Findings Of Fact Background Petitioner 1/ owns and operates a licensed nursing facility certified to participate in the Florida Medicaid Program. The facility, which is located at 490 South Old Wire Road, Wildwood, Florida, first became a Medicaid provider on January 27, 1987. Expanded from 120 beds to 180 beds prior to March, 1988, the average occupancy of WeCare is 175-176 residents. The Medicaid patient census is usually over 140 residents. Petitioner operates the only nursing facility in Sumter County providing skilled nursing services. By letter dated December 13, 1990, Petitioner requested an interim rate increase. The letter covers the 12-month period commencing October 1, 1990, which is the effective date of the federal Omnibus Budget Reconciliation Act of 1987 (OBRA). Petitioner requested an interim rate hike of $2.53 per patient day based on a total increase in expenses, due largely to OBRA requirements, of $161,815.32. By letter dated February 15, 1991, Respondent denied the request. The letter fails to address $114,415.32 in anticipated costs, mostly in the areas of nursing and new- resident assessment. These items were inadvertently omitted from Petitioner's December 13 letter. The February 15 response divides projected expenses into two categories: patient care costs and operating costs. The letter treats as patient care costs projected expenditures for food and employee wages to expand evening programs for residents, added consultant expenses for pharmaceutical advice, added consultant expenses for assistance with overall OBRA compliance and preparation for the state survey, new costs due to quality assurance committee meetings with department heads and outside consultants, and additional wages resulting from an increase in the federal minimum-wage standard. The February 15 letter treats as operating costs projected expenditures for the disposal of hazardous waste and maintenance requested by WeCare's resident council. Florida's Hedicaid Reimbursement Plan The Florida Title XIX Long-Term Care Reimbursement Plan , Version III, dated December 17, 1990 (Plan) 2/ is intended to provide reimbursement for reasonable costs incurred by economically and efficiently operated facilities. The Medicaid program pays a single per diem rate for all levels of nursing care. After a facility's first year of operation, a cost- settling process results in a final cost report, which serves as a baseline for the following years. Following the first year's operation, facilities file cost reports annually. In the absence of a special rate freeze, Respondent adjusts a facility's reimbursement rate twice annually based upon the factors discussed below. There are four components of a facility's total per diem rate for Medicaid patients. These cost components make up the total Medicaid patient per diem cost. The return on equity component 3/ is not involved in this case. The property cost component plays a minor role in this case. In a facility such as WeCare, which is owned rather than leased, property costs include depreciation, mortgage interest, equipment rent, ad valorem taxes, and property insurance. The two key reimbursement components in this case are "operating costs" and "patient care costs." The Plan defines these terms as follows: Patient care costs include those costs directly attributable to nursing services, dietary costs, activity costs, social service costs, and all medically ordered therapies. All other costs, exclusive of property cost and return on equity or use allowance costs are considered operating costs. Plan, pages 40-41. In general, the reimbursement program sets rates prospectively followed by a cost-settling process. In other words, a rate is set for the coming period in the manner described below. At the end of the period, a cost-settlement takes place. There are limited exceptions to the prospective orientation of the rate-setting process: the prospectively determined individual nursing home's rate will be adjusted. retroactively to the effective date of the affected rate under the following circumstances: an error was made by [Respondent] in the calculation of the provider's rate. A provider submits an amended cost report used to determine the rate in effect. An adjustment due to the submission of an amended cost report shall not be granted unless the increase in documented costs shall cause a change of 1 percent in the reimbursement rate. The amended cost report shall be filed by the filing date of the subsequent cost report or the date of the first field audit exit conference for the period being amended or the date a desk audit letter is received by the provider for the period being amended, whichever is earlier. Further desk or on-site audits of cost reports disclose a change in allowable costs in those reports. Plan, pages 31-33. In this case, Petitioner seeks "interim changes in [its] component reimbursement rates, other than through the routine semi-annual rate setting process." Plan, page 33. Like normal reimbursement rates, interim rates are set prospectively and then cost-settled at the end of the interim rate period. Plan, page 2. Accounting for property costs under the Fair Rental Value System (FRVS), Petitioner is ineligible for an interim change in Medicaid reimbursement rate under the Plan. Petitioner's sole means to obtain rate relief for property costs is to file for a rate adjustment as of January 1 and July 1 of any year. Plan, page 33-34. On January 1 and July 1, Petitioner may obtain an adjustment to the FRVS rate if "expenditures for capital additions and improvements totalling, $100 per licensed bed accrue in the 6-month periods ending April 15 or October 15 prior to rate semesters beginning July 1 and January 1, respectively." Plan, page 72. Because Petitioner has 180 beds, the threshold for the FRVS property cost adjustment is thus $18,000. The Plan does not require that the acquired property for which the rate adjustment is sought be purchased to comply with a new legal requirement. The reimbursement process is quite different for patient care and operating costs. Addressing interim rate hikes for these components of the reimbursement rate, the Plan provides: Interim rate changes reflecting increased costs occurring as a result of patient care or operating changes shall be considered only if such changes were made to comply with existing State or Federal rules, laws, or standards, and if the change in cost to the provider is at least $5000 and would cause a change of 1 percent or more in the providers current total per diem rate. If new State or Federal laws, rules, regulations, licensure and certification requirements, or new interpretations of existing laws, rules, regulations, or licensure and certification requirements require providers to make changes that result in increased or decreased patient care, operating, or capital costs, requests for component interim rates shall be considered for each provider based on the budget submitted by the provider. All providers' budgets submitted shall be reviewed by [Respondent] and shall be the basis for establishing reasonable cost parameters. In cases where new State or Federal requirements are imposed that affect all providers, appropriate adjustments s1hall be made to the class ceilings to account for changes in costs caused by new requirements effective as of the date of the new requirements or implementation of the new requirements, whichever is later. Interim rate requests resulting from 1. [devoted to property component interim rate hikes sought by non-FRVS providers] and 2. above must be submitted within 60 days after the costs are incurred, and shall be accompanied by a 12-month budget which reflects changes in services and costs. . . . An interim reimbursement rate, if approved, shall be established for estimated additional costs retroactive to the time of the change in services or the time the costs are incurred, but not to exceed 60 days before the date [Respondent] receives the interim rate request. The interim per diem rate shall reflect only the estimated additional costs, and the total reimbursement rate paid to the provider shall be the sum of the previously established prospective rates plus the interim rate. . . Interim Rate Settlement. Overpayment as a result of the difference between the approved budgeted interim rate and actual costs of the budgeted item shall be refunded to [Respondent]. Underpayment as a result of the difference between the budgeted interim rate and actual costs shall be paid to the provider. Interim rates shall not be granted for fiscal periods that have ended. The determination of interim reimbursement rates is best illustrated by following the Plan through the typical rate-calculation process. A facility must first "calculate per diems for each of these four cost components [patient care, operating, property, and return on equity] by dividing the components' costs by the total number of Medicaid patient days from the latest cost report." Plan, page 41. The facility adjusts its "operating and patient care per diem costs that resulted from [the calculation set forth in the preceding paragraph] for the effects of inflation . Plan, page 41. This is done by "multiplying both of these per diem costs" by the rate of increase of the Florida Nursing Home Cost Inflation Index at the midpoint of the cost reporting period. Plan, page 41. This step takes the facility's per diem rates then in effect for the patient care cost and operating cost components and increases them by the applicable inflation rate. The facility calculates the adjustment for a low occupancy factor. In all cases, the operating, patient care, and return on equity components are calculated separately. Otherwise, this step is irrelevant to the present case. Plan, pages 41 et seq. The next step is to calculate the statewide ceilings for, among other components,, the patient care cost and operating cost. These ceilings are determined separately, as evidenced by the use of different standard deviations in the calculation of the respective ceilings. Plan, page 47. These ceilings are otherwise irrelevant to the present cases The Plan next requires the facility to "[e] stablish the target reimbursement for operating and patient care cost per diems for each provided." The target per diems limit the respective per diem rates of these two components even if the applicable ceilings and inflation adjustments otherwise warrant a rate increase. In other words, a facility's per diem rate for patient care may be below the ceiling and warrant an increase for inflation; however, the increased rate may not exceed the target rate. The "target" more frequently than the "ceiling" serves to limit rate increases for the operating cost per diem rate and patient care cost per diem rate. For each of the two per diem rates, the target limits the increase of the provider's then-current per diem rate, without regard to incentives, to the rate of increase of the Florida Nursing Home Cost Inflation Index multiplied by 1.786. Plan, pages 48 -49. The Plan requires each facility to calculate separately its operating cost per diem and patient care cost per diem. For each component, the Plan "requires that the facility receive the lowest of the rates--then-current plus inflation, target, or ceiling. Plan, pages 49-50. Thus, for instance, the patient care component could be limited by its target but the operating component could receive a full inflation increase. The importance of interim rate changes is that they increase the reimbursement rate against which the targets are calculated for operating and patient care cost per diem rates. In this manner, the interim rate hike raises the applicable targets. As noted above, if the new federal or state requirements affect all providers, the ceilings can also be raised, although this issue has not been addressed in this case. Cost Reports Three of Petitioner's cost reports were admitted into evidence. Two cover one-year periods ending June 30, 1989, and June 30, 1990. One covers a six-month period ending December 31, 1990. The most recent cost report includes a request by Petitioner to obtain a FRVS property cost rate adjustment for computer and software hardware purchased in the last six months of 1990. The report classifies these items as property for cost reimbursement purposes. The cost report is relevant as evidence of the proper classification of computer hardware and software and the proper means by which an FRVS provider may obtain an adjustment for additional property costs. 4/ The parties disagree as to which of the two earlier cost reports should be used to supply the threshold for Petitioner's request for an interim rate hike with respect to operating and patient care costs. Respondent insists that the source of Petitioner's "current total per diem rate," against which the 1% threshold is applied to determine eligibility for the interim rate hike, is the cost report for the year ending June 30, 1989. However, on or about October 30, 1990, Petitioner filed a cost report for the year ending June 30, 1990 (1990 cost report). This was about six weeks before applying for an interim change in the reimbursement rate. Respondent ignores the later cost report because it was filed late. However, there is no authority prohibiting the use of the more current cost report simply because it is filed late, at least when, as here, it is filed before the interim rate request is filed. 5/ For calculating the thresholds in this case, there is no difference in which cost report is used. Both parties used $38,000 as the threshold, which is sufficiently accurate under the facts of this case. The possible thresholds are $36,071 under the 1990 cost report 6/, which is hereby adopted, and $34,350 under the cost report for the prior year. 7/ New Cost Items Although the original request for an interim rate hike identifies more than $160,000 of new expenses necessitated by changes in the law, Petitioner refined its earlier estimate based on actual experience prior to the hearing. The new figure is $126,598.32, as identified at the hearing and in Petitioner Exhibit 42. 8/ Petitioner claims that changes in the law necessitated the following costs, which are stated, where applicable, as increases in expenses preexisting changes in the relevant law: PATIENT CARE PLANNING/RESTRAINT FREE ENVIRONMENT--SALARY NURSING 30,027.52 NURSING ASSISTANTS 19,762.73 DIETARY 4,073.23 TOTAL WAGES 53,863.48 TOTAL BENEFITS 10,234.06 TOTAL WAGES AND BENEFITS 64,097.54 ADMINISTRATIVE NURSING WARD CLERK 3,500.00 DATA ENTRY 513.00 IN-SERVICE EDUCATION 6,403.21 TOTAL WAGES 10,416.21 TOTAL BENEFITS 1,979.08 TOTAL WAGES AND BENEFITS 12,395.29 CONSULTANTS TO ASSURE COMPLIANCE WITH OBRA PHARMACY 440.00 SOCIAL SERVICE 250.00 DIETARY 1,093.75 TOTAL 1,783.75 AUTOMATION OF MDS AND RESIDENT TRUST FUND ACCOUNTING OUTSIDE DATA PROCESSING SERVICE 3,033.75 COMPUTER SOFTWARE 2,495.00 COMPUTER HARDWARE 1,540.00 TOTAL 7,068.75 MISCELLANEOUS OBRA MATTERS PRINT RESIDENTS' RIGHTS MATERIALS 401.05 B. GERIATRICS SURVEY AND TRAINING 500.00 C. ABUSE REGISTRY 285.00 D. WAGE AND HOUR FOR MAINTENANCE 11,178.00 E. MAINTENANCE BENEFITS 2,123.81 TOTAL 14,487.86 VI. OTHER REGULATORY CHANGES A. MINIMUM WAGE 13,827.84 B. MINIMUM WAGE BENEFITS 2,627.29 C. CHANGES IN OBRA/NFPA 9/ STANDARD 7,412.99 D. REMOVAL OF INFECTIOUS WASTES 2897.01 10/ TOTAL 26,765.13 GRAND TOTAL $126,598.32 Classification of New Cost Items Cost items IV.B, IV.C, and VI.C. are property costs representing $2495 and $1540 for computer software and hardware and $7412.99 for privacy curtains around residents' beds. Petitioner has failed to prove that these items, whose costs appear suitable for depreciation or cost-recovery, constitute patient care costs or operating costs. As property costs, Cost Items IV.B, IV.C, and VI.C are ineligible for an interim rate adjustment. Even if Petitioner had requested a FRVS property cost adjustment and thus raised the issue in this case, these items total only $11,447.99, which is below the $18,000 threshold for FRVS property cost rate adjustments. Because of the failure of these items to satisfy the threshold, as well as the fact that changing legal requirements are irrelevant to an adjustment in the property cost reimbursement rate, the remainder of the recommended order does not address Cost Items IV.B, IV.C, and VI.C. Cost Item VI.D, which is $2897.01 for infectious- waste removal, is an operating cost that is not a patient care cost. Cost Items VI.A and B, which are for $16,455.13 in wages and benefits due to an increase in the minimum-wage law, are operating costs that are partly patient care costs. Based partly on the testimony of Petitioner's accountant, one-half of the minimum wage and benefits, such as in the laundry and housekeeping departments, is an operating cost that is not a patient care cost. The remainder of the minimum wage and benefits is a patient care cost. Thus, $8227.57 of Cost Items VI.A and B is an operating cost that is not a patient care cost, and $8227.56 of Cost Items VI.A and B is a patient care cost. Cost Items V.D and E, which are for $13,301.81 in maintenance wages and benefits, are also operating costs that are partly patient care costs. These items represent an incremental increase over typical maintenance costs previously incurred by the facility. Petitioner has proved that two-thirds of the additional maintenance costs are patient care costs expended to address better the needs of the residents, such as by providing immediate repairs to wheelchairs or making their rooms more homelike by, for example, hanging bulletin boards in the rooms, installing personal television sets, and installing locks on cabinet drawers. Thus, $8867.88 of Cost Items V.D and E are patient care costs. The evidence as to the remaining $4433.93 of Cost Items V.D and E is sufficient to establish these expenditures as operating costs, but insufficiently descriptive to prove that these maintenance expenses are properly classified as patient care costs. Cost Item VI.D, one-half of Cost Items VI.A and B, and one-third of Cost Items V.D and E total $15,558.51 in operating costs that are not patient care costs. This is below the $34,350 threshold required for an interim rate hike for operating costs. Due to the possibility that Respondent may reject the Conclusion of Law that the patient care costs and operating costs must separately satisfy the threshold, the remainder of the recommended order discusses Cost Item VI.D. Description of Cost Items Background Prior to making any changes at the WeCare nursing facility following the effective date of OBRA, Petitioner was in full compliance with all applicable law and had earned and maintained a superior rating. None of the cost items was expended to eliminate pre-OBRA substandard conditions. In addition, patient needs were generally unchanged during the year preceding the effective date of OBRA and the following year. In other words, there were no significant changes in patient mix with respect to activity, levels of admissions and discharges, or other matters affecting costs. The largest portion of Petitioner's claim is Cost Item I, which comprises $64,097.54 in wages and benefits for nurses, nurse assistants, and dietary services. The nursing item is for 1.43 fulltime equivalents, the nursing assistant item is for 1.9 fulltime equivalents, and the dietary item is for 0.35 fulltime equivalents. Following the implementation of OBRA, WeCare changed its resident assessment forms. Previously, the facility had used primarily a standard admission record and nursing history and assessment to assess initially the new resident. These forms required about one-half hour per patient to complete. The new standardized assessment form has become known as the Minimum Data Set (MDS). The 11-page MDS is a highly sophisticated instrument that requires comprehensive data collection far more elaborate than that previously undertaken. These data must be obtained from the resident and, in many cases, other sources. The MDS also contains an intricate analytic section. In general, the MDS standardizes the resident- assessment process by which nursing staff collect and analyze data, form conclusions, and recommend interventions. The MDS is also a major step toward assembling a national database on the burgeoning population of nursing-facility residents. Even without regard to the analytic features of the MDS, the old resident assessment forms are different by kind, not degree, from the MDS. The new form requires that the facility's personnel invest considerably greater time and effort assessing each resident's functional abilities. The MDS elicits a richly detailed description of an individual and his needs and abilities, and many questions in the MDS require careful and thoughtful observation of the resident. For instance, the first page of the MDS requires important information concerning the resident's legal status. The array of options include legal guardian, durable power of attorney/health care proxy, health care surrogate, and family member. The same page also demands that the facility personnel determine if the resident has effectuated a living will, do-not- resuscitate code, organ donation, feeding or medication restriction, or autopsy request. Encouraging the resident's involvement with the outside community, the first page concludes by asking if the resident is registered to vote. The second page deals with cognitive patterns. This section also places demands on facility personnel considerably greater than those required by the old resident assessment forms. Personnel must check the resident's short- term and long-term memory and his ability to recall the current season, location of his own room, faces of staff, and his presence in a nursing facility. Personnel must assess the resident's ability to make decisions; the four options range from independent to severely impaired. Personnel must also assess the resident's tendency toward disordered thinking or delirium with five optional specific descriptions, such as "cognitive ability varies over course of day." Twenty-five options are contained in the section of the MDS covering the resident's ability to communicate. These data range from whether he wears a hearing aid or uses another receptive communicative technique such as lip reading to very detailed descriptions of the extent to which he can make himself understood and, in a separate set of questions, understand others. The level of detail is intense throughout the MDS. Other areas covered include physical functioning and structural problems (with 12 options to describe the resident's body control problems ranging from loss of balance to loss of limbs); continence; psychosocial wellbeing (including his level of identification with past roles and life status); mood and behavior patterns; activity pursuit patterns; disease diagnoses (32 options); health conditions (22 options); oral/nutritional status; skin condition; medication,' use; and special treatment and procedures. The analytic aspect of the MDS is contained in the Resident Assessment Protocol (RAP). The RAP references by letter and number nearly all of the answers," supplied on the MDS. The RAP legend supplies a matrix by which these answers are analyzed to determine if they require (trigger) an identified intervention. The RAP even quantifies the extent to which an intervention is likely necessary. These triggers are very detailed and quantify a decision-making process that gas subjective and necessarily more variable prior to the introduction of the MDS. The MDS takes at least one hour more to complete per resident than did the old forms. Petitioner's personnel have tried to avoid duplication. However, Respondent cited Petitioner for a deficiency involving their elimination of one of the pre- OBRA forms in WeCare's first audit following implementation of OBRA. Moreover, quarterly updates of the MDS take additional time, although only selected information is required at such times. Recognizing the increased importance of the initial resident assessment, Petitioner assigned the primary responsibility for the task to the three nurses who serve as coordinators of the three 60-bed units at WeCare. While working on the MDS forms, the unit coordinators' responsibilities are assumed by licensed nurses. The additional work presented by the MDS over the old form requires 1.43 licensed nurse fulltime equivalents. The cost of this is reflected in Cost Item I.A, which is $30,027.52, exclusive of benefits. Benefits were calculated in Petitioner Exhibit 8 at 19% of wages, so the benefits attributable to Cost Item I.A equal $5705.23. Petitioner has failed to establish that the nursing assistants, reflected as cost Item I.B, were required by to complete the new MDS form or any-other new OBRA requirement. The substance of Petitioner's evidence in this regard amounts to proving that: a) no other variables (e.g., change in patient mix or number) could account for the increased hours and b) nursing assistant hours increased after OBRA became effective. Without specific proof of the activities performed by the nursing assistants, it is impossible to determine if their efforts were necessitated by OBRA, such as in the MDS-assessment process, or were merely associated with nonrecurring activities by which facilities such as WeCare digested OBRA and tried to determine the extent to which they had to change prior practices. It is doubtful that Petitioner could have established the requisite relationship between the nursing assistant work and the MDS duties. Cost Item I.A is a reasonable allowance for the new work required of nurses by the MDS forms. Exclusive of benefits, $30,027.52 represents 1.43 fulltime nursing equivalents or about 2980 hours annually of nursing service. There is no evidence in the record linking the expenditure of additional nursing hours to the preparation of the MDS forms, even after consideration of the more limited quarterly reassessments. Petitioner likewise failed to establish that any new OBRA requirement, including the preparation of the MDS, was associated with the dietary cost of $4073.23, which is Cost Item I.C. Petitioner proved that Cost Items II.A and B, totalling $4013 of wages and $762.47 of benefits, were associated with the processing of the data collected in the process of preparing the MDS. The data-processing duties of these individuals are a necessary part of processing the RAPs and triggers in the MDS and determining if an intervention is indicated or required. The ward clerk and data entry person relieved the Director of Nursing of data-processing duties that, unlike the data-collection part of the MDS, do not require nursing expertise to perform. The processing of the RAPs and triggers, although important and time-consuming, is largely mechanical task. Petitioner proved that Cost Item IV.A, which is $3033.75 for outside data processing services, was also associated with the processing of the data collected in the process of preparing the MDS. These services ran from October, 1990, through April, 1991, when the ward clerk and data entry person assumed these duties. The outside data processing, as well as the ward clerk and data entry person, also included trust fund and asset accounting on behalf of residents. Petitioner failed to establish that the services of the in-service coordinator, as reflected in Cost Item II.C, were required by OBRA. Prior to OBRA, the Director of Nursing performed nearly all of the in-service activities. When OBRA was implemented, the Director of Nursing, could not perform these tasks because she was, at first, intensely involved with all aspects of ensuring that WeCare attained or maintained compliance with the new law. A nursing facility and its personnel must remain familiar with federal and state laws governing nursing facilities and their professions. However, nothing in OBRA required new levels of in-service education of nursing facility staff. By contrast, Petitioner proved that the promotion of residents' rights and welfare necessitated Cost Item V.B, which is $500 for a geriatrics survey and training. Petitioner showed that the services of Myra Carpenter, which are Cost Item V.B, were narrowly focused to assist Petitioner's personnel in promoting the rights and welfare of geriatric residents. Cost Items I.A and V.B are sufficient to allow for whatever training was necessary of the unit coordinators in charge of completing the MDS forms and general facility personnel as to the promotion of the rights of residents, especially geriatric residents. Petitioner failed to prove that Cost Items III.A, and C, which are $440 for pharmacy and $1093.7.5 for dietary consultants, were associated with army new OBRA requirement. As discussed in the Conclusions of Law, prior state requirements in these areas were rigorous. For the same reason, Petitioner failed to prove that OBRA necessitated Cost Item V.A, which is $401.05 for printing residents' rights manuals. Petitioner proved that the promotion of residents' rights and welfare was directly responsible for Cost Item III.B, which is $250 for a social service consultant. He increased his hours after OBRA to meet the demands of the residents and the residents' council for operational and structural changes at WeCare. Petitioner proved that the promotion of residents' rights and welfare was also associated with the two-thirds of Cost Items V.D and E previously determined to constitute patient care costs. 11/ The portion of these maintenance wages and benefits assigned to patient care costs constitute part of Petitioner's effort to promote the rights and welfare of the residents. Many of WeCare's residents are young persons who, often afflicted with multiple sclerosis, still possess considerable mental acuity. Adjustment to the environment of a nursing facility can be difficult for such persons, as well as for other residents. Empowering the residents to demand and obtain changes in their living environment is one useful means of promoting the residents' rights and, especially, welfare. The evidence was unconvincing that all of Cost Items V.D and E were devoted to the type of patient-care maintenance described in the preceding paragraph. Petitioner thus failed to establish the nature of the remaining one-third of Cost Items V.D and E. In the absence of proof to the contrary, these expenditures are characterized merely as operating expenses unassociated with any aspect of OBRA. Respondent has emphasized OBRA's promotion of residents' rights and welfare in seminars devoted to OBRA and post-OBRA facility surveys. As to the latter, the surveys of WeCare prior to OBRA typically took a couple of hours. Following OBRA, the surveys take four hours with much of the additional time devoted to resident interviews to ensure that the facility is promoting residents' rights and, especially, welfare. The OBRA mandates, as properly construed by Respondent, increasingly emphasize results or outcome's, not merely processes or procedures. Although OBRA largely leaves to the nursing facility the decision of how specifically to promote residents' rights and welfare, the new requirements of OBRA, as discussed in the Conclusions of Law, remain clear, ambitious, and enforceable. Cost Items III.B, V.B, and two-thirds of V.D and E, although not explicitly dictated by OBRA, were reasonably expended by Petitioner to promote residents' rights and, especially, welfare. Petitioner has proved that Cost Item VC, which is $285 for checking the names of employees on the abuse registry, was associated with a new OBRA requirement. The minimum-wage hike and benefits, which are Cost Item VI.A and B totalling $16,455.13, were mandated by a change in law and exclude any "ripple-effect" in other wages Petitioner proved that one-half of the minimum.-wage hike and benefits or $8227.56, are patient care costs. The remaining $8227.57 of minimum-wage hike and benefits, which obviously were also mandated by law, are operating costs that are not patient care costs. The only other operating cost that is not a patient care cost is Cost Item VI.D, which is $2897.01 for the removal of infectious wastes. Petitioner has proved that the additional costs in connection with the disposal of infectious wastes were associated with a change in state law. Based on the foregoing, Petitioner has proved that $61,672.41 of its expenditures are patient care costs associated with new OBRA requirements and a change in the minimum-wage laws. Petitioner failed to prove that the remaining $37,919.41 of its patient-care costs were associated with any change in law. Petitioner has proved that $11,124.58 of its expenditures are operating costs, other than patient care costs, that were associated with new infectious waste regulations and minimum-wage laws. Petitioner failed to prove that tie remaining $4433.93 of operating costs, which are one-third of the maintenance wages and benefits, were,' associated with any change in law. The remaining $11,447.99 of Petitioner's expenditures are property costs. For the reasons set forth above, the necessity of these costs is irrelevant to this proceeding.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Health and Rehabilitative Services enter a final order determining that Petitioner is entitled to an interim rate adjustment of $0.96 per diem. ENTERED this 20 day of March, 1992, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20 day of March, 1992.
The Issue Whether the Petitioner is qualified for licensure as a medical doctor in Florida by examination.
Findings Of Fact Petitioner graduated from the School of Medicine at the University of Pennsylvania in 1955, following which he did a rotating internship at Abington Memorial Hospital before reporting for active duty in the U.S. Navy. Upon release from active duty in the Navy in 1959 he entered a residency program in general surgery at Hospital of University of Pennsylvania followed by thoracic surgery which he completed in 1965. Petitioner was certified by the American Board of Surgery in 1965 and by the Board of Thoracic Surgery in 1966. From 1965 to 1986 Petitioner was engaged in the practice of general, cardiac, thoracic and vascular surgery. In the latter part of this period, he headed a cardiothoracic surgery team at Lankenau Hospital, Philadelphia, which performed some 700-800 open-heart surgeries per year. It was during this period that most of the malpractice suits were filed against Petitioner, the hospital and other doctors on his team. As head of the surgical team Petitioner did the definitive surgery (bypass grafts) while other members of the team opened and closed the chest cavity. Petitioner is currently licensed to practice medicine in Pennsylvania, New York, New Jersey, Delaware and Arizona. At the time he first applied for licensure in Florida in 1988, he was licensed in Pennsylvania, New Jersey and Arizona. No licensing agency has brought any charges against Petitioner's license. Petitioner took and passed the FLEX examination in 1988 scoring 84 and 83 on the two parts of the exam. In the past twenty years, 19 malpractice suits have been filed against Petitioner. Of those suits 9, have been dismissed by Plaintiffs without any recovery from Petitioner, and two were settled on behalf of Petitioner, one in 1979 for $50,000 and one in 1989 for $25,000. Those settlements represented little more than nuisance value. The hospital defendant settled one case for $225,000 and another for $2,500. Of the remaining eight suits the complete medical records of those cases were reviewed by another cardiothoracic and vascular surgeon who opined that five are without merit. For the remaining three, additional evidence is needed to fairly appraise the merits of those suits. This additional information will not be available until discovery is completed. Petitioner's testimony, that these remaining three cases did not involve a failure on his part to practice medicine with that level of care, skill, and treatment which is recognized by a reasonable prudent similar physician as being acceptable under similar conditions and circumstances, corroborates the Affidavit of the risk manager (Exhibit 3) and letters in the file (Exhibit 1) stating those cases are deemed to be without merit and will be vigorously defended. All of these suits were brought in Pennsylvania where the backlog of civil cases is such that civil cases are not scheduled for trial until approximately seven years after the suit is filed. Furthermore, the complaints filed in these cases contain general allegations that the Respondent's negligence, inattention, failure to adequately apprise the plaintiff of possible complications of the surgery, along with the negligence of the hospital and others involved with the surgery, directly resulted in the plaintiff's death, injury, etc. These are catch- all allegations and the specific nature of the malpractice claim cannot be discerned from these pleadings. Cardiothoracic and vascular surgery is a high risk field of medicine in that the patients are frequently very sick and elderly. Accordingly, the success rate for this type surgery is lower than for most surgeries, and this leads to a higher incidence of suits alleging malpractice. Many of these earlier suits were brought before the doctors began paying attention to documenting that they fully explained the risks of the surgery to the patient and thereafter the patient gave informed consent to the operation. Petitioner has been more assiduous in this regard in recent years than he was several years ago. This practice will have the effect of reducing the incidence of malpractice suits against surgeons. It is noted that several of the suits alleged the plaintiffs were not adequately advised regarding the risks involved and, therefore, they did not give informed consent to the surgery.
Recommendation It is RECOMMENDED that Horace MacVaugh III be granted a license to practice medicine in Florida. DONE and ENTERED this 19th day of December, 1990, in Tallahassee, Leon County, Florida. K. N. AYERS 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 19th day of December, 1990. APPENDIX Petitioner's proposed findings are accepted, except: 8. Accepted only insofar as consistent with HO #5 and 6. 15. Rejected. No evidence was presented in this regard. Respondent's proposed findings are accepted except: 17. Second and third sentences rejected as not supported by any competent evidence. COPIES FURNISHED: Roger Lutz, Esquire Robin Uricchio, Esquire HOLLAND & KNIGHT Post Office Box 1526 Orlando, Florida 32802 Allan Grossman, Esquire The Capitol, Suite 1602 Tallahassee, Florida 32399-1050 Dorothy Faircloth, Executive Director Florida Board of Medicine Northwood Centre, Suite 60 1940 North Monroe Street Tallahassee, Florida 32399-0750 Kenneth E. Easley, Esquire General Counsel Department of Professional Regulation Northwood Centre, Suite 60 Tallahassee, Florida 32399-0792
Findings Of Fact The Petition named Dr. Decker as the physician providing obstetric services at Jeovani’s birth on January 18, 2008. Attached to the Motion for Summary Final Order is an affidavit of NICA's custodian of records, Tim Daughtry, attesting to the following, which has not been refuted: One of my official duties as Custodian of Records is to maintain NICA’s official records relative to the status of physicians as participating physicians in the Florida Birth-Related Neurological Compensation Plan who have timely paid the Five Thousand Dollar ($5,000.00) assessment prescribed in Section 766.314(4)(c), Florida Statutes, and the status of physicians who may be exempt from payment of the Five Thousand Dollar ($5,000.00) assessment pursuant to Section 766.314(4)(c), Florida Statutes. Further, I maintain NICA's official records with respect to the payment of the Two Hundred Fifty Dollar ($250.00) assessment required by Section 766.314(4)(b)1., Florida Statutes, by all non-participating, non-exempt physicians. * * * As payments of the requisite assessments are received, NICA compiles data in the “NICA CARES” database for each physician. The “NICA CARES physician payment history/report” attached hereto for Dr. Lawrence Decker, indicates that in the year 2008, the year in which Dr. Decker participated in the delivery of Jeovani Morataya, as indicated in the Petitioner’s Petition for Benefits, Dr. Decker did not pay the Five Thousand Dollar ($5,000) assessment required for participation in the Florida Birth-Related Neurological Injury Compensation Plan. Further, it is NICA’s policy that if a physician falls within the exemption from payment of the Five Thousand Dollar ($5,000) assessment due to their status as a resident physician, assistant resident physician or intern as provided in Section 766.314(4)(c), Florida Statutes, annual documentation as to such exempt status is required to be provided to NICA. NICA has no records with respect to Dr. Decker in relation to an exempt status for the year 2008. To the contrary, the attached "NICA CARES physician payment history/report shows that in 2008, Dr. Decker paid the Two Hundred and Fifty Dollar ($250) assessment required by Section 766.314(4)(b)1., Florida Statutes, for non- participating, non-exempt licensed physicians. The physician payment history/report for Dr. Decker supports Mr. Daughtry’s affidavit. Petitioners have not offered any exhibits, affidavits or any other evidence refuting the affidavit of Mr. Daughtry, which shows that Dr. Decker had not paid his $5,000 assessment for 2008. At the time of the birth of Jeovani, Dr. Decker was not a participating physician in the Plan. The Petition was filed on August 11, 2015, which is more than five years after Jeovani’s birth.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner be reimbursed for fiscal year 1979 and 1980 in accordance with the foregoing adjustments. DONE and ENTERED this 17th day of December, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of December, 1982.
The Issue The issue in this case is whether the Petitioner should be required to pay $300 as workers' compensation reimbursement for medical services provided to a patient.
Findings Of Fact Raulerson is an acute care hospital in Okeechobee, Florida, owned by Okeechobee Hospital, Inc. Raulerson's licensed premises includes the acute care hospital building and an additional building that contains a physical therapy department and an outpatient clinic identified as "Company Care." Company Care provides occupational health and workers' compensation services to employees working for participating employers. The clinic operates as a department of the hospital and is staffed by salaried employees of the hospital. The ambulatory care services provided at the clinic are hospital services pursuant to Florida Administrative Code Rules 59A- 3.065(4) and 59A-3.2085(7). The Patient suffered a compensable injury on August 4, 2011, and was treated on that date at the Raulerson emergency room. On August 8 and 15, 2011, the Patient went to the Raulerson outpatient clinic for evaluation and to have a non-surgical wound dressing changed or removed. Using a standard hospital billing form known as a UB-04, Raulerson submitted a single $400 bill to the Petitioner. The bill contained a separate $200 charge for each of the two outpatient service dates. The Florida workers' compensation program refers to the UB-04 form as a DFS-F5-DWC-90 form. Although the Petitioner attempted to assert at the hearing that the outpatient services had not been fully authorized, the stipulation filed by the parties prior to the hearing clearly stated that the services were authorized by the Petitioner and that there are no issues of medical necessity presented in this case. The Petitioner declined to pay the bill for the outpatient visits and issued an Explanation of Benefits Review (EOBR) form that provided the following coded explanation for its decision: 64-PAYMENT DISALLOWED: BILLING ERROR: SERVICE "NOT COVERED" UNDER APPLICABLE WORKERS' COMPENSATION REIMBURSEMENT MANUAL. * * * 5218-FACILITY CHARGE FOR TREATMENT ROOM OR CLINIC VISIT HAS BEEN IMPROPERLY BILLED PURSUANT TO NATIONAL UNIFORM BILLING MANUAL GUIDELINES. PROFESSIONAL SERVICES RENDERED FOR FACILITY BASED PHYSICIAN ARE TO BE BILLED ON APPROPRIATE FORM. NO ADDITIONAL REIMBURSEMENT GRANTED FOR FACILITY FEE. The standard billing form used by health care professionals to file for reimbursement of medical claims is a CMS-1500 form (identified as the DFS-F5-DWC-9 form by the Florida workers' compensation program). Essentially, the Petitioner has asserted that Raulerson should have submitted bills for the outpatient services on a professional services billing form rather than on a hospital billing form. The apparent effect of submitting the charges on the hospital billing form rather than the professional services billing form was to increase the reimbursement rate paid for the services. There was no credible evidence that Raulerson's use of the hospital billing form violated any applicable requirements of the Florida workers' compensation program. The Petitioner has previously paid similar claims that were submitted on the UB-04 hospital billing form. Florida Administrative Code Rule 69L-7.501 incorporates by reference, the Florida Workers' Compensation Manual for Hospitals (2006 Edition), which, states, in relevant part, as follows: Section X: Outpatient Reimbursement Reimbursement Amount Except as otherwise provided in this Section, hospital charges for services and supplies provided on an outpatient basis shall be reimbursed at seventy-five percent (75%) of usual and customary charges for medically necessary services and supplies, and shall be subject to verification and adjustment in accordance with Sections XI and XII of this manual. * * * Section XI: Disallowed, Denied and Disputed Charges * * * Physician Services The insurer shall not reimburse a hospital for physician services when billed by the hospital on the hospital billing form. Proper billing and reimbursement of physician services rendered in any location, including inside a hospital, shall be in accordance with the requirements of rules 69L-7.602 and 69L-7.020. Rule 69L-7.602 is the Florida Workers' Compensation Medical Services Billing, Filing and Reporting Rule. Rule 69L-7.602(4)(c) requires that hospitals submit bills using Form DFS-F5-DWC-90 (the hospital billing form). Rule 69L-7.602(4)(b)4.b. states as follows: Outpatient billing--Hospitals shall in addition to filing a Form DFS-F5-DWC-90: Enter the CPT®, HCPCS or workers' compensation unique code and the applicable CPT® or HCPCS modifier code in Form Locator 44 on the Form DFS-F5-DWC-90, when required pursuant to the UB-04 Manual; and Make written entry "scheduled" or "non-scheduled" in Form Locator 80 of Form revision 2006--'Remarks' on the DFS-F5-DWC- 90, when billing outpatient surgery or outpatient surgical services; and Attach an itemized statement with charges based on the facility's Charge Master; and Submit all applicable documentation required pursuant to Rule 69L-7.501, F.A.C.; Bill professional services provided by a physician or recognized practitioner on the Form DFS-F5-DWC-9, regardless of employment arrangement. (emphasis supplied). Rule 69L-7.602(1)(nn) sets forth the following relevant definition: "Recognized Practitioner" means a non- physician health care provider licensed by the Department of Health who works under the protocol of a physician or who, upon referral from a physician, can render direct billable services that are within the scope of their license, independent of the supervision of a physician. The services in this case were provided by an advanced registered nurse practitioner (ARNP), a recognized practitioner as defined by the rule. The coding on the bill submitted to the Petitioner by Raulerson indicated that the services were provided in a clinical setting (Revenue Code 510) by a recognized practitioner (CPT Code 99211). Review of the bill by the Department indicated that the charge for services attributed to "Revenue Code 510" was a "facility fee" rather than a professional services fee. Raulerson did not submit a bill for the professional services provided to the patient on August 8 and 15, 2011, by the ARNP. No specific charges for physician services were included on the bill at issue in this proceeding. Whether rendered on an inpatient or outpatient basis, the provision of hospital-based services routinely entails the services of medical professionals. The evidence failed to establish that Raulerson was legally required to submit a bill for professional services or that the bill at issue in this case should have been submitted on a professional services billing form.
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 affirming the Reimbursement Dispute Determination dated January 20, 2012, wherein the Department directed FFVA Mutual Insurance Company to pay a $300 reimbursement claim filed by Raulerson Hospital. DONE AND ENTERED this 25th day of July, 2012, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 25th day of July, 2012. COPIES FURNISHED: Julie Jones, CP, FRP, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Julie Lewis Hauf, Esquire Law Office of Julie Lewis Hauf, P.L. 15880 Summerlin Road, Suite 300 PMB 315 Fort Myers, Florida 33908 Mari H. McCully, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Richard M. Ellis, Esquire Rutledge, Ecenia and Purnell, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301
Findings Of Fact Respondent, Herbert Goloff, D.C., is a chiropractor licensed to practice in the State of Florida. From March 10, 1988, through September 3, 1991, Dr. Goloff treated Ruth Waddle, a Workers' Compensation patient, for lumbar myofascitis. Lumbar myofascitis is an inflammation of the muscle and the fascia in the lumbar spine. Lumbar myofascitis is indicated by the following objective findings: recurrent spasms, limitation of motion, tender nodules, trigger point tenderness in the muscles, and taut or sensitive skin. On June 14, 1988, the Respondent placed Ruth Waddle at maximum medical improvement (MMI). The Respondent treated Ruth Waddle 14 times before placing her at MMI. The Respondent treated Ruth Waddle a total of 171 times after MMI. The Respondent is required to maintain documentation substantiating the treatment and services he rendered to Ruth Waddle in order to receive reimbursement for those services. The Respondent is required to perform an initial history, make a diagnosis, and develop a plan of care and document his subjective and objective findings in his records. The Respondent is also required to keep notes reflecting his subjective and objective findings, his appraisal or assessment and his plan of action (SOAP notes) for the patient Ruth Waddle, in order to substantiate and justify that the medical treatment and services he renders are medically necessary. If a health care provider cannot document that this treatment and services are medically necessary, he is not entitled to receive reimbursement for his services. The Respondent's records indicate that there was unscheduled ongoing care of the patient after June 14, 1988. Whenever the patient was in pain she would come in to the Respondent's Office and ask for a treatment. Respondent was not practicing full time in 1988. The patient seldom scheduled an appointment. She frequently came in on a Tuesday, a day she knew that Respondent had office hours. The patient would describe her symptoms to Respondent and he would perform various therapies, including mild adjustments. Respondent would make minimum entries in the patient's progress notes. Respondent's treatment of the patient Ruth Waddle, after reaching MMI, for the temporary relief of pain was palliative care. The Respondent's records indicate that there was inadequate testing of the patient Ruth Waddle to substantiate the medical necessity of treatment after June 14, 1988. The Respondent's records do not contain a plan of care or treatment for Ruth Waddle. The Respondents records do not contain an initial history for Ruth Waddle. The Respondents records do not contain an evaluation of Ruth Waddle's physical condition at the time of MMI relative to muscle spasms and range of motion, as well as other neurological and orthopedic tests. Respondent failed to maintain SOAP notes for the patient Ruth Waddle. The Respondent's records do not contain objective medical findings to substantiate the medical necessity of services rendered to Ruth Waddle after June 14, 1988. The Respondent's records do not substantiate the medical necessity of the frequency and duration of the treatment provided to Ruth Waddle after June 14, 1988.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Respondent be determined to have failed to substantiate the treatment of Ruth Waddle after June 14, 1988. The Respondent be ordered to return the sum of $7,354.68 to the American States Insurance Company for the fees that the Respondent collected in treating Ruth Waddle after June 14, 1988, when the patient reached MMI. DONE and ENTERED this 30th day of March, 1994, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 30th day of March, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4546 The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's proposed findings of fact. Accepted in substance: paragraphs 1-14. Respondent's proposed findings of fact. Accepted in substance: paragraphs 2, 5(a), 5(b) (in part). Rejected as against the greater weight of the evidence: paragraph 4, 5(b) (in part), 5(c). COPIES FURNISHED: Michael G. Moore, Esquire Department of Labor and Employment Security Suite 307 Hartman Building 2012 Capital Circle, S.E. Tallahassee, Florida 32399-2189 William J. McCabe, Esquire Shepherd, McCabe & Cooley 1450 West S.R. 434, Suite 200 Longwood, Florida 32750 Shirley Gooding, Secretary Department of Labor and Employment Security Suite 303 Hartman Building 2012 Capital Circle, S.E. Tallahassee, Florida 32399-2152 Cecilia Renn, Esquire Chief Legal Counsel Department of Labor and Employment Security Suite 307 Hartman Building 2012 Capital Circle, S.E. Tallahassee, Florida 32399-2152
The Issue The issue is what is the correct amount of workers’ compensation reimbursement to Largo Medical Center for emergency services rendered to patient M.C. for a work-related injury?
Findings Of Fact Petitioner, Guarantee, is a carrier within the meaning of Subsections 440.02(4) and (38), Florida Statutes, and Florida Administrative Code Rule 69L-7.602(1)(w). Respondent, the Department, has exclusive jurisdiction to decide disputes relating to the reimbursement of health care providers by carriers for medical services rendered to injured workers. § 440.13(7) and (11)(c), Fla. Stat. Intervenor, Largo, is a health care provider within the meaning of Subsection 440.13(1)(h), Florida Statutes. Largo is an acute care hospital located in Largo, Pinellas County, Florida. On July 25, 2009, Largo provided emergency services to patient M.C., a 32-year-old female, who was injured at her place of work. M.C. was examined by Largo’s emergency department physician. She received two Computed Tomography (“CT”) scans without contrast dye, one of the brain and one of the cervical spine. She also received a pregnancy test and an X-ray of her lumbar spine. The results of these diagnostic tests were negative. M.C. was given a cervical collar to wear, and was discharged. Largo’s total charges for M.C.’s outpatient emergency services were $7,885.05. Largo submitted its claim for reimbursement using the standard “uniform billing” form, UB-04. The UB-04 sets out each service provided to M.C., the individual charge for each service, and the total charge. The individual services on the UB-04 submitted for patient M.C. are listed as follows: urine pregnancy test; X-ray; CT scan of the cervical spine; a three-dimensional rendering of the image and its interpretation; the CT of the brain; and the emergency department visit itself. Largo’s claim was received by MCMC, an organization described as a “third-party administrator,” and was referred in turn to Qmedtrix. Qmedtrix is a medical bill-review agent located in Portland, Oregon. Qmedtrix performs bill review by referral from carriers and third-party administrators, and performed a bill review for Guarantee of the bill submitted by Largo. For its compensation, Qmedtrix is paid a percentage of the difference, if any, between the amount billed by the facility and the amount paid by the carrier. Following Qmedtrix’ review, Largo received a check from Guarantee in the amount of $5,287.97, along with an “Explanation of Medical Benefits” review (EOBR), which is required to be sent along with the bill payment. For reasons that are not clear, there are two EOBRs in evidence for this claim. One (Petitioner’s Exhibit 4) has the logo “MCMC” in the upper left hand corner and is substantially more formal. The other (Largo’s Exhibit 3) does not have any identifying logo, but the following statement appears on page two: “For questions regarding this review, please call MCMC at 1-888-350-1150.” It is not clear why MCMC would have generated two different EOBRs for the same claim, but, in any event, the allowed amounts for the six components of Largo’s charges and the total payment amount, $5,287.97, is the same on both EOBRs. The EOBR that is Largo’s Exhibit 3 sets out the six individual components of Largo’s claim, and indicates that the first five were approved for reimbursement at 75 percent of the charge billed by Largo. The sixth component is the charge for the emergency department visit itself. For that charge, Largo billed $1,365.38, of which 75 per cent would be $1,024.04. The EOBR indicates the corresponding 25 percent discount from billed charges ($341.35) under a column entitled “MRA,” and indicates further that an additional reduction of $625.81 was applied, leaving an approved payment of $398.22 for the emergency room component of the claim. The additional reduction of $625.81 is under a column entitled “Ntwk Redc,” and the narrative explanation under the total payment states, ”The network discount shown above is based on your contract with the network.” Guarantee conceded at hearing that there was no contract applicable to the claim. The EOBR also has references to “convalescent care” and “PIP days,” neither of which apply to Largo’s claim. The EOBR that is Guarantee’s Exhibit 4 has one column entitled “Qualify Code.” In completing an EOBR, insurers must select a code from a list of approximately 50 codes found in Florida Administrative Code Rule 69L-7.602(5)(o)2., which identifies the reason for the disallowance or adjustment. For the emergency room visit, the EOBR shows a code of 82, which is explained as follows: “Payment adjusted: Payment modified pursuant to carrier charge analysis.” Both EOBRs indicate a “procedure code” of 99283. The UB-04 submitted by Largo used code 99284. These codes are among five codes that are used by hospitals to bill emergency department visits based on “level” of intensity rendered. These codes are taken from the American Medical Association’s Current Procedural Terminology (or CPT), a coding system developed for physician billing, not for hospitals. Over the years, these CPT codes have been adopted by hospitals for billing emergency department visits. Emergency department services are billed with CPT codes 99281 through 99285. After receiving the payment and EOBR, Largo timely filed a Petition for Resolution of Reimbursement Dispute, with attachments, to the Department. Largo alleged in its Petition that the correct reimbursement amount owed was $5,913.79, leaving an underpayment of $625.82. Qmedtrix, acting as Guarantee’s representative, then filed Guarantee’s Response to Petition for Resolution of Reimbursement Dispute and attachments with the Department. Attached to the Response was a letter from R.W. von Sydow dated November 5, 2009. The letter asserted that the correct payment to the hospital (Largo) should be determined on an average of usual and customary charges for all providers in a given geographic area, rather than the hospital’s usual and customary charges. As authority, Mr. von Sydow cites the case of One Beacon Insurance v. Agency for Health Care Administration, 958 So. 2d 1127 (Fla. 1st DCA 2007). The letter also requested that the Department “scrutinize the bill in question in order to determine, first, whether the hospital in fact charged its usual charge for the services provided and, second, whether the billed charges are in line with the customary charges of other facilities in the community.” The letter further alleges that the hospital “upcoded” the emergency room visit, billing using CPT code 99284, asserting that the proper billing code should have been 99283. The letter concludes that the amount paid, $398.22, for the emergency department visit is closer to the “usual and customary” charges that Qmedtrix asserts, on behalf of Guarantee, is applicable to the claim. On November 13, 2009, the Department issued its Determination. The Determination states in pertinent part: The Carrier Response to Petition for Resolution of Reimbursement Dispute disputes the reasonableness of the hospital’s “usual and customary charges,” maintains the petitioners’ charges should be based on the average fee of other hospitals in the same geographic area, and references a manual not incorporated by rule. There are no rules or regulations within Florida’s Workers’ Compensation program prohibiting a provider from separately billing for individual revenue codes. The carrier did not dispute that the charges listed on the Form DFS-F5- DWC-90 (UB-92) or the charges listed on the itemized statement did not conform to the hospital’s Charge Master. Nor did the carrier submit the hospital’s Charge Master in the response or assert that the carrier performed an audit of the Charge Master to verify the accuracy of the billed charges. Therefore, since no evidence was presented to dispute the accuracy of the Form DFS-F5- DWC-90 or the itemized statement as not being representative of the Charge Master, the OMS finds that the charges billed by the hospital are the hospital’s usual and customary charges. Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier’s reasons for disallowance or adjustment. The EOBR submitted with the petition does not conform to the EOBR code requirements of Rule 69L-7.602(5)(q), F.A.C. Only through an EOBR is the carrier to communicate to the health care provider the carrier’s reasons for disallowance or adjustment of the provider’s bill. Pursuant to s. 440.13(12), F.S., a three member panel was established to determine statewide reimbursement allowances for treatment and care of injured workers. Rule 69L-7.501, F.A.C., incorporates, by reference, the applicable reimbursement schedule created by the panel. Section 440.13(7)(c), F.S., requires the OMS to utilize this schedule in rendering its determination for this reimbursement dispute. No established authority exists to permit alternative schedules or methodologies to be utilized for hospital reimbursement other than those adopted by Rule 69L-7.501, F.A.C., unless the provider and the carrier have entered into a mutually agreeable contract. Rule 69L-7.501, F.A.C., incorporates, by reference, the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Since the carrier failed to indicate any of the services are not medically necessary, the OMS determined proper reimbursement applying the above referenced reimbursement guidelines. Therefore, the OMS has determined that the carrier improperly adjusted reimbursement to Largo Medical Center for services rendered to the above- referenced injured employee on July 25, 2009. Based upon the above analysis, the OMS has determined that correct reimbursement equals $5,913.79 ($7,885.05 x 75% [Hospital Manual] = $5,913.79). The determination letter also informed Guarantee of its right to an administrative hearing. Guarantee timely filed a Request for Administrative Hearing, which gave rise to this proceeding. CODING FOR M.C.’S EMERGENCY SERVICES As mentioned above, Largo reported the emergency department visit using CPT Code 99284. No one from the hospital testified, but Largo’s expert, Allan W. March, M.D., reviewed Largo’s hospital record for M.C. Dr. March is a graduate of Dartmouth College and Johns Hopkins University Medical School. He has extensive experience in, among other things, hospital physician practice and utilization review. Dr. March describes utilization as the oversight of medical care to affirm that it is appropriate, cost-effective, and medically necessary. Dr. March has worked as an emergency department physician and has personally treated upwards of 5,000 workers’ compensation patients. Dr. March testified on behalf of Largo and the Department. Dr. March described M.C. and her injuries from the hospital record as follows: This is a 32-year-old female who had just slipped at her place of work prior to arrival at the emergency department and presented in moderate distress, with moderate pain in the head, neck, and lower back. And the patient displayed tenderness in the posterior neck area as well as in the right lower back. Dr. March reviewed Largo’s hospital record for M.C. to analyze whether Largo appropriately used CPT code 99284, or whether it should have used a lower CPT code. Largo’s coding for the emergency department visit is based on the American College of Emergency Physicians’ “ED Facility Level Coding Guidelines” (ACEP Guidelines). By using the ACEP Guidelines, Largo used a nationally recognized methodology in determining the level of service to which the hospital should bill. He noted that the hospital’s charge sheet indicated that the level of services was marked at a Level 4. Dr. March compared the hospital’s charge list with the ACEP Guidelines and found them to be essentially the same, and that the Level 4 marked on the charge sheet corresponded with CPT code 99284. Dr. March found that Largo used a nationally recognized methodology in determining the level of service to which the hospital should bill. In Dr. March’s opinion, Largo correctly assigned 99284 to M.C.’s emergency department visit, and that the assignment of 99284 is substantiated by the medical record. Under the ACEP guidelines, the CPT code level assigned is always the highest level at which a minimum of one “possible intervention” is found. In this case, Dr. March determined that two CT scans were ordered by the physician and performed by the hospital, which substantiates the use of a 99284 code under the ACEP Guidelines. Dr. March further explained that the coding level of a hospital does not correspond directly to the coding level assigned by the physician. The physician’s services are coded under the CPT-4 coding book. According to Dr. March, the CPT coding manual is applicable to facility coding only if the hospital chooses to use this manual as a basis in their methodology for coding. Further, Dr. March explained that the separate billing of the emergency department visit captures separate and distinct costs incurred by hospitals that are not included in line-items for procedures. The claim submitted by Largo was sent to Qmedtrix for a bill review. Its data elements were first entered into Qmedtrix’ proprietary bill-review software known as “BillChek.” The software placed Largo’s claim on hold for manual review. The claim was then manually reviewed by Mr. von Sydow, Director of National Dispute Resolution for Qmedtrix. Although his educational background is in law, Mr. von Sydow is a certified coder certified by the American Health Information Management Association (AHIMA). Mr. von Sydow determined in his bill review that Largo should have used code 99283 instead of 99284. Mr. von Sydow described what he considers to be inconsistencies between certain diagnosis codes under the International Classification of Diseases, Ninth Edition (ICD-9) and the CPT codes used to classify the emergency department visit. He considers the ICD-9 codes on Largo’s claim (specifically 959.01 used to indicate “head injury, unspecified”) to be inconsistent with CPT code 99284. In his view, ICD-9 corresponds more closely with CPT code 99283. Moreover, Mr. von Sydow referenced a study by the American Hospital Association (AHA) and AHIMA, which suggests that hospitals should count the number and kind of interventions to approximate the CPT factors, but that a hospital should not include in this count interventions or procedures, such as CTs or X-rays, which the hospital bills separately. He further acknowledged that the federal Centers for Medicare and Medicaid Services (CMS) allow hospitals to use their own methodology in applying the CPT codes. David Perlman, M.D., received his undergraduate degree from Brown University and his medical degree from the University of Oregon. He has considerable experience as an emergency room physician. For the past six years, he has worked for Qmedtrix initially doing utilization review and as its Medical Director since 2005. Dr. Perlman testified on behalf of Guarantee. Dr. Perlman is familiar with the ACEP guidelines relied upon by Dr. March and the AHA/AHIMA study relied upon by Mr. von Sydow. He is also familiar with the CPT code handbook. Dr. Perlman suggested that the use of the ACEP guidelines could result in reimbursement essentially already provided in a separate line-item. He agrees with the methodology recommended by the AMA/AHIMA study. That is, counting the number and kind of interventions or procedures to approximate the CPT book’s factors to consider in selecting the code billed for emergency department services, but not including in this count interventions or procedures, such as CTs or X-rays, which the hospital bills separately. In Dr. Perlman’s opinion, M.C.’s injuries supported assignment of CPT code 99283 rather than 99284. The fact that M.C. underwent CT scans did not alter this conclusion. According to Dr. Perlman, use of a CT scan in a patient’s emergency department treatment determines that the facility may assign a 99284 code under the ACEP guidelines. In his opinion, this does not necessarily reflect the severity of the illness or injury. Dr. Perlman acknowledged, however, that hospitals are free to use the ACEP guidelines and that many hospitals do so. The preponderance of the evidence establishes that there is no national, standardized methodology for the manner in which hospitals are to apply CPT codes 99281-99285 for facility billing. The preponderance of the evidence also establishes that, while there is a difference of opinion as to whether ACEP guidelines are the best method, it is a nationally recognized method used by many hospitals. Largo’s use of this methodology is supported by the weight of the evidence as appropriate. M.C.’s hospital record amply documents the interventions required for the assignment of CPT code 99284 under the ACEP guidelines. Dr. March’s opinion that the separate billing of the emergency department visit captures separate and distinct costs incurred by hospitals that are not included in line-items for procedures is accepted. It is concluded that the coding of M.C.’s emergency department visit as 99284 by Largo was appropriate. There is no dispute that Largo’s charges as represented on the UB-04 form conform to its internal charge master, or that the services represented were in fact provided, or that they were medically necessary.
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 requiring Petitioner to remit payment to Largo consistent with the Determination Letter dated November 13, 2009, and Section 440.13(7)(c), Florida Statutes. DONE AND ENTERED this 17th day of June, 2010, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of June, 2010.
The Issue The issue presented for decision herein is whether or not Proposed Rule 10- 5.005(2), Florida Administrative Code, as promulgated by DHRS constitutes an invalid exercise of delegated legislative authority. Based upon the following findings of fact, conclusions and analysis, proposed Rule 10-5.005(2)(a) and (b) is invalid.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received and the entire record compiled herein, I hereby make the following relevant factual findings. DHRS' Office of Health Planning and Development is divided into two separate divisions: The Office of Community Medical Facilities, which administers the State Certificate of Need Program and has responsibility for making recommendations regarding CON applications, and (2) the Office of Comprehensive Health Planning, which has primary responsibility for development of rules pertaining to Certificate of Need policy. Mr. Robert Maryanski, Administrator of the Office of Community Medical Facilities, believes his office made no formal comments (perhaps informal comments,) concerning the proposed rule. Mr. Maryanski considered that the proposed rule was objectionable based on his understanding of the statutes. (TR 33, 54). Elfie Stamm is employed by the Office of Comprehensive Health Planning and has primary responsibility for development of Proposed Rule 10-5.005. The text of the proposed rule is as follows: 10-5.005 Exemptions. * * * (2)(a) Physician offices or physician group practices which do not exist for the primary purpose of providing elective surgical care are exempt from certificate of need requirements for ambulatory surgical centers as specified in 10-5.011(30). This certificate of need exemption applies to offices and associated surgical suites maintained by one or more private physicians or a physician group which is used only by the physician or the physicians of the group practice, and in which 50 percent or more of the patients treated annually are non-surgical patients. (b) Physician offices, or physician group practices applying for designation as an ambulatory surgical center (ASC) by the Health Care Financing Administration (HCFA) and who meet the requirements for exemption from certificate of need review under the provisions delineated under paragraph (2), shall submit a request for exemption from certificate of need to the Department. The physician office or physician group practice shall provide the Department with at least 30 day's written notice of the proposed exemption from the certificate of need requirements for ambulatory surgical centers. Within 30 days of receipt of such written notice, the Department shall determine if the physician office or physician group practice is exempt and advise the applicant of its determination in writing. (Petitioner's Exhibit 6). The proposed rule exempts physician offices and physician group practices from CON requirements for ambulatory surgical centers (ASC) when at least 50 percent of the patients treated annually in these facilities are non- surgical patients. The proposed rule purportedly implements the Federal Health Care Financing Administration's (HCFA) policy allowing physician offices which are exempt from State CON and licensure requirements to apply directly (to HCFA) to receive ASC designation for medical facility reimbursement purposes without first obtaining a CON. Currently, "Ambulatory Surgical Center" means a facility, the primary purpose of which is to provide elective surgical care and in which the patient is admitted to and discharged from such facility within the same working day and which is not part of a hospital. However, a facility existing for the primary purpose of performing therapeutic abortions, an office maintained by a physician for the practice of medicine, or an office maintained for the practice of dentistry shall not be construed to be an ASC. Section 395.002(2), Florida Statutes (1985). DHRS is trying to implement what it believes to be a statutory CON exemption for doctor's offices through the proposed rule. In so doing, HRS considers physicians' offices to be indistinguishable from physician group practices. In this regard, the relevant statutes do not reference physician group practices. Historically, HRS would not certify physician offices as medicare providers (in its role as surveyor for HCFA) because such certification entails the requirement that a physician's office comply with the State ASC Law. In short, a physician's office wishing to become an ASC had to satisfy both CON and State licensure requirements in order to be certified as a medicare providing ASC. Prior to promulgation of the proposed rule, DHRS never had a policy that group practices or physicians with operating suites are excluded from the statutory definition of an ASC. DHRS has no exemptions or exclusions for physicians' groups with surgical suites so that they could become ASCs for medicare certification. (Testimony of Tom Porter, previous supervisor for DHRS' Certificate of Need Program). DHRS took the position that it was without authority to grant an exemption to physician group practices and the related offices as an associated surgical suite without such facility having first obtained a CON as an ASC prior to offering such services. DHRS also took the position that a physician wishing to do minor surgical procedures as a sub-part of his office practice would not be required to obtain a CON as an ASC. These services could be done as an ancillary part of the physician's office. (Testimony of Gene Nelson, former Administrator, Office of Comprehensive Health Planning and Administrator of the Office of Community Medical Facilities prior to Mr. Maryanski's tenure with DHRS). Section 381.495, Florida Statutes, provides for several defined exemptions from CON review. As stated above, the proposed rule purports to grant an exemption to physician offices or to physician group practices from State CON requirements. Section 381.493 (3)(a), Florida Statutes (1985), states, in relevant part, that an office maintained by a physician for the practice of medicine is excluded from the definition of an ASC. The referenced statute does not grant an exemption from the ASC regulation nor has DHRS previously exempted a person or entity from CON review under such circumstances. DHRS has historically distinguished between a physician performing minor surgical procedures as an ancillary part of his office versus a full service ASC. HCFA clarified in Memorandum FQA-731, Ambulatory Surgical Center regulations relating to compliance with state licensure requirements and the application of state CON provisions as a prerequisite for medicare certification. (Pet. Exh. 8) In states where ASC licensure laws are in effect, facilities seeking to participate in medicare must meet such licensure requirements. Thus, 42 CFR Section 416.40 states, in pertinent part, that the ASC must comply with state licensure requirements. CON provisions must be met as a prerequisite for medicare licensure certification for an entity to operate legally within a state and CON approval is required before the decision to award a license is made. In instances where licensure is not required either by virtue of the absence of an ASC Licensure Law or the exemption of certain entities from the licensure law, compliance with CON provisions is not necessary for medicare eligibility as an ASC. It is through a series of correspondence between Mr. Robert Streimer of HCFA and Mr. Marshall Kelley, DHRS' Assistant Secretary for Program Planning that affords the proffered "basis" for the proposed rule. (TR 87). The Streimer letter provides that ASC services performed in a physician's office which is not required by state law to be licensed as an ASC and which meets all medicare ASC requirements would be covered and reimbursed by medicare at the ASC rate. As noted, DHRS historically took a different position. Nowhere in Mr. Kelley's letter to Mr. Streimer did HRS identify the specific criteria that would relate to an exemption request in Florida as currently stated in the proposed rule. DHRS, based on the proposed rule, now takes the position that any physician having a operating room and furnishing surgical procedures for less than 50 percent of his or her patients would be entitled to an exemption from CON requirements and in turn be entitled to apply for certification from HCFA as an ASC for ASC reimbursement (facility fee). The proposed rule allows for surgery currently performed in a physician's office to qualify for higher reimbursement from medicare (i.e., a facility fee). DHRS uses as authority for the proposed rule, Section 381.493(3)(a), Florida Statutes. Prior to receipt of Streimer's letter, DHRS considered HCFA's policy to be that if a facility did not have a CON and was not licensed as an ASC, there would be no medicare certification forthcoming from HCFA. The Streimer letter purportedly clarifies HCFA's policy although it does not represent a change in that policy. (Petitioner's Exhibit 6). The proposed rule defines "primary as 50 percent or more of the patients treated annually as being non-surgical patients. However, according to the 1982 federal regulations, an entity seeking application and certification as a medicare ASC must be dedicated exclusively to the provision of Ambulatory Surgical Services (42 CFR Section 416.2). Federal Rules provide that the requirement for ASC's to be certified in order to receive medicare payments was expected to exclude physicians offices. There appears to be no federal regulation dealing with reimbursement for the surgical procedures which are to be done in physicians' offices. To satisfy HCFA's certification requirements, an applicant must satisfy the relevant state licensure requirements if any, and meet federal certification requirements. As presently codified, it is impossible to simultaneously satisfy the proposed rule and the federal ASC definition contained in 42 CFR Section 416.02. Thus, an entity could not "exclusively" provide ASC services and at the same time not exist for the "primary" purpose of providing elective surgical care on an outpatient basis. They are mutually exclusive since the two definitions are inconsistent. The Streimer letter initiated HRS's evaluation of current statutes and the proposed rule is, according to HRS, designed to implement current statutes. HCFA's policy is that if a facility legally provides or is allowed to provide elective surgical procedures in Florida, without having to be licensed as an ASC or having gone through the CON process, it is inappropriate to require the facility to obtain a CON and be licensed as an ASC as a condition of that facility being approved for medicare reimbursement at the ASC rate. Prior to HCFA's correspondence, HCFA required an applicant for medicare ASC certification to meet State Law and also meet its certification requirements. This is still the case and the HCFA's correspondence to DHRS did not change that requirement. The purpose of the Health Facility and Health Services Planning Act, more commonly known as the CON law, (sometimes called the Act) is to protect the public health, safety and welfare of Floridians. These protections are further defined as a necessary increase in health care, minimizing duplication in health services, and minimizing situations where there is an underutilization of existing health care resources. The proposed rule does not relate to or otherwise address any "need" issue or capacity issue and contrary thereto, allows for uncontrolled growth of surgery suites as long as the physician group practice has 50 percent or more of total patients treated as non-surgical patients. It can be expected that there will be a proliferation of physicians, solo or group practices, with physician surgical practices developing in addition to hospital out-patient surgery. Additionally, there is no physical constraint on the location of the physician and a physician's group practice. Adoption of the proposed rule will also increase the cost of the total health care system in Florida as follows: The average cost per procedure increases when procedures are spread out over a greater number of fixed facilities and because of incentives that would be inherent in this additional capacity for additional unnecessary utilization. Physicians would receive a facility fee in addition to a professional fee. Physicians would thereby receive more money for doing the same procedures they are currently doing in their offices without the facility fee. The effect of the introduction of surgery centers where there is already excess capacity in hospitals and in freestanding surgery centers is to increase the cost of health care to the community. With the addition of new facilities, there are added fixed costs placed into the system that would remain until the facility becomes outmoded. With the addition of fewer procedures spread over more fixed costs, the average cost per procedure likewise increases even though the cost to an individual patient might appear to be lower in an alternative setting. Excess capacity leads to underutilization with the resultant increase in the rates for surgery. Without a capacity constraint, there will be more elective surgery performed. With the approval of the proposed rule, a doctor's office will be eligible for medicare reimbursement for a facility fee. Medicare reimbursement for a facility fee is unique to ASCs and does not apply to surgical procedures performed in a doctor's office. The purpose behind reimbursing for facility fees is that there is considerable overhead associated with performing relatively complex surgical procedures which require an operating room. If procedures are so simple as to be safely performed in a doctor's office, the intent of the rule is to distinguish between these two settings. It is desirable for procedures to be done in a doctor's office that are simple because it is the lower cost setting. Procedures performed in a physician's office will not qualify for the facility fee reimbursement and overhead payment because of the simplistic nature of the procedures and the lack of need for sophisticated equipment which is currently being used in ASCs. The federal regulations were intended to remove hospital surgery to ASCs, if appropriate, and to remove minor surgery to doctors' offices in order to avoid reimbursement for procedures which can be done in a less sophisticated setting. If more procedures are shifted to medicare certified ASCs, there would be an additional facility fee and physicians would be eligible for this reimbursement. An example of the operational effect of the proposed rule is the scenario surrounding Doctor Stephen S. Spector and the Presidential Eye Surgery Center in Palm Beach County. Doctor Spector was denied a CON for an ASC based on a lack of need for additional operating suites in Palm Beach County. After DHRS made its initial decision denying Dr. Spector's CON, he petitioned for a formal administrative hearing. A Recommended Order was entered denying Dr. Spector a CON and HRS then issued a Final Order denying a CON to Dr. Spector. Dr. Spector has since simply requested an exemption for a freestanding ASC pursuant to the proposed rule. DHRS will entertain this request and if granted, Dr. Spector will be entitled to medicare certification and a facility fee for surgical procedures performed in his office. The proposed rule will encourage the massive proliferation of outpatient surgery facilities and outpatient surgery suites. 3/ Evidence adduced at final hearing indicates that CON approved and licensed freestanding ambulatory surgery centers are currently underutilized and not operating at optimal capacity. The result will be increased hospital and ASC costs per unit because fixed costs must then be spread over a smaller patient base. It is likely that there will be underutilization of existing facilities. The proposed rule does not foster the purposes of Florida's CON law and it will not restrain increases in health care costs. The proposed rule will enhance or maximize unnecessary duplication and promote underutilization of existing resources. Pursuant to Section 120.54(2), Florida Statutes (1985), the Department is required to prepare an economic impact statement of the proposed rule. For the proposed rule, HRS states, in part, in its economic impact statement as follows: The proposed amendment is expected to have an economic impact on hospital outpatient departments and ambulatory surgical centers licensed by the State. It is expected that some Medicare patients who previously have been referred to hospital outpatient departments or a freestanding ambulatory surgical center licensed by the State may have their elective surgeries performed in the physician's group practice. In addition, the proposed rule may encourage the development of physician group practices with surgical suites since they are exempted from the certificate of need process and State licensure requirements. The fiscal impact on hospitals and ambulatory surgical centers cannot be estimated since the Department has no data regarding the number of potential applicants under this Rule, the location of those applicants, the volume of surgeries which may be performed by these entities, or the number of surgeries which would have been performed in hospital outpatient departments or State licensed ambulatory surgical centers in the absence of these new entities. (Petitioner's Exhibit 7). The economic impact statement for the proposed rule does not provide any data or method used in making the required economic impact estimates. The statement does not include any data to analyze whether the rule will impact ASCs having less than one million dollars net worth and less than 25 employees or whether the proposed rule will have an economic impact on hospitals and ambulatory surgery centers. Although HRS has indicated that the exact amount of the fiscal impact is impossible to estimate due to the unknowns respecting the number of physician offices or group practices that will qualify for the exemptions and therefore no analysis was undertaken or developed, studies could have been made to determine the effect any level of participation would have on hospital costs and utilization of existing facilities. Although the task of compiling such data would, no doubt, be arduous, evidence adduced at final hearing indicates that DHRS could have, with effort, compiled a data base with a stratified sample which would have been reliable and could forecast the likely effect of the proposed rule within an acceptable margin of error. DHRS did not compile data which would provide an estimate as to the number of patients who would choose the physician's office over other facilities that perform Ambulatory Surgery. DHRS never requested input from hospitals or outpatient surgery centers with respect to pay or patient mix. DHRS conducted no surveys with respect to the number of potential applicants under the proposed rule. DHRS considered it not relevant to examine the capacity of existing freestanding surgery centers or hospitals having outpatient surgery facilities. DHRS conducted no studies to determine the accessibility of existing ASCs and hospital ASCs. No studies were done to examine the impact, as to the cost to patients, that the proposed rule is likely to have on existing providers. No studies were done to assess the impact the proposed rule will have on the medicare trust fund. No studies were done to determine the impact, if any, on Florida small and minority businesses. It is true that a great deal of the needed data was not readily available to HRS whereas, on the other hand, it made no attempt to gather such data. DHRS has the ability to assess the number of surgeries that could be performed in hospital outpatient departments and ASC's since DHRS does such compilations on a day to day basis when it projects the need for new ASCs. DHRS could have commissioned studies to determine the effect any level of participation would have on hospital costs and utilization. Development of an adequate data base and a meaningful economic impact of the proposed rule is paramount in view of the legislative mandate (to DHRS) to contain health care costs. Rules are promulgated to further the purpose and objective of the statutes they implement. To accomplish this, they must be consistent with the statute. Here, the purpose of the statute is cost containment. Evidence adduced at final hearing reveals, without contradiction, that the proposed rule will increase health care costs, contrary to the major purpose for its existence. Finally, DHRS compiled no data as to the impact on the ability of hospitals to provide indigent care under the proposed rule. As example, Florida Hospital projects that it will provide $48,000,000 in uncompensated care for fiscal year 1986. If the hospital were to lose revenue as result of this proposed rule, the level of indigent care will also correspondingly be reduced in order to offset the loss of revenue. Other parties herein provide services to indigent persons. The proposed rule does not require these exempt facilities to provide indigent care. In addition to the above economic impact which will be brought about by the proposed rule on the Health Care system as a whole, the proposed rule will have an economic impact on the existing hospitals and ASC's. (TR 276-277; 438-440). As example, one Petitioner herein advises that if one surgery suite were added by an existing physician group or formed near the hospital, the hospital will lose approximately $481,000 per annum. By letter dated August 29, 1986, DHRS forwarded a copy of the purposed rule to the statewide and local health councils requesting comments by September 12, 1986. The public hearing on the proposed rule was scheduled for October 20, 1986. Neither health council (state or local) participated in the public hearing for the proposed rule nor has either council submitted comments respecting the proposed rule. The notice provided to the local and statewide health councils for comments on the proposed rule was adequate and afforded the various councils an opportunity to voice any concerns or provide input about the proposed rule. Dr. Montgomery, an Intervenor herein, will receive additional medicare reimbursements of $500.00 per patient for a facility fee under the proposed rule. Dr. Montgomery approximated that he performed 320 cataract surgeries per year of which approximately 300 patients are paying patients. Approximately 85 percent of those patients are over 65. Therefore, Dr. Montgomery will receive medicare reimbursement for 255 patients or approximately $127,500.00 in additional fees if his office is certified as exempt under the proposed rule.
The Issue The issue is what is the correct amount of workers’ compensation reimbursement to Aventura Medical Center for emergency services rendered to patient J.R. for a work-related injury?
Findings Of Fact Petitioner, Guarantee, is a carrier within the meaning of Subsections 440.02(4) and (38), Florida Statutes, and Florida Administrative Code Rule 69L-7.602(1)(w). Respondent, the Department, is charged with the review and resolution of disputes regarding the payment of providers by carriers for medical services rendered to injured workers. The Department has exclusive jurisdiction to decide reimbursement disputes. § 440.13(7) and (11)(c), Fla. Stat. Intervenor, Aventura, is a health care provider within the meaning of Subsections 440.13(1)(h), Florida Statutes. Aventura is an acute care hospital located in Aventura, Miami- Dade County, Florida. On May 27, 2009, Aventura provided emergency services to the patient J.R., a 41-year-old male, who was injured at his place of work. J.R. was examined by Aventura’s emergency department physician. He received two Computed Tomography (“CT”) scans, one of the abdomen and one of the pelvis. He also received a urinalysis, a complete blood count (CBC), and an X-ray of his left side and ribs. J.R. was discharged after these tests. Aventura’s total charges for J.R.’s outpatient emergency services were $9,877.47. Aventura submitted its claim for reimbursement using the standard “uniform billing” form, UB-04. The UB-04 sets out each service provided to J.R., the individual charge for each service, and the total charge. The individual services on the UB-04 submitted for patient J.R. are listed as follows: comprehensive metabolic; assay lipase; amylase syrum; automated hemocram; urinalysis; X-ray of the ribs and chest; X-ray of the abdomen; contrast CT scan of the pelvis; contrast CT scan of the abdomen; the emergency department visit itself, and low osmolar contrast media (LOCM). Aventura’s claim was received by MCMC, an organization described as a “third-party administrator,” and was referred in turn to Qmedtrix. Qmedtrix is a medical bill-review agent located in Portland, Oregon. Qmedtrix performs bill review by referral from carriers and third-party administrators, and performed a bill review for Guarantee of the bill submitted by Aventura. For its compensation, Qmedtrix is paid a percentage of the difference, if any, between the amount billed by the facility and the amount paid by the carrier. Following Qmedtrix’ review, Aventura received a check from Guarantee in the amount of $6,987.21, along with an “Explanation of Medical Benefits” review (EOBR), which is required to be sent along with the bill payment. The EOBR sets out the 11 individual components of Aventura’s claim, and indicates that the first nine were approved for reimbursement at 75 percent of the charge billed by Aventura. The tenth component is the charge for the emergency department visit itself. For that charge, Aventura billed $722.00, of which 75 per cent would be $541.50. The EOBR indicates the corresponding 25 percent discount from billed charges ($180.50) under a column entitled “MRA,” and indicates further that an additional reduction of $143.28 was applied, leaving an approved payment of $398.22 for the emergency room component of the claim. The additional reduction of $143.28 is under a column entitled “Ntwk Redc,” and the narrative explanation under the total payment states, ”The network discount shown above is based on your contract with the network.” Guarantee conceded at hearing that there was no contract applicable to the claim. The eleventh and last component is the charge for the LOCM, which was completely disallowed with the explanation, “Correction to a Prior Claim.” The EOBR also has references to “convalescent care” and “PIP days,” neither of which apply to Aventura’s claim. The EOBR indicates a “procedure code” of 99283. The UB-04 submitted by Aventura also used the code 99283. This code is among five codes that are used by hospitals to bill emergency department visits based on “level” of intensity rendered. These codes are taken from the American Medical Association’s Current Procedural Terminology (or CPT), a coding system developed for physician billing, not for hospitals. Over the years, these CPT codes were adopted by hospitals for billing emergency department visits. Emergency department services are billed with CPT codes 99281 through 99285. After receiving the payment and EOBR, Aventura timely filed a Petition for Resolution of Reimbursement Dispute, with attachments, to the Department. Aventura alleged in its Petition that the correct reimbursement amount owed was $7,408.10, leaving an underpayment of $420.89. Qmedtrix, acting as Guarantee’s representative, then filed Guarantee’s Response to Petition for Resolution of Reimbursement Dispute and attachments with the Department. Attached to the Response was a letter from Mr. von Sydow dated November 9, 2009. The letter asserted that the correct payment to the hospital (Aventura) should be determined on an average of usual and customary charges for all providers in a given geographic area, rather than the hospital’s usual and customary charges. As authority, Mr. von Sydow cites the case of One Beacon Insurance v. Agency for Health Care Administration, 958 So. 2d 1127 (Fla. 1st DCA 2007). The letter also requested that the Department “scrutinize the bill in question in order to determine, first, whether the hospital in fact charged its usual charge for the services provided and, second, whether the billed charges are in line with the customary charges of other facilities in the community.” The letter further alleges that the hospital “upcoded” the emergency room visit, billing using CPT code 99283, asserting that the proper billing code should have been 99282. The letter concludes that the amount paid, $398.22, for the emergency department visit is closer to the “usual and customary” charges that Qmedtrix asserts, on behalf of Guarantee, is applicable to the claim. On November 18, 2009, the Department issued its Determination. The Determination states in pertinent part: The 2006 HRM, Section 12.,A., vests specific authority in the carrier to review the hospital’s Charge Master to verify charges on the itemized statement and to disallow reimbursement for specifically itemized services that do not appear to be medically necessary. No documentation submitted indicates the carrier elected to exercise this option. Moreover, the carrier did not allege that any service was deemed not “medically necessary” or that the charges present on the DWC-90 failed to match the charges on the provider’s Charge Master. Therefore, the OMS finds the charges billed by the hospital are the hospital’s usual and customary charges. The 2006 HRM provides for reimbursement of emergency room services at seventy-five percent (75%) of the hospital’s usual and customary charges. Whereas, the carrier failed to substantiate is [sic] adjustments and disallowances of reimbursement on the EOBR and the hospital’s billed charges are accepted as the hospital’s billed charges are accepted as the hospital’s usual and customary charges, the OMS determines correct total reimbursement equals $7,408.10 ($9,877.47 x 0.75). The determination letter also informed Guarantee of its right to an administrative hearing. Guarantee timely filed a Request for Administrative Hearing, which gave rise to this proceeding. CODING FOR J.R.’S EMERGENCY SERVICES As mentioned above, Aventura reported the emergency department visit using CPT Code 99283. No one from the hospital testified but Aventura’s expert, Allan W. March, M.D., reviewed Aventura’s hospital record for J.R. Dr. March is a graduate of Dartmouth College and Johns Hopkins University Medical School. He has extensive experience in, among other things, hospital physician practice and utilization review. Dr. March describes utilization as the oversight of medical care to affirm that it is appropriate, cost-effective, and medically necessary. Dr. March has worked as an emergency department physician and has personally treated upwards of 5,000 workers’ compensation patients. Dr. March testified on behalf of Intervenor and Respondent. Dr. March described J.R. from the hospital record as follows: This is a 41-year-old male who was kicked in the flank one week prior to his presentation to the emergency department, while engaged in a fight, and was seen immediately prior to his appearance in the emergency department by a workers’ compensation physician, who referred the patient to the emergency department noting a stat referral, meaning that he wanted that patient evaluated within the hour. Dr. March reviewed Aventura’s hospital record for J.R. to analyze whether Aventura appropriately used CPT code 99283. Dr. March explained that Aventura’s selection of CPT code 99283 for the UB-04 was, in all likelihood, due to a particular reference in J.R.’s patient record. Specifically, in that section of the record indicating “Permanent Medical Record Copy” at the bottom of each page, page 6 reflects an entry made on May 29, 2009, which was two days after the services were rendered. The May 29, 2009, entry was made by the emergency physician to assign a level for emergency physician services, and indicates “ER LEVEL III.” Although the “level” reference is for physician services and not for facility services, it would have been used by Aventura’s hospital coder in the absence of an emergency department charge sheet adopting the widely used guidelines from the American College of Emergency Physicians (ACEP Guidelines).” Aventura used an alternate methodology of determining the severity level of the patient, in which the coder would have used the complexity of the medical evaluation by the physician. Under the ACEP guidelines, the CPT code level assigned is always the highest level at which a minimum of one “possible intervention” is found. In this case, Dr. March determined that two CT scans were ordered by the physician and performed by the hospital, which substantiates the use of a 99284 code under the ACEP Guidelines. Thus, Dr. March determined that Aventura could have justified the use of CPT code 99284, which is higher than the 99283 CPT code assigned by Aventura, had the ACEP guidelines been used. Dr. March further explained that the separate charge for the emergency visit is intended to compensate the hospital for “evaluation and Management” costs not captured in other line items. According to Mr. March, the separate charge does not duplicate charges for specific procedures rendered, such as a CT scan. The claim submitted by Aventura was sent to Qmedtrix for a bill review. Its data elements were first entered into Qmedtrix’ proprietary bill-review software known as “BillChek.” The software placed Aventura’s claim on hold for manual review. The claim was then manually reviewed by Mr. von Sydow, Director of National Dispute Resolution for Qmedtrix. Although his educational background is in law, Mr. von Sydow is a certified coder certified by the American Health Information Management Association (AHIMA). Mr. von Sydow determined in his bill review that Aventura should have used code 99282 instead of 99283. Mr. von Sydow supported his conclusion that CPT code 99282 is the appropriate code for the emergency department visit by comparing the procedure codes and diagnosis codes reported by the hospital with examples of appropriate billing for emergency department services in the CPT code handbook. Mr. von Sydow concluded that the hospital’s billing with CPT code 99283 was not appropriate and that the hospital should have billed with CPT code 99282. Mr. von Sydow also calculated that while the hospital billed $722 with CPT code 99283, its usual and customary charge for a visit billed with 99282 is $600. Moreover, Mr. von Sydow referenced a study by American Hospital Association (AHA) and AHIMA, which suggests that hospitals should count the number and kind of interventions to approximate the CPT factors, but that a hospital should not include in this count interventions or procedures, such as CTs or X-rays, which the hospital bills separately. He further acknowledged that the federal Centers for Medicare and Medicaid Services (CMS) allow hospitals to use their own methodology in applying the CPT codes. David Perlman, M.D., received his undergraduate degree from Brown University and his medical degree from the University of Oregon. He has considerable experience as an emergency room physician. For the past six years, he has worked for Qmedtrix initially doing utilization review and as its medical director since 2005. Dr. Perlman testified on behalf of Guarantee. Dr. Perlman is also familiar with the ACEP guidelines referenced by Dr. March and the AHA/AHIMA study relied upon by Mr. von Sydow. He is also familiar with the CPT code handbook. Dr. Perlman suggested that the use of the ACEP guidelines could result in reimbursement essentially already provided in a separate line-item. He agrees with the methodology recommended by the AMA/AHIMA study. That is, counting the number and kind of interventions or procedures to approximate the CPT book’s factors to consider in selecting the code billed for emergency department services, but not including in this count interventions or procedures, such as CTs or X-rays, which the hospital bills separately. In Dr. Perlman’s opinion, J.R.’s injuries supported the assignment of CPT code 99283 as designated by Aventura. Dr. Perlman agreed with Dr. March’s opinion that Aventura could have billed at a higher level (99284), but not based on the number and kind of interventions or procedures. Dr. Perlman instead referenced examples in the ACEP guidelines. Dr. Perlman acknowledged that hospitals are free to use the ACEP guidelines and that many hospitals do so. Both Drs. March and Perlman are of the opinion that Aventura’s use of CPT code 99283 was appropriate, and further agreed that Aventura could have assigned the higher code of 99284. Therefore, coding J.R.’s emergency department visit as 99283 by Aventura was appropriate.
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 requiring Petitioner to remit payment to Aventura consistent with the Determination Letter dated November 18, 2009, and Section 440.13(7)(c), Florida Statutes. DONE AND ENTERED this 17th day of June, 2010, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of June, 2010.
