Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1, The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1, The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $2,000.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed February 4, 2013 2:20 PM Division of Administrative Hearings ORDERED at Tallahassee, Florida, on this 40 day of aces , 2013. My ; Elizabéth Dudeks'Secretary Agenty for Helth Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and wig copy of this Fina] Order was served on the below-named persons by the method designated on this day of tv ff , 2013. Richard Shg6p, Agency Co ey Agency fgt Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Andrea M. Lang, Senior Attorney | Jacob Weiss, President Office of the General Counsel OJCommerce, LLC Agency for Health Care Administration 1700 N.W. 64" Street, Suite 460 (Electronic Mail) Fort Lauderdale, Florida 33309 | (U.S. Mail) The Honorable Stuart M. Lerner Administrative Law Judge Division of Administrative Hearings (Electronic Mail) _ |
The Issue The issue is whether the methodology employed by respondent in calculating petitioners' budget letter gross revenues per adjusted admission is a rule, not duly promulgated, and thus is an illegal exercise of delegated legislative authority.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: A. Parties Petitioners, Easte Point Hospital, Inc. and others, are fourteen hospitals in the State of Florida who are subject to the regulatory jurisdiction of respondent, Health Care Cost Containment Board (Board). Petitioner, Florida League of Hospitals, Inc., is a nonprofit organization which is organized and maintained for the benefit of the proprietary hospitals which comprise its membership. The Board is a state agency charged with the responsibility of annually reviewing hospital budgets to insure that a hospital's charges do not exceed certain established thresholds. Intervenor, Citizens of the State of Florida, is represented by the Office of the Public Counsel. That office has the duty of representing citizens in all proceedings before the Board. Events Leading to the Filing of the Rule Challenges Petitioners are required to annually file their projected budgets with the Board for its review and approval. This controversy pertains to the filing of budgets for fiscal year 1992. There are two types of budget filings authorized by law. First, a hospital may file what is known as a budget letter, which is a one- page submission on a form provided by the Board. In preparing such a letter, the hospitals are required to provide information regarding their gross revenues per adjusted admission (GRAA) and maximum allowable rate of increase (MARI), two financial indicators that are used by the Board in measuring the reasonableness of a hospital's charges. A budget letter is to be filed whenever a hospital does not intend to increase its charges (GRAA) in the next fiscal year by more than the percentage amount specified in its approved MARI. Secondly, a hospital may file a detailed budget which is much more complicated than the budget letter and requires the completion of a twenty-seven page form. The preparation of a detailed budget is obviously more time- consuming and expensive than a budget letter and requires the hospital to justify its entire budget. The detailed budget is to be filed whenever a hospital intends to increase its charges (GRAA) from one fiscal year to the next by a greater percentage amount than is specified in the MARI. These cases deal with the legitimacy of a methodology used by the Board in determining whether a hospital is eligible to file a budget letter. In this proceeding, each of the fourteen hospitals filed budget letters with the Board in May 1991. After the budget documents were reviewed by the Board's staff, on June 21, 1991, the Board issued virtually identical proposed agency action to each hospital advising the hospital that its budget letter was "nonconforming for the following reason: The hospital's maximum GRAA should be $ , instead of $ , ", with the appropriate dollar amounts inserted in the blanks. The letter went on to advise each hospital that it should resubmit a corrected budget document and until it did so, its submission would be considered incomplete. The effect of the Board's action was to reduce each hospital's budget letter GRAA and the amount of revenues (charges) it could receive in the next fiscal year unless it agreed to file a detailed budget. The hospitals are accordingly affected by the proposed agency action and thus have standing to being this action. Likewise, since the methodology employed by the Board in rejecting the budget letters affects all members of the Florida League of Hospitals, Inc. who file budget letters, that organization also has standing to participate. The parties have further stipulated to the standing of intervenor, Citizens of the State of Florida. Although the proposed agency action does not show the methodology used by the Board in reaching its conclusion that the "maximum GRAA" was overstated, the record reveals that the Board utilized a certain methodology to calculate the "base GRAA", the first calculation in the budget letter review process. /2 This methodology is described in the second sentence of Subsection 407.50(3), Florida Statutes (1989) as follows: In determining the base, the hospital's prior year audited actual experience shall be used unless the hospital's prior year audited experience exceeded the applicable rate of increase in which case the base shall be the gross revenue per adjusted admission from the year before the prior year, and then inflated by the applicable rate of increase for the current year. Petitioners concede that the methodology used by the Board tracks the language in the above statute verbatim. However, they contend that, when the language in subsection 407.50(2)(a) is considered, it becomes apparent that the use of this methodology is the review of budget letters is not clearly called for, and thus the methodology is a policy having all of the attributes of a rule which has not been adopted pursuant to chapter 120. Conversely, respondent and intervenor claim the methodology is not a policy but simply an interpretation of the controlling statute. Is the Methodology a Rule? By virtue of rather extensive amendments to the law in 1988, budget letters were first authorized for use by hospitals beginning with budget years 1990 and 1991. Prior to that time, all hospitals filed detailed budgets. There was no quarrel over the manner in which hospitals performed their calculations in the first two budget letter filings since subsection 407.50(1) clearly specified the methodology for making all calculations during the first two years. This controversy arises because all subsequent filings of budget letters are controlled by language found in other portions of section 407.50. The relevant portions of that statute read as follows: (a) Except for hospitals filing a budget pursuant to subsection (3), each hospital, at least 90 days prior to the commencement of its next fiscal year, shall file with he board a certified statement, hereafter known as the "budget letter", acknowledging its applicable maximum allowable rate of increase in gross revenue per adjusted admission from the previous fiscal year as calculated pursuant to s. 407.002(17) and its maximum projected gross revenue per adjusted admission for the next fiscal year, and shall affirm that the hospital shall not exceed such applicable maximum allowable rate of increase. . . * * * At least 90 days prior to the beginning of its fiscal year, each hospital requesting a rate of increase in gross revenue per adjusted admission in excess of the maximum allowable rate of increase for the hospital's next fiscal year, shall be subject to detailed budget review and shall file its projected budget with the board for approval. In determining the base, the hospital's prior year audited actual experience shall be used unless the hospital's prior year audited actual experience exceeded the applicable rate of increase in which case the base shall be the gross revenue per adjusted admission from the year before the prior year, increased by the then applicable rate of increase for the current year. * * * A reading of the above statute indicates that subsection 407.50(2) (a) prescribes the form and manner for a budget letter submission. The submission consists primarily of a certified statement by the hospital acknowledging "its applicable maximum allowable rate of increase in gross revenue per adjusted admission from the previous fiscal year as calculated pursuant to s. 407.0C2(17) and its maximum projected gross revenue per adjusted admission for tie next fiscal year, and shall affirm that the hospital shall not exceed such applicable maximum allowable rate of increase. At the same time, subsection 407.50(2) (a) provides that its provisions shall apply to all hospitals "except those filing a (detailed) budget pursuant to subsection (3)". However, the subsection does not prescribe the manner in which the budget letter's base GRAA should be calculated. On the other hand, subsection 407.50(3) appears, at least facially, to impose certain requirements upon detailed budget filings, including the time requirements for filing a detailed budget, who must file one, and the manner in which to calculate the "base". Thus, a literal reading of the statute could lead the reader to reasonably conclude that, while subsection 407.50(2) (a) does not prescribe the manner in which the base GRAA should be calculated for purposes of a budget letter submission, the same judgment can be reached with respect to subsection 407.50(3). In other words, an affected person would not necessarily know from a reading of the law that the base GRAA for a budget letter submission filed under subsection (2) (a) would be calculated using a methodology found in subsection (3). Accordingly, it is found that the methodology used by the Board in calculating the budget letter GPAA is not a statutory interpretation but instead is a policy. While respondent and intervenor presented evidence to justify and explain the rationale for calculating the budget letter base GRAA in this manner, this evidence is more relevant in the companion section 120.57(1) cases. The methodology employed by the Board is one of general applicability since it applies to all hospitals who file budget letters in fiscal year 1992 and beyond. It is applied uniformly without discretion by agency personnel to all hospitals, requires compliance and has the direct and consistent effect of law. The policy has not been adopted as a rule.
The Issue Whether the Health Care Cost Containment Board correctly determined the amount of the Public Medical Assistance Trust Fund assessments for the period April 1, 1986, through March 31, 1987, and the period April 1, 1987, through December 31, 1987, attributable to the operation of the Petitioner?
Findings Of Fact These findings of fact were stipulated to by the parties. Golden Glades Regional Medical Center, formerly known as Miami General Hospital, is a 352-bed acute-care hospital located at 17300 NW 7th Avenue, Miami, Dade County, Florida. It holds HRS license 2288 and has been assigned HCCB number 10-0222. Its fiscal year is the calendar year. It has been owned by Golden Glades Regional Medical Center, Ltd., a Florida Limited partnership, since December of 1987. As of January 1, 1986, and for sometime prior to that, the hospital was known as Miami General Hospital and operated with a fiscal year ending March 31. On August 15, 1986, the HCCB certified to HRS that 1.5 percent of the $40,101,199 net annual operating revenue of Miami General Hospital for its fiscal year ending March 31, 1986, was $601,517.98. (Hospital Exhibit 1) As of January 1, 1987, the owner of Miami General Hospital was Miami General Hospital, Inc. (The majority shareholder of Miami General Hospital, Inc., was International Medical Centers, Inc., ("IMC"). Miguel Recarey, Jr., was president of IMC). (HX 2, 3, 4, 5, 6 and 9) Under subsection (7) of Section 407.05, Fla. Stat., and HCCB Fla. Admin. Code Rule 10N-1.004(3)(a), an audited actual report for fiscal year ending March 31, 1987 (hereafter "the 1987 audited actual report") was due within 120 days of that date; i.e., on or about July 31, 1987. However, on May 14, 1987, prior to the date the foregoing report was required to be filed, IMC was placed in receivership by the Florida Department of Insurance in Leon County Circuit Court Case No. 87-1456. On June 2, 1987, HRS was notified by Miami General Hospital that the hospital was in receivership. (HX 7) On June 18, 1987, an involuntary petition for bankruptcy was filed in the United States Bankruptcy Court for the Southern District of Florida, in Case No. 87-2131, "In re: Miami General Hospital". The Bankruptcy Order (HX authorizing the sale of the hospital found as follows: The hospital has been operating with losses of about $1,000,000 per month for sometime. The hospital was without funds to operate other than monies supplied from IMC (which itself had been placed in receivership) or use of cash collateral as to which First American Bank and Trust claimed a secured lien. On June 29, 1987, the HCCB was notified by Miami General Hospital that Miami General Hospital had been placed in receivership May 14, 1987, and that it was placed in bankruptcy June 18, 1987. (HX 8) On June 29, 1987, Miami General Hospital timely requested an extension of time to complete or provide the 1987 HCCB prior year report contending that the receivership and bankruptcy placed the hospital in a position where it was not able to complete its financial statements. In addition, the HCCB was notified by Miami General Hospital that the hospital did not have authority to retain an accounting firm to provide audited financial statements. (HX 8) (On July 24, 1987, the HCCB granted that extension request and advised the hospital that the report should be filed no later than 60 days following the Bankruptcy Court's approval of the hiring of an accounting firm to perform the audit.) (HX 13) In the meantime, on July 9, 1987, the assets of Miami General Hospital were sold by the trustee, free and clear of all claims, to First American Bank and Trust Company (FABT). (HX 10, 11) On August 4, 1987, the HCCB was notified by Miami General Hospital that the Bankruptcy Court had instructed the hospital's management team to file all reports and audits and that a copy of the HCCB's letter of July 24, 1987, would be saved for the new owners to keep on file. (HX 14) The letter of August 4, 1987, was not acknowledged by the HCCB. On or about August 8, 1987, an application for change of ownership of the hospital's license was received by HRS. That application reflected a change of ownership date of July 9, 1987, and indicated G. H. Corporation of Miami, c/o First American Bank and Trust - Legal Counsel, as owner of the hospital. (HX 12) On August 25, 1987, a bill of sale and trustee's deed, was executed from the trustee to G. H. Corporation of Miami, a Florida corporation. (HX 15, 16, 17) On August 25, 1987, license 2232 was issued by HRS to G. H. Corporation of Miami, d/b/a Miami General Hospital. (HX 18) Under HRS licensure laws and HCCB rules, a change of ownership occurred. On September 1, 1987, C & S Health Corp. submitted an application to HRS for change of ownership of the hospital reflecting a date of change of ownership of October 26, 1987. (HX 19) On September 4, 1987, a 1987 prior year report for Miami General Hospital was submitted by G. H. Corporation to the HCCB. (HX 20) The report was prepared using unaudited data. Receipt of that report was acknowledged September 16, 1987, by the HCCB (HX 21), but the report was deemed incomplete by the HCCB because it lacked audited financial statements, and a complete report, including audited financial statements, was requested. On September 28, 1987 the HCCB was notified that G. H. Corporation of Miami owned the land and buildings comprising Miami General Hospital as of August 25, 1987. (HX 22) The HCCB acknowledged this change of ownership November 17, 1987. (HX 23, 24) By special warranty deed dated December 5, 1987 (HX 25), ownership of the hospital was transferred from G. H. Corporation of Miami to Golden Glades Regional Medical Center, Ltd., which is the current owner of the facility. On December 7, 1987, Golden Glades Regional Medical Center, Ltd., filed a hospital license application with HRS. (HX 26) On December 8 and 10, 1987, the HCCB was notified that Golden Glades Regional Medical Center, Ltd., purchased Miami General Hospital on December 9, 1987 and in HX 28, that it desired to change its fiscal year to that of the calendar year. (HX 27, 28) On December 10, 1987, license 2277 was issued to Golden Glades Regional Medical Center, Ltd., d/b/a Miami General Hospital. (HX 29) On December 16, 1987, Golden Glades Regional Medical Center, Ltd., through counsel, advised the HCCB that, while wishing to comply with all applicable rules and regulations, literal compliance may be difficult due to the prior bankruptcy. The hospital also delayed changing its fiscal year. (HX 30) On December 23, 1987, the HCCB was provided with further explanations regarding the 1987 audited financial statements. By correspondence dated December 23, 1987, the HCCB was notified, "by way of further explanation, on May 14, 1987 Miami General Hospital was placed under State receivership by the Department of Insurance, and the Department operated the Hospital until it was sold to First American Bank and Trust (FABT) on June 18, 1987. FABT operated the hospital until it was sold to Golden Glades Regional Medical Center, Ltd. on December 9, 1987. The deed was recorded on December 11, 197. Because of the wrongdoing of the former owners that led to the State control, subsequent bankruptcy sale and criminal convictions of several of the former owners of the Hospital, the filing of audited financial statements is impossible. The new owners of the Hospital are totally unrelated to its former owners". 1/ (HX 31) On December 10, 1987, HRS license 2285 was issued to Golden Glades Regional Medical Center, Ltd. (HX 32) On March 3, 1988, the HCCB was notified that the hospital had been the subject of bankruptcy and that several of its former owners (IMC) had been prosecuted for matters relating to the operation of care services. (HX 35) aa. On April 14, 1988, Golden Glades Regional Medical Center, Ltd., through counsel, requested a waiver of the requirement to file an audited actual report for the hospital's fiscal year 1987, which, in this case, involves the period from about December 6, 1987, to December 31, 1987. (HX 36) bb. On May 13, 1988, the hospital objected to being assessed based on data supplied by Miami General Hospital for that hospital's 1986 fiscal year and notified the HCCB of the several changes of ownership of the hospital during the calendar year 1987. (HX 37) cc. On February 13, 1989, the HCCB was again requested to address assessments on Golden Glades Regional Medical Center. (HX 38) dd. On February 14, 1989, the HCCB was notified of approval by Medicare of the change in the hospital's fiscal year and the unsuccessful negotiations to sell the hospital to Jackson Memorial. (HX 39) ee. On March 14, 1989, HCCB certified to HRS that Golden Glades Regional Medical Center (hereafter, "Golden Glades") had not submitted a prior year actual report for fiscal year ending March 31, 1988, and therefore HCCB certified that the 1987 net revenue of Golden Glades was that shown by Miami General Hospital's most recent prior year report, which was for March 31, 1986. (HX 40) ff. On October 19, 1989, HCCB certified that Golden Glades had not submitted a prior year report for the fiscal year ending December 31, 1987, but certified to HRS that for purposes of assessments, 1.5 percent of $40,101.189 (the net revenue in Miami General Hospital's March 31, 1986 report) was $601,518. (HX 50) gg. On November 17, 1989, HCCB notified HRS that Golden Glades Regional Medical Center had filed financial statements for the year ended December 31, 1988, however, the audit was not finalized. (HX 51) Net revenue in the financial statements for the year ended December 31, 1988, was $10,599,690. One and a half percent of that amount is $158,995. The notification of November 17 was not a certification by the HCCB. Golden Glades Regional Medical Center, Ltd., is a limited partnership. Its general partner is CNS. Collection and disbursement of Public Medical Assistance Trust Fund monies pursuant to Section 395.101(2), Florida Statutes, is the responsibility of the Department of Health and Rehabilitative Services and not the Respondent. The Department of Health and Rehabilitative Services was not a party to these proceedings. The Respondent is only responsible for calculating the amount of a hospital's Public Medical Assistance Trust Fund assessment and certifying the amount of the assessment to the Department of Health and Rehabilitative Services. The Respondent used the audited actual data for the fiscal year ending March 31, 1986, in calculating the Public Medical Assistance Trust Fund assessment of the Petitioner for the period of April 1, 1986, through March 31, 1987, and the period of April 1, 1987, through December 31, 1987. The Respondent is required by Section 395.101(2), Florida Statutes, to certify the Public Medical Assistance Trust Fund assessment of a hospital within six months after the end of the hospital's fiscal year. No exception is provided for changes in ownership of the hospital. A change in ownership does not affect the Respondent's responsibilities under Section 395.101(2), Florida Statutes.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be issued dismissing, with prejudice, the Petitioner's Petitions in these cases. DONE and ENTERED this 31st day of May, 1990, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 1990.
Findings Of Fact The petitioner participates in Florida's Medical Assistance Program (Medicaid) as a provider of skilled nursing home care and intermediate care facilities. The Petitioner had contracts with the Department to provide such services for Medicaid eligible persons during the years 1971 and 1972, including all times during the Petitioner's fiscal year which ended September 30, 1972. The contracts provided inter alia as follows: For each patient eligible for Medicaid, it is understood the payment agreed upon will include room, board, laundry and services as defined in the Division's [the Division of Health of the Department] information pamphlet regarding skilled nursing home care., Handling, administra tion and recording of drugs will be in accord with the requirements of the Division of Health [of the Department]. Each recipient will have a specified amount of personal income or an assistance grant to meet the cost of personal needs and clothing which will not be used to meet the cost of care. Skilled nursing care shall be based on medical orders, where required, standard nursing practices, and care which will assure the patient's privacy, independence, and mobility within their capabilities including the right to choose their own physician, pharmacy and/or other providers of medical care. The Petitioner agreed under the contracts to maintain adequate financial records, and to make them available to the Department upon request. For the fiscal year ending September 30, 1972, the Petitioner received $25,839.38 as a Medicaid reimbursement expense for certain drug and pharmaceutical items. During 1976 the Department performed an audit on the Petitioner's books, and based on the audit, is seeking to recover $24,196.00 of that amount. The Petitioner has actually recovered $7,660.66 of its drug expenses from sources other than Medicaid funds. The Petitioner has made some effort to recover the remaining $16,535.34 directly from patients or their relatives. While a precise audit has not been made to determine how much of that money was actually recovered, it appears from past experience, and from an examination of approximately fifteen percent of the total accounts that the Petitioner recovered ten percent of the funds, or $1,653.53. The remaining $14,881.81 was not recovered from any source other than Medicaid reimbursement funds. The Department sought to offer into evidence its rules Chapter 10C-9, Florida Administrative Code. These rules assertedly were in effect during the year in question. Nothing on the face of the rules reveals what their effective date might have been, and no other evidence was introduced to establish when these rules were in effect, or if they were in effect at the relevant time. It is apparent that the present rules of the Department set out at Chapter 10C-9, Florida Administrative Code were not in effect during the relevant fiscal year. The proffered rules have not been accepted as having been in effect during the relevant year.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED: That a final order be entered finding the Petitioner entitled to $14,881.81 of Medicaid reimbursement funds for expenses that it made for medically necessary drugs and pharmaceuticals for the fiscal year ending September 30, 1972. Since the Petitioner has received $24,196.00 in reimbursement funds, it should remit $9,314.19 to the Department in a mutually acceptable manner of payment. DONE and ORDERED this 30th day of October, 1979, in Tallahassee, Florida. G. STEVEN PFEIFFER Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: W. Kirk Brown, Esquire 313 Williams Street, Suite 10 Post Office Box 4075 Tallahassee, Florida 32303 Amelia M. Park, Esquire District VI Legal Counsel Department of Health and Rehabilitative Services 4000 West Buffalo Avenue Tampa, Florida 33614 Allan M. Dabrow, Esquire PECHNER, DORFMAN, WOLFE, ROUNICK & CABOT Suite 1300, 1845 Walnut St. Philadelphia, Pennsylvania 19103 APPENDIX
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1, The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part Il, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $10,000.00 in administrative fines. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. In addition the Respondent shall pay the Agency $6,000.00 as survey fee in accord with law. The checks are to be made payable to the “Agency for Health Care Administration” and contain the AHCA ten-digit case number and should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed March 20, 2015 11:10 AM Division of Administrative Hearings 3. Conditional licensure status is imposed on the Respondent beginning on June 13, 2014 and ending on July 28, 2014. ORDERED at Tallahassee, Florida, on this / O day of Mag, , 2015. ot, h buf Seca for Health Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correc; y of this Final Order yas served on the below-named persons by the method designated on this Ja ay of ere. , 2015. Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Deborah E. Leoci Jonathan s. Grout, Esq., Office of the General Counsel Attorney for Facility Agency for Health Care Administration Goldsmith & Grout, P.A. (Electronic Mail) PO Box 2011 Winter Park, Florida 32790 (U.S. Mail)
Findings Of Fact Background Petitioner, United Health, Inc. (United), is the owner and operator of approximately one hundred and twenty-three nursing homes in thirteen states. In the State of Florida, it owns and operates sixteen nursing homes and one intermediate care facility for the mentally retarded that are licensed by respondent, Department of Health and Rehabilitative Services (HRS). At issue in this proceeding are the cost reports and supplemental schedules filed by thirteen nursing home facilities.1 In accordance with Medicaid guidelines, petitioner was required to annually submit cost reports to HRS reflecting its allowable costs in providing Medicaid services to its patients. HRS is designated as the state agency responsible for the administration of Medicaid funds under Title XIX of the Social Security Act. In order to be reimbursed for said costs, the facility was required to show that the costs were in conformity with Federal and State Medicaid reimbursement principles. Those principles are embodied in the Long Term Care Reimbursement Plan (Plan) adopted by the State.2 This document contains the reimbursement methodology to be used for nursing homes who provide Medicaid services. In addition, providers must comply with Health Insurance Manual 15 (HIM-15), a compendium of federal cost reimbursement guidelines utilized by HRS, and generally accepted accounting principles. By letter dated September 9, 1985 petitioner requested that HRS adjust its July 1, 1985 reimbursement rates for the thirteen facilities to reflect certain annualized costs incurred during the preceding fiscal year ending December 31, 1984. According to the letter, the adjustment was appropriate under Section V.B.I.b. of the September 1, 1984 Plan. On October 21, 1985, an HRS Medicaid cost reimbursement analyst issued a letter denying the request on the following grounds: Our review of the information submitted with the fiscal year end 12/31/84 cost reports revealed that the annualized operating and patient care costs were not documented to be new and expanded services or related to licensure and certification requirements. The annualized property cost appeared to be 1 2 various purchases, repairs and maintenance and was not documented to be capital improvements. The denial prompted the instant proceeding. B. Reimbursement Principles In General Under the Medicaid reimbursement plan adopted for use in Florida, nursing homes are reimbursed by HRS on a prospective basis for their allowable costs incurred in providing Medicaid services. This method is commonly referred to as the prospective plan, and has been in use since 1977. Under this concept, a nursing home files with HRS, within ninety days after the close of its fiscal year, a cost report reflecting its actual costs for the immediate preceding fiscal year. Within the next ninety days, the nursing home is given a per diem reimbursement rate (or ceiling) to be used during the following twelve months.3 For example, if a provider's fiscal year ended December 31, 1984, its cost report would be due by March 31, 1985. HRS would then provide estimated reimbursement rates to be used during the period from July 1, 1985 through June 30, 1986. As can be seen, there is a time lag between the end of a cost reporting year and the provider's receiving the new rate. The new reimbursement rate is based upon the provider's actual costs in the preceding fiscal year (reporting period) adjusted upward by an inflation factor that is intended to compensate the provider for cost increases caused by inflation. The prospective plan enables a provider to know in advance what rates it will be paid for Medicaid services during that year rather than being repaid on a retroactive basis. If a provider operates efficiently at a level below the ceiling, it is "rewarded" being allowed to keep a portion of the difference. Conversely, if it exceeds the caps, it is penalized to the extent that it receives only the rates previously authorized by HRS, and must absorb the shortfall. At the same time, it should be noted that the reimbursement rate is not intended to cover all costs incurred by a provider, but only those that are reasonable and necessary in an efficiently operated facility. These unreimbursed costs are covered through other provider resources, or by a future cut in services. When the events herein occurred, there were two types of adjustments allowed under the prospective plan. The first adjustment is the inflation factor, and as noted above, it 3 authorizes the provider to adjust certain reported costs by the projected rate of inflation to offset anticipated cost increases due to inflation. However, because the prospective plan (and the inflation factor) ignores other cost increases that occur during the given year, HRS devised a second type of adjustment for providers to use. This adjustment is known as the gross-up provision, and allows the annualization of certain costs incurred by a provider during a portion of the reporting period. The concept itself .s embodied in subparagraph B.1.b. of Part V of the September 1, 1984 Plan. Its use may be illustrated with the following example. A provider constructs an addition to its facility with an in-service date at the end of the sixth month of the reporting period. By reflecting only the depreciation associated with the addition during the last six months of the reporting period, the facility understates its actual costs, and is reimbursed for only one-half of the facility's depreciation during the following year. Under the gross-up provision the provider grosses up, or annualizes, the reported cost to give it a full year's effect, thereby ensuring that the next year's rates will be more realistic. Although the provision has application to this proceeding, over objection by the nursing home industry it was eliminated from the Plan on October 1, 1985 and is no longer available to providers. At hearing HRS contended the provision should have been eliminated in 1984, but through oversight remained in effect until 1985. However this contention is rejected as not being credible, and is contrary to the greater weight of evidence. Finally, neither party could recall if a request under this provision had ever been filed. They do acknowledge that HRS has never approved such a request during the more than two years when the provision was operative. In addition to the gross-up and inflation provisions, there exists an alternative means for additional rate reimbursement through what is known as the interim rate provision. Under this provision, a provider can request an interim rate increase from HRS during the period when its prospective rates are in effect to cover major unexpected costs. Assuming a request is valid and substantiated, a provider is eligible for immediate cash relief dating back to the date of the actual expense. However, because of HRS' concern that this provision was being "abused", only those costs which exceed $5,000 and cause a change of 1% or more in the total prospective per diem rate are now eligible for reimbursement. These monetary thresholds on interim rate requests became effective September 1, 1984. When these higher thresholds were imposed, HRS made representations to the nursing home industry that a provider could still utilize the gross-up provision to cover other unexpected costs. Finally, it is noted that unlike the prospective rate, an interim rate is cost settled. This means the provider's cost reports are later audited, and excess reimbursements must be repaid to HRS. This differs from the prospective plan where any "overpayments" are not subject to recoupment by HRS. Even so, a provider is limited by the reasonableness and prudent buyer concepts which serve as a check on potential abuse by a provider. The Gross-Up Feature In its relevant form, the gross-up provision was first adopted for use by HRS in its April 1, 1983 Plan.4 It required HRS to: Review and adjust each provider's cost report referred to in A. (1.) as follows: * * * b. to compensate for new and expanded or discontinued services, licensure and certification requirements, and capital improvements which occurred during the reporting year but were not included or totally accounted for in the cost report. This language was incorporated with only minor changes into the September 1, 1984 Plan and is applicable to the cost reports in issue. In its 1984 form, the provision required HRS to review and adjust each provider's cost report as follows: b. To compensate for new and expanded or discontinued services, licensure and certification requirements, and capital improvements not included or totally accounted for in the reporting year. For additional costs to be provided, the provider must furnish adequate supporting documentation. 4 Accordingly, if a cost fits within one of the three categories, HRS is required to adjust a provider's report to compensate it for the expenditure. The April 1, 1983 Plan was negotiated by the nursing home industry and HRS representatives at a meeting in Gainesville, Florida. For this reason, it is commonly referred to as the Gainesville Plan. Through testimony of negotiators who participated at the meeting, it was established that the Plan had three objectives: to give proper payment to nursing homes; to meet state and federal regulations; and to help upgrade care in the nursing homes. At the same time, the negotiators recognized that a prospective plan based on inFla.ion alone overlooked other cost increases that occurred during a given year. Therefore, the gross-up provision was added to the Plan to ensure that providers could estimate (and recoup) their future costs in as accurate a manner as possible, and to bring the plan into compliance with federal guidelines. It was also designed to ensure that a provider did not have to wait an extraordinarily long time for expenses to be recognized. In addition, HRS was hopeful that the gross-up provision would minimize the providers' reliance upon the interim rate feature (which was intended to cover only major items) thereby reducing the agency's overall workload. Indeed, the interim and gross-up features were intended to complement each other, in that one provided immediate relief on major unexpected items while the other provided a means to adjust partial year costs incurred during the reporting period. The implementation of thresholds on the interim rate provision in September, 1984 increased the importance of the gross-up provision to handle smaller items. Therefore, HRS' contention that the interim and gross-up provisions are in conflict is hereby rejected. In order for a cost to be eligible for annualization, it must fall within one of three categories: new or expanded service, a capital improvement, or a cost to meet HRS' licensure and certification requirements. The parties have stipulated that HRS' denial of United's request was based solely upon HRS' perception that the costs did not fall within any of the three categories. The three types of costs within the feature are not defined in the Plan. Testimony from the Plan's negotiators established that the language in the gross-up feature was meant to be construed broadly and to encompass many costs. For this reason, no limitations were written into the Plan. Even so, the provision was not intended to give carte blanche authority to the providers to annualize every partial cost. There is conflicting testimony regarding the meaning of the term "capital improvement" and what expenditures are included within this category. However, Sections 108.1 and 108.2 of HIM-15, of which the undersigned has taken official notice, define a capital item as follows: If a depreciable asset has, at the time of its acquisition, an estimated useful life of at least 2 years and a historical cost of at least $500, its cost must be capitalized, and written off ratably over the estimated useful life of the asset. . . * * * Betterments and improvements extend the life or increase the productivity of an asset as opposed to repairs and maintenance which either restore the asset to, or maintain it at, its normal or expected service life. Repairs and maintenance costs are always allowed in the current accounting period. With respect to the costs of betterments and improvements, the guidelines established in Section 108.1 must be followed, i.e., if the cost of a betterment or improvement to an asset is $500 or more and the estimated useful life of the asset is extended beyond its original estimated life by at least 2 years, or if the productivity of the asset is increased significantly over its original productivity, then the cost must be capitalized. The above guidelines are more credible and persuasive than the limited definition of capital item enunciated at final hearing by HRS personnel. Therefore, it is found that the HIM-15 definition is applicable to the gross-up feature and will be used to determine the validity of petitioner's claim to gross up certain expenditures. There is also conflicting testimony as to what the term "new and expanded or discontinued services" includes. Petitioner construes this item to include any costs that increase the volume of services to a resident. Therefore, petitioner posits that an increase in staffing which likewise increases services to residents is subject to annualization. Conversely, HRS construes the term to cover any costs for new or expanded services that enable a facility to provide patients with services not previously provided or to expand an existing service to more patients in the facility. The latter definition is more credible and persuasive and will be used by the undersigned in evaluating petitioner's request. Finally, petitioner interprets the term "licensure and certification requirements" to cover any costs incurred to meet staffing requirements that are required by HRS rules. According to petitioner, the category would include expenditures that are made for so-called preventive maintenance purposes and to avoid HRS sanctions. On the other hand, HRS construes the language to cover costs incurred by a provider to either meet a new licensure and certification requirement, or to correct a cited deficiency. It also points out that salary increases were intended to be covered by the inflation factor rather than through this feature of the plan. This construction of the term is more reasonable, and is hereby accepted as being the more credible and persuasive. Petitioner's Request Petitioner's fiscal year ends on December 31. According to HRS requirements its cost reports must be filed by the following March 31. In accordance with that requirement petitioner timely filed its December 31, 1984 cost reports for the thirteen facilities on or before March 31, 1985. The reports have been received into evidence as petitioner's composite exhibit 3. Attached to the reports were schedules supporting a request for gross-up of certain capital items, additions and deletions of various personnel, and union salary increases that exceeded the inflation rate. The parties have not identified the actual dollar value of the items since only the concepts are in issue. In preparing the supporting schedules, United's assistant director of research reviewed all so-called capital items purchased by the thirteen facilities during the fiscal year, and determined which were purchased after the beginning of the year.5 He then calculated the depreciation on those 5 expenditures made after the beginning of the year and has included those amounts on the supporting schedules to be annualized. Consistent with the definition contained in Sections 108.1 and 108.2 of HIM-15, those items that are in excess of $500 (after annualization), that extend the useful life of the asset for two years or more, or that increase or extend the productivity of the asset are subject to annualization. It should be noted that repairs and maintenance items, as defined in Sections 108.1 and 108.2, are excluded from this category. Petitioner next seeks to adjust its rates by grossing up the net increase in costs associated with additions and deletions of various staff during the reporting period. Any net staffing additions that provide patients with services not previously provided or that expand an existing service to more patients in a given facility are properly subject to the gross- up provision. All others should be denied. Petitioner also contends that these costs should be considered as a licensure and certification requirement since they satisfy staffing requirements under HRS rules. To the extent the filling of old positions occurred, such expenditures are appropriately covered by the gross-up provision. The remainder do not fall within the purview of the provision. Finally, petitioner seeks to adjust its rates to cover all salary increases over and above the inflation factor that were awarded to union employees pursuant to its union contract. Under petitioner's theory, if such costs were not paid, United stood to lose staff through a strike which in turn could result in licensure and certification problems. But these concerns are speculative in nature, and such an interpretation would result in automatic approval of any salary increase called for by a union contract, no matter how unreasonable it might be. Since the expenditures do not meet the previously cited criteria, they must be denied.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That petitioner's request to have its July 1, 1985 reimbursement rates adjusted for thirteen facilities to reflect annualized costs as submitted on supplemental schedules with its 1984 cost reports be approved in part, as set forth in the conclusions of law portion of this order. The remaining part of its request should be DENIED. DONE AND ORDERED this 31st day of October, 1986, in Tallahassee, Florida. DONALD R. ALEXANDER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 1986.
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $500. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 90 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 Filed August 29, 2014 9:49 AM Division of Administrative Hearings ORDERED at Tallahassee, Florida, on this 24 day of Dutuat , 2014.
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and ory or this Final Order was served on the below-named persons by the method designated on this 6 2 , 2014, lay of 7485 as Richard Shoop, Agency Cletk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Andrea M. Lang Miriam Alonso, Administrator Office of the General Counsel Living Care Solutions LLC d/b/a The Pointe of Agency for Health Care Administration North Gables (Electronic Mail) 5890 S.W. 8” Street Miami, Florida 33144 (U.S. Mail) Darren A. Schwartz Administrative Law Judge Division of Administrative Hearings (Electronic Mail)
Conclusions Having reviewed the Administrative Complaints and Notices of Intent to Deny, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights forms to the Providers. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. ORDERED at Tallahassee, Florida, on this 23 day of _Mgech 2014. Filed April 11, 2014 3:47 PM Division of Administrative Hearings
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct Serer this Final Order was served on the below-named persons by the method designated on this .3/ day of fhe a , 2014. Richard Shoop, Agency Cler Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Thomas J. Walsh II Anna G. Small, Esq. Office of the General Counsel Allen Dell, P.A. Agency for Health Care Administration 202 South Rome Avenue (Electronic Mail) Tampa, Florida 33606 (U.S. Mail) Lawrence P. Stevenson Administrative Law Judge Division of Administrative Hearings (Electronic Mail)
