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TEHC, LLC vs AGENCY FOR HEALTH CARE ADMINISTRATION, 08-003693 (2008)

Division of Administrative Hearings, Florida Filed:Lauderdale Lakes, Florida Jul. 28, 2008 Number: 08-003693 Latest Update: Sep. 25, 2009

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ABC HOME HEALTH SERVICES, INC. vs DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 90-000946 (1990)

Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Feb. 12, 1990 Number: 90-000946 Latest Update: Oct. 26, 1990

Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The letter of intent and authorizing board resolution to establish a new Medicare certified home health agency filed by ABC for District Four for the September, 1989 batching cycle was timely filed with HRS and the Health Planning Council for Northeast Florida, Inc., and met all statutory and rule requirements for filing. The CON application to establish a new Medicare certified home health agency filed by ABC for District Four for the September, 1989 batching cycle was timely filed with HRS and the Health Planning Council for Northeast Florida, Inc. The CON application to establish a new Medicare certified home health agency for District Four for the September, 1989 batching cycle was deemed complete and accepted for review by HRS, effective November 13, 1989. There is a numeric need for one additional Medicare certified home health agency in District Four as determined by HRS and published pursuant to Rule 10-5.011(1)(d), Florida Administrative Code. Local Health Plan The 1989-90 CON Allocation Factors Report for HRS District Four (Health Plan) is the applicable health plan with regards to this proceeding. In its application ABC addressed the recommendations found in the Health Plan. The Health Plan recognizes that under the new methodology for determining numeric need, a licensed home health agency within an HRS district could serve any and all counties within the district. However, the Health Plan contains recommendations for allocating home health agencies. The Health Plan makes the following recommendations: Geographic Preference Home health agencies should be allocated to counties on the following basis: Preference should go to applicants who will establish their program in a county which does not have any CON approved agencies or subunits based in the county. Consideration should be given to counties with a low number of Medicare visits per 1,000 persons 65 years and older. Competing Applications In the case of competing applications for the same or similar geographic area, preference should be given to those applicants which demonstrate: They will meet identified needs in the most cost-effective manner. They are addressing a current or potential geographic access problem in the district. They will serve the widest spectrum of the population, including the medically indigent. They have written agreements with a broad spectrum of local hospitals, nursing homes, mental health resources and/or other service providers in order to help ensure continuity of care. They demonstrate in their CON application how they will comply with any conditions placed on the CONs. They will serve AIDS patients. ABC proposes to locate its agency office in Duval County because it contains medical centers, hospitals with discharge planners and physician staff for referrals, and because of enhanced recruiting and retaining of appropriate staff. However, it proposes to serve all patients referred to it in all counties located throughout District Four, including Baker County. Baker County has no CON approved home health agency based within the county. However, it is presently being served by home health agencies based in Duval County. Because of its small population, with a relatively low percentage of the population being 65 years old or older, its distance from hospitals and the recruiting and staffing problems it would engender, it is doubtful that Baker County could support a main office for a home health care agency. In fact, the 1988 Local Health Plan indicated that Baker County should probably not have a home health agency physically located within the county. Baker County has the lowest number of citizens 65 years of age or older and the lowest usage rate for home health agencies. There is no data or documentation to show why the usage of home health services in Baker County is low. However, HRS makes the assumption from the usage rate only that Baker County is underserved. Duval County is not considered as being underserved in terms of Medicare units. By locating in Duval County, ABC does not specifically comply with preference 1A or 1B. However, ABC has proposed to serve all patients within District Four referred to it regardless of where the patient is located, and regardless of the patient's payor class. (Medicare, Medicaid, private pay or indigent) While 1A and 1B of the Health Plan's recommendation is concerned with geographic preferences, 2A through 2F of the Health Plan's recommendations are preferences that relate mainly to situations involving competing applications in the same batch. ABC meets a majority of those preferences, including: 1A. ABC will be among the lowest in cost of the existing providers in District Four. 1B. ABC goes to the patient and has stated it will serve all of the patients within District Four referred to it. 1C. ABC proposed to serve all patients referred to it, including the medically indigent and medicaid. Because of the situation with Medicaid patients, ABC did not project any Medicaid patients. However, ABC proposed to serve all patients on which it has referrals including Medicaid patients. 1D. ABC did not have written referrals with hospital, nursing homes and other resources for patient referrals. However, ABC stated that this was its standard operating procedure and if granted a CON they would establish written referrals. 1E. ABC does not specifically address how they would comply with any condition placed on the CON. 1F. Again, ABC proposed to serve all patients within District Four referred to it, including AIDS and HIV patients. Since ABC has no control over which patients are referred to it, then its payor mix is just a projection. Whether an AIDS or HIV patient is on Medicare, Medicaid, private pay or medically indigent ABC has proposed to served them. In fact, it has a corporate policy to train and educate its employees in this area of service. ABC has shown that it intends to serve AIDS and HIV patients on which it has referrals. State Health Plan The 1989 Florida State Health Plan is the applicable health plan in this proceeding. The State Health Plan is a comprehensive three-volume document which describes Florida's health system and the services available to Florida residents. Specifically, the State Health Plan addresses certain preferences which HRS uses in reviewing home health CON applicants. They are as follows: Preference shall be given to an applicant proposing to serve AIDS patients. Preference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area. Preference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same HRS service district and proposing to serve such patients within its market area. Preference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies. Preference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction. Preference shall be given to an applicant proposing a comprehensive quality assurance program and proposing to be accredited by the Joint Commission on Accreditation of Healthcare Organizations. As to 16A, ABC has proposed to serve all patients in District Four that are referred to it by referring agencies, including AIDS and HIV patients regardless of their of payor class. ABC has a stated commitment to serving AIDS and HIV patients. The evidence establishes that of all AIDS cases reported in District Four, Duval County has approximately 69 percent. District-wide 52 percent of all reported AIDS cases have ended in death whereas in Duval County the percentage is 56. Very few AIDS patients are medicare eligible. A higher percentage of AIDS patients in Duval County are served as indigents or under Medicaid, notwithstanding HRS' Medicaid Project AIDS Care. As to 16B, ABC proposes to provide the full range of services, including high technology services. ABC included in it application excerpts from its high tech policy manual. There was no data available from local health council on what high tech services are available from existing providers. As to 16C, while ABC's payor mix does not indicate that they would be serving a disproportionate share of Medicaid and indigent patients there is no data indicating what access problem, if any, exists for Medicaid and indigent case patients needing home health care services. ABC proposes service to all patients within District Four that are referred to it be referring agencies. As to 16D, while there is no data available that any county within District Four is in fact underserved, ABC has stated that it will serve all counties in District Four and there is no evidence to show that ABC will not serve all counties in District Four. As to 16E, ABC has indicated it will comply with this requirement and there is no evidence to show that ABC will not furnish the data in terms of consumer survey response. As to 16F, ABC has a quality assurance program in place and HRS agreed that ABC could provide quality of care to its patients. Statutory Criteria Section 381.705(1)(a), Florida Statutes - Availability and Access to Services District Four has 20 Medicare certified home health agencies, with five located in Duval County and, one approved but not yet established Medicare certified home health agency. However, as stated in the State Agency Action Report (SAAR) there is a market for another home health agency in District Four as determined by the fixed need pool. ABC's stated commitment to serve all counties in District Four and to serve all patients in those counties referred to it by referring agencies regardless of whether the patient's payor class should enhance the convenience and accessibility to patients. Section 381.705(1)(b), Florida Statutes - Quality of Care, Efficiency and Adequacy of Existing Area Providers There is no specific data available from HRS concerning the quality of care, efficiency and adequacy of services being provided by existing care providers in District Four. ABC did not conduct a survey to assess the existence of quality care problems in District Four. However, the existence of quality care problems in District Four would be difficult to gauge since the in- home provision of services makes them largely beyond public or professional scrutiny. In fact, generally, with few exceptions, application for home health agencies do not address this criterion. The parties stipulated that the provisions of Section 381.705(1)(c) through (g), Florida Statutes were deemed to have been met or otherwise not applicable. Section 381.705(1)(h), Florida Statutes - Availability of Resources and Funds and Accessibility of Service to all Residents of Service District The evidence establishes that ABC has sufficient resources and funds to accomplish what it proposes. HRS has no data suggesting significant access problems for Medicaid patients to home health care nor was there sufficient evidence that AIDS or HIV patients suffer an access problem for home health care. However, due to improvements in terms of Medicaid reimbursement any access problem that may exist should be reduced. ABC has a stated commitment to serving all patients in District Four regardless of the patient's payor class. This commitment should improve the accessibility of home health care to underserved patients if, in fact, there is an access problem for the Medicaid, AIDS, HIV or indigent patients. Section 389.705(1)(i), Florida Statutes - Financial Feasibility ABC projects it will do 12,000 home visits in year one and 14,000 home visits in year two. These projections are based on ABC's experiences in other districts, particularly District Three. These projections also represent approximately 25 and 29 percent of the new visit pool market for each year, respectively. However, ABC clients would not necessarily all come from the new visit pool. ABC's projected home care visits are reasonable based on its experience in other Florida districts and its experience in other states, notwithstanding its lack of an established referral network in District Four and being a new entrant into the District Four market. ABC's financials displayed in its application are reasonable and consistent with its Florida experience. ABC's payor mix and visit each correlate to its actual Florida experience. ABC's pro forma expenses for year one and year two are reasonable. ABC projects a first year profit of $3,914 and a second year profit of $5,010 and after the second year, ABC should continue to show a profit. ABC's proposed project will benefit ABC by allowing it to meet its long term goals. ABC's existing Florida agencies are operating in financially sound manner and there is no reason to believe that ABC's proposed agency will not operate in the same manner. ABC's liquidity ratio is 0.7 to one which means that ABC has excess current liabilities over current assets and is one factor used for determining the general health of a company. ABC has an accumulated deficit of $651,836. From all of the above, ABC's proposed agency is feasible in both the short term and the long term. It was stipulated that Section 381.705(1)(j) and (k), Florida Statutes were deemed to have been met or otherwise inapplicable. Section 381.705(1)(l), Florida Statute - Impact on Competition Since ABC has a stated commitment to serve all patients in all counties in District Four referred to it regardless of the payor class and is offering a full range of services, including high tech, its proposal should only serve to enhance competition within District Four, notwithstanding that the proposal is primarily a Medicare home health care provider which would not provide any financial competition. The parties stipulated that Section 381.705(1)(m), Florida Statutes was deemed to have been met or otherwise inapplicable. Section 381.705(1)(n), Florida Statutes - Medicaid and Indigent Care Very few medicaid and indigent patients are served by the existing agencies in District Four. Most of these patients are served by the Visiting Nurses Association (VNA) which is subsidized by United Way, local governments and other sources. There is no data or documentation that Medicaid patients do not in fact have a significant access problem. Medicare is the predominant payor source in Florida and is ABC's primary payor source even though ABC has a stated commitment to serve all patients regardless of payor class. A high percentage of Florida's Medicaid budget for home health services is used for co-insurance for medicare. Therefore, Medicaid patients that are "dually eligible" are receiving home health care under Medicare. Florida's Medicaid program does not reimburse for physical therapy, speech therapy or occupational therapy for adults. In a Medicare certificate home health agency there is only a certain pool of profit available to serve Medicaid and indigent patients. Therefore, if the percentages of Medicaid service goes up then indigent or charity cases must suffer or the agency cannot operate in the "black". While HRS usually places a condition on the CON concerning Medicaid services, a majority of the recently issued CONs for home health care had no such condition placed on them. The parties stipulated that Section 381.705(2) and (3), Florida Statutes were deemed to have been met or otherwise inapplicable. State Agency Action Report (SAAR) HRS up to and including, the home health care agency batching cycle immediately preceding the instant September 1989 batch, used not applicable (N/A) on those criteria that were not typically addressed by applicants or were not considered to be applicable to an applicant. HRS now enters a "no" in those situations but a "no" in this situation has no adverse or negative impact on HRS' decision. Typically, approved applicants do not meet all the statutory criteria. Some of the criteria may be only partially met and some may not be met at all.

Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a final order be entered granting ABC's application for a certificate of need (CON No. 6015). DONE and ENTERED this 26th day of October, 1990, in Tallahassee, Florida. WILLIAM R. CAVE 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 26th day of October, 1990. APPENDIX TO THE RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, ABC 1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the finding of fact which so adopts the proposed finding of fact: 6(2,3); 7(8); 8(7,8,11); 9(8,10); 11(7,14); 15(4); 16(16,17,18,19); 17(16,18); 18(16,21); 19(16,22); 20- 21(23,24); 23(25); 25(4,25); 28-29(25-27); 31-38(29); 40-42(29); 45(32); 48- 52(33,34,35,36); 54-58(32,37,38,41); 61-64(43); 68-70(45,46,47); 72- 77(47,48,49); 79-81(47,49,50); 83(51); 85-87(53); 89(53); 90(54). 2. Proposed findings of fact 1-5, 10, 12-14, 22, 24, 26, 27, 30, 39, 43, 44, 46, 47, 53, 59, 60, 65-67, 71, 78, 82, 84, 88, 91 and 92 are unnecessary. Specific Rulings of Proposed Findings of Fact Submitted by Respondent, HRS Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 3-9(5,6,7,9,12,13,14); 12- 26(14,18,19); 28-29(15,16); 44-46(32) 48-51(39,40). Findings of fact 1 and 2 are covered in the preliminary statement. Proposed findings of fact 10, 11 as to the last 2 sentences, 27, 30, 31, 32 other than last sentence, 33, 35, 36 other than last sentence, 37, 38, 39, 41, 42, 47 and 52 are not supported by substantial competent evidence in the record. The last two sentences of finding of fact 34 are adopted in finding of fact 25, otherwise not supported by substantial competent evidence in the record. Proposed finding of fact 43 is unnecessary. The first two sentences of proposed finding of fact 53 are adopted in finding of fact 36, otherwise not supported by substantial competent evidence in the record. Copies furnished to: R. Terry Rigsby, Esq. F. Philip Bank, P.A. 204-B South Monroe Street Tallahassee, FL 32301 Edward Labrador, Esq. Assistant General Counsel 2727 Mahan Drive, Suite 103 Tallahassee, FL 32308 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 Linda Harris, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700

Florida Laws (1) 120.57

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SANTA FE HEALTHCARE SYSTEMS, INC. vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 85-001501 (1985)

Division of Administrative Hearings, Florida Number: 85-001501 Latest Update: Jan. 23, 1986

Florida Laws (3) 400.461, 400.462, 400.471

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VISITING NURSE ASSOCIATION vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 86-003558 (1986)

Division of Administrative Hearings, Florida Number: 86-003558 Latest Update: May 21, 1987

Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that HRS enter a Final Order granting VNA a CON to establish a District-wide home health agency as set forth in the proposal and conditioned upon its fulfilling its 2.3 percent indigent and 2. 5 percent Medicaid percentage commitments and upon phasing in its services in two stages, beginning with its first base at VNA Respite in Leesburg, Lake County. DONE and ORDERED this 21st day of May, 1987, at Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings This 21st day of May, 1987. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 86-3558 The following constitute rulings pursuant to Section 120.59(2), Florida Statutes, upon the respective proposed findings of fact (FOF): Petitioners proposed FOF: 1-6 Covered in FOF 1. 8-14 Accepted but as stated subordinate to the facts as found. 15-17 Covered in FOF 16. 18 Accepted but subordinate to the facts as found. 19-21 Covered in FOF 17. Rejected as conclusionary and not supported by credible competent substantial evidence. Covered in FOF 18. Covered in FOF 16. Covered in FOF 24. Covered in FOF 14. 27-23 Covered in FOF 24. 29 Covered in FOF 18. 30-35 Covered in FOF 24. 36-37 Covered in FOF 18. 38 Rejected as a conclusion of law of facts as found 25-26. 39-40 Covered in FOF 16, 22 and 25. 41-52 Except as covered in FOF 16, 22, and 25-26, these proposals are subordinate and unnecessary to the facts as found, or to the degree indicated in those FOF, are not supported by direct competent substantial evidence. 53-55 Except as covered in FOF 3, 25-26, these proposals are subordinate to the facts an found and unnecessary. 56-57 Covered in FOF 19. 58 Rejected as stated as not supported by the direct credible evidence as a whole. 59-68 Covered in FOF 22-23. Covered in FOF 21. Covered in FOF 20. 71-74 Subordinate and unnecessary to the facts as found in FOF 21. 75-86 In large part these proposals are irrelevant for the reasons stated in the facts as found; that material which is not irrelevant is CUMULATIVE, subordinate and unnecessary to the facts as found. Additionally these proposals are so unsatisfactorily numbered or otherwise delineated as to be something apart from proposals of findings of ultimate material fact. See FOF 10, 19, and 27. 87-94 Covered in FOF 15. 95-96 Covered in FOF 14. 97-98 Subordinate and unnecessary to the facts as found. 99-101 Covered in FOF 15. 102-105 Rejected in part for the reasons set out in FOF 4 and 28 in part as not supported by the record as a whole and in part as subordinate and unnecessary. 106-110 Except as covered in FOF 7-12, 19, 22, and 25, and the conclusions of law (COL), these proposals are rejected as not supported by the record as a whole. 111. Rejected as not supported by the record as a whole. See FOF 2 and 8. 112-118 Except as covered in FOF COL, these proposals are the record as a whole. 7-12, 19, 22, aid 25, and the rejected as not supported by 119 Covered in FOF 2. 120 Covered in FOF 10-12 and the COL. 121-129 Except as covered in FOF 7-12 and 14, rejected as not 1-131 Supported by the record as a whole. Covered in FOF 22 and 25. 132 Covered in FOF 21-23. 133-134 Rejected as conclusions of law. Respondent's proposed FOF: Covered in FOF 2. Covered in FOF 5. Covered in FOF 6. Covered in FOF 1. Covered in FOF 2-3. Covered in FOF 16. Covered in FOF 17. Covered in FOF 21. Covered in FOF 3. Covered in FOF 2-3. Covered in FOF 4. Covered in FOF 7. Covered in FOF 8-12. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Leo P. Rock, Jr., Esquire Linda D. Schoonover, Esquire Suite 1200 201 East Pine Street Orlando, Florida 32801 John Rodriguez, Esquire, Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700

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MONEF HEALTH SERVICES, INC. vs AGENCY FOR HEALTH CARE ADMINISTRATION, 00-004924 (2000)

Division of Administrative Hearings, Florida Filed:Miami, Florida Dec. 07, 2000 Number: 00-004924 Latest Update: Apr. 16, 2002

The Issue The issue for determination is whether Petitioner must reimburse Respondent for payments totaling $29,701.19 that Petitioner admittedly received from the Medicaid Program between May 1, 1996, and March 31, 1998, in compensation for the provision of home health services. Respondent contends that Petitioner is not entitled to retain the payments in question, primarily on the allegations that the compensated services were not medically necessary, were improperly documented, or both.

Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Monef to repay the Agency the principal amount of $5,165.60. DONE AND ENTERED this 14th day of November, 2001, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of November, 2001.

Florida Laws (4) 120.569, 120.57, 409.913, 83.05

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HOME CARE ASSOCIATES OF NORTHWEST FLORIDA, INC. vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 87-002150 (1987)

Division of Administrative Hearings, Florida Number: 87-002150 Latest Update: Jul. 01, 1988

The Issue The ultimate issue is whether the application of Home Care Associates for a Certificate of Need to establish a Medicare-certified home health agency in Okaloosa and Walton Counties should be granted. The principal factual issue is whether there is a need for an additional agency and the principal legal issue is what criteria for need should be applied. The statutory criteria for determining need is Section 381.705, Florida Statutes. In this proceeding, the Petitioner showed its entitlement to a CON using the statutory criteria set out in Section 381.705, Florida Statutes. GENERAL STATEMENT Proposed Findings of Fact were filed by the Petitioner and the Intervenors. The Respondent adopted and incorporated the Intervenor's Proposed Findings of Fact adding to the Intervenor's findings its own proposed findings numbered 1 through 20. Proposed findings submitted by the parties are addressed in an Appendix hereto.

Findings Of Fact All home health care agencies in the State of Florida must be licensed and those home health care agencies which want to participate in the Medicare program must also obtain a Certificate of Need (CON). Medicare is a federally funded health program for the elderly and certain disabled persons. Medicare provides reimbursement only for the following part-time and intermittent home care: skilled nursing, physical therapy, speech therapy, home health aide, and medical social services. Medicare does not reimburse for custodial care or 24-hour-a-day care (adult congregate living facilities or nursing homes) or acute care services (hospitals). In order for a provider of Medicare home services to be reimbursed, the provider must have a CON and serve Medicare-eligible persons who: (a) are referred by order of a physician, (b) are home bound, (c) require skilled care, and (d) require skilled services only on a part-time basis. The patient must have rehabilitative potential and need skilled home care for Medicare to reimburse for home care. The overall goal of Medicare home health services is to have the patient functioning at his/her optimum level using rehabilitative services and having registered nurses and other skilled professionals to instruct the family and patient in rendering patient care. Medicaid provides reimbursement to providers only for skilled nursing services and home health aide services to patients who meet strict income and asset limitations. No reimbursement is provided for any other services. Medicaid has maximums or caps on reimbursement for services rendered under the program, and will pay for the services rendered up to the amount of the caps which are based upon allowable patient care costs. Medicaid reimburses only a fixed amount established by HRS for a specific service. Respondent, HRS, is the state agency responsible for administering the State Health Planning Act pursuant to Sections 381.701 through 381.715, Florida Statutes. The Petitioner, Home Care Associates of Northwest Florida, Inc. (Home Care), is a Florida corporation owned by Marck Ehrman, M.D., Warren A. Phillips, Dennis L. Sauls, Ronald O. White, and Steven P. Espy. Dr. Ehrman is a practicing hematologist/oncologist in Ft. Walton Beach, Florida. Home Care filed a Letter of Intent on October 8, 1986 and on December 15, 1986, it actually filed a CON application for a Medicare-certified home health agency to be established in Okaloosa and Walton Counties in the State of Florida. These counties are in Subdistrict IB of HRS District I which is composed of four counties. This application was identified by HRS as CON Action No. 4911. Okaloosa and Walton Counties are an appropriate service area for Home Care. Home Care's application was placed in the December 15, 1986 batching cycle by HRS, which preliminarily denied the application. There were no other applications for a Medicare- certified home health agency in Okaloosa and Walton Counties filed in said batching cycle with which Home Care's application could be comparatively reviewed. HRS published notice of its denial in 13 FAW 1806 (May 8, 1987). Home Care timely requested an administrative hearing by petition filed with HRS on May 11, 1987. Choctaw filed a timely Petition to Intervene on August 14, 1987, and Northwest filed its Petition to Intervene on August 28, 1987. Both petitions were filed more than one month before the scheduled final hearing, and Choctaw was granted standing to intervene by Order of the Hearing Officer dated August 20, 1987, and Northwest was granted standing to intervene by Order of the Hearing Officer dated September 4, 1987. Both Intervenors were determined to be existing providers of Medicare home health services in the geographic area for which Petitioner had applied for a CON. The basis for the denial of the Petitioner' application for Certificate of Need was based upon the Respondent's determination that: There was no need demonstrated by Home Care Associates of Northwest Florida for an additional home health agency to serve the residents of Okaloosa and Walton Counties. Marta V. Hardy was the Deputy Assistant Secretary for Regulation and Health Facilities, Department of Health and Rehabilitative Services, from September 1984 through June 1987. Ms. Hardy was responsible for home health agency policy and was the ultimate decision maker with regard to the preliminary denial of the instant Certificate of Need. (Petitioner's PFF paragraph 19) 1/ In the Fall of 1984, Respondent attempted to promulgate a proposed rule on home health care facilities to replace a rule on need which had been invalidated in an earlier rule challenge proceeding. This proposed rule was invalidated in 1985 because it was based on a use rate methodology which contained arbitrary criteria. On May 15, 1986, in response to invalidation of the proposed rule, Bob Sharp, administrator of Comprehensive Health Plans for the Department of Health and Rehabilitative Services, published an interim policy by memorandum which was used to review applications for CON's for home health agencies. This interim policy utilized a variation of the previously invalidated rule but attempted to correct criticisms which had resulted in the invalidation of the proposed rule. The Sharp memorandum was a public document and interested persons were aware of this memorandum and the policies expressed therein. The interim policy promulgated by Sharp was applied to home health agency applications beginning with the first batching cycle in 1986. The interim policy used a use rate/population methodology which projected the number of Medicare enrollees using home health services. The projected number of users was multiplied by the average number of visits per Medicaid home health user. Under the interim policy the total number of visits was divided by 9,000 to determine the gross number of agencies needed. Nine thousand visits was deemed by agency planners to constitute a large enough use base to sustain a home health agency based on the agency's assessment of the economies of scale of home health operations. The total number of licensed and approved agencies was subtracted from the gross number of agencies needed to yield the number of new agencies which could be approved. The interim policy provided that new agencies would be phased in over a three year period and resulted in the approval of 23 Certificates of Need between May 15, 1986 and December 1986. This interim policy was defended by the Respondent before the First District Court of Appeal in December 1986. During the Summer 1986, representatives of the Florida Association of Home Health Agencies (FAHHA) complained to the Governor's Office about the interim policy, contending that the interim policy put too many home health agencies in the field. As a result of FAHHA's complaints, meetings were held between members of the Governor's staff and representatives of the Department of Health and Rehabilitative Services to include Marta V. Hardy. As a result of these meetings, the Department abandoned its interim policy. Ms. Hardy was instructed that additional applications for home health agencies would have to be approved by her superiors. Medical or financial factors did not change during this period, which would warrant a change in policy. The Department changed its policy but did not publish any document rescinding Sharp's Memorandum. No notice was given to the public that the change in policy had occurred until after the second batching cycle of 1986, the one which contained the Petitioner's CON. Similarly, the Department did not notify the public that there was a need for additional services or agencies. Marta Hardy had instructed her staff not to issue any more home health agency CON's until a new methodology had been developed. The applicants were informed that the Department of Health and Rehabilitative Services had changed its interim policy and there was no numerical need methodology. Applicants were asked for an unlimited extension of time within which the Department could render a decision on their applications. In the absence of a rule on need, the Department required the applicants who refused to agree to an extension of time to demonstrate an unmet need based upon the broad statutory criteria found in Chapter 381, Florida Statutes. The Department of Health and Rehabilitative Services characterizes the procedure above as a free form action utilizing the statutory criteria found in Section 381.705, Florida Statutes. Using the free form procedure, one home health agency CON was granted in a county in which no existing service was being provided. The three existing Medicare-certified home health agencies in Subdistrict IB are: Northwest, Choctaw, and Okaloosa County Health Department (OCHD). OCHD is the home health agency of last resort for chronically ill patients in Okaloosa County. It renders services to those patients who would not be treated otherwise. It conducts few Medicare visits: 363 in 1985-86 and 225 Medicare visits in 1986-87. OCHD's costs to provide a home visit are high and the number of visits per patient is low. While rendering all classes of home health care, its services are limited, slow, and not competitive with the private agency in the County. It lacks the ability to perform high tech home care. Its program, which is directed by the Department of Health and Rehabilitative Services, is placing its current emphasis on maternal-child health. When OCHD is eliminated as a competitive element, Northwest is the only provider of Medicare-certified home health services in Okaloosa County and Choctaw is the only provider of medicare-certified home health care in Walton County. The market share of Northwest in Okaloosa County is 92 percent. It has provided home health services in Okaloosa County for nine years. Choctaw currently has a 100 percent market share in Walton County and has been the sole provider of home health services for over ten years. There are no alternative home health care providers in Walton County. Choctaw and Northwest provide all basic home health care services in their respective service areas. Neither Choctaw nor Northwest had provided technically innovative home health care services until the last few months when they added certain basic types of high tech care, such as infusion pumps. To the extent there has been an increase in the availability of such services, it appears to be a competitive response to the pending application of the Petitioner. The skills and services currently available in Walton and Okaloosa Counties in the area of home health are not state-of-the-art home health services which Home Care states it will provide. Home health agencies first must develop the capacity to provide sophisticated patient evaluation and high tech services if physicians are going to depend on and use these services when planning out-patient care. Petitioner is a durable medical equipment ("DME") company. This company has brought new technology to the Ft. Walton Beach area to include oxygen services, pulmonary rehabilitation, home dialysis, parenteral nutrition and hydration. A related company provides private duty nursing care to non- Medicare and non-Medicaid patients currently. Dr. Ehrman is also involved in Home Care Professionals. Home Care Professionals, a non-Medicare provider of home health care services and durable medical equipment, was developed to meet the needs of home care patients whose needs were not being met by current providers. Dr. Ehrman is already using computers to assist in the transmission of data from the patient's location to the doctor's location and to transmit and receive the results of lab tests. He plans and has allocated money to computerize Home Care. This will cut down on delays in transmitting and receiving information. Lab results and other patient information will be computerized. Dr. Ehrman plans to rigorously select his staff and provide to them in-service training in new procedures and high tech home health care. Home Care's nurses will be better trained than current providers' nurses. Home Care will assign a patient to one nurse. The Petitioner, Home Care, will provide a new, competitive alternative to the existing agencies which will provide incentive for all the agencies to improve their services and the quality of their care. Choctaw and Northwest staff their cases geographically east and west. Choctaw refers patients in the south end of Walton County to Northwest, and Northwest refers patients in the northern part of Okaloosa County to Choctaw. This practice, which is a technical violation of their DHRS licensing by county, is dictated by the geography of the service area and the natural and man-made obstacles, including Choctawhatchee Bay, I-10, and Eglin Air Force Base, which create geographical divisions which span both counties east and west while the counties run north and south. The largest and most rapidly growing population areas are in the southern portions of both counties. This is where the major acute care hospitals are located. The remaining population in these counties tends to be along the I-10/U.S 90 corridor where smaller hospitals are located. Patients which cannot be treated in these smaller hospitals have been referred historically to facilities and physicians in Pensacola, although this is changing as more patients are being sent to facilities and physicians in Ft. Walton Beach. Approval of this application is consistent with the boundaries of the subdistrict, will enhance competition encouraging the other providers to upgrade their services, and will tend to orient care along a north-south axis. The Petitioner would be he only provider licensed to serve both Walton and Okaloosa Counties which would be advantageous because it could legally staff on an east- west axis and avoid the problems created by the geographic division of Subdistrict IB. In determining the need for home health agencies in Subdistrict IB, a two year planning horizon was used. A two year planning horizon is reasonable. Two years from the Petitioner's filing date would be December 1988. Data for the periods ending July 1988 and January 1989 were used because the official population projections from the Governor's Office focus on July and January of each year. The two projected dates bracket December 1988, two years from the filing date. The population of elderly (65 and over) for Subdistrict IB is projected to be 16,868 for January 1988 and 17,350 for January 1989. The Medicare use rate the number of Medicare home health visits per elderly person in Florida for 1984 was multiplied by the projected elderly population to arrive at a projected number of visits. The number of visits projected to occur in July 1988 was 31,976, and 32,889 visits were projected for January 1989. An average of the two projections was used to estimate the number of projected visits in December 1988. Dr. Kolb, an expert in health planning, researched the optimal size of an agency. She determined that once an agency's visits reach the range of 6,000 to 9,000, economies of scale are achieved in which the fixed costs are spread sufficiently among all visits to make operations viable, and that once this scale of operations is reached, costs per visit become relatively static or are affected more by other factors. Her findings in this regard are consistent with the conclusions reached by HRS in adopting virtually the same criteria in the Sharp policy which it used to evaluate need in the first half of 1986. See Paragraph 15 above. The optimum size for an agency is riot wholly dependent upon ratio of costs per visit, but it is that size which keeps costs low, fosters healthy competition, sustains the quality and availability of service, encourages innovation, and meets the other statutory objectives. To determine the number of agencies needed, the projected number of visits was divided by 9,000, the optimal number of visits per agency, which showed a need for 3.6 agencies. Rounding up, this calculation shows a total need for four (4) agencies in the subdistrict in December 1988. There are three licensed and approved home health care agencies in Subdistrict IB. Subtracted from the four agencies needed in December 1988, one additional agency could be added. The addition of Home Care to the home health market will not significantly affect existing providers. Home Care projects it will deliver 3,800 visits in its first year of operation and 7,000 visits in its second year. A large percentage of those visits are attributable to population growth alone. If the state home health use rate of 1.9 is applied to the 4,588 population growth expected by 1990, an additional 8,717 home health visits will be generated. That growth alone will meet the volume of visits projected by Home Care. Home Care will do new procedures and will educate existing providers and physicians to the availability and desirability of using new services provided by Home Care. This will cause an increase in the local use rate. Approval of Home Care's application will increase the overall market for home health services. Dr. Ehrman is a highly trained and experienced physician. Dr. Ehrman has been instrumental in improving the nature and delivery of health care in his medical specialty and community. He has improved the way blood smears are done at the hospital lab and improved the administration of blood bank at the local hospital. He has organized and taught nurses about chemotherapy and developed a tumor board. He helped get radiological procedures improved. Dr. Ehrman has developed new and innovative practices in his office and has assisted patients in obtaining appropriate Medicare reimbursement for services and drugs. Northwest adduced evidence that it operates very close to its Medicare cost caps; however, Northwest pays out much of its revenue to related organizations in the form of management, consulting, and computer fees. For example, in the 1986 cost reporting period, Northwest paid $17,783 to related organizations. In 1985-86, Northwest provided 2,818 home health aide visits at a cost of $19.29 pea visit. In 1986-87, Northwest paid $76,849 to related organizations with shared members of their boards. Northwest provided 3,406 home health aide visits in 1986-87 at a cost of $28.95 per visit. These related organizations are for-profit entities. Open-ended management and administrative contracts with related organizations allow management to add expenses in order to reach the cost caps each year. If management and administrative fees were backed out of Northwest's "costs," it would be well below its cost caps. As Northwest's visits have increased, administrative, general, and other expenses also have increased (1985-86: $91,708; 1986-87: $198,635). However, the direct costs associated with providing the nursing care for those visits have decreased (1985-86: $89,281; 1986-87: $81,71). Thus, the increase in visits did not result in any overall cost- efficiencies or savings, but in an increase in money paid out as administrative expenses. There is no relationship between number of visits and cost per visit once an agency is beyond the volume needed to cover its minimal operating costs. An increase in number of visits does not necessarily result in lower costs per visit. An analysis of hospital utilization by Medicare reveals that the rate of use in District I is higher than both the Florida and national average. Analysis of the local nursing home use rate reveals it is 68 percent higher than the statewide nursing home use rate. This is in spite of the fact that Walton and Okaloosa Counties have more nursing home beds than other areas of the State and the beds in these counties are at 95 percent occupancy. Analysis of the home health use rate for Walton and Okaloosa Counties reveals that it is approximately 40 percent lower than the statewide use rate. Many nursing home placements and hospital admissions could be avoided if appropriate home health care were available and utilized. For example, a home health service could start antibiotics in the nursing home for patients who had received the medication before, rather than admit the patient to the hospital to start the treatment as is currently done. The proposed agency will not decrease the number of visits by existing agencies because of (1) the increase in population, (2) the shifts to home health care from acute care facilities and nursing homes, and (3) the increase in the types of home health care available. The application contains Home Care's projection of income and expenses for the first two years of operation. See Figure 7, Page 22 of the application. Evaluation of costs for a two year period shows that they are reasonable. The assumptions about payor mix, utilization projections, gross charges per visit type, salaries, inflation, depreciation, marketing, advertising, administrative expenses, bad debts/charity, travel expenses, depreciation, costs of medical supplies, and gross revenues made in the feasibility study were reasonable. The projections of revenue from visits and from medical supplies are reasonable and their sum constitutes gross revenue. Deductions for contractual allowances and bad debt/charity are reasonable and when deducted from gross revenue they determine net revenue. Dr. Kolb, an expert in health planning, supervised the preparation of the financial feasibility projections contained in the application. The methodology used by Dr. Kolb was reasonable, appropriate, and supported by the facts. Dr. Kolb conservatively estimated reimbursement to arrive at contractual allowances. Subsequent to her preparation of the pro forma and the filing of the application, the Legislature increased by 100 percent the amount Medicaid reimburses for home health services. Medicare has also subsequently increased its cost services. This increases the range of reimbursement available to the Petitioner and makes Dr. Kolb's predictions of financial success more viable. The amount of $22,600 is reasonable for the cost of this project. Equipment costs of $7,600 include office equipment and the lease- purchase of a computer terminal. The computer will be used for billing and for tracking patient problems. The depreciation expense is derived from an assumption of five years' depreciation on $7,600 worth of office equipment, When deductions from revenue are subtracted from gross revenue, net revenue is approximately $284,700 in the second year. Home Care has the capital to fund this project. Individual expenses on the expense column on the pro forma include salaries, contract services, administrative expenses, transportation, marketing and advertising, medical supplies, and depreciation. Administrative salaries and benefits are based on the assumption that in the first year there will be three administrative full time equivalents ("FTE"): an administrator, a nurse supervisor, and a clerical person. In the second year, this will increase to three and a half FTE's. The salaries for these positions in year two are $28,350 for the administrator, $22,050 for the nurse supervisor, and $28,800 for one and a half clerical personnel. In addition, an 18 percent fringe benefit figure is computed. Salary assumptions are based on area wage levels. Both the salary assumptions and the number of FTE's and salaries are reasonable. A breakdown of total per visit costs is depicted on HCA X-26. The expenses for contract visits represent the cost per visit in each of the listed categories. The contract rates in year one are: home health aide - $8.25; speech pathologist - $30.00; medical/social worker - $25.00; occupational therapist - $30.00; skilled nurse - $13.75; and physical therapist - $30.00. Medical supplies are assumed to be $1.00 per visit in the rest year and are inflated by 5 percent in the second year. This assumption is reasonable. Although not required, Petitioner has allocated funds for advertising and marketing which are not allowable expenses in computing reimbursable expenses; however, this will help in informing the public and medical professionals about the availability of home health services. The transportation expense is based on $.21 per mile which is reimbursed to employees. This is a reasonable assumption. Administrative expenses include rent ($12,000), telephone ($4,800), insurance ($5,000), postage ($2,000), office supplies ($3,000), legal and accounting fees ($4,000), dues ($500) , and licenses ($500). Most expense items are inflated 5 percent for the second year. The expense and inflation assumptions are reasonable. In order to test the reasonableness of the assumptions contained in the pro forma, Dr. Kolb compared the projected costs in the second year to Medicare cost limitations. Home Care's projections are 28 percent below the Medicare cost limits for 1987. Home Care could have $78,000 more in expense and still be below its Medicare cost limits. In both his private office practice and in his DME company, Dr. Ehrman tries to ensure that underserved groups receive medical services. Although there is a large medically indigent population in the area Dr. Ehrman serves, he does no financial screening in his office. Dr. Ehrman is a participating provider in Medicare. This means that he has agreed in advance to accept Medicare assignment for his services. Dr. Ehrman is also a Medicaid provider. Three to five percent of his patients are Medicaid. The assumption that Home Care will have the same financial policies which are reflected in Dr. Ehrman's practice is reasonable. The assumption that Home Care will provide three percent Medicaid and three percent indigent home health visits is reasonable. Home Care's project is financially feasible on both an immediate and long term basis.

Recommendation Having determined, based upon the facts adduced at hearing, that there is a need for another home health care agency and that the applicant meets the statutory criteria, it is RECOMMENDED that the Department of Health and Rehabilitative Services approve Certificate of Need Number 4911. DONE and ORDERED this 1st day of July, 1988, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of July, 1988.

Florida Laws (2) 120.57, 400.461

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ALLSTAR CARE, INC. vs AGENCY FOR HEALTH CARE ADMINISTRATION, 96-004064CON (1996)

Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Aug. 28, 1996 Number: 96-004064CON Latest Update: Nov. 10, 1997

The Issue Whether any or all of the applications for certificates of need to establish medicare-certified home health agencies in Broward County (AHCA District 10) by Petitioners Allstar Care, Inc.; Medicorp Home Health Care Services; and Medshares of Florida, Inc., should be approved by the Agency for Health Care Administration.

Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter a final order granting CON Nos. 8418, 8419, and 8448 to Medicorp Home Health Care Services, Medshares of Florida, Inc., and Allstar Care, Inc., respectively. DONE AND ENTERED this 3rd day of September, 1997, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of September, 1997. COPIES FURNISHED: Robert J. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303 Michael Manthei, Esquire Broad & Cassell Broward Financial Centre, Suite 1130 500 East Broward Boulevard Fort Lauderdale, Florida 33394 Alfred J. Clark, Esquire Suite 201 117 South Gadsden Street Tallahassee, Florida 32301 Richard Patterson, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403

USC (1) 42 CFR 484.14(a) Florida Laws (3) 120.57, 408.034, 408.039

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MEDICAL PERSONNEL POOL OF TAMPA-ST. PETERSBERG, INC. vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 85-002074 (1985)

Division of Administrative Hearings, Florida Number: 85-002074 Latest Update: Apr. 25, 1986

The Issue Whether the Department of Health and Rehabilitative Services should grant petitioners' applications for certificates of need for the establishment of Medicare certified home health agencies in Hillsborough and Polk Counties, Florida.

Findings Of Fact HRS thereby adopts and incorporates by reference the findings of fact set forth in the recommended order except for the last sentence of paragraph 32 and paragraph 33. See discussion in ruling on exceptions.

Recommendation Based upon the foregoing findings of fact and conclusions of laws, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a final order granting and issuing CON Nos. 3605 and 3606 to Medical Personnel Pool. DONE and ENTERED this 25th day of April, 1986, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS, 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 25th day of April, 1986.

Florida Laws (1) 120.57

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HOME HEALTH SERVICES AND STAFFING ASSOCIATION AND KELLY ASSISTED LIVING SERVICES, INC. vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 85-001377RP (1985)

Division of Administrative Hearings, Florida Number: 85-001377RP Latest Update: Mar. 12, 1986

The Issue The issue is the consideration of the validity of proposed Rule 10-5.11(14), Florida Administrative Code.

Florida Laws (2) 120.54, 120.68

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ENGLEWOOD HOME HEALTH CARE, INC. vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 85-001751 (1985)

Division of Administrative Hearings, Florida Number: 85-001751 Latest Update: May 07, 1986

Recommendation Based on the foregoing Findings Of Fact and Conclusions of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, enter a final order: (a) granting the application of Petitioner, Personnel Pool of Southwest Florida, Inc., for a certificate of need for Medicare home health services but only for Lee County and only on the conditions (1) that Personnel Pool provide 2% of its total visits to Medicaid patients and one hour of uncompensated visits to indigent patients for every 20 hours of visits to Medicare patients for which it is reimbursed and (2) that it will operate all of its home health services out of the same corporate entity out of which it operates Medicare-certified home health services: (b) denying the Personnel Pool application as to Collier and Charlotte counties; and (c) denying the application of Petitioner, DeSoto Memorial Hospital. RECOMMENDED this 7th day of May, 1986 in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1986.

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