise take into account any contractual arrangement between the parties governing reimbursement for services provided by health care providers, including any workers’ compensation managed care arrangement under section 440.134, Florida Statutes. Ex. FS3 at 2. Accordingly, even though the determination form reflects that the ASC petitioner met its filing requirements for a reimbursement dispute over a bill for services in the amount of $5,188.00, none of which was paid according to the EOBR, and even though the carrier failed to file a response to the petition, the Division did not make a determination that the carrier improperly disallowed payment or that the petitioner had substantiated entitlement to additional reimbursement in the amount of the agreed-upon contract price, as it had in previous determinations. Instead, the Division set forth the “correct reimbursement” amount that would apply if the MRA applied, while noting that amount would not apply if there was a contractual arrangement providing a different amount. The carrier was not ordered to remit any amount within 30 days. Reimbursement Disputes Involving Issues of Compensability or Medical Necessity Prior to November 2015, the Division resolved reimbursement disputes by determining the issues as framed by the carrier’s actions under section 440.13(6), to disallow or adjust payment of a bill or specific line items in a bill for reasons (codes) in the EOBR, which were contested by the provider in a timely-filed petition under section 440.13(7)(a). The EOBR code list contains one code (code 10) for denial of payment of an entire claim based on non-compensability of an injury or illness. One other code (code 11) is for partial denial of payment, where there is a compensable injury, but a specific line item indicates treatment unrelated to the compensable injury. Five additional codes (codes 21 through 26) apply to disallowed payments for various medical necessity reasons. Fla. Admin. Code R. 69L-7.740(13)(b). Prior to November 2015, the Division resolved reimbursement disputes when the provider timely petitioned to contest the disallowance or adjustment of payment by a carrier, as set forth in the EOBR, including when the EOBR cited compensability and/or medical necessity code(s) as the reason(s) for disallowing or adjusting payment of a provider’s bill. On or about November 2, 2015, the Division changed its policy and no longer addressed in its reimbursement dispute determinations whether a carrier properly or improperly disallowed or adjusted payment for reasons of medical necessity or compensability. Exhibit AH6 is an example of a Division written determination that makes no determination of whether a carrier properly or improperly disallowed payment of a line item based on a medical necessity issue (EOBR Code 24). Instead, the “determination” included this note: Note: The Department will not address any disallowance or adjustment of payment where the basis for the disallowance or adjustment or payment by the carrier involves denial of compensability of the claim or assertion that the specific services provided are not medically necessary. Ex. AH6 at 2. This note has been included in all determinations issued after November 2015, where payment was disallowed or adjusted based on medical necessity or compensability. Rulemaking Process The Division began rule development to incorporate its policy changes in amendments to chapter 69L-31. A Notice of Development of Proposed Rules was published on December 16, 2015. The notice set forth the preliminary text of proposed amendments, including new proposed rule 69L-31.016, entitled “Reimbursement Disputes Involving a Contract or Workers’ Compensation Managed Care Arrangement.” The notice stated that the purpose and effect of proposed rule 69L-31.016 was “to limit the scope of dispute resolutions to compliance with standards under Chapter 440, F.S. and exclude issues of contract interpretation.” The exclusion of disallowed or adjusted payments based on issues of compensability and medical necessity, not mentioned in the statement of purpose and effect, was initially put in rule 69L-31.005, in a paragraph stating that the Department will only address specific EOBR line items where the carrier adjusted or disallowed payment and are disputed by the provider, but then stating that the Department will not address specific EOBR adjustment or disallowance items involving compensability or medical necessity, even if disputed. A rule development workshop was held on January 12, 2016. The Department published a second Notice of Development of Proposed Rules, revising the proposed changes to chapter 69L-31, including both the contract/managed care exclusion and the compensability/medical necessity exclusion. On June 10, 2016, the Division held a second rule development workshop addressing the proposed rule revisions. On December 7, 2016, the Division published a Notice of Proposed Rules, formally initiating rulemaking to revise chapter 69L-31. The notice set forth a revised proposed rule 69L-31.016. Its new title was “Reimbursement Disputes Involving a Contract or Workers’ Compensation Managed Care Arrangement or Involving Compensability or Medical Necessity,” joining in one rule all of the new exceptions, for which the Division would not be making determinations of whether carriers properly or improperly adjusted or disallowed payments. As proposed, the rule provided: When either the health care provider or carrier asserts that a contract between them establishes the amount of reimbursement to the health care provider, or where the carrier provided health care services to the injured worker through a workers’ compensation managed care arrangement pursuant to Section 440.134, F.S., the Department will not issue a finding that there has been any improper disallowance or adjustment. Instead, the determination will only indicate the reimbursement amount for the treatment established by the appropriate reimbursement schedules, practice parameters, and protocols of treatment under Chapter 440, F.S., to assist the health care provider and carrier in their independent application of the provisions of the contract or workers’ compensation managed care arrangement to resolve the dispute. When the carrier asserts the treatment is not compensable or medically necessary and as a result does not reimburse, the Department will not issue a finding that there has been any improper disallowance or adjustment. Instead, the determination will only indicate the reimbursement amount for the treatment established by the appropriate reimbursement schedules, practice parameters, and protocols of treatment under Chapter 440, F.S., should compensability or medical necessity be later established. The stated purpose of proposed rule 69L-31.016 was to specify “that the scope of Department determinations involving reimbursement disputes is limited to findings relating to reimbursement schedules, practice parameters, and protocols of treatment, and [to clarify] that the Department will issue no findings regarding an improper disallowance or adjustment in reimbursement involving managed care contracts or when the carrier asserts that medical treatment was either not compensable or not medically necessary[.]” Jt. Ex. 3. As published in December 2016, proposed rule 69L- 31.016 cited sections 440.13(7)(e) and 440.591 as the “rulemaking authority,” and sections 440.13(7) and (12)(a) and 440.134(15) as the “laws implemented.” The Division’s notice stated that, based on its determinations as to adverse impact and regulatory costs: “A SERC has not been prepared by the Agency.” Jt. Ex. 3. By letter dated December 28, 2016, Parallon proposed a LCRA to the proposed rule 69L-31.016(1) (and to other proposed rules not at issue in this proceeding). The LCRA explained that Parallon was already experiencing increased costs because of the Division’s unadopted policy, and Parallon proposed that the most appropriate lower cost alternative to accomplish the statutory objectives was not to adopt proposed rule 69L-31.016(1). On January 5, 2017, the Division held a public hearing on the proposed rules. Petitioners (through counsel) offered comments in opposition to the proposed rules. Parallon’s counsel also submitted the LCRA letter into the record. On May 2, 2017, the Division published a Notice of Correction. The notice stated that, contrary to the statement in the Notice of Proposed Rules, SERCs had been prepared for the proposed rules, and that the SERC for proposed rule 69L-31.016 now had been revised to address the LCRA. The impression given by the various documents identified as a SERC or revised SERC, half of which are entitled “Department of Financial Services Analysis to Determine if a [SERC] is Required,” all of which are similar or identical in content, and none of which bear a date, is that, prior to the LCRA, Respondent did not prepare a SERC for proposed rule 69L- 31.016; it prepared a document by which it determined that no SERC was required. After the LCRA was filed, Respondent added a reference to the LCRA, but otherwise did not change the content of its non-SERC. In the Notice of Correction, the Division stated: “The [SERC] for each of the above-referenced proposed rules is available by accessing the Department’s website at http://www.myfloridacfo.com/Division/WC/noticesRules.htm.” The document titled “Department of Financial Services Analysis to Determine if Statement of Estimated Regulatory Costs Is Required,” referred to by the Division as the SERC, was not available on the DFS website on May 2, 2017, as the Notice of Correction indicated. Instead, it was available at the referenced website location on or after May 3, 2017. Upon request by counsel for Parallon on May 3, 2017, the document referred to as a SERC was also provided to Parallon. Mr. Sabolic testified that the document referred to as the SERC was actually available at the Division on May 2, 2017, and would have been made available to someone if it was requested on that day. However, the noticed means by which the document would be “made available” was at a specific website location that was not functional until May 3, 2017. The so-called SERC document for proposed rule 69L- 31.016 suffers from several obvious deficiencies. As to the Division’s “economic analysis,” the document states: “N/A.” That is because the Division did no economic analysis.9/ In response to two separate prompts, for the Division to set forth a “good faith estimate of the number of individuals and entities likely to be required to comply with the rule,” and separately, to give a “general description of the types of individuals likely to be affected by the rule,” the Division gave the identical response: “This Rule changes how the Medical Services Section review Petitions for Resolution of Reimbursement Disputes. Only the Medical Services Section will be required to comply.” In addition, the document indicates (with no explanation or analysis) that there will be no transactional costs to persons required to comply with the new rule, and no adverse impact at all on small businesses. In contrast to the so-called SERC document indicating that only the medical services section will be required to comply with, or be impacted by, the proposed rule, in the Division’s 2013 legislative proposal seeking to remove its statutory authority to determine reimbursement disputes involving contracts, the Division was able to identify persons who would be affected by the proposal, acknowledging as follows: “Workers’ compensation carriers, including self- insurers (DFS Div. of Risk Mgmt), third party administrators, and health care providers, including facilities, are affected.” And, of course, the Division was well aware by May 2017 of the variety of providers and carriers expressing their interests and concerns during the rule development that had been ongoing for 17 months by then. To say that the Division gave the SERC task short shrift would be generous. The Division did not take this task seriously. The so-called SERC document also identified the Parallon LCRA. In response to the requirement to describe the LCRA and provide either a statement adopting it or a statement “of the reasons for rejecting the alternative in favor of the proposed rule,” the Division stated: Parallon’s lower cost regulatory alternative consisted of a cost-based argument against the adoption of the proposed rule on the basis that the existing rule provides a lower cost alternative. The Division rejected the regulatory alternative and intends to move forward with adoption on the proposed rule, but will revise the proposed rule to read as follows[.] Jt. Ex. 12, at bates-stamp p. 48. The reference to a revision to the proposed rule does not belong in the statement of reasons for rejecting the LCRA. Its placement there was misleading, as if the revision to the proposed rule helped to explain why the Division rejected the LCRA. But no revision was made to the rule to which the LCRA was directed--proposed rule 69L-31.016(1). The revision was to proposed rule 69L- 31.016(2), not addressed by the LCRA. At hearing, Mr. Sabolic attempted to provide the statement of reasons for rejecting the LCRA, missing in the so- called SERC document. He said that the cost-based argument was considered speculative and lacked data (but that explanation was not in the so-called SERC document). Although he thought that the SERC document stated that the LCRA was rejected because it was based on a “faulty” cost-based argument, the word “faulty” was not in the SERC. On its face, the SERC offers no reason why the “cost-based argument” was rejected— just that it was rejected. The amendment to proposed rule 69L-31.016(2) mentioned in the SERC document was also published on May 2, 2017, in a Notice of Change. The change was shown as follows: When the carrier asserts the treatment is not compensable or medically necessary and as a result does not reimburse, the Department will not issue a finding that there has been any improper disallowance or adjustment. Instead, the determination will only address line items not related to indicate the reimbursement amount for the treatment established by the appropriate reimbursement schedules, practice parameters, and protocols of treatment under Chapter 440, F.S., should compensability or medical necessity be later established. If the petitioner has submitted documentation demonstrating the carrier authorized the treatment, the Department will issue a finding of improper disallowance or adjustment. The Notice of Change did not change either of the other challenged provisions—proposed rule 69L-31.016(1) and the proposed deletion of rule 69L-31.005(2)(d). The Notice of Change deleted the prior citation to section 440.13(12)(a) as one of the laws implemented by proposed rule 69L-31.016, leaving only sections 440.13(7) and 440.134(15) as the laws implemented. Division’s Justifications for the Challenged Proposed Rules Mr. Sabolic was Respondent’s hearing representative and sole witness to explain and support the challenged rules. Mr. Sabolic testified that when a contract dictates the reimbursement amount, the Division does not believe it has statutory authority to interpret or enforce contract terms. Yet he acknowledged that the Division’s reimbursement determinations were required to be based on policies set forth in chapter 440, and that the Division was required to apply its reimbursement manuals that are promulgated as rules. Both chapter 440 and the reimbursement manuals expressly require reimbursement at the agreed-upon contract price, as detailed above. The Division recognized this for a decade, during which it applied chapter 440 and its reimbursement manuals to determine the agreed-upon contract price, resolve reimbursement disputes, and order carriers to pay the amount required by their contracts. The Division’s rationale stands in stark contrast to the Division’s 2013 request for a legislative amendment to remove its statutory authority to determine reimbursement disputes when reimbursement is dictated by contracts. The Division’s request constitutes an admission that it believes it has the statutory authority it now says it lacks. Apart from statutory authority, Mr. Sabolic indicated that in the decade during which the Division did resolve reimbursement disputes involving contracts, it was sometimes difficult to determine whether there was a contract in effect between the parties. There was a variety of contracts, and sometimes they were complex. With regard to managed care arrangements, Mr. Sabolic said that, similar to contracts, the Division does not think it has the power to interpret or enforce managed care arrangements, because that power lies within AHCA under section 440.134. He said that section 440.134(15) was cited as a law implemented by proposed rule 69L-31.016 because the statute addresses grievance or complaint procedures under a managed care arrangement. Intervenors Summit Companies attempted to prove that providers are required to resolve reimbursement disputes involving workers’ compensation managed care arrangements by using the grievance process described in section 440.134(15). The evidence failed to support that contention. The evidence showed that the grievance form used by the Summit Companies’ managed care arrangement, approved by AHCA, describes the grievance process as encompassing “dissatisfaction with medical care issues provided by or on behalf of a workers’ compensation managed care arrangement.” Tr. 323. As confirmed by the definitions of “complaint” and “grievance” in the workers’ compensation managed care law, the grievance process is used to resolve an injured worker’s dissatisfaction with an insurer’s managed care arrangement, including a refusal to provide medical care or the care provided. See § 440.134(1)(b) and (d), Fla. Stat. Although under AHCA’s rules and the Summit Companies’ form, providers may initiate the grievance process, they would be doing so essentially on behalf of the injured worker or in tandem with the injured worker to resolve the injured worker’s dissatisfaction with medical care issues. When the issue is the insurer’s refusal to provide medical care, the grievance process is an administrative remedy for the injured worker that has to be exhausted before an injured worker can file a petition for benefits pursuant to section 440.192. Not surprisingly, providers have not attempted to file grievances to raise reimbursement disputes with insurers, as nothing in section 440.134(15), the rules, or the Summit Companies’ approved form contemplate use of the process for that purpose, much less mandate it. Strangely, Mr. Sabolic attempted to justify the proposed rule’s carve-outs from the reimbursement dispute process by reference to section 440.13(11)(c), which gives the Department “exclusive jurisdiction to decide any matters concerning reimbursement[.]” As he put it: I think that the statute indicates we can decide any matter relating to reimbursement under 440.13(11)(c), and that’s how we’re deciding to deal with those situations when a managed care arrangement or a contract is involved. That’s our decision. Our decision is that that determination’s going to reflect the amount that is in the applicable reimbursement manual for that service date. Tr. 232. It must be noted that section 440.13(11)(c) was not cited as one of the laws implemented by the proposed rules, even if the premise could be accepted that a grant of exclusive jurisdiction to decide any matter concerning reimbursement includes authority to decide never to decide certain matters concerning reimbursement. Mr. Sabolic admitted that under proposed rule 69L-31.016(1), the Division does not and will not issue a written determination of whether the carrier properly adjusted or disallowed payment when a contract or managed care arrangement is involved. Mr. Sabolic testified that the proposed deletion of rule 69L-31.005(2)(d) (requiring a copy of the contract or managed care arrangement addressing reimbursement) is tied to proposed rule 69L-31.016(1) that gets the Division out of the business of looking at contracts. The Division will not require any proof that a contract or managed care arrangement governs reimbursement so as to trigger the no-decision decision. Instead, if either a provider indicates in its petition or a carrier indicates in its response that reimbursement is pursuant to a contract or managed care arrangement, that ends the inquiry, and the Division will not determine whether the carrier properly adjusted or disallowed payment. Mr. Sabolic said that he was not concerned with the potential for abuse, because in the decade when the Division was in the business of interpreting and applying reimbursement provisions in contracts, it was very rare that the parties disagreed on whether a contract was in effect between them that governed reimbursement. Mr. Sabolic offered no justification for carving out from reimbursement disputes carrier adjustments or disallowances of payment based on compensability or medical necessity issues. He just reported the Division’s decision that if a carrier disallows or adjusts payment for line items on bills and cites reasons (EOBR codes) involving compensability or medical necessity, “we will indicate that we’re not going to issue a determination on those line items and [we will] only issue a determination on those line items which don’t reflect the carrier’s disallowance related to compensability or medical necessity.” But if the petitioner gives “proof that the carrier authorized treatment,” the Division “will proceed with rendering a determination related to those line items.” Tr. 197. The Division’s determinations under proposed rules 69L-31.016(1) (when a contract or managed care arrangement is alleged) and 69L-31.016(2) (when payment is disallowed or adjusted for compensability or medical necessity reasons) are characterized by the Division as “neutral determinations” in which there is no winner and no loser. A more fitting characterization is “non-determination.”
Findings Of Fact Respondent is Hooshang Hooshmand, a licensed physician at all times relevant to these proceedings. He was issued license number ME 0021496 by the State of Florida. Medicare is a program of the U.S. Department of Health and Human Resources which is administered by the Health Care Financing Administration (HCFA). The program allows for third party payment, by the federal government, for diagnostic programs and medical treatments administered on an inpatient and outpatient basis to individuals eligible for medicare coverage. Among providers of medical services, only licensed physicians may be paid by the program for rendition of services. Others who may be reimbursed include health care professionals, such as durable medical equipment suppliers, as well as patients themselves in the instance of medical services rendered by a nonparticipating physician. On October 9, 1987, in the United States District Court for the Southern District of Florida, Respondent was convicted, after a jury trial, of ten counts of submission of fraudulent medicare claims in violation of Title 18, U.S.C. Section 287 and Section 2. He was also convicted on 11 counts of devising a scheme to defraud by mail, the U.S. Department of Health and Human Resources in violation of Title 18, U.S.C., Section 1341 and Section 2. Respondent's sentence upon his conviction included a term of 18 months imprisonment and five years probation upon completion of imprisonment and any parole period; payment of restitution in the amount of $3,101.24; payment of a fine of $250,000; payment of an assessment of $300; performance of 5,000 hours of community service during the five year probationary period following imprisonment. The verdict and sentence are presently on appeal to the United States Circuit Court of Appeals for the Eleventh Judicial Circuit. The expert testimony of Michael Gutman, M.D., a specialist in forensic psychiatry in the State of Florida, establishes that the practice of medicine in Florida encompasses not only a physician's technical competence; but also the relationship between a physician and the patient. Such a relationship is based upon trust and honesty. While the physician's expectation of payment for services is part of the patient/physician relationship, fraudulent billing for those services by the physician to either the patient or a third party payor directly affects the practice of medicine through its impact on that relationship. A fraudulent billing scheme, such as that of which Respondent was convicted, introduces dishonesty to the physician/patient relationship and prevents a proper evaluation of the patient in favor of a methodology permitting fraudulent billing. Such methodology would necessarily be one chosen to permit fraudulent billing in a way which would escape detection; a choice not necessarily in the best interest of the patient. Gutman's testimony also provides an adequate record upon which to find that fraud, such as that reflected by Respondent's criminal conviction, also directly relates to the ability to practice medicine because the physician's professional judgement and ethical standards are involved. Such judgement has a direct bearing on the ability to practice medicine. How that judgement is exercised could very well affect the life of the patient in some situations. While it is found Respondent's conviction of fraud in the use of the billing apparatus in his practice directly relates to professional judgement and the ability to practice medicine, there has been no showing that the Respondent's judgemental aberration at that time detrimentally affected his patients' health or his technical competence. In mitigation of the charge in the administrative complaint, Respondent provided testimony of witnesses establishing his technical competence and expertise in his areas of specialization; his extremely impressive professional credentials; the high regard in which he is held by certain of his peers and patients; and his previously unblemished record in the practice of medicine. Respondent also provided testimony of witnesses establishing the complexity of medicare billing and the fact that many physicians, while holding ultimate responsibility for the accuracy of such billing, delegate this task to subordinates. Testimony of Respondent establishes that the complexity of medicare procedures played a major role in his violation of the legal requirements in that system of reimbursement and is partially to blame for his criminal conviction. The testimony of Eleanor Breckner, offered by Petitioner to rebut Respondent's testimony, is not credited. In addition to Beckner's demeanor while testifying, her testimony is diminished in view of her admission that she committed perjury and embezzlement on previous occasions. Beckner also admitted to incidents of attempted suicide indicative of mental instability. Her testimony is not credited with any probative value.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent pay an administrative fine of $2,500 and that his license be placed on probation for a period of two years upon terms and conditions to be established by the Board of Medicine. It is further recommended that a condition of such probation require the satisfactory completion by Respondent of a course of study designed to provide him the information and skills necessary to properly comply with medicare reimbursement procedures. DONE AND ENTERED this 3rd day of March, 1989, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1989. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. RESPONDENT'S PROPOSED FINDINGS 1.-4. Addressed. 5.-6. Unnecessary to result. 7. Addressed in part, remainder unnecessary. 8-10. Unnecessary to result. 11. Addressed in part; remainder unnecessary. 12.-14. Unnecessary to result. Addressed in part; remainder unnecessary. Adopted by this reference. Rejected, not supported by the evidence. Unnecessary to result. 19.-20. Not supported by the weight of the evidence. Unnecessary to result; also cumulative. Adopted by this reference. Rejected as cumulative. Not supported by the weight of the evidence. Unnecessary to result and not relevant. 26.-27. Unnecessary to result. Unnecessary to result and cumulative. Addressed in part; remainder unnecessary to result. 30.-31. Unnecessary to result; cumulative. 32. Reject, not supported by weight of the evidence. 33.-36. Rejected, not relevant. 37.-41. Unnecessary to result. 42.-43. Addressed in part, remainder unnecessary. 44.-45. Unnecessary to result reached. 46. Addressed in part, remainder unnecessary. 47.-50. Unnecessary to result. Unnecessary and cumulative. Unnecessary to result. Rejected on basis of relevancy. 54.-56. Addressed in part, remainder unnecessary. Unnecessary to result reached. Rejected, not relevant. Unnecessary to result reached. Rejected, not relevant. 61.-67. Unnecessary to result reached. Rejected, not credible and not supported by the weight of the evidence. Also a legal conclusion. Addressed. Unnecessary to result. Adopted by this reference. Adopted in substance. Rejected as a legal conclusion. PETITIONER'S PROPOSED FINDINGS 1.-7. Adopted in substance. 8.-9. Addressed. COPIES FURNISHED: Jonathan King, Esq. Department of Professional Regulation 130 North Monroe Street Tallahassee, FL 32399-0750 Joesph C. Jacobs, Esq. Melissa Fletcher Allaman, Esq. 305 South Gadsden Street P.O. Box 1170 Tallahassee, FL 32302-1170 Roy L. Glass, Esq. 3000-66th Street North Suite B St. Petersburg, FL 33710
The Issue The issue for determination in this case is whether the agency's interpretation of its Title XIX, ICF/MR Reimbursement Plan is a rule, and if so, whether it is an invalid rule.
Findings Of Fact Friendly Village of Brevard, Inc. d/b/a Washington Square (herein, Washington Square) is an intermediate care facility for the mentally retarded (ICF/MR), located at 2055 North U.S. 1, in Titusville, Florida. Friendly Village of Orange, Inc., d/b/a Lake View Court (herein, Lake View Court), is also an ICF/MR located at 920 W. Kennedy Boulevard, in Eatonville, Florida. Both facilities are operated by Developmental Services, Inc. Both are certified ICF/MR's participating in the Florida Medicaid Program. The Department of Health and Rehabilitative Services (HRS) is the state agency responsible for overseeing the ICF/MR Medicaid Program. Representatives of HRS and Florida's ICF/MR industry began negotiations on a new state Medicaid reimbursement plan in 1982 and 1983. The participants in the negotiations sought to remove certain cost limitations and to insure that individual facilities would receive fair reimbursement of their allowable costs. The negotiations resulted in the Title XIX ICF/MR Reimbursement Plan dated July 1, 1984 (the 1984 Plan). The 1984 Plan provides, in part, for the establishment of reimbursement rates for new ICF/MR's entering the Florida Medicaid program after January 1, 1983. Under the plan, a provider is required, prior to beginning operations, to prepare a budgeted costs report projecting what it expects to spend in allowable costs during the next year for care to its residents. HRS reviews these budgets and establishes a per diem rate, using the budgeted costs and the number of patients, arriving at a per patient, per day rate. Each month, as services are provided, the ICF/MR bills the state Medicaid program for the number of patient days times the per diem. During the period in question, cost settlement occurred at the conclusion of the budgeted period. The provider filed his cost report detailing what was actually spent in allowable costs, HRS compared that amount with the amount budgeted and settled with the provider. Washington Square entered the Florida Medicaid program on January 19, 1983; Lake View Court entered the program in February 1983. Both facilities filed cost reports for periods ending on February 29, 1984. Sometimes cost settlements occur quickly through a desk review. Other times, as here, audits are performed and settlement may occur much later. The audits of Washington Square and Lake View Court were conducted in 1985 for their initial cost reports ending February 1984. The audits were issued in April and May 1988. Those audits state that prior to July 1, 1984, the Florida Medicaid Program recognized only those interim rate settlements resulting in an overpayment. This is an interpretation of the 1984 Plan which Petitioners dispute and which, in this case, Petitioners contend is an invalid rule. ICF/MR Reimbursement plans prior to July 1, 1984, had one-way cost settlement, which meant that if the provider as overpaid, the funds had to be returned to HRS; if the facility as underpaid, it did not receive additional reimbursement. The 1984 ICF/MR Plan was changed to allow two-way cost settlement, thus allowing an underpaid provider to recover its approved costs. Petitioners claim that a proper interpretation of the 1984 Plan, especially when read with the 1985 Plan, is that two-way cost settlement is retroactive to January 1983, for new providers entering the program after January 1, 1983. HRS disagrees with that interpretation and this issue is the subject of the consolidated case, #88-2938. HRS' interpretation means that Petitioners will not be reimbursed for underpayments received during their first reporting period. The 1984 Plan was adopted as a rule by incorporation, in Rule 10C- 7.49(4)(a)2. Florida Administrative Code.
The Issue Whether Petitioner received Medicaid overpayments and, if so, the total amount of the overpayments.
Findings Of Fact AHCA is charged with administration of the Medicaid program in Florida pursuant to Section 409.907, Florida Statutes. Petitioner is a durable medical equipment provider that provided Medicaid services to Medicaid beneficiaries pursuant to a valid Medicaid Provider Agreement with AHCA under provider number 9512721 00. Petitioner was an authorized Medicaid provider during the period of October 1, 1999, through September 30, 2001, which is the audit period at issue here. AHCA conducted an audit of paid Medicaid claims for services claimed to have been performed by Petitioner from October 1, 1000, through September 30, 2001. On October 16, 2002, AHCA issued a Final Agency Audit Report ("FAAR") requesting Petitioner to reimburse AHCA in the amount of $28,407.90, for Medicaid claims submitted by and paid to Petitioner, for services allegedly rendered during the audit period. When the FAAR was issued, AHCA's claims for overpayment were based upon audit findings that paid Medicaid claims for certain services performed by Petitioner did not meet Medicaid requirements. The deficiencies in the subject Medicaid claims included a lack of documentation of required medication for nebulizer equipment, payments in excess of allowable total amounts for rent-to-purchase equipment, and payments for portable oxygen with a lack of documentation that the attending practitioner has ordered a program of exercise or an activity program for therapeutic purposes, that the recommended activities cannot be accomplished by the use of stationary oxygen service, and that the use of a portable oxygen system during exercise or activity results in improvement in the individual's ability to perform the exercises or activities. During the subject audit period, the applicable statutes, rules, and Medicaid handbooks required Petitioner to retain all medical, fiscal, professional, and business records on all services provided to a Medicaid recipient. Petitioner had to retain these records for at least five years from the dates of service. Petitioner had a duty to make sure that each claim was true and accurate and was for goods and services that were provided in accordance with the requirements of Medicaid rules, handbooks, and policies, and in accordance with federal and state law. Medicaid providers who do not comply with the Medicaid documentation and record retention policies may be subject to administrative sanctions and/or recoupment of Medicaid payments. Medicaid payments for services that lack required documentation and/or appropriate signatures will be recouped. Claire Cohen, AHCA's analyst, generated a random list of 30 Medicaid recipients (cluster sample) who had received services by Petitioner during the audit period. In addition, AHCA generated work papers revealing the following: the total number of Medicaid recipients during the audit period; the total claims of Petitioner, with dates of services; the total amount of money paid to the Petitioner during the audit period; and worksheets representing the analyst's review of each recipient's claims for the audit period. After Ms. Cohen reviewed the medical records and documentation provided by Petitioner, she reviewed the Medicaid handbook requirements, and arrived at a figure of $7,572.13 as the total overpayment for all cluster sample claims. Using the Agency's formula for calculating the extrapolated overpayment, Ms. Cohen determined that the overpayment in this case amounted to $29,703.63. Ms. Cohen then prepared the June 20, 2002, Preliminary Agency Audit Report (PAAR) and mailed it to Petitioner. At that point, the case was reassigned to Ellen Williams, a program analyst/investigator. Ms. Williams reviewed additional documentation submitted by Petitioner, and on October 16, 2002, issued on behalf of AHCA, the FAAR, which reduced the alleged overpayment to $28,407.90. Part of this reduction resulted from Petitioner's paying $369.97 to satisfy the issue concerning payments in excess of allowable totals for rent-to-purchase equipment. At the hearing, Ms. Williams testified that the adjusted overpayment amount was $27,473.27. The formula used by AHCA is a valid statistical formula, the random sample used by the Agency was statistically significant, the cluster sample was random, and the algebraic formula and the statistical formula used by AHCA are valid formulas. The DME/Medical Supply Services Coverage and Limitations Handbook provides, in part: Medicaid reimburses for portable oxygen when a practitioner prescribes activities requiring portable oxygen. The oxygen provider must document the following information in the recipient's record: the recipient qualifies for oxygen service; the attending practitioner has ordered a program of exercise or an activity program for therapeutic purposes; the recommended exercises or activities cannot be accomplished by the use of stationary oxygen services; and the use of a portable oxygen system during the activity or exercise results in an improvement in the individual's ability to perform the activities and exercises. The DME/Medical Supply Services Coverage and Limitations Handbook also provides, in part: Medicaid may reimburse for a nebulizer if the recipient's ability to breathe is severely impaired. The documentation of medial necessity must include required medications. The following payments are claimed by AHCA to be overpayments for failure to provide documentation of medical necessity and required medications: Recipient Date of Service Procedure Overpayment 4 7/19/00 E0570 $106.70 9 6/30/00 E0570 $106.70 10 10/24/00 E0570 $106.70 14 02/15/00 E0570 $106.70 16 05/08/00 E0570 $106.70 23 06/09/00 E0570 $106.70 26 06/14/00 E0570 $106.70 The remaining overpayments claimed by AHCA concern the failure to document that the attending practitioner had ordered a program of exercise or an activity program for therapeutic purposes that required the use of a portable oxygen system. The Medicaid Provider Reimbursement Handbook provides, in part, that "Records must be retained for a period of at least five years from the date of service." The types of records that must be retained include "patient treatment plans" and "prescription records." The handbook goes on to provide in pertinent part: Medical records must state the necessity for and the extent of services provided. The following minimum requirements may vary according to the services rendered: * * * Treatment plan, including prescriptions; Medications, supplies, scheduling frequency for follow-up or other services; Progress reports, treatment rendered; * * * Note: See the service-specific Coverage and Limitations Handbook for record keeping requirements that are specific to a particular service. Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid Payments. Medicaid payments for services that lack required documentation or appropriate signatures will be recouped. Note: See Chapter 5 in this handbook for information on administrative sanctions and Medicaid payment recoupment. Petitioner, through its owners and operators, is of the view that it does not need to have the documentation on file, and it does not ask physicians for details about their prescriptions, "because that's something private from doctors and patient." Petitioner, by signing a Medicaid Provider agreement, agreed that all submissions for payment of claims for services will constitute a certification that the services were provided in accordance with local, state, and federal laws, as well as rules and regulations applicable to the Medicaid program, including the Medical Provider Handbooks issued by AHCA. Petitioner routinely obtained from Medicaid beneficiaries to whom it provides goods or services a written statement authorizing other healthcare provides to furnish any information needed to determine benefits.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency issue a final order requiring Petitioner to reimburse the Agency for Medicaid overpayments in the total amount of $27,473.27, plus such interest as may statutorily accrue. DONE AND ENTERED this 22nd day of September, 2003, in Tallahassee, Leon County, Florida. S MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of September, 2003. COPIES FURNISHED: Tom Barnhart, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Lawrence R. Metsch, Esquire Metsch & Metsch, P.A. 1455 Northwest 14th Street Miami, Florida 33125 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308
The Issue Whether the Department of Health and Rehabilitative Services improperly determined the Petitioners' rate of Medicaid reimbursement for the period January 1, 1990, through June 30, 1990?
Findings Of Fact The Emergency Rule and the Permanent Rule have been determined to be valid in a Final Order entered simultaneously with this Recommended Order. The Department's action in freezing the Medicaid reimbursement rate of the Petitioners in these cases was taken pursuant to the Emergency Rule and the Permanent Rule.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order in these cases dismissing the Petitioners' amended petitions. DONE and ENTERED this 26 day of May, 1992, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of May, 1992. APPENDIX Case Numbers 91-4893, 91-4894, 91-4895, 91-4914, 91-4929, 91-5837 and 91-6191 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioners' Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1 and 4. 2 5-6. 3 13. 4 7. 5 3 and 13-14. 6 15. 7 17-19. 8 20. 9 21. 10 22. 11 23. 12 8. 13 12. 14 11. 15 24. 16 25-27. 17 28-29. 18 29. 19 30-32. 20 34-37. See 39. The last three sentences are not relevant. The determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 39. The last two sentences are not relevant. The determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 23 40-41. 24 43. 25 45. 26 46. 27 47. 28 48. The last two sentences are argument. 29 49. 30 42. 31 29 and 32. The weight of the evidence failed to prove the Department's motive for providing assurances to HCFA were anything other than to meet federal requirements. 32 28. 33 55. 34 34-35. See 59-60 and 63. The detailed findings of fact concerning the nature of the Department's inflationary analysis are not necessary. HCFA rejected this analysis and based its decision on other information provided by the Department. Additionally, the determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 35 See 60-63. 36 52-54. 37 54. 38 55 and hereby accepted. 39 59 and hereby accepted. 40 See 60-65. HCFA did not "reject" the Department's proposed plan amendment. 41 See 63. 42-43 See 60-66. 44-46, 50-54 Although the proposed findings of fact concerning what the Department told HCFA are generally correct, these proposed findings of fact are not relevant to this proceeding. As previously stated, the determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 47 Hereby accepted. 48-49 Hereby accepted except for the proposed findings that the Department "misled", "misrepresented" or provided "inaccurate and misleading information." The last sentence of proposed finding of fact 49 is not relevant. 55 67. 56 Hereby accepted. 57 Not relevant. 58 69. 59 70. 60 71. 61 50 and 73. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1. 2 4. 3 5. 4 6. 5 3 and 13-14. 6 15. 7 17-19. 8 20. 9 21. 10 22. 11 23. 12 8. 13 11. 14 24. 15 25-26. 16 Hereby accepted. 17 27 and 29-32. 18 34-37. 19 39-41. 20 41. 21 43. 22 33. 23 42. 24 52-53 and 58. 25 54. 26 55. 27 56. 28 57. 29 60-65. 30 67. 31 68. 32 69. 33 70. 34 71. 35 50 and 73. 36 72. 37 73. 38 Hereby accepted. COPIES FURNISHED: Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Slye General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Thomas C. Fox, Esquire Michael D. Smith, Esquire 1200 18th Street, N.W. Washington, D.C. 20036 Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302 W. David Watkins, Esquire Post Office Box 6507 Tallahassee, Florida 32314-6507 David Pius Medicaid Counsel Department of Health and Rehabilitative Services 1317 Winewood Boulevard Building 6, Room 230 Tallahassee, Florida 32399-0700
The Issue Whether Respondent, Department of Financial Services, Division of Workers’ Compensation, Medical Services (the Department), correctly determined the amount of reimbursement Petitioner, Zenith Insurance Company (Zenith), owes to Lawnwood Regional Medical Center (Lawnwood) for medical services, pursuant to section 440.13(7), Florida Statutes (2018).1/ More specifically, the issues raised in this case are: whether Zenith properly adjusted or disallowed payment by paying what it believed were “reasonable” charges for the Workers’ Compensation medical services provided; whether the Department’s consideration of a “Stop-Loss” percentage-based methodology, as opposed to a per diem rate, may serve as a basis for reimbursement; and what, if any, is the additional amount Zenith owes to Lawnwood for reimbursement in this case.
Findings Of Fact Parties and Participants The Department is the state agency responsible for administration of the Florida’s Workers’ Compensation process set forth in chapter 440. As such, it has exclusive jurisdiction to decide any matters concerning reimbursement for medical services under this process. See § 440.13, Fla. Stat. Zenith is a carrier as defined by section 440.13(1)(c). Lawnwood, a non-party, is a health care facility as defined by section 440.13(1)(g). Lawnwood is part of a network known as East Florida Division, Inc. (East Florida), a division of HCA Inc. Parallon, a non-party, manages the billing, revenue cycle management, and reimbursement dispute process for certain hospitals, including Lawnwood. (Jt. Stip. Facts, ¶¶ 33 and 34). Parallon filed the Petition for Resolution of Reimbursement Dispute in this case on behalf of Lawnwood. Coventry Health Care Workers Compensation, Inc., and/or Coventry Life and Health Insurance Company on behalf of First Health Group Corp. (Coventry), serves as a “middleman” between insurance carriers and health care providers. As explained by Carol Brodie, Coventry offers carriers, such as Zenith, access to special rates it has negotiated with health care facilities and providers. Essentially, Zenith is a third-party beneficiary of the rates negotiated between East Florida and Coventry. Medical Services at Issue Lawnwood provided health services to a workers’ compensation patient (patient) from January 21 through 25, 2016. The patient was to be treated for a routine outpatient surgical procedure to release an extensor tendon of his index finger. According to the unrefuted testimony of Linda Joy (a Zenith employee), the surgeon inadvertently cut the patient’s digital nerve, artery, and vein. This resulted in more extensive treatment than originally contemplated. The patient was ultimately admitted to the hospital for inpatient care, and released four days later. Payment Dispute Lawnwood issued a bill to Zenith for $163,697.30 (Lawnwood bill) for the services and treatment it provided to patient. Zenith regularly audits bills it receives from health care providers and makes adjustments if necessary. These adjustments are provided to the health care provider along with the payment in the form of an Explanation of Bill Review (EOBR). The EOBR goes through each itemized line in a bill and explains to the provider what was reduced and why. In this case, Zenith sent the Lawnwood bill to Ms. Joy for review. She reviewed the patient’s relevant medical records, as well as billing documentation, and a coding summary sheet (containing codes for procedures, medications, and other services utilized by the health care and insurance industry) from Lawnwood. Ms. Joy opined the Lawnwood bill was very high for the services provided. Both of the Department’s witnesses also felt the amount billed by Lawnwood was unexpected. Andrew Sabolic (an assistant director at the Department) was surprised at Lawnwood’s bill, stating: “it was an amount that I didn’t anticipate a hospital would charge for those types of services.” Similarly, Lynne Metz (a Department employee) testified: “The charges were high compared to what I would expect.” The Department has not made any determination or review of whether the bills or charges submitted by the hospital are reasonable for the services provided. (Jt. Stip. Fact, ¶ 28). Ms. Joy and other Zenith staff compared the charges and the information on the coding summary sheet with payments of other similar providers through a medical revenue and billing database program, known as “OPTUM 360 Revenue Cycle Program” (OPTUM360). In making the comparison, Zenith also utilized databases and benchmarks that are accepted in the industry, including Medicare, the MediSpan Drug Database, Health Care Blue Book, Health Engine, other state’s workers’ compensation reimbursement formulas, usual and customary charges, and other hospitals’ charges in the same zip code as Lawnwood. Based on the OPTUM360 results and its own analysis, Zenith calculated the total reimbursement amount acceptable to other health care providers under Medicare for the same treatment and services would be $11,173.81. As a result, Zenith issued an EOBR that adjusted the Lawnwood bill and indicated, “THIS BILL HAS BEEN PRICED IN ACCORDANCE WITH THE TERMS OF YOUR CONTRACT WITH COVENTRY NATIONAL.” Along with the EOBR, Zenith provided benchmark data to Lawnwood to support its repricing, editing or adjustment of the bills at issue. (Jt. Stip. Facts, ¶¶ 36 and 37). In the EOBR, Zenith used four explanation codes: “47,” “81,” “92,” and “93,” as authorized by Florida Administrative Code Rule 69L-7.740(13)(a) and (b), to explain why payment was disallowed or adjusted. Code “47” (Payment disallowed: insufficient documentation: invoice or certification not submitted for implant) was used for the disallowance on a line item for an implant. Id. The parties agree that was appropriate. Code “81” (Payment adjusted: billing errors: payment modified pursuant to charge audit) was used for the line items other than the disallowed implant charge, based on Zenith’s review of the entire bill, line by line, and resulting adjustment. Id. Code “92” (Paid: no modification to information provided on the medical bill: payment made pursuant to workers’ compensation reimbursement manual for hospitals) was used because it is generally on all hospital bills. Id. Code “93” (Paid: no modification to information provided on the medical bill: payment made pursuant to written contractual arrangement) was used because Zenith had a contract with Coventry, and Coventry had an agreement with East Florida and Lawnwood. The Department has not adopted a rule establishing an EOBR code (or similar descriptive explanation) to be used by a carrier when the carrier identifies a bill or charge from a hospital that the carrier deems to be so excessively high so as to be an unreasonable basis for reimbursement under the Florida Worker’s Compensation Law. (Jt. Stip. Fact, ¶ 8). In other words, there is no code in rule 69L-7.740 for disputing a line item as being “unreasonable” or “too high.” Based on the repriced and adjusted bill, Zenith reimbursed Lawnwood $31,844.70 for the medical services provided. (Jt. Stip. Fact, ¶ 40). This amount was approximately three times the OPTUM360 amount of $11,173.81. When asked how Zenith made the decision to give three times the OPTUM360 amount, Ms. Brodie explained: We didn’t take the [OPTUM360] Medicare payment or even 120 or 140 percent of Medicare, which we thought was more than fair. . . . So because Florida -- I don't want to say they're problematic, but Florida bills, we're seeing such an increase in the amount of billed charges and we're seeing a lot of disputes when we don't pay to the penny of what the expected amount is, that we were trying to go above and beyond and try to make our payment more palatable, I guess, to the provider. So we wanted to be more than generous, so we came up with three times Medicare. Catherine Trotter (a Parallon employee) Parallon filed a request for reconsideration of the EOBR with Zenith after Lawnwood had reviewed it and determined $31,844.70 was insufficient. On April 18, 2016, Parallon, on behalf of Lawnwood, filed a Petition for Resolution of Reimbursement dispute with the Department challenging the EOBR and demanding additional payment. Based on Ms. Joy’s testimony, Zenith did not contest the medical necessity of the services provided by Lawnwood, nor was there evidence Zenith claimed overutilization (the appropriateness of the level and quality of health care provided to the patient). Rather, Zenith claimed, and still claims in these proceedings, it did not pay the billed amount because the individual charges were unreasonable. Contract Provisions Zenith and Parallon, on behalf of Lawnwood, agree that a reimbursement contract applies to this dispute. (Jt. Stip. Fact, ¶ 35). The Department also based the Third Determination on the contract provisions. The parties disagree, however, as to what contract provisions apply and how they should be applied. At the hearing, the parties also disputed whether the Department was provided with the applicable contractual provisions during the petition process. The undersigned need not determine who sent what to whom, because this is a de novo proceeding; and what matters is the evidence admitted at the hearing. See 120.57(1)(k), Fla. Stat.; Haines v. Dep’t of Child. & Fams., 983 So. 2d 602, 606 (Fla. 5th DCA 2008). No contract directly between Zenith and Lawnwood was presented at the hearing. The following documents, however, establish the agreement between Coventry and Lawnwood: (1) Amendment to Model Facility Agreement executed January 20, 2015 (MFA Amendment); Appendix A, “Payment Rate” (Appendix A); and Attachment 1, “Participating Facility List (Attachment 1); and (4) Amendment to Model Facility Agreement between Lawnwood and Coventry (also known as First Health), effective October 1, 2006 (Lawnwood Amendment). Parallon’s legal manager testified the MFA Amendment, Appendix A, Attachment 1, and the Lawnwood Amendment were the only contract provisions relevant to the reimbursement determination. These documents set the rates for Coventry (and its network clients such as Zenith), but do not provide definitions or terms that may have been included in the original “Model Facility Agreement.” Nonetheless, the Lawnwood Amendment defines the “Workers’ Compensation Contract Rate” as follows: “the amount payable under the terms of this Contract shall be the lesser of the Contract rate or a 5% discount from the amount payable under hospital guidelines established under any state law or regulations pertaining to health care services rendered to occupationally ill/injured employees.” Therefore, to make a determination of how much is owed, findings must be made as to what is the “Contact rate,” and what is the amount payable under “any state law or regulations” governing workplace injuries (State rate). Relevant to determining the “Contract rate,” Paragraph 3 of the MFA Amendment provides the following under “Rates”: The current rate reflected on Appendix A to the Agreement shall be increased by 3% for inpatient dates of admission and/or outpatient dates of service occurring on and after October 1, 2014. Appendix A contains a table depicting inpatient rates for Lawnwood as “35% Discount from Hospital’s Total Billed Charges.” (emphasis added). Because the services were provided after October 2014, the 35 percent discount reduced by the three percent discount results in Lawnwood’s expected contractual reimbursement rate to be 68 percent of the “Hospital’s Total Billed Charges,” from any of Coventry’s clients, including Zenith. Thus, the applicable Contract rate is 68 percent of the total bill submitted by Lawnwood. Zenith disputes the meaning of “Hospital’s Total Billed Charges” and argues for application of a “reasonableness” standard to this term. In support of this assertion, Zenith offers the following documents which relate to the agreement between Zenith and Coventry: (1) the Workers’ Compensation Network Services Agreement effective November 1, 2008, (Network Agreement); (2) Supplement A to the Network Agreement, titled “Network Access” (Supplement A); and (3) the Sixth Amendment to the Network Agreement executed November 24, 2015 (6th Amendment). The Network Agreement, Supplement A, and 6th Amendment are heavily redacted. Regardless, it is clear these documents classify Zenith as a “client,” who pays Coventry for access to a discounted rate for medical services with a “Contract Provider.” The Contract Provider and Coventry have a separate “provider agreement” setting this discounted rate. Although, the terms “contract rates,” “fee,” and “provider fee schedule,” are all defined in the Network Agreement Coventry has with Zenith, the definitions or explanation of these terms are redacted. Thus, there is no evidence these terms apply to the Lawnwood bill or the rate established between Coventry and Lawnwood. Similarly, Supplement A defines “Bill” but is also redacted. Regardless, based on the inclusion of these sections in the Network Agreement and attachments, Zenith and Coventry knew how to define special terms. If they intended to give a special meaning to the term “Hospital’s Total Billed Charges,” they could have done so. Section 2.2 of the 6th Amendment states, “[Zenith] agrees that the Contract Rate shall be applied to bills received from [Lawnwood] and further agrees that no other rates . . . shall be applied to such bills.” (emphasis added). Again, without any evidence to the contrary, “bills received” applies to the Lawnwood bill. Although Zenith argues the remaining language in section 2.2 allows it to “modify, edit or otherwise dispute any bill,” this modification must be done pursuant to the contract and workers’ compensation laws and regulations. As stated before, the EOBR regulations do not contemplate adjustments to be based on the reasonableness or fairness of prices or charges. More importantly, there is no basis in the contract provisions or state law and regulations allowing Zenith to reimburse Lawnwood in the amount of three times the OPTUM360 amount. As explained in the Conclusions of Law, the undersigned also cannot infer this as a basis for modification of the reimbursement amount. Zenith also cites to section 2.6 of Supplement A to justify its repricing based on the OPTUM360 results and other industry-used benchmark comparison data. That section, titled “Benchmarking Database,” states, “In the event [Zenith] . . . performs a bill review or repricing function on [Lawnwood’s] bills, Zenith shall . . . update at least twice annually and utilize a nationally accepted charge-benchmarking database to determine the proper percentile of charges in the applicable zip code as approved by Coventry and Client.” Granted this section contemplates that benchmark databases can be used by Zenith in repricing bills, but it speaks to the proper percentile of charges, not the reasonableness of the underlying prices or charges. There was no evidence Coventry approved a “proper percentile of charges” as required. The undersigned finds there is no language in the redacted versions of the Network Agreement, Supplement A, or 6th Amendment that changes Zenith’s requirement (as Coventry’s client) to pay the lesser of (1) 68 percent of the “Hospital’s Total Billed Charges” or (2) 5 percent less than the rate provided pursuant to applicable state laws and regulations. Finally, Zenith argues that the definition provided in a Coventry contract with an undisclosed health care provider, titled “Workers’ Compensation Product Addendum,” should be used to determine the meaning of the term “Hospital’s Total Billed Charges.” See Zenith’s PRO, p. 22-23 (“By implication, these are all in the same network and use the same contractual provisions.”). This document (Zenith’s Exhibit 39) provides definitions, if applicable, that could have been helpful in addressing Zenith’s arguments. For example, this document ties the amount owed by a Coventry client to an “allowable amount” and “eligible bill charges.” There is no evidence, however, that Zenith’s Exhibit 39 was executed by Lawnwood (or East Florida), or that the provisions in this document were part of any agreement between Coventry and Lawnwood, or Coventry and Zenith. As such, the undersigned finds it is not applicable to these proceedings. Applying the Contract rate--68 percent of the “Hospital’s Total Billed Charges” indicated in the Network Agreement and attachments--to the Lawnwood bill would require Zenith to provide a total amount of $110,859.24, or an additional amount of $79,014.54. The Workers’ Compensation System The analysis does not stop there. The next step is to determine how much would be owed at “a 5% discount from the amount payable under hospital guidelines established under any state law or regulation pertaining to health care services rendered to occupationally ill/injured employees.” The undersigned finds this provision refers to the laws and regulations under Florida’s workers’ compensation system set forth in chapter 440 and the Department’s rules. In making the determination decisions in this case, the Department used the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2014 Edition, and incorporated by reference in rule 69L-7.501 (HRM). The HRM generally provides for reimbursement based on either a per diem fee or the amount agreed upon by contract between the carrier and medical services provider. Under the section titled “Reported Charges,” the HRM provides: “charges for hospital inpatient services shall be reimbursed according to the Per Diem Fee Schedule provided in this chapter or according to a mutually agreed upon contract reimbursement agreement between the hospital and the insurer.” HRM at 15. “Per Diem” is defined as “a reimbursement allowance based on a fixed rate per calendar day which is inclusive of all services rather than on a charge by charge basis.” HRM at 35. In certain circumstances when provider bills are in excess of $59,891.34, a per diem rate is not used. Rather, the HRM provides that the reimbursement amount is calculated using a percentage methodology of 75 percent of the billed charges. This “Stop-Loss Reimbursement” is defined as “a reimbursement methodology based on billed charges once reaching a specified amount that is used in place of, and not in addition to, per diem reimbursement for an inpatient admission to an acute care hospital or a trauma center.” HRM at 17 and 35 (emphasis added). As explained below, the Stop-Loss methodology conflicts with section 440.13(12)(a), which specifically provides for establishment of a maximum reimbursement amount (MRA) based on a per diem rate for inpatient hospital care.5/ Applying the State rate--the per diem rate set forth in the HRM--Lawnwood would receive $3,850.33 per day, except for the day of discharge, which equals $11,550.99. HRM at 16. Applying the five percent discount, as set forth in the Lawnwood Amendment, to the $11,550.99 amount, the total amount payable by Zenith to Lawnwood equals $10,973.44. Because the State rate is less than the amount calculated using the Contract rate, the undersigned finds Zenith owed Lawnwood a total reimbursement amount of $10,973.44, which is less than the $31,844.70 already paid by Zenith.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order dismissing the petition of Lawnwood Regional Medical Center for resolution of a reimbursement dispute. DONE AND ENTERED this 8th day of May, 2019, in Tallahassee, Leon County, Florida. S HETAL DESAI 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 8th day of May, 2019.
Findings Of Fact The Home The Miami Jewish Home and Hospital for the Aged is a multi-faceted operation located on an entire city block in Miami. It provides a variety of services including an adult congregate living facility, an auditorium, a nursing home and a 32-bed hospital. Residents may come to the Home bringing with them their cash, and property and other possessions, to be sold. An account is opened for the resident from which charges made by the Home may be deducted. This fund is the Resident Asset Fund. Earings on the Resident Asset Fund are applied to reduce the Home's operating deficit. The Home provides Medicare and Medicaid services. Medicaid provides for long-term care for the indigent. About 60% of the Home's patient days were devoted to Medicaid patients in 1985. By participating in the Medicaid program, the Home is required to file cost reports each year to determine its allowable costs under Medicaid rules. The fiscal year for the nursing home runs from July 1 to June 30. The Medicaid Program Medicaid costs are shared between the federal government and the State of Florida. The Medicaid program is administered at the federal level by the Department of Health and Human Services (HHS), and at the state level by the Department of Health and Rehabilitative Services (HRS). The Health Care Financing Administration (HCFA) of HHS establishes the Medicaid costs the federal government will pay for. HCFA's Provider Reimbursement Manual, also referred to as HIM-15, contains reimbursement guidelines. Medicaid reimbursement is calculated as a rate per Medicaid patient per day. Reimbursement is provided prospctively and is based on prior cost reports, inflated forward to the period of reimbursement. The Home's unaudited cost report data is used for that purpose. In order to insure the accuracy of the Medicaid cost reports, HRS performs either test reviews or full field audits of the reports. Full audits are done either by HRS auditors or by outside auditors on contract with HRS. Here the Home's cost report was audited for HRS by Peat Marwick Mitchell & Co. HRS reviews the preliminary audit reports of its contract auditors, which can result in changes before the final audit report is issued. The 1985 Medicaid Cost Report A Medicaid cost report for the fiscal year ending June 30, 985 was filed by the Home in mid-October 1985. David Farkas, the Director of Financial Operations for the nursing home prepared that Medicaid cost report; he also had it reviewed by the accounting firm of Deloitte Haskins & Sells before it was submitted to the Department. In the Medicaid cost report, a nursing home's costs are broken down into four components: (a) those from operations; (b) those from patient care, (c) return on equity and (d) property. Costs within each of those four categories are determined and then divided by the number of patient days at the nursing home to determine a cost per patient day. The cost per patient day for the categories of operating costs and patient care are compared to a ceiling or cap that is generated through surveys performed by the Department of Health and Rehabilitative Services. Caps are adjusted for the geographical location and size of the facility. Assuming that the nursing home is at or below the cap for operations and patient care determined from the survey, the cost per patient day in each of the four components are added to form a composite reimbursement rate. Costs incurred in excess of the caps for operations and patient care are not reimbursed. An inflation factor is then added to a provider's costs because the State of Florida operates on prospective reimbursement system. Patient Trust Fund A nursing home which holds residents' funds is required by Section 400.162, Florida Statutes (1987) to provide a bond equal to twice the average monthly balance of the funds it held during the preceding year in order to ensure that the funds will be available to residents. The nursing home also has the option, in lieu of a bond, to provide a self-insurance fund protecting the monies it holds in trust. By letter dated May 31, 1985, the nursing home received approval from the Department to establish a self-insurance fund under Section 400.162 Florida Statutes. Its account was opened with Sun Bank of Miami. When the account was established the Home was required to deposit in it twice the average monthly balance of its Resident Asset Fund for the preceding year. As of June 30, 1985, the Patient Trust Fund contained $2,750,000, representing twice the $1,375,000 in resident assets held in the Resident Asset Fund. The money the Home placed in the Patient Trust Fund came from donations and from the building fund for the Home. Those funds are held in the form of treasury notes and certificates of deposit. The nursing home treated the Patient Trust Fund as part of the building fund in its 1985 Medicaid cost report. When the funds which comprise the Patient Trust Fund are placed with a trustee, they are restricted. The trustee holds the securities, and the State has the right to draw against those securities when a default occurs in the nursing home's handling of residents' funds. Only the principal amount of the Home's self-insurance fund is restricted, however. The Home itself receives the benefit of interest or dividends which accrue on the monies deposited in the self-insurance fund. Those earnings accrue to the benefit of the Home's building fund. The premium for a surety bond of the type required by Section 400.162(5)(b)1. Florida Statutes in 1985 would have cost the Home 2 percent of the amount bonded; based on 2 percent of $2,750,000, the premium would have been $55,000. This bond premium would have been treated as an allowable operating cost. The Home's operating costs exceeded the cap, however, so it actually would have received no additional reimbursement for the $55,000 bond premium if a bond had been purchased. The Audit After the nursing home submitted its 1985 Medicaid cost report, Barry Scutillo of Peat Marwick contacted the Home on behalf of HRS to audit the Home's records supporting its 1985 report. The audit resulted in a number of adjustments which were discussed with representatives of the nursing home at an exit conference. The issue of the proper treatment of the nursing home's funds deposited in the Patient Trust Fund at Sun Bank was discussed during the audit. The auditor for Peat Marwick, Mr. Scutillo, thought that the Home had accounted for the use of those funds correctly by seeking a return on equity from Medicaid for the securities in the Patient Trust Fund. The Audit Report Ultimately, Mr. Scutillo's field work was reviewed by more senior members of Peat Marwick and by HRS. An audit report was issued by Peat Marwick Mitchell & Company dated November 18, 1986 which did propose adjustments to the Home's cost report arising from the treatment of the funds which had been deposited in the Patient Trust Fund in Sun Bank. The audit report proposed to reduce nursing home's equity by $2,734,270 and to adjust the return on equity before apportionment by $108,515. The other adjustments proposed are of no consequence, because the nursing home is already at or exceeds the Medicaid cost caps, and federal regulations would prevent the Home from receiving additional reimbursement on the other adjustments even if they were made in the nursing home's favor. After the nursing home filed a request for an administrative hearing on the adjustments made in the Peat Marwick audit, representatives of the nursing home and HRS met to discuss the issues, and agreed to present a joint position paper to HCFA for a non-binding determination on the issue whether the Home was entitled to a return on equity for the funds in the Patient Trust Fund at Sun Bank. The parties agreed that each would prepare a position paper which would be forwarded to the appropriate federal officials for review. The Home's position paper was submitted to HRS but HRS failed to submit it to the federal government. Instead, HRS submitted only its own position paper. After the Home discovered this, it sent its position paper directly to the HCFA. HCFA's Response The HCFA responded, after reviewing the position of both parties, that the self-insurance fund should be excludedfrom the Home's equity capital. 1/ The HCFA believed that the fund was segregated and not used to provide patient care. 2/ The manual which HCFA relied upon, (HIM-15), contains in Section 1202.1 a definition of equity capital which includes the health care provider's investment in property, plant and equipment related to patient care, and that working capital necessary for the proper operation of patient care activities. A proprietary provider is entitled to a rate of return on its equity capital which is "a percentage equal to 1 and 1/2 times the average of the rates of interest on special issues of public debt obligations issued to the Federal Hospital Insurance Trust Fund for each of the months during the provider's reporting period." (HIM-15, Section 1206). The manual also describes items which are to be excluded from the computation of equity capital, and in Section 1218.9 states: Where a provider maintains a self- insurance program in lieu of purchasing conventional insurance, the funds in the self-insurance reserve fund must be set aside in a segregated account to cover possible losses and not used to provide patient care. Therefore, the amount deposited in the fund and the earnings on the self-insurance reserve remaining in the fund are not included in equity capital. The nursing home argues that Section 1218.9 focuses on self-insurance funds which a health care provider maintains to protect itself, and that the section is inapplicable here, because the funds deposited with Sun Bank were deposited for the protection of patients, not of the nursing home. This is unpersuasive. The nursing home itself is responsible for any defalcations in the handling of residents' assets placed with it as trustee. The Patient Trust Fund which serves as self-insurance for claims against the Home for mismanagement of the Resident Trust Funds is similar to conventional insurance.
