The Issue Whether the application for certificate of need number 8391, filed by Shands Teaching Hospital and Clinics, Inc., to establish a Medicare certified home health agency in District 4 meets, on balance, the statutory and rule criteria for approval.
Findings Of Fact The Agency For Health Care Administration (AHCA) is the state agency authorized to administer the certificate of need (CON) program for health care services and facilities in the state. Shands Teaching Hospital and Clinics, Inc. (Shands) is the applicant for CON 8391 to establish a Medicare - certified home health agency in AHCA District 4. AHCA health planning District 4 includes Duval, Nassau, Baker, Clay, St. Johns, Flagler and Volusia Counties. Shands operates a 576-bed statutory teaching hospital for the University of Florida Medical School in Gainesville, four other acute care hospitals, one rehabilitation hospital, a psychiatric facility, and out- patient clinics. Shands Home Care Division has 20 licensed home health care offices in 10 of the 11 AHCA districts in Florida. It is authorized to provide Medicare-certified services in 7 of the districts. In District 4, Shands currently operates a licensed home health agency, or what is called a “private duty” agency (Shands-Jacksonville) which is Medicaid-certified. A CON is a prerequisite to Medicare certification. Shands proposes to condition its CON on the provision of 5 percent Medicaid and 2 percent indigent care. The project costs are estimated to total $24,285, of which $11,000 in capital costs are intended to purchase additional computer equipment. AHCA preliminarily denied Shand’s application because it determined that an additional Medicare certified home health agency is not needed in District 4. At the hearing, AHCA maintained that Shand’s proposal will not increase the accessibility, quality of care, efficiency, appropriateness, or adequacy of services available to Medicare recipients in District 4. AHCA has also adopted guidelines which require applicants for home health agencies to demonstrate an access problem, a payor group not being served, limited availability, and linkages with health care providers. Shands concedes that it is unable to demonstrate an access problem, that any payor group is denied service, or that home health services are not available, however, Shands has substantial linkages with other health care providers. Home health services are provided by physical, occupational, respiratory, and speech therapists, registered nurses, licensed practical nurses, home health aides and homemakers. The cost of a home health visit to the patient’s residence differs greatly depending on whether a highly skilled nurse or therapist, or a less skilled aide or homemaker provides the service. There are thirty-seven licensed and three approved home health agencies in District 4. Unlike health care services delivered in health care facilities, there are no physical capacity limitations on expansion. As demand increases, agencies hire or contract for the services of additional staff. As a practical matter, however, to avoid the time and expense of driving, home health agencies tend to serve patients in relatively close proximity to their offices. The available information shows 11 agencies with offices in Duval, 7 in Volusia, 3 in St. Johns, and 1 each in Clay and Flagler, and none in Nassau County. The offices of Shands-Jacksonville are located in southeast Duval county, near Interstates 295 and 95, on Baymeadows Road. The location is close to Clay and St. Johns Counties. Numeric Need AHCA has no rule methodology to determine the need for Medicare-certified home health agencies. The prior methodology was invalidated in Principal Nursing v. AHCA, DOAH case no. 93-5711RX, reversed in part, 650 So.2d 1113 (Fla. 1st DCA 1995). In an attempt to establish need, Shands presented its own methodology for the July 1997 planning horizon. Shands examined hospital discharges to home health care agencies, from 1994-1995, in District 4. The methodology considers the projected growth in population over 65, actual hospital discharges to home health agencies, and the most cost effective size of home health agencies. Approximately 70 percent of the hospital discharges referred for home health care were patients age 65 or older. In District 4, approximately 15 percent of the population is 65 or over, as compared to 18.7 percent statewide. The population in District 4 and statewide will grow approximately 9 percent from 1996 to 2001. However, the 65 and over population of District 4 is projected to grow by 10.82 percent, as compared to statewide projected growth of 7.36 percent for the 65 and over population. By July 1997, the projected population of District 4 is 1,514,655, of which 234,404 will be over 65. Shands also analyzed the cost effective agency size (CEAS) of home health agencies, finding the home health agencies in a range between 30,000 to 95,000 visits a year are the most cost effective, which is consistent with the average size of 46,496 visits a year for District 4 agencies. Costs for each visit to a patient are greater for smaller home health agencies, until business increases to 25,000 to 30,000 visits. After that, economies of scale allow the additional costs for each additional visit to become negligible. In large part, the costs are higher because smaller agencies have disproportionately more skilled staff, particularly nurses. Within the range of the CEAS, the proportion of visits provided by nurses and home health aids is more balanced. When agencies become very large, over 125,000 visits, each visit begins to add costs, and home health agencies begin to increase the proportion of home health aide visits. Factors which tend to increase use rates for home health agencies include all of those which are resulting in lower lengths of hospital stays, including the use of Diagnostic Related Group (DRG) categories, increased managed care, and other financial disincentives to hospitalization. Advances in medical care also have expanded the types of procedures or treatments administered in the home rather than in a hospital. Medicare-certified home health agency use rates in District 4 have consistently increased from 1.65 in 1989, to 2.18 in 1990, to 2.61 in 1991, to 3.97 in 1992, to 5.46 in 1993, and 7.01 in 1994. Shands used a blended use rate rather than assuming that the historical trend in growth will continue and, from that, projected total visits of 1,969,666 in July 1997, as compared to 1,527,000 actual visits in 1994. When divided by the mean District 4 home health agency size of 46,496 visits, the result is a need for 43 agencies in the district. After subtracting the existing 37 licensed and 3 approved agencies, Shands' expert reasonably found a need, after rounding off 2.53, for up to 3 additional home health agencies in District 4. Of the over 400,000 projected additional visits from 1994 to 1997, Shands reasonably projects 11,000 visits in year one, and 16,000 in year two, when compared to the experiences of existing providers in the District. Subsection 408.035(1)(a) - the need for health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan. The 1993 State Health Plan (SHP) includes preferences for home health agency applicants proposing to (1) serve AIDS patients, (2) provide a full range of services, including high technology services, (3) provide a disproportionate share of Medicaid and indigent care, (4) serve underserved counties, (5) use surveys to measure patient satisfaction, and (6) become JCAHO-accredited. The district health plan (DHP) includes preferences for applicants which (1) economically meet acceptable quality standards, (2) will alleviate geographic access problems, (3) will treat HIV infected patients, (4) have adequate health manpower, (5) will serve rural county residents, (6) have letters of support from other health care providers, (7) will serve areas without CON-approved agencies, (8) will locate in counties with averages of less than 4,000 home health visits per 1,000 persons 65 years or older, and (9) commit to having personnel on-call during evenings and weekends. SHP(1) and DHP(3) - AIDS/HIV positive patient care Shands provided 191 discharges for 1,514 inpatient days of care to AIDS/HIV positive patients from October 1994 through September 1995. Shands is affiliated with the Northeast Florida AIDS Network and participates in the Medicaid AIDS waiver, having qualified separately for that program. Extensive out-patient services are provided by Shands to allow AIDS patients to avoid institutionalization. All Shands nurses and home health personnel receive orientation and in-service training in the care of AIDS/HIV positive persons. SHP (2) - a full range of services, including high technology services, is needed Shands offers ventilator, intravenous or infusion, wound care, and high technology drug therapies, as well as pediatric care, which usually involves extremely high technology services. The high technology services are provided by licensed practical nurses or registered nurses, as opposed to home health care aides or homemakers. Shands also operates pharmacies to provide the drugs or equipment needed for high technology services. SHP (5) - surveys for patient satisfaction; and DHP (6) - letters of support from other health care providers and agreements with hospitals, nursing homes and other providers. Because of its existing Medicare - certified home health agencies, Shands already uses and reports to the state the results of its surveys. Shands also has agreements with doctors, hospitals and managed care organizations. Shands' application also includes the required letters of support. Subsection 408.035(1)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district; SHP (4)- underserved counties, DHP(2) - to alleviate geographic access problems; DHP(5) - serve rural county residents; (7) - areas without other CON - approved agencies; and (8) - counties with less than 4,000 visits per 1,000 persons 65 and over. No geographic access data is available to determine whether or not any problem exists in District 4. There is no evidence that counties in the district are underserved, although portions of Clay and Flagler Counties are rural areas. There is no evidence that any counties in District 4 have had fewer than 4,000 home health visits per 1,000 persons 65 and over. The existing supply of comparable services in District 4 can theoretically and legally expand to provide the projected 1,969,666 visits in 1997. However, competition from new providers encourages quality improvements and maintains cost-efficient agency sizes. Most Medicare-certified agencies in Jacksonville take care of only Medicare patients. Some have related entities to care for private pay or commercial insurance patients. Visiting Nurses Association (VNA) and St. Vincents in Duval County are the Medicare - certified agencies to which Shands refers patients. In 1994, VNA and St. Vincents reported 194,691 and 46,300 total visits, respectively. Subsection 408.035(1)(c) - ability of the applicant to provide quality of care and the applicant's record of providing quality of care; and SHP (6) - JCAHO accreditation. Shands Home Care agencies have received JCAHO accreditation, beginning in 1991. Shands successfully operates Medicare - certified home health agencies in AHCA Districts 3, 5, 6, 7, 8, 9 and 10. Shands-Jacksonville, which started in 1995, is currently being surveyed for JCAHO accreditation. Shands operates other home health agencies which, like Shands-Jacksonville, are not Medicare-certified in AHCA Districts 1 and 11. Shands has an extensive quality assurance and quality improvement plan. Established standards of care apply to guide personnel in the procedures to follow in providing each kind of therapy or service that Shands offers. Subsection 408.035(1)(d) - availability, adequacy alternatives to facilities or services to be provided by the applicant. Home health care is the preferable, lower cost alternative to longer acute care stays or to re-admissions caused by a lack of adequate care following an acute care hospital stay. Existing Medicare-certified home health agencies range from a low of 2,058 visits for Olsten in St. Johns County to a high of over 370,000 visits by Careone in Volusia County. The realistic alternative to Shands’ proposal is for Shands to continue referrals to Medicare- certified home health agencies, one of which exceeded the CEAS by more than 70,000 visits in 1994. Subsections 408.035(1)(e) - probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources; and Subsections 408.035(1)(f) - need in the service district of applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas. The parties stipulated that the criteria in Subsections 408.035(1)(e) and (f) are not at issue or not in dispute in this case. Subsection 408.035(1)(g) - need for research and educational facilities including, but not limited to, institutional training programs and community training programs for health care practitioners and for doctors of osteopathy and medicine at the student, internship, and residency training levels. As one of the six state statutory teaching hospitals, Shands meets the need for research, educational and training programs. Subsection 408.035 (1) (h) - availability of resources; including manpower, management, personnel . . . effects on clinical needs of health professional training programs . . .; accessible to schools for health professionals . . . and the extent to which proposed services will be accessible to all residents of the district; DHP 1 - economically provide acceptable quality; DHP (4) - adequate health manpower and (9) - on- call personnel. Shands Home Care has 2700 employees statewide. Shands Hospital and Shands Home Care have extensive recruitment and human resource capabilities. Fringe benefits include choices of several medical plans, dental insurance, legal insurance, and competitive vacation policies. The existing Shands-Jacksonville operates from a 1500 square foot office, with a staff of 15 employees. Up to 185 contingent staff people are available to Shands - Jacksonville. The number of hours that the contingent staff works can be adjusted to meet the demands of the agency. Shands will increase full time staff to 18 people. Shands can provide approximately $25,000 to fund the total project cost, without affecting the costs of other services provided by Shands. In 1995, Shands’ net cash flow from operations exceeded $68 million. Shands already meets and, if CON approved, can continue to meet the requirement of having personnel on-call to provide services evenings and weekends. Subsection 408.035 (1)(i) - immediate and long term financial feasibility of the proposal. The parties stipulated that the long - term financial feasibility of Shands’ proposal is not in dispute and not at issue in this proceeding. Subsection 408.035 (1)(j) - special needs and circumstances of health maintenance organizations (HMOs). Shands maintains contractual relationships with 22 HMOs statewide, 5 of which include home health care. Shands claims that its application will meet the special needs of HMO patients. Shands does not have an HMO within its organization and is not an HMO. As AHCA has interpreted the criterion, the applicant must be an HMO to quality. Subsection 408.035(1)(k) - needs and circumstances of entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. The parties stipulated that the criterion is not in dispute or not at issue. Subsection 408.035 (1)(l) - probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in financing and delivery of health services which foster competition and service to promote quality assurance and cost-effectiveness. Medicare reimbursement is the same for all providers of home health services, so that the approval of an additional home health agency is not expected to affect costs. AHCA takes the position that an additional provider in District 4 will shift the market shares to the new provider to the detriment of the existing home health agencies. The available evidence indicates that only Shands, VNA, and St. Lukes serve pediatric patients. In that market, Shands competes with VNA which had 194,691 visits in 1994, the largest number in Duval County. If certified for Medicare reimbursement, Shands will also primarily compete with VNA, and additionally, St. Vincents. The methodology previously used by AHCA to determine the numeric need for home health agencies was an invalid rule because it was anti-competitive and failed to consider cost efficiency. The methodology used by Shands takes those factors into consideration, and demonstrates that an additional home health agency will foster competition and cost-efficiency in District 4. Subsection 408.035 (1)(m) - costs and methods of proposed construction including costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. The parties stipulated that the criterion is not in dispute or not at issue in this proceeding. 408.035(1)(n) - proposed provision of health care services to Medicaid patients and medically indigent; and SHP (3) - disproportionate share Medicaid and indigent care. Shands is a disproportionate share Medicaid provider and proposes a commitment to provide 5 percent Medicaid and 2 percent indigent care. In 1994 and 1995, Shands provided approximately $27 million and $28 million, respectively, in charity care. Shands Home Care provided approximately 20 percent Medicaid in 1994, 27 percent in 1995, and 27 percent through March of 1996. 408.035(1)(o) - applicants past and proposed provision of services which promote a continuum of care in a multilevel health care system, which may include, but is not limited to, acute care, skilled nursing care, home health care, and assisted living facilities. Shands is a multi-level provider, with a range of services from virtually every tertiary service, such as open heart surgery, bone marrow, and organ transplantations to out-patient clinics. In addition to the Gainesville teaching hospital, Shands also operates 422-bed Alachua General Hospital, 83-bed Upreach Rehabilitation Hospital, and 40-bed Vista Pavilion in Gainesville, and 54-bed Bradford Hospital in Starke, 128-bed Lake Shore Hospital in Lake City, and 30-bed Suwannee Hospital in Live Oak. The continuum of care is enhanced by the use of “clinical pathways” which direct the plan of care through an illness from inpatient to rehabilitative to home care. It provides an effective communications tool for the health care providers in each setting. Shands resources include a large statutory teaching hospital, acute care community hospitals, psychiatric and rehabilitation facilities. The continuum of care is enhanced by allowing Medicare patients discharged from the hospitals to District 4 agencies to receive follow- up home health care within the same system. Shands- Jacksonville has an integrated system for health care personnel to care for Medicaid, HMO, or private pay patients. That same group will care for Medicare patients while maintaining its Medicaid and indigent commitment. Subsections 408.035(2) and (3) - construction of new inpatient facilities and CONs prior to 1984 Based on the parties' stipulation, Subsections 408.035 (2) and (3) are not applicable or not in dispute in this proceeding. Agency consistency and rule-making In the preceding batching cycle, AHCA recommended approval of two additional home health agencies in District AHCA rated both of those as completely or partially complying with fewer review criteria, and as not complying with more review criteria than the Shands application in this cycle. The guidelines established by AHCA which require an applicant to demonstrate existing problems with access to and a lack of available home health services are given no independent weight in evaluating the application, having not been adopted by rule. The issues are considered to the extent that accessibility and availability are included in the applicable statutory review criteria. On balance, Shands meets the criteria for approval of its CON to provide home health care to Medicare recipients in District 4.
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 issuing CON 8391 to Shands Teaching Hospital and Clinics, Inc., to establish a Medicare-certified home health agency in AHCA District 4 conditioned on providing 5 percent of total annual gross revenues by payor to Medicaid patients and 2 percent to indigent care. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 20th day of March, 1997. ELEANOR M. HUNTER 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 20th day of March, 1997. COPIES FURNISHED: Moses E. Williams, Esquire Agency For Health Care Administration Office of the General Counsel 2727 Mahan Drive Tallahassee, Florida 32308 James M. Barclay, Esquire Cobb, Cole and Bell 131 North Gadsden Street Tallahassee, Florida 32301 Sam Power, Agency Clerk Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308 Jerome W. Hoffman, General Counsel Agency For Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issues are whether the alleged actions of the respondents demonstrate a lack of fitness or trustworthiness to engage in the business of insurance within the meaning of Subsection 626.611(7), Florida Statutes (2004), and, if so, what penalty should be imposed. (All statutory references are to Florida Statutes (2004) unless otherwise stated.)
Findings Of Fact Petitioner is the state agency responsible for regulating insurance agents in Florida. The respondents, Crain and Carll, are licensed as Life and Health insurance agents pursuant to respective license numbers A056967 and A040734. The respondents have known each other for approximately 13 years. During that time, the two engaged in the business of selling health insurance. Mr. Carll was an independent contractor, but Mr. Crain was Mr. Carll's only boss. Mr. Crain wholly owns two Florida corporations that he operates as insurance agencies. The two corporations are identified in the record as International Life and Health Services of Manatee County, Inc. (Manatee), and International Life and Health Services of Sarasota County, Inc. (Sarasota). Mr. Crain owns two other Florida corporations. They are identified in the record as Independent Living Home Care Agency, Inc. (Home Care Agency), and Independent Living Home Care Membership Association, Inc. (Home Care). Home Care promises in a plan written by Mr. Crain to provide plan purchasers with access to discounted in-home care (the plan). Approximately 44 Florida residents purchased the plan in 2005 and 2006 from insurance agents, including Mr. Carll, who, as agents for Mr. Crain, Manatee, or Sarasota, previously sold health insurance to some of the plan purchasers. Mr. Crain is personally and fully liable for the acts of the selling insurance agents within the meaning of Section 626.839. Mr. Crain is a health insurance agent who is the president and sole shareholder of a health insurance agency. Mr. Crain directly supervised and controlled the insurance agents who sold the plan in Florida. Mr. Crain wrote the plan and trained the insurance agents in the content of the plan, sales techniques, how to exclude impaired customers, and how to determine whether a customer was an appropriate candidate to purchase a plan. Mr. Crain did not obtain a legal opinion concerning his final version of the plan. The plan satisfies the statutory definition of insurance. However, the plan is not health insurance that the legislature has expressed its intent to regulate.1 The plan promises Home Care will provide a purchaser of a membership with access to in-home care from a third-party provider, denominated as a "caregiver," at a cost substantially less than the market rate caregivers normally charge for such services (discounted home care services). The plan promises to refund 120 percent of the membership fee if Home Care were unable to provide access to discounted home care services. The plan excludes medical care from the definition of home care services. Home care services include companion and homemaker services; housekeeping and laundry services; transportation services for doctor visits, groceries, and visits with friends; meal preparation; assistance with dressing and undressing; organizing files and bills; not burdening loved ones; protecting assets and heir's inheritance; gaining respect; and preserving one's legacy while gaining respect and dignity. The plan offers memberships for four, six, and eight years. Only four and six-year memberships are pertinent to this proceeding. The respective cost for each four and six-year membership is $2,475 and $3,475. Home Care promises each member will have access to discounted home care services for respective benefit periods of 1.5 and 2.5 years. The cost of membership does not apply toward the cost of discounted home care services. Services are not available at the discounted rate for the first 90 days after the date a purchaser requests services (the elimination period).2 The elimination period is 180 days "for pre-existing conditions".3 An additional payment of $1,395 reduces the normal elimination period from 90 to 60 days, extends the membership period an additional two years, and extends the respective benefit periods by one year. The plan charges an additional 25 percent if a purchaser elects installment payments. The plan promises home care services at substantial discounts below the market rate. The discounted plan rates are $94 for 24 hours of service; $72 for eight hours of service; and $36 for four hours of service. Market rates in the community range from $204 to $480 for 24 hours of service and from $16 to $18 an hour for shorter periods.4 The 44 plans sold in Florida generated approximately $192,000 in membership fees for Home Care. Mr. Crain deposited the fees into a bank account he created for Home Care and for which Mr. Crain is the sole authorized signatory. Home Care paid commissions to insurance agents ranging from 50 and 60 percent of the sale proceeds. The allegations in this proceeding pertain to four of the 44 plan purchasers. Ms. Janet McClurkin purchased the plan in April 2005 in two installments totaling $2,112. Ms. Ruth Frakes purchased the plan in February 2005 in two installments totaling $4,870. Ms. Carin Clareus purchased the plan in February 2005 for one payment of $1,953. Ms. Eva Muller purchased the plan in March 2005 for one payment of $3,475.5 A finding of guilt requires proof of one or more of five essential allegations, the first of which alleges the four plan purchasers are elderly women who, at the time of purchase, were "disabled" and suffered from "diminished mental capacity." The four sales allegedly violated the plan prohibition against sales to anyone "not of sound mind or body." The four plan purchasers are clearly elderly women. At the time of the hearing, Ms. McClurkin was 94 years old.6 Ms. McClurkin is Canadian, has been widowed for approximately 35 years, has no children or nearby family, and lives alone. Her nephew had power of attorney at the time of the hearing. Ms. McClurkin suffered from hearing and memory loss. She had worn two hearing aids for about a year, was recovering from surgery for breast cancer two years earlier, and had functioned for over 15 years with two artificial hips. Ms. Frakes was 90 years old at the time of the hearing.7 Ms. Frakes had been widowed for approximately 26 years and had no children and no surviving relatives. Ms. Frakes wore a Life Alert alarm, had been wearing two hearing aids for approximately seven years, had been reading through a magnifying glass for approximately five years, was taking medication for high blood pressure, and suffered from arthritis. Ms. Clareus was 97 years old at the time of the hearing and resided in a community of about 200 senior citizens.8 She immigrated to the United States in 1928, had been widowed for approximately four years at the time of the hearing, and had no children and no nearby relatives. Ms. Clareus had been legally blind for approximately eight years but was able to read through an assistive device in her residence. Ms. Muller was approximately 85 years old at the time of the hearing. She immigrated from Germany and then became a U.S. citizen, all in a time frame not disclosed in the record. Ms. Muller had been divorced early in her life and lived alone in a mobile home community. She had no nearby relatives and experienced memory problems. Ms. Muller owns an automobile but does not drive. Friends drive for her. After purchasing the plan, Ms. Muller executed a power of attorney naming Ms. Ingrid Eglsaer as her general power of attorney. At the time of the hearing, the four witnesses demonstrated confusion and difficulty in recalling specific facts. However, their confusion and impaired memory at the hearing was not clear and convincing evidence that the witnesses were incompetent when they purchased the plan. The allegation of incompetence at the time of purchase may be supported by inference or surmise, but inference and surmise do not satisfy the requirement for clear and convincing evidence.9 Petitioner submitted no expert testimony concerning the mental capacity of a purchaser at the time of the purchase. Petitioner next alleges the respondents misrepresented that Home Care would provide home care services and home medical care without further charge. Each Administrative Complaint admits the alleged misrepresentation conflicts with the terms of the plan.10 The plan promises access to discounted home care services and states that the membership fee does not apply toward charges for discounted home care services.11 The evidence is less than clear and convincing that the respondents misrepresented the contents of the plan in a manner that led purchasers to believe they would receive home care services or home medical care without additional charge. Testimony of the four purchasers concerning verbal representations by insurance agents during sales transactions is confused, is not precise and explicit, and is less than clear and convincing. Each purchaser may have inferred that she was purchasing insurance for either home care services or home medical care without an additional charge. Some purchasers had previously purchased such insurance from the same insurance agent. Each sale included a consultation in which the insurance agent reviewed other insurance held by the purchaser. The plan included terms that sounded to elderly women like familiar insurance terms. For example, the plan requires the purchaser to apply for coverage and employs terms such as "Eligible Persons," "Effective Date," "Elimination Period," "Limitations and Exclusions," and "Benefit Discount Period." The plan extends the elimination period when "pre- existing conditions" exist, describes home care providers as "caregivers," and discusses "co-payments." The plan includes a disclosure form and a medical release form. The evidence is less than clear and convincing that the respondents made promises or representations, other than those in the plan, to induce a purchaser to infer that the plan entitled her to discounted home care or medical care at no additional charge. Rather, the terms of the plan were purposefully confusing and induced the four elderly women to draw the desired inference. Petitioner also alleges the respondents made false and worthless promises that defrauded the purchasers. However, it is unnecessary to resolve the allegations of fraud in this case.12 This case can be resolved if the evidence supports one of two remaining allegations. First, the respondents allegedly misrepresented the access to discounted caregiver services that a purchaser acquired upon payment of a membership fee. Second, the promises of access to discounted caregiver services that the respondents made to each of the four plan purchasers were false and worthless.13 The plan misrepresented the access to caregivers that a purchaser acquired upon payment of a membership fee. The plan provides, in relevant part: If a member joins the association they are guaranteed the homecare discounts provided for in the contractual agreement. Respondent Crain, Exhibit 1, at 4. The plan does not name or otherwise identify a caregiver responsible for supplying the discounted caregiver services "guaranteed" in the plan. In that regard, the plan is factually distinguishable from a home care plan that passed judicial scrutiny in an unrelated proceeding.14 Neither Mr. Crain nor Home Care possessed a legal right to require a caregiver to provide discounted services in accordance with the terms of the plan. Neither Mr. Crain nor Home Care possessed the practical ability to ensure that a caregiver would provide home care services at any price, much less the discounted prices promised in the plan.15 The absence of either a legally enforceable right or practical ability to ensure that a caregiver would provide the discounted home care services promised in the plan were material facts that Mr. Crain did not disclose to purchasers. The failure to disclose material facts was willful and misrepresented the access to discounted caregiver services that a purchaser acquired upon payment of a membership fee. Testimony from Mr. Crain concerning his practical ability to ensure delivery of discounted caregiver services was neither credible nor persuasive to the fact-finder. Mr. Crain discussed home care services with a number of caregivers. Based on those conversations, Mr. Crain developed a list of caregivers he said he could call in the future to request discounted caregiver services promised in the plan if and when one of the 44 purchasers requested services (the list).16 The list evolved between January 2005 and September 2006. Mr. Crain advertised for caregivers in local newspapers. The collective responses numbered between 100 and 200. Mr. Crain or a staff-member collected the contact information for each responder and questioned each responder concerning, among other things, their qualifications and experience. The final list identified 15 caregivers. Mr. Crain described the list of 15 in answers to questions from the fact-finder: [Q] Well, I want to make sure I understand clearly. So, you ran an ad. People called in, you took down their contact information, and did you run [abuse registry] screens on these people? [A] Yes, I did. [Q] Okay. You mentioned earlier 200 responded. Did all 200 make the list? [A] The list? . . . [Q] . . . The list I'm referring to is the list referred to in testimony of . . . [insurance] agents of yours that said you maintained a list of contract individuals . . . Did you maintain a list? [A] I had a list of potential caregivers from the original ad, yes. * * * [Q] So you ran two ads. You had some responses to the first ad, and overwhelming responses to the second ad, and when you talked to the person, what did [you] do . . . ? [A] They call in -- I briefly qualify them. * * * [Q] And what kind of information do you collect? [A] Name, address, phone number, work history, educational history ethical behavior . . . . [and abuse] screening . . . . [I]f the agency they work for currently or in the past could not fax me a copy of . . . screening . . . by AHCA [Agency for Health Care Administration], then I could then screen them myself. [Q] [H]ow many of these people did you actually either screen or get faxes of their screen? [A] About seven. [Q] Out of how many? [A] Altogether, I had spoken to no less than a hundred people. [Q] From both ads? [A] Correct. . . . [Q] How many of the seven did you screen yourself? [A] Three. . . . [Q] Okay. Now, you talked to a hundred. Did you compile a resource list? [A] Yes, I did. [Q] And how many . . . , of the hundred, made the resource list? [A] I had at least 15 potentially eligible people that could work for me, but I had seven that could go at any moment. Or not at any moment but that were available, already screened with experience and ready to go. Or around seven. Transcript (TR) at 581-585. Mr. Crain did not bond or insure any of the 15 potentially eligible caregivers. Mr. Crain explained the bonding procedure in the following testimony: [Q] [The plan] . . . talks about having people bonded, insured, and fully screened, correct? [A] Yes. [Q] Now, we've already talked about screening. How would you make arrangements to bond and insure someone? [A] If they were employed, to bond a person is a one-page form . . . [y]ou deliver to this insurance agency . . . down the road from my office . . . and putting a hundred dollars for every ten thousand dollars of bonding you want. . . . [Q] So, when in the process would you bond and insure someone? [A] The day or the day before they went out to the actual care. [Q] So actually, prior to having a request for services and actually arranging for somebody to go out, you wouldn't have gone through the trouble or expense of bonding or insuring, correct? [A] Correct. [Q] Who actually bears the expense of bonding and insuring? [A] The provider. [Q] You mean the worker? [A] Yeah. . . . TR at 585-586. The plan promised that access to discounted services included a guaranteed refund equal to 120 percent of membership if Home Care were unable to provide access to the discounted caregiver services promised in the plan. Mr. Crain wrote the refund language to state: 17. 120% money back guarantee. If [Home Care] cannot provide homemaker and companion services at the discounted rate as governed by this contract, the company shall pay the member all the fees paid plus an additional 20%. Due to severe, unprecedented, skyrocketing costs for caregivers, or an unforeseen increase in the demand for personnel, the company will make this refund. [Home Care] has a big responsibility to provide quality home care services to all of it's [sic] members. Even though management owners and outside professionals have thoroughly though [sic] out almost every variable in making this contract both beneficial to the customers and profitable for [Home Care], no one can predict the future. Therefore it is agreed by both parties that by entering into this contract that the legal remedy for [Home Care's] possible inability to provide the service at the discounted rate, is for [Home Care] to refund 120% of the member's fee after reviewing the case with legal counsel as provided for by [Home Care] regarding the unusual circumstances of the said member. Respondent Crain, Exhibit 1, at 7. The promise that access to discounted caregiver services includes a guaranteed refund of 120 percent of the membership fee is a false promise. The promise is not conditioned on any discernable legal standard or any other standard capable of objective measurement. Rather, the applicable standard is a subjective standard to be interpreted at the sole discretion of Mr. Crain. Mr. Crain willfully included the false refund promise in the plan. As Mr. Crain explained: The right to get a refund? After five days, they don't have a right to get a refund. [Q] Do you or have you, on behalf of the company, given refunds to persons beyond the five-day period? [A] Yes. [Q] Is that at your discretion? [A] Yes. [Q] Is there any particular policy or plan regarding when and how to give a refund and how much? [A] No. TR at 614. Mr. Crain is the sole arbiter of the entitlement to a refund and the amount of the refund to be paid. For example, Mr. Crain paid Ms. Muller 120 percent of her membership fee but paid only a prorated amount to Ms. Clareus.17 The promise to refund 120 percent of the membership fee is worthless. Mr. Crain willfully included the worthless promise in the plan. The refund obligation is owed solely by Home Care, and Home Care has not retained sufficient reserves to fund its contractual obligation.18 Mr. Crain withdrew virtually all of the $192,000 in membership fees to pay commissions, operating costs, and similar expenses. On June 19, 2006, Home Care had $946 in its bank account. The last refund obligation Home Care owes to the two unpaid purchasers in this proceeding will not expire until sometime in 2011. The corporate promise to refund 120 percent of the membership fee is worthless because it is an unfunded obligation to pay refunds from non-existent reserves. Mr. Carll did not exercise ordinary diligence, much less the reasonable skill and diligence required of an insurance agent, to examine the plan for misrepresentations and false promises. Mr. Carll willfully failed to independently examine the plan. As Mr. Carll explained during his testimony: Jim was constantly on the phone interviewing people, prospective caregivers, talking to -- even to home health care agencies that provide homemaker services, and it's my understanding that he had compiled a list of people who could be called in the event if someone requested for [sic] service. * * * [Q] When you had meetings with Mr. Crain, did you ask him questions? [A] Yes. [Q] What questions did you ask about the plan? [A] Oh, how does the elimination period work. You know, when do services begin? What do people have to do to get services? Questions of that nature. [Q] Anything else? [A] Just questions about, you know, well how to talk to these people and, you know, what to look for when you walk into a house. [Q] Did you ask Mr. Crain what ability he had to ensure that these third party contractors would provide their services for the fees he guaranteed in the plan? [A] Yes. [Q] Okay. What did you ask him? [A] I said, Well, how can we be sure that these people will get the services that they need when they ask for them? [Q] And? [A] He said that he had interviewed numerous people. He had a list of people that he could call . . . to provide [discounted services]. . . . [Q] Did you ask Mr. Crain what ability he had to . . . enforce that representation from them if, at some future time, he asked them to provide that service, and they said they no longer would? [A] I didn't ask him that question. [Q] So you didn't ask him if he had these people under legal contract for the term of the plan? [A] No. . . . I have a lot of faith in Jim Crain. TR at 358 and 422-424. Mr. Carll knew, or should have known, that the plan he sold included misrepresentations. Mr. Carll knew, or should have known, from the language of the plan that the refund promise is false. Each of the respondents is an insurance agent who enjoyed a fiduciary relationship which arose from previous sales of health insurance. Mr. Carll also enjoyed a fiduciary relationship that arose during the previously discussed consultative role he performed when he reviewed with plan purchasers their existing insurance. As Mr. Carll explained during his testimony: Well, a lot them, some of them were referrals, some of them were people we already knew. [Q] How did you know them? [A] That they had purchased insurance with us before. You know, a lot of them called the office. [Q] For what purpose did they call? [A] Well, they called the office looking for the agent that sold them insurance. TR at 360-361.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding the respondents guilty of violating Subsection 626.611(7), for the reasons stated herein, and suspending their licenses for 24 months from the date the proposed agency action becomes final. DONE AND ENTERED this 31st day of January, 2007, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 31st day of January, 2007.
Findings Of Fact This proceeding involves certificate of need (CON) application No. 4912 by Home Health Care of Bay to establish a Medicare-certified home health agency to serve Bay County Florida. Home Health Care of Bay's CON application was timely filed on December 15, 1986. Home Health Care of Bay's application was deemed complete on March 2, 1987. On April 30, 1987, DHRS preliminarily denied Home Health Care of Bay's CON application based on a determination that: There was no need demonstrated by Home Health Care of Bay for an additional home health agency in Bay County. Home Health Care of Bay is owned by Mark Ehrman, M.D. Dr. Ehrman is a board-certified internist, hematologist, and oncologist. Dr. Ehrman has been in private practice in Fort Walton Beach, Florida, since November, 1984. Prior to 1984, Dr. Ehrman was involved in the organization and delivery of medical services, the teaching of medicine, and the practice of medicine in Canada. Home Health Care of Bay will serve all patients regardless of race, income, sex, ethnic background, religion, or physical handicap. Home Health Care of Bay will provide 3 percent Medicaid and 3 percent indigent home health visits. Dr. Ehrman, both in his office and in his durable medical equipment (DME) company, goes to great lengths to ensure that indigent persons receive medical services. Dr. Ehrman, in his office practice, provides medical services to all persons regardless of their ability to pay. He is a participating physician in Medicare, Medicaid, and other insurance programs. Dr. Ehrman's participation in these programs and his determination not to screen patients financially has increase access to medically underserved patients. Dr. Ehrman's private practice includes approximately 5 percent Medicaid patients. In the past, home health agencies have tended to focus on acute medical problems. The traditional model for home health care has been to shorten an acute hospital stay for a discrete problem. Even chronically ill patients still came to the hospital when they had an acute episode. There has been little focus on avoiding hospitalization. There is now a shift in home health care which attempts to avoid hospitalization in appropriate cases. Dr. Ehrman, in treating patients at home, has become involved with sophisticated triage procedures, home pain management, and other procedures which maximize a patient's time outside the hospital. Such procedures allow patients to remain safely and comfortably in their homes. Procedures which can be safely done in the home include the starting of I/V morphine drips or I/V antibiotics. These procedures have traditionally not been done in the home. Nationally, and in Bay County, several factors are causing a shift to home health use. First, pressure is being applied in the form of reimbursement mechanisms to reduce the expense of institutional care. Patients are discharged from the hospital sooner and there is more pressure to use home health services. Second, an increased incidence of chronic illnesses, such as AIDS, will increase the use of home health services. The incidence of AIDS and AIDS related diseases will continue to increase and has obvious implications for increased home health usage. Home health care will make "hospital-like" care more available and less expensive for AIDS patients. Third, health consumers want to maintain the quality of their lives and remain at home as long as possible. HOME HEALTH CARE OF BAY'S PROPOSAL Home Health Care of Bay will provide medical personnel services in the disciplines of registered nursing, certified home health aides, occupational therapy, speech therapy, physical therapy, and medical/social work. These services will be provided to Medicare, private insurance, and indigent patients. Home Health Care of Bay will provide traditional home health services and many "high-tech" services which currently are not available at all or are not routinely done in Bay County. Such services include the transfusion of blood and blood products, professional pain management, the drawing of arterial blood gases, the care of Groshong and Hickman catheters, and the care of subcutaneous pumps and subcutaneous venous access devices. Home Health Care of Bay's proposed services will be utilized by many different types of patients, including renal patients, chronic pulmonary patients, chronic heart disease patients, and cancer patients. Home Health Care of Bay will provide health care services to AIDS patients. Petitioner's Exhibit 5 contains a complete list of services which Home Health Care of Bay will provide. Home Health Care of Bay's services will be available 24 hours a day, 7 days a week. This is an important commitment because home health care patients need services regardless of the time of day or day of the week. Even more important than the discrete list of services that Home Health Care of Bay will provide is the integration of all these services into one agency. In that way, patients are not shuttled from place to place; their care can be organized and integrated for maximum benefit. This integration will be accomplished by formulation of a plan of therapy which will include evaluation by a social worker and a physician in order to deal with the patient's total needs. Home Health Care of Bay's commitment to a total integration of patient services is evidenced by its plan to provide 4 percent of its visits in the medical/social work category. Such services are important in providing comprehensive care. The provision of medical/social work services will help patients and their families identify both medical and non- medical needs. Once such needs are identified, the patients and families can be channeled to the appropriate services, agencies and resources. Home Health Care of Bay will provide the physician with direct and timely communication about the patient. This will include daily delivery of complete medical records. Such a service is crucial in order to provide home care to patients with complicated problems. Home Health Care of Bay has a budget line item for marketing of $21,000 in the first year and $18,000 in the second year of operation. This money will be used to change the perception and pattern of home health use. Patients and doctors will be made aware of the availability of new home health services and the integration of those services with existing services. Home Health Care of Bay's marketing effort will overcome the reluctance of some physicians to utilize home health services. The demographics of the subdistrict of Bay County were analyzed and compared to the demographics of District II. The analysis shows that from 1986 to 1989, 3,076 persons 65 and over will be added to the population of Bay County. This represents a growth rate of 21.5 percent in Bay County compared to a district growth rate of 12.4 percent. Of the elderly growth in District II of 7,355, approximately 40 percent of such growth is occurring in Bay County. Forty percent (40 percent) is a high percentage in a 14 county district and indicates that the elderly population in Bay County is growing at a very rapid rate. Elderly persons are the most frequent users of home health services. Thus, rapid population growth is occurring in the segment of the population most in need of home health services. STATUTORY CRITERIA 1/ Consistency With State Health Plan Home Health Care of Bay`s proposal was reviewed for conformity with the State Health Plan and is consistent with that plan. The 1985-1987 Florida State Health Plan states: Home health agencies provide nursing, health aid, therapy and other kinds of services to patients in their homes. This allows individuals to remain at home rather than use more expensive institutional care to recover from acute illness or to manage chronic conditions. The State Health Plan further states: Home health services can be a cost effective form of long term care for the elderly and the infirm. The provision of home health services proposed by Home Health Care of Bay will provide residents of Bay County with a lower cost alternative to institutionalized long term care as referenced in the above State Health Plan excerpts. The State Health Plan also addresses the unwillingness of many providers to serve the medically needy: Medicare is the largest payor for home health care to the elderly, though some private insurers and Medicaid both cover home health services. Policy makers are increasingly concerned about providers' willingness to serve Medicaid recipients and medically indigent Floridians. Home Health Care of Bay has committed to provide at least 3 percent Medicaid and 3 percent indigent visits. Such a commitment will greatly increase access of medically underserved groups. Approval of a provider who accepts a significant portion of Medicaid patients will encourage current providers to accept such patients in order to retain their Medicare and private referrals. Physicians and discharge planners are much more willing to refer to an agency that will care for all their patients. The State Health Plan contains the following objective: OBJECTIVE 1.5.: To assure that the number of home health agencies in each service area promote the greatest extent of competition consistent with reasonable economies of scale by 1987. The methodology utilized by Home Health Care of Bay to project need maximizes competition consistent with economies of scale by allowing additional providers to enter the market while maintaining existing agencies at a size at which they can operate efficiently. Consistency With Local Health Plan Home Health Care of Bay's proposal was reviewed in relation to the 1986 District Two Health Plan and is consistent with that plan. The local health plan contains a section on long-term care services, including home health services. This section contains a numerical methodology to determine need. That methodology indicates a need for an additional agency in Bay County. The local health plan also contains priorities for home health services. Priority C states that: Priority will be given to home health services applications who have a history of providing, or will commit to provide, services to Medicare, Medicaid and medically indigent patients. Dr. Ehrman, the owner of Home Health Care of Bay, has a record in his practice of providing services to all payor groups. He has committed to continue to do so in his home health agency. Priority D of the Local Health Plan states: Priority will be given to home health services applicants who have a history of providing, or will commit to provide, a public marketing program for their services which includes pamphlets, public service announcement and various other community awareness activities. Home Health Care of Bay has budgeted for and committed to an extensive marketing program. A marketing priority is unusual in a local health plan and indicates an awareness of the need to educate the public about home health services. Determination Of Need DHRS currently has no rule governing the need for home health agencies. A historical summary of the regulation of home health agencies in Florida is described in a memorandum prepared by Ms. Marta V. Hardy. Ms. Hardy was the Deputy Assistant Secretary for Regulation and Health Facilities, DHRS, from September 1984 through June 1987. Ms. Hardy was responsible for all CON decisions and was the ultimate decision-maker in regard to the preliminary denial of Home Health Care of Bay's CON. In the fall of 1984, DHRS attempted to promulgate a rule to replace the invalidated Rule of 300. This proposed rule was based on a use rate methodology, but was invalidated in a rule challenged proceeding in 1985. After the invalidation of the proposed rule, DHRS implemented an interim policy which it used to review home health agencies. This interim policy is reflected in the "Bob Sharpe memo," dated May 15, 1986. The interim policy was applied to home health agency application beginning with the first batching cycle in 1986. The interim policy utilized a variation of the previously invalidated rule and attempted to correct the problems which caused the proposed rule to be found invalid. The interim policy is a use rate/population methodology which projects the number of Medicare enrollees using home health services in the future. This number is multiplied by the average number of visits per Medicare home health user. The total number of visits is divided by an agency size of 9,000 visits to yield the gross number of agencies needed. The total number of licensed and approved agencies is subtracted from the gross need number to yield the net number of agencies needs. The interim policy phased in the needed agencies over a three year period. DHRS defended the interim policy in circuit court when the Florida Association of Home Health Agencies (FAHHA) sought to stop DHRS from using the policy. DHRS defended the interim policy in December, 1986, before the First District Court of Appeal. Use of the interim policy resulted in the approval of 23 home health agencies. DHRS abandoned its interim policy sometime in the fall of 1986. No notice was given to the public or to interested parties that a change in DHRS policy had occurred. DHRS published no document rescinding the Sharpe memo. Only after applications were filed in the second batching cycle of 1986, were applicants informed that DHRS had changed its interim policy. Applicants in the December, 1986, batching cycle, including Home Health Care of Bay, were asked for an unlimited extension of time within which DHRS could render a decision. Applicants who refused to agree to an extension were evaluated on the basis of the "statutory need criteria." Applicants who did not agree to an extension were denied. In only one instance was a CON granted after abandonment of the interim policy. This occurred in Franklin County, where no home health agency existed at the time of that approval. DHRS' new "policy" was not developed by DHRS health planners. The "policy" put the burden of proof on the applicant to demonstrate an unmet need. Such a demonstration would be difficult to make. The Office of Community Medical Facilities, the office within DHRS responsible for preliminary CON review, reviewed Home Health Care of Bay's application using the "policy" based on "the thirteen statutory criteria." Such a review required Home Health Care of Bay to prove need by demonstrating an unmet need. However, as evidenced by the Office of Community Medical Facilities' review of Home Health Care of Bay's application, a policy requiring an applicant to meet a negative burden of proof is unreasonable. It imposes a standard which is virtually impossible for an applicant to meet. Ms. Joyce Farr was the DHRS employee responsible for the review of Home Health Care of Bay's application and for the development of the related State Agency Action Report (SAAR). The SAAR was the only work product Ms. Farr prepared in regard to Home Health Care of Bay's application. Ms. Farr has never been qualified as an expert witness in the home health area. Ms. Farr has no formal education in health planning and is unfamiliar with Medicare reimbursement. Ms. Farr does not consider herself to be an expert in financial feasibility projections, staffing, or quality of care. Ms. Farr is not in a policy-making position at DHRS. Ms. Farr was given no instructions by her superiors as to how to review Home Health Care of Bay's application. DHRS presented the testimony of Ms. Farr to attempt to explain how Home Health Care of Bay's application was reviewed. Ms. Farr was tendered and accepted, not as an expert health planner, but as an expert in "CON review." Ms. Farr articulated the standard she used to determine need: [I]f an applicant or residents of a county or community resources of a county or just about any organization basically says that there is an unmet need, meaning that there is no home health services available or there is an accessibility problem where certain groups are not being served -- certain services are not being offered -- I become aware of it by their simply documenting, "I cannot get home health services," like CAPS [Capitol Area Community Aging Agency] that said, "They aren't serving these people. We need somebody in here to serve these people." That would show that there was an unmet need. Unless an applicant, or community resource, could demonstrate an accessibility problem, no need existed according to Ms. Farr. Ms. Farr did not review the Medicare cost reports of current providers to determine the services they provided prior to recommending denial of Home Health Care of Bay's application. Ms. Farr reviewed utilization data of current providers for only one year. Ms. Farr did no analysis of the types of visits provided by existing providers. Ms. Farr looked only at the total number of visits. The only information Ms. Farr utilized in regard to the type of visits being provided was information given to her by existing providers. In determining that no need existed for medical/social work services, Ms. Farr relied on the list of social service agencies included in the local health plan, but did no analysis as to what services such agencies offered. Ms. Farr determined that no Medicaid access problem existed in Bay County based on information current providers gave her. She did not verify these representations with the Medicaid office. Ms. Farr did no charge comparison in her review. At the time of her review, Ms. Farr did not know when a new competitor last entered the market in Bay County. Ms. Farr did not address Objective 1.5 of the State Health Plan in her review. She was unaware of Objective 1.5 until it was pointed out to her in deposition. Ms. Farr utilized no planning horizon in determining need, though she admitted that one of the purposes of CON review is to plan for future health needs. Ms. Farr's review of Home Health Care of Bay's application was deficient for several reasons. First, Ms. Farr's review did not look at a projection of future need. It did not analyze demographics or utilize a planning horizon. It contains no elements of a needs analysis. A mere review of what currently exists misses the point of health planning. Second, in making a determination of no need, Ms. Farr relied solely on comments of existing providers who told her that there was no need for a competing agency. Dr. Deborah Kolb, vice-president of Jennings, Ryan, Federa & Co., participated in the preparation of Home Health Care of Bay's CON application. In preparing the needs assessment portion of the application, Dr. Kolb reviewed the State Health Plan, the Local Health Plan, utilization data, home health CON decisions, and services offered by current providers. The need methodology which appears in Home Health Care of Bay's application is contained in Dr. Kolb's expert report. The methodology appearing in her report and the application was the interim policy in use by DHRS at the time the application was filed. This was the methodology in the Bob Sharpe memo. Home Health Care of Bay will provide home health services to the residents of Bay County. Bay County is in DHRS Service District II. According to the 1986 District II Health Plan, District II is composed of 14 separate subdistricts. Each subdistrict is composed of one county. Bay County is a reasonable service area for Home Health Care of Bay. Dr. Kolb utilized a two-year planning horizon to project the need for home health agencies. This is a reasonable planning horizon. Table 3 of Dr. Kolb's report analyzes need on a district-wide basis. Two time frames, July, 1988, and January, 1989, are shown because Home Health Care of Bay's application was filed in December, 1986. Two years from that date would be December 1988. The official population projections from the Governor's Office focus on July and January of each year. Use of the two project dates straddles the December, 1988, planning horizon. The population numbers of District II for 65 and over are 62,546 for January, 1988, and 63,558 for January, 1989. The 1984 Medicare use rate, which is an estimate of the number of Medicare home health visits per elderly person in Florida for 1984, is multiplied by the projected elderly population to arrive at a projected number of visits. The number of projected visits in Table 3 of 118,565 in July, 1988, and 120,483 in January, 1989, is a result of multiplying the use rate by the projected population. To determine the number of agencies needed, the projected number of visits is divided by optimal agency size. This calculation yields a gross agency need of 13 agencies in the district in July, 1988, and January, 1989. The number of licensed and approved agencies, 12, is subtracted from gross need, 13, to yield net need of one (1) agency in July, 1988, and January, 1989. Dr. Kolb utilized 9,000 for the optimal agency size figure. This is consistent with the interim policy and with data which suggests that is where economies of scale occur. An optimal agency size of 9,000 appears in the Local Health Plan methodology. Table 4 of Dr. Kolb's report presents the same analysis as Table 3, described above, on a subdistrict basis to determine where the one agency found to be needed in District II should be located. Use of the same methodology results in a gross agency need of three. The two existing agencies are subtracted from the gross need of three to yield a net need for one agency in July, 1988, and January, 1989, in Bay County. The methodology described above is a reasonable one for determining need. The methodology utilizes a common health planning approach. It is the same methodology used by DHRS as an interim policy. It is the same type of methodology used by DHRS in planning for other types of health services. Beyond the numerical analysis discussed above, other factors indicate the need for an additional home health agency in Bay County. Bay County has a very low home health use rate and a very high nursing home use rate. The Bay County home health use rate is 1.5 visits per person 65 years and older. The Bay County use rate is significantly lower than the state use rate of 1.89. This disparity indicates a gap between real need and historical utilization. At the same time, Bay County has a nursing home use rate of 41 beds per thousand elderly compared to a state rate of 23 beds per thousand. Additionally, the occupied nursing home beds per thousand elderly is much greater in Bay County than in the state. In the state there are 21.3 occupied beds per thousand elderly. The utilization of Bay County's nursing home beds is approximately 75 percent greater than utilization in the state as a whole. These statistics suggest an inappropriate allocation of resources between home health care services and more expensive institutional nursing home services. Nursing home utilization would decrease with more sophisticated home health care. Many people are inappropriately institutionalized in nursing homes and could be cared for at home. From a medical perspective, Dr. Ehrman was of the opinion that an additional home health agency was needed. Availability, Quality Of Care, Efficiency, Appropriateness, Accessibility, Extent Of Utilization, And Adequacy Of Like And Existing Services There are currently two Medicare-certified home health care agencies serving Bay County. One way to evaluate agency performance is to analyze the mix of services and the number and types of visits being provided. Current providers have concentrated heavily on providing nursing and aide visits. Of approximately 18,000 visits provided each year, approximately 16,000 visits comprised the nursing and aide categories. Neither provider did any specifically medical/social work visits in 1985 or 1986. Additionally, the total number of visits delivered to the residents of Bay County has remained constant in 1985 and 1986. Bay County's constant use rate illustrates the need for more education in regard to home health services. While current providers do certain high tech procedures if directed to by a doctor, current providers are not committed to consistently doing high tech procedures. High tech services are not the most profitable. Their margins are often low and it is more economically beneficial for current providers to provide aide services. Transfusions, initiation of I/V antibiotics, continuous infusion of morphine, pain nursing, and catheter care are all services which existing agencies have rarely done or do with great difficulty. Without doing such procedures as a regular basis, competency is difficult to maintain. Bay Home Health Care Agency d/b/a Home Health of Panama City (Home Health of Panama City) is a free-standing home health agency and has been in business for 11 1/2 years. Home Health of Panama City does no Medicaid visits. Bay Medical Center Home Health receives referrals from Home Health of Panama City because Home Health of Panama City does not take Medicaid or indigent patients. Home Health of Panama City does no medical/social work visits. Home Health of Panama City has no money budgeted for marketing. Bay Medical Center Home Health is a hospital based home health agency. It functions as a department of Bay Medical Center, an acute care hospital located in Panama City, Florida. In the past two years, Bay Medical Center Home Health has provided no medical/social work visits though some of those services were provided by nurses during nursing visits or by other departments of Bay Medical Center. Bay Medical Center Home Health does not currently provide care of certain high tech devices such as the Denver pleuroperitoneal pump or the subclavian pump. Its staff would have to be trained to provide such care. Bay Medical Center Home Health has never given blood transfusions or cared for a Denver shunt. Bay Medical Center Home Health has a very low number of average visits per patient (6.8) when compared to the state average of 30 visits per patient. Bay Medical Center Home Health does a low percentage of Medicaid visits. In 1986, Bay Medical Center Home Health was reimbursed for 120 Medicaid visits out of a total of 3,280 Medicaid-reimbursed visits provided in District II. A comparison of reimbursed Medicaid visits provided by Bay Medical Center Home Health to District II as a whole demonstrates a Medicaid access problem. In 1986, Bay County had 25 percent of the district's population and 16 1/2 percent of the district's Medicaid eligible. Yet only 3.7 percent of the district's Medicaid-reimbursed home health visits were provided in Bay County. If services were Medicaid accessible, the number of Medicaid visits would be closer to the Medicaid percent of the population. Bay Medical Center Home Health Care's Medicaid visits represented only 1 percent of their total visits for 1986. When Home Health of Panama City's zero (0) Medicaid visits is considered, out of all home health visits provided in Bay County only 0.7 percent were Medicaid visits. Approximately 25 percent of Dr. Ehrman's patients from the Panama City area are Medicaid or indigent. This evidences a need for more Medicaid services. Bay Medical Center Home Health has no line item for marketing and advertising. Ability of the Applicant To Provide Quality of Care Dr. Ehrman is a highly trained and experienced physician. While in Canada, Dr. Ehrman established a hematology and oncology health care delivery system in Montreal. This system is still in existence and working well. Dr. Ehrman has been instrumental in improving the delivery of health care in his practice area. He has established tumor boards at local hospitals and provided many new procedures and devices in the home. Dr. Ehrman has raised the level of awareness on the part of other practitioners in his area as to a team approach to the delivery of services. This has increased the type of home services now available. Dr. Ehrman has responded to the needs of his patients for a multi- disciplinary approach to oncology by associating a clinical psychologist. This person deals with the psychological needs of the cancer patients seen by Dr. Ehrman. Dr. Ehrman has been instrumental in beginning many new and innovative practices in his office. For instance, he administers chemotherapy to Medicare patients in his office. He accomplished this by arranging with local pharmacists to mix and supply chemotherapy drugs. Dr. Ehrman will work with these same pharmacists in Home Health Care of Bay. Dr. Ehrman is involved in a durable medical equipment company. Many new devices and treatments were first used in the area by Dr. Ehrman's company. Dr. Ehrman has been a leader in the community in keeping up with new home health care developments. Home Health Care of Bay will have adequate staff on a full-time basis and add staff as utilization increases. Dr. Ehrman currently contracts with two nurses who are well trained and have over 1,000 hours of in-service training. Home Health Care of Bay is committed to keeping up with state-of-the- art home health care services and will add new services as they are developed. Availability and Adequacy of Alternatives There are no realistic alternatives to the establishment of a new home health agency. The alternative of nursing home care is not satisfactory. Most persons would prefer home care to nursing home care when at all possible. The alternative to home care which is currently being used is to shuttle the patient from the emergency room to the hospital to the doctor's office. Eventually the patient drops out of the system or settles for a lower level of services. Availability of Resources, Including Health Manpower, Management Personnel and Funds for Capital and Operating Expenditures . . . Extent to Which the Proposed Services Will Be Accessible to All Residents The staffing requirements for Home Health Care of Bay are shown on Table 11 of the application. That staffing plan is reasonable. Home Health Care of Bay will have a full-time administrator at a salary of $27,000. A capable administrator can be recruited at that salary. Home Health Care of Bay will employ a full-time nurse supervisor at a salary of $21,000. A nurse supervisor can be hired at that salary. Home Health Care of Bay will employ a full-time clerical person at an annual salary of $16,000. A clerical person can be hired at that salary. The above salaries and Home Health Care of Bay's ability to recruit such persons is reasonable based on Dr. Ehrman's experience employing similar personnel in his office. Home Health Care of Bay will hire contract staff to provide skilled nursing services, physical therapy services, speech therapy services, occupational therapy services, medical/social work services, and home health aide services. Such persons can be contracted with to provide the type of services Home Health Care of Bay proposes based on discussions with such persons. Dr. Ehrman currently contracts with two nurses in Ft. Walton Beach to provide nursing services similar to those proposed by Home Health Care of Bay. Such services are provided mainly to non-Medicare patients and the arrangement has worked very well. Funds for Capital and Operating Expenditures Project costs are depicted on Table 25 of the application. The costs are reasonable. Home Health Care of Bay can be started for $22,600. Immediate and Long-Term Financial Feasibility of the Proposal At hearing, DHRS admitted the short-term financial feasibility of Home Health Care of Bay's proposal. The statement of projected income and expense in Figure 7 of the application and on page 14 of Dr. Kolb's report was prepared under Dr. Kolb's supervision. The majority of assumptions on which the pro forma is based have been stipulated to by DHRS as reasonable assumptions on which to base a financial projection. The only assumptions not admitted by DHRS relate to utilization and payor mix. DHRS, however, introduced no evidence that refuted the reasonableness of these assumptions. The utilization projection used to calculate gross revenue in the pro forma was 3,800 visits in 1988 and 8,500 visits in 1989. The utilization projections are reasonable based on the agency's demographic base and Dr. Ehrman's commitment to education and marketing. The projection of costs and charges depicted on page 45 of the application is reasonable based on Dr. Ehrman's current office experience. The number of visits is multiplied by the charge per visit type to calculate gross revenue. This calculation yields a gross revenue of approximately $200,000 in year 1 and $462,000 in year 2. The payor mix for Home Health Care of Bay is found on Table 7 of the application. Home Health Care of Bay predicts 3 percent Medicaid visits, 80 percent Medicare visits, 14 percent private pay and insurance visits, and 3 percent indigent visits. The pay mix projections are reasonable based on the mix of patients Dr. Ehrman currently sees. Ms. Farr admitted that the projections were reasonable. The difference between Medicare and Medicaid reimbursement and full charges results in the contractual allowances figure. Bad debt and charity deductions were calculated based on 3 percent indigent and 3 percent Medicaid visits. Deductions from gross revenue, which are funds not received because of contractual allowances, bad debts, or charity, are subtracted to yield net revenue. Deductions from revenue are approximately $38,000 in year 1 and $135,000 in year 2. Net revenue is approximately $162,000 in year 1 and $327,000 in year 2. The second portion of the pro forma lists expenses. This list contains all the expenses expected for a new home health agency. All the expenses listed are reasonable. The pro forma shows a loss of $28,505 in the first year and a profit of $13,207 in the second year. Home Health Care of Bay has the equity to sustain a loss in the first year. In the second year of operation, based on the above assumptions, expenses are $314,000 and net revenue is $327,000 for a net income of $13,000. These projections indicate that the project is financially feasible in the long term. Table 26 on page 41 of the application presents the project timetable anticipated when the application was filed. Any delay in this timetable due to this litigation will not materially change the projections or commitments contained in the application. Impact of the Proposal on Costs of Providing Health Services, Including Effects of Competition and Improvements in Financing and Delivery of Health Services Which Foster Competition and Services To Promote Quality Assurance and Cost Effectiveness The introduction of a new home health agency into the Bay County market will stimulate competition. Such competition will stimulate growth in competitors and increase the overall level of services. Approval of a new competitor where there has been no new competition for nine to ten years will put pressure on providers to provide a wider range of services as well as higher quality services. Ms. Young, administrator of Bay Medical Center Home Health, admitted that if Home Health Care of Bay's CON is approved, her agency might begin educating physicians in regard to available services, rather than waiting for physicians to request a service. As the current providers testified, as agency visits go up or down, the number of staff required can be adjusted without incurring unreasonable costs. Current providers have control over their costs and staffing. Home Health Care of Bay's charges are competitive. In some areas, such as skilled nursing and home health aide, Home Health Care of Bay's charges are lower than current providers' charges. Price competition allows competition for private pay patients. Impact The addition of Home Health Care of Bay to the home health market will not significantly affect current providers. Studies have indicated that new entrants into the home health market do not significantly affect existing providers. The elderly population of Bay County is growing rapidly. When the 1984 home health use rate is applied to elderly population growth between 1986 and 1989, approximately 5,800 new visits are attributable to population growth alone. Home Health Care of Bay projects it will deliver 3,800 visits in its first year of operation and 8,500 visits in its second year. Thus, a large percentage of those visits are attributable to population growth alone. Home Health Care of Bay's marketing and education programs will raise the local use rate and generate more visits. Dr. Kolb analyzed the financial impact of Home Health Care of Bay's project on current providers. Her analysis considers a worst case scenario and assumes that current providers' visit levels will be affected by the introduction of a new provider. The analysis then calculates the financial impact on current provider. In order to do this, Table 11 calculates the average cost per visit from existing agencies' 1985 Medicare cost reports. Home Health Care of Panama City's average cost per visit is $37.18. Bay Medical Center Home Health's average cost per visit is $41.76. The Medicare program pays agencies the lower of Medicare cost caps or actual costs. The current providers in Bay County are well below the Medicare cost caps and so will be paid their actual costs. Table 11 calculates the difference between actual agency costs and Medicare cost caps. Home Health of Panama City was 18 percent below its cost caps. Bay Medical Center Home Health was 24 percent below its cost caps. Thus, Home Health Care of Bay could provide the number of visits it projects and even if all those visits came from existing providers, the current providers could still operate at a level of cost that would be Medicare reimbursable. The approval of Home Health Care of Bay's application will not have a significant adverse impact on existing providers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order granting CON No. 4912 to Home Health Care of Bay County, Florida, Inc., to establish a Medicare-certified home health agency in Bay County, Florida. DONE AND ENTERED this 17th day of December, 1987, in Tallahassee, Florida. DIANE K. KIESLING 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 17th day of December, 1987. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 87-2151 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, Home Health Care of Bay County, Florida, Inc. 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: 1-3(1-3); 5(4); 7-10(5-8); 12-16(48- 52); 18(53); 19 & 20 (54); 21(55); 24-27(56-59); 28- 31(59-62); 37-52(9-24); 54-57(25-28); 58-77(28-47); 78-89(63-74); 91-102 (75- 86); 104-114(87-97); 116-129(97-110); 130(110); 131(111); 133-135(112); 136- 139(113); 140 & 141(114); 142-153(115-126); 154-163(126-135); 165-175(136-146); 179-182(147-150); 183(150); 184 & 185(151); 186(152); 187 & 188(153); 189- 191(154); 192 & 193(155); 194 & 195(156); 196(157); 197(158); 200-203(159-162); 207(163); 209(164); 210(165); 212-218(166-172); and 219-225(172-178). 2. Proposed findings of fact 17, 32-36, 53, 90, 103, 115, 132, 164, 176- 178, 198, 199, 204-206 and 211 are subordinate to the facts actually found in this Recommended Order. Proposed findings of fact 22, 23 and 208 are rejected as being unsupported by the competent, substantial evidence. Proposed findings of fact 4 and 11 are rejected as being unnecessary and/or irrelevant. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Department of Health and Rehabilitative Services 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: 1(1 & 2); 2(3); 6(Footnote 1); 7(148) and 13(4). Proposed findings of fact 3-5, 8-12, 14-40, 43-45 and 47-53 are subordinate to the facts actually found in this Recommended Order. Proposed finding of fact 42 is rejected as being unsupported by the competent, substantial evidence. Proposed findings of fact 4 and 46 are rejected as being unnecessary and/or irrelevant. COPIES FURNISHED: Byron B. Mathews, Jr., Esquire Vicki Gordon Kaufman, Esquire McDermott, Will and Emory 101 N. Monroe Street Tallahassee, Florida 32301 Theodore E. Mack, Esquire Assistant General Counsel Department of Health and Rehabilitative Services Regulation & Health Facilities Ft. Knox Executive Center 2727 Mahan Drive Tallahassee, Florida 32308 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Petitioner filed an application with HRS for a Certificate of Need to establish and operate a new home health agency in Hillsborough, Manatee, Pasco and Pinellas Counties. HRS has given notice of its intent to deny the application on the grounds that the proposed project is not consistent with Rule 10-5.11(14)(a) and (b), Florida Administrative Code. That preliminary determination is the subject of a pending formal administrative proceeding filed pursuant to Section 120.57(1), Florida Statutes. The Florida Association of Home Health Agencies (FAHHA) is an organization formed in 1975 to represent the interests of home health care agencies in Florida. Its members consist of seventy (70) licensed home health care agencies in Florida. As of 1981, there were approximately 144 home health agencies licensed in Florida. The membership of the FAHHA fear that if the challenged rule were invalidated, there would be a proliferation of other new home health agencies into the markets served by association members. This, it is felt, would redistribute existing patient censuses and result in increased costs per patient. Gulf Coast Home Health Services, Inc. is a private, for-profit organization operating a home health care agency in Hillsborough County. It provides medical and other therapeutic services to patients in their homes as ordered by the patient's physician. Such services are provided under a variety of programs, including Medicare, Medicaid, private pay and third-party private insurance carriers. Its Administrator believes that the challenged rule helps to keep costs from escalating and that the rule's invalidation would have a negative economic impact upon his agency. Effective July 1, 1977, the Florida Statutes were amended to require a certificate of need as one of the prerequisites for licensure of a new home health agency. Emergency rules were promulgated by HRS to include proposed new home health agencies in the certificate of need program and to establish standards against which applications for certificate of need for new home health agencies could be judged. Emergency Rule 10-ER77-12 amended Rule 10-5.11(14), Florida Administrative Code, by setting forth a formula methodology for determining, on a county by county basis, the number of home health agencies necessary to meet the needs of the population. The Emergency Rule further stated that mitigating and extenuating circumstances could be considered in approving a certificate of need for a new home health agency even though the formula methodology of need determination did not clearly indicate need. Three examples of mitigating and extenuating circumstances were provided in the Emergency Rule, but they were not stated to be all-inclusive. In the summer of 1977, HRS began the process of developing a permanent rule containing criteria upon which certificate of need determinations for home health agencies would be based. There ensued exchanges of correspondence, discussions, meetings and a workshop among representatives of the Department of HRS, local health systems agencies, individual home health agencies and representatives of FAHHA to discuss what type of regulation would be most appropriate. One of the prime concerns at the workshop was the proliferation of home health agencies and the stabilization of the industry. As indicated by a majority vote or a show of hands of the attendees at the workshop, it was the consensus that the formula methodology for determining need, as set forth in the Emergency Rule, should be deleted and substituted with a "rule of 300." As finally adopted by HRS in 1977, Rule 10-5.11(14) provided that a certificate of need for a proposed new home health agency or subunit could not be issued until the daily census of the existing home health agencies or subunits providing services within the same service area reached an average of 300 patients, in the aggregate, for the immediate preceding calendar quarter unless need could be demonstrated by application of the three mitigating and extenuating circumstances listed in subparagraph (b) of the Rule. The three circumstances listed included documented population variances, documentation that the population of the proposed service area is being denied access to home health care services in that existing agencies are unable to provide services to all persons in need of home health care, and documentation that approval of the proposed agency would foster cost containment for all providers in the area. As to the numerical figure of 300, the rule, as originally adopted in 1977, meant that if the total average number of patients being serviced in a particular health service area by all existing home health agencies exceeded 300 patients on a daily basis, then a need was indicated for a new home health agency. For example, if there were three agencies in a given area with patient censuses of 401, 400 and 100, the average would exceed 300 and a need would be indicated. The "rule of 300" was suggested and proposed for adoption by representatives from the FAHHA. The number 300 was selected by the Association for the average "based upon the experience of various home health providers in the state. It's the consensus of the association's members that an agency operates with optimum administrative efficiency up to a patient level of approximately 300. As the census begins to climb to any significant degree beyond the 300 level, administrative efficiency declines. In conclusion, the association urges the adoption of the 300-average-patient-census rule. It is fair to the HSA's because it allows them to control unwarranted growth with a minimum of administrative difficulty. It is fair to the agencies because it assures them of the potential for an adequate patient census while maintaining their flexibility to have a larger or smaller census. 1/ The representatives from the FAHHA and private existing home health agencies felt that the rationale for the "rule of 300" was to afford the industry a chance to recover from rising costs resulting from the proliferation of new home health agencies. It was believed that traditional formula-based methodologies for need determinations would not work because of the ease of expansion of services and service areas and because the data base necessary for the formula methodology was not available. According to an FAHHA witness, the 1977 "rule of 300 came about due to a lack of successful alternatives." (TR. 329). The HRS representative in charge of drafting the 1977 rule admitted that, at that point in time, "no one could make a decision about whether or not the rule of 300 would be good, bad or indifferent. . ." (TR. 35). No empirical data, statistical analysis or studies were considered by HRS to illustrate that the "rule of 300" as adopted in 1977 was justified. Rule 10-5.11(14) was amended in 1979 to its present form, and this is the rule which is being challenged in this proceeding. No reason or rationale for the amendment was provided by witnesses for HRS or the intervenors or by any documentary evidence adduced at the hearing. Notice of intent to amend many portions of Chapter 10-5, Florida Administrative Code, was published in the Florida Administrative Weekly. The notice provided as follows: "PURPOSE AND EFFECT:" To amend Rule 10-5 for administration of the 'Health Facilities and Health Services Planning Act' in compliance with legislative intent and mandate, to eliminate references to the Section 1122 program which has been terminated in Florida, and to adopt health planning guidelines developed by HEW. "SUMMARY OF RULE:" These amendments will provide administrative rules under which the Certificate of Need program will be administered in compliance with state and federal requirements." No specific reference to Rule 10-5.11(14) or home health agencies was provided in the notice filed in the Florida Administrative Weekly. No specific reference to home health agencies or the "rule of 300" was provided in the HRS detailed statement of facts and circumstances justifying the proposed rules, the HRS statement of purpose or effect, the HRS summary of the rule or the HRS economic impact statement, as filed with the Joint Administrative Procedures Committee or the Secretary of State. Copies of the proposed amendment were sent to a representative of FAHHA and to existing home health care agencies. The 1979 amendment to Rule 10-5.11(14), Florida Administrative Code, made substantial changes to the manner in which new home health agencies' applications for a certificate of need were to be evaluated. The "rule of 300" was no longer to be applied as an average figure for all existing home health agencies or subunits, in the aggregate. Instead, the amendment required that a certificate of need shall not be issued until the daily census of each existing agency within the service area has reached an average of 300 patients for the immediate preceding calendar quarter, unless need could be demonstrated by application of the mitigating and extenuating circumstances listed in the amended rule. While the former 1977 rule listed three mitigating and extenuating circumstances which "may be considered" even though application of the 300 figure did not indicate need, the 1979 amendment provided only two circumstances which "must be met" before the Department could issue a certificate of need in the event that application of the "rule of 300" did not indicate need. In its entirety, the 1979 amendment to Rule 10-5.11(14) provides as follows: "(14)(a) A Certificate of Need for a proposed new home health agency or subunit shall not be issued until the daily census of each of the existing home health agencies or subunits providing services within the health service area of the proposed new home health agency or subunit has reached an average of 300 patients for the immediate preceding calendar quarter unless the need for the proposed new home health agency or subunit can be demonstrated by application of the mitigating and extenuating circumstances in Rule 10-5.11(14) (b) herein. (b) Mitigating and extenuating circumstances which must be met for the department to issue a Certificate of Need for a proposed new home health agency or subunit even though the previously described need determination procedure does not clearly indicate needs are: Documentation that the population of the proposed service area is being denied access to home health care services in that existing home health agencies or subunits within the proposed service area are unable to provide service to all persons in need of home health care, or Documentation that approval of such proposed new home health agency or subunit would foster cost containment for all providers in the health service area." Home health agencies in existence in 1977 were not required to meet the "rule of 300," but rather were grandfathered. No applicant for a certificate of need for a home health agency from the effective date of the 1977 "rule of 300" to the present has been able to satisfy the numerical component of the rule and no applicant has ever satisfied the mitigating or extenuating circumstance relating to the fostering of cost containment "for all providers in the health service area." Indeed, there was great confusion as to the meaning of "all providers" on the part of those responsible for enforcing and administering the certificate of need program within HRS. Between 1977 and 1979, four applicants were able to satisfy the other mitigating or extenuating circumstance regarding accessibility by demonstrating that the existing home health agencies were unwilling to service indigent or Medicaid patients, whom the applicants promised to serve. A survey of 100 home health agencies in Florida revealed that only six of the 100 had an average active census greater than 300 during the second quarter of 1980. A home health agency provides health and medical services and supplies to individuals in the individual's own home. Such services include part-time or intermittent nursing care, medical social services, nutritional guidance, physical, occupational or speech therapy and homemaker services. While an agency may not provide skilled nursing or medical services to a patient without a physician's order, the spectrum of services provided by any particular agency is a matter of choice. Inasmuch as patients are visited and treated in their own place of residence, the home health care business in not capital intensive. In terms of equipment and facilities, the initial capitalization of a home health care agency is not very high and the costs are variable and adjustable as compared with other health care facilities. Since there are low fixed costs involved in operating a home health agency, economies of scale are generally not expected. An agency may expand its services and its service area with relatively little expense. Rule 10-5.11(14), as amended, does not provide for a consideration of the level of care or the quality of care being offered by the existing facilities or by the applicant for a new facility. It does not measure the efficiency of existing agencies with respect to the size or level of services offered. Given the facts that the "rule of 300" does not purport to measure or quantify the number of patients needing home health care or the quality, size or scope of services offered by existing agencies, the rule does not even provide an effective measure of utilization of existing agencies. It does not require consideration of the financial feasibility of the applicant's proposal. The rule does not consider principles of cost containment for the public, as opposed to other providers in the area. While the rule does not prohibit a consideration of these factors if the 300 figure is met, it does, on its face, preclude the approval of a new home health agency when the 300 figure is not met, absent the two "mitigating or extenuating circumstances" relating to access and cost containment for other providers.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Petitioner J & J seeks a Certificate of Need to establish a new home health agency in the Tampa Bay area to serve the residents of Hillsborough, Pinellas, Pasco, and Manatee Counties for an estimated project cost of $85,000. All necessary funding for the project is to be supplied by petitioner's parent, Johnson and Johnson. It is the expressed intent of J & J to provide only specialized patient services in the home to those patients who are acutely ill and in need of intensive or intermediate level clinical services in lieu of hospitalization. J & J intends to serve early hospital discharge patients who require more than single follow-up or maintenance care after discharge. It does not seek to provide maintenance-level care to patients, and would refer such patients to another home health agency. J & J does not intend to become a part of hospital rotation lists utilized to refer the less acutely ill homebound patient to a home health agency. J & J proposes to hire full-time clinical specialty certified registered nurses to provide services to ten general categories of patients. The specific diagnoses or treatment modalities which J & J expects to provide include cerebrovascular accident (CVA or stroke) with and without paralysis, oncology and chemotherapy, hyperalimentation, enteral therapy, respiratory therapy, intravenous antibiotics, other nutritional services and neuro-ortho. These proposed services are intended to be a replacement for more expensive in- hospital health care. J & J intends to accept only those patients within the above classifications who are sick enough to require home health care in lieu of hospitalization, and not those who can be treated strictly on an outpatient basis. The key factor for acceptance of a patient by J & J is not the diagnosis of the patient, but is the patient's acuity level. J & J has an ongoing research program to develop additional clinical specialty home health services based upon physician input, technical developments end patient needs. One of its reasons for establishing a home health agency in the Tampa Bay area is because J & J's national corporate headquarters are to be located in Tampa and this proximity would facilitate its research and development efforts. J & J has staffed its existing home health agencies in Texas and California, and proposes to staff its Tampa agency, with full-time nurses with acute care experience. Orientation continuing education programs for nurses are planned. The nurses are to be either certified as clinical specialists or develop their clinical expertise through J & J's own internal privileging program. The proposed new agency, as do the existing Texas and California agencies, will have its own pharmacist, therapists, dieticians, social workers and certified home health aides. It will also operate its own pharmacy and will provide and deliver durable medical equipment and supplies. Nurses will be on duty and/or on call 24 hours a day, seven days a week. As noted above,' J & J seeks to serve those patients who require special expertise in their care. Planning for discharge will begin during the patient's hospitalization and there will be a patient screening process before a patient is accepted. An assessment of the patient's home and family life will be made to determine that conditions are suitable for treatment and recovery at home. A registered nurse is to be assigned as the "primary nurse" to coordinate the patient's plan of care with the clinical specialist, therapists and physician. The patient's physician is to be given a weekly report of the patient's progress. An elaborate charting and recordkeeping system is anticipated and is provided at J & J's existing home health agencies. A prospective, con current and retrospective quality assurance program is to be instituted which involves a quarterly internal review and a utilization review by physicians. Based upon statistics which illustrate that 26,800 patients for every one million population group are discharged annually in the ten classifications which J & J seeks to serve, J & J predicts it can treat 1,430 patients per year in the four- county area. These figures are based on nationwide statistics and are not site-specific to the four-county area. J & J presently owns and operates three existing agencies in Texas and California. Certificates of need for home health agencies are not required in those states. The Dallas/Ft. Worth center opened on April 4, 1983, and had, as of the time of the hearing in this matter, a daily patient census of 70. The Houston center opened on April 11, 1983, and had a daily patient census of 60. The daily patient census at the Los Angeles center, which opened on July 6, 1983, was 60. These existing agencies also accept only specialty care patients who can receive services in lieu of hospitalization. The Texas centers have rejected as many as 47 percent of their referrals because the patients either did not meet the medical criteria for the J & J system, because of their home situation or, in some instances, because of financial reasons. In California, the charge for a visit by a registered nurse is $75.00, while the charge for a therapist visit is $65.00. The charges in both Texas centers are, and the proposed Florida center will be, $65.00 for a registered nurse's visit and $55.00 for a therapist's visit. All these charges are higher than the current cap or limit for Medicare reimbursement. The Petitioner's projected cost for an R.N. visit is $52.40. This cost is higher than the current Medicare cost cap for skilled nursing services. After the Florida four-county agency becomes fully operational, J & J projects that only 23 percent of the patients it serves will be Medicare patients. It is anticipated that the remaining patients will be primarily private pay, privately insured or self-insured patients who will be attracted to the J & J program because of its cost-savings potential. The existing operations in Texas and California serve 60 to 70 percent Medicare patients. These percentages are expected to decline due to J & J's efforts to educate and convince private reimbursers to use J & J's services in lieu of hospitalization. A large public relations firm has been retained by J & J to communicate with insurers end the medical community regarding the benefits of clinical, specialized home health care, especially as a replacement for hospital care. The patient mix of most of the existing licensed home health agencies in the four-county area is in excess of 95 percent Medicare. A license and certificate of need are only required under Florida law for home health agencies which serve Medicare patients. At least some of the existing agencies have accordingly severed their operations into those which serve and those which do not serve the Medicare patient. J & J does not believe it would be feasible to open its four-county agency as an unlicensed and uncertificated agency to serve only private pay patients because it believes that licensure will be helpful in convincing private insurers to use its agency. Also, a patient may begin his treatment as a non-Medicare patient, but bay later qualify for such benefits, and J & J desires to provide a continuity of treatment. Although J & J's proposed charges and costs are higher then the Medicare reimbursement system currently allows, J & J will attempt to obtain a waiver of the Medicare cap by demonstrating the highly specialized nature of the services it provides and by illustrating that J & J's home health care is in lieu of more expensive hospital care. Although J & J does not plan to serve all patients regardless of their ability to pay, it has and will continue to provide care to indigent and medically indigent patients. Approximately 20 such patients have been served in the existing agencies in Texas and California. There are approximately thirteen licensed home health agencies in Hillsborough, Pinellas, Pasco end Manatee Counties. Eleven of these agencies are members of FAHHA, a voluntary association whose membership is comprised of home health agencies licensed by the State of Florida. Though some of the existing agencies have expanded their operations by the opening of new submits in other areas, there have been no Certificates of Need issued to any new home health agency in the four-county area since 1978. The intervenor Gulf Coast provides home health services in Pinellas, Pasco and Hillsborough Counties, as well as Hernando County, through six different offices. In addition to providing maintenance and homemaker services to its patients, Gulf Coast provides most, if not all, the same specialty services proposed by J & J. Their patients include CVA patients with and without paralysis, oncology patients of which two are receiving I.V. chemotherapy at home and several hyperalimentation patients. Gulf Coast provides enteral and respiratory therapy, as well as I.V. antibiotic services. Its staff, which includes approximately 90 professionals, 140 ancillary staff and 50 contract personnel, includes socialists in the areas of pulmonary nursing, enterostomal therapy, oncology and psychiatric nursing. Gulf Coast has recently started an I.V. certification program for its nurses. Approximately one-third of the nurses have bad a year or more of prior experience in critical care units. A registered nurse is on-call 24 hours a day. Quality control assurances include monthly utilization review, both in-house and by a physician. Gulf Coast makes arrangements with local vendors and suppliers for all durable medical equipment and pharmaceutical supplies needed by its patients. It has experienced an annual growth in its average daily census of between 15 and 20 percent, and its administrators feel that it has the capacity to expand its services, even with its present staff, in the event of greater demand for the more specialty-type services proposed by J & J. Gulf Coast's current Medicare cost cap for registered nursing services is approximately $48 to $50 per visit. Its actual costs for such services, for which it is reimbursed, are approximately $37 or $38 per visit. The Intervenor Manasota is one of six licensed home health agencies in Manatee County. All its patients are Medicare patients, and some 70 percent of its referrals are hospital referrals from the two existing hospitals in Manatee County-- Manatee Memorial Hospital and Blake Hospital. In addition to maintenance level and homemaker services, Manasota has provided more specialized services to patients including nasogastric, gastrostomy, stomal, enterostomal and I.V. antibiotic therapy. It has the staff and capacity to provide chemotherapy and hyperalimentation, but has not bed any physician request for those services for their patients. Manasota has experienced a significant decline in the number of new patients it has admitted end in its average daily census. This appears to be related to the reduction in the number of discharges from Manatee Memorial Hospital and the fact that Blake Hospital owns its own home health agency. The decrease in patient census et Manasota has resulted in an increase in its cost per visit from $32.50 to $41.00 per visit. The Medicare cost cap for Manasota is approximately $44.30. Manasota has the capacity to expand to serve an increased number of Medicare patients. Blake Home Health is affiliated with Blake Hospital in Manatee County, and receives 75 percent of its referrals therefrom. It is the policy of Blake Hospital to refer all discharged hospital patients who require home health care to Blake Home Health unless the attending physician has specifically designated a different agency. Blake is available to serve its patients 24 hours a day end has access to the hospital pharmacy. It presently renders services in the areas of enteral, stomal end parenteral therapy and handles cerebrovescular cases. While nurses are available to Blake Home Health to perform I.V. antibiotic therapy and chemotherapy, Blake has never been requested to perform such services. Independent Home Health is an existing licensed home health agency located in Clearwater, and was recently purchased by Morton Plant Hospital. Independent presently provides and has performed all the specialized, home health services proposed by J & J. It operates 24 hours a day, with a nurse on call after 5:00 p.m. Its quality assurance program involves a monthly nursing audit and quarterly utilization review by a physician. Its charge for nursing services is $40 per visit. Independent has the ability to expand to provide further services. Global Home Health Services, Inc. has five offices in the four-county area, with a total average daily census of approximately 400. Global performs almost all of the specialized services proposed by J & J and has never had a request for services in those categories that it was unable to fulfill. The number of patients receiving home chemotherapy and hyperalimentation is very few, due to lack of demand for such services. It is open seven days a week, 24 hours a day. Global charges $47.00 per nursing visit, and makes all arrangements for the ordering and delivery of supplies, durable medical equipment and pharmaceuticals. Global has the ability, even with its present staff to serve 20 or 305 more patients and to expand the range of services it presently provides. The Visiting Nurses Association of Hillsborough County (VNA) is a public non-profit home health agency that serves any patient regardless of age, race or ability to pay. It provides all the services which J & J proposes to offer, although only about 3 percent of its total patients receive these specialized services. The VNA has its own continuing education programs and also conducts training programs for other home health agencies, specifically in the areas of I.V. chemotherapy and I.V. antibiotics. VNA offers 24-hour services, and has the ability and capacity to expand to meet any increased need or demand for home health services. Its cost per nursing visit is about $29, and it charges $35 per visit. Its average patient census 1as increased from 212 in 1980 to 720 in 1983. The existing agencies rely heavily on referrals from hospital rotation lists. None of the existing agencies about which evidence was adduced at the hearing have their own pharmacy or durable medical equipment or supply services. Many agencies, if not most, use some independent contractor, therapists on an as-needed basis. While each of the existing agencies experienced a growth in their average daily census in the Veers between 1980 and 1983, some agencies experienced a slight decrease in the number of patients and visits during the six months immediately prior to the hearing. Increased home health utilization in the future is suggested due to the new Medicare reimbursement system for hospitals. This system is based upon diagnostic-related groups (DRG's) and the amount of reimbursement is based upon the average length of stay for a given diagnosis, regardless of the patient's actual length of stay. The former system reimbursed hospitals for their actual costs of treating a patient. The DRG system will provide hospitals with the financial incentive to discharge patients at the earliest possible point. It can be expected that demand for home health care services for more acutely ill early discharge patients will increase. Officials responsible for discharging patients from Tampa General Hospital and St. Joseph's Hospital in Tampa were of the opinion that the existing home health agencies in Hillsborough County were doing a fine job in providing follow-up care of both chronically ill patients end those patients who are acutely ill with a good prognosis. While these persons were in favor of the adequate provision of more advanced and intensive home health care, they believe that their current needs are being met by the existing agencies.
The Issue Whether the applications for certificate of need numbers 8380, 8381, 8382 and 8383, filed by Petitioners RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., ("IHS of Florida,") and Putnam Home Health Services, Inc., meet, on balance, the statutory and rule criteria required for approval?
Findings Of Fact Care First The Proposal Care First, the holder of a non-Medicare-certified home health agency license, was established in March of 1996. Owned by Mr. Freddie L. Franklin, Care First is the successor to another non-Medicare-certified home health agency also owned by Mr. Franklin: D. G. Anthony Home Health Agency ("D. G. Anthony"). Established in May of 1995, D. G. Anthony provided over 10,000 visits in its first 10 months of operation mostly in Leon and Wakulla Counties, pursuant to a contract with Calhoun-Liberty Hospital Association, Inc. Very few of the 10,000 patients were referred to D. G. Anthony by Calhoun-Liberty; they became D. G. Anthony's patients through community-based networks, including physicians, created through the efforts of Mr. Franklin and D. G. Anthony itself. D. G. Anthony was dissolved in 1996. Both its patient census and its staff of 45 were absorbed by Care First. D. G. Anthony's contract with Calhoun-Liberty was substantially assumed by Care First so that it provided service to Medicare patients as Calhoun-Liberty's subcontractor. From the point of view of the federal government, the Medicare patients served by Care First were Calhoun-Liberty's patients, even those who had not been referred to Care First by Calhoun Liberty and who had been referred from other community sources. Care First, therefore, was simply a sub- contractor providing the services on Calhoun-Liberty's behalf. The contract was terminated effective December 1, 1996. Calhoun-Liberty was free to terminate Care First with 30 days notice, a peril that motivated Mr. Franklin to seek the CON applied for in this proceeding. With the termination of the contract, Care First ceased serving Medicare patients, "because Mr. Franklin did not want to enter into another subcontractor arrangement because of all the issues and problems," (Tr. 934,) associated with such an arrangement. Mr. Franklin is involved with nursing homes as the administrator at Miracle Hill Nursing Home in Tallahassee. He is an owner of Wakulla Manor Nursing Home in Wakulla County, and he owns a 24 bed CLF, Greenlin Villa, also in Wakulla County. Miracle Hill has the highest Medicaid utilization of any nursing home in District 2. Both Miracle Hill and Wakulla Manor are superior rated facilities. On the strength of Mr. Franklin's extensive experience with community-based organizations and health care services, as well as Care First's succession to D. G. Anthony and other historical information and data. Care First decided to proceed with its application. In the application, Care First proposes to establish a home health agency that, at first, will serve primarily Franklin, Gadsden, Jefferson, Leon, Liberty and Wakulla Counties. It plans to expand into Madison and Taylor Counties in its second year of operation. Five of these eight counties have high levels of poverty; six of the eight are very rural, with the population spread widely throughout the county. Ninety-six percent of Care First's patients are over age Minority owned, approximately 65% of the patients are members of minorities. Many of the patients live in rural areas and are Medicaid recipients or are uninsured low income persons who do not qualify for Medicaid but cannot afford home health care. Since it will be serving the same patient base as a Medicare-certified agency, Care First has committed to the provision of 7% of its visits to Medicaid patients and 1% of its visits to patients requiring charity/uncompensated care. Care First projects 18,080 visits in its first year and 29,070 in its second year. Care First will promote efficiency through the use of a case management approach. Each patient will be assigned a case manager who will act as the patient advocate to provide care required and to identify and assist the patient with access to other "quality of life" enhancing services. Care First proposes an appropriate mix of services, including skilled nursing, physical therapy, speech and language therapy, occupational therapy, home health aide services and social services. Care First estimates its total project cost at $25,808. Of this amount, $2,000 is indicated as "start-up cost", with nothing allocated to salaries. Care First indicates no "capital projects" other than its proposal for the home health agency in District 2. Care First's proposal would be funded from a $60,000 bank line of credit. Projected Utilization Potential patients will be able to gain access to Care First through several avenues, including physician referral, hospital referral, nursing home discharge, assisted living referrals from community agencies and organizations such as Big Bend Hospice and through private referral. In addition, there are several natural linkages to the community for Care First. Wakulla Manor and Miracle nursing facilities offer Care First's services to discharged residents in need. Very often, residents and families choose Mr. Franklin's agency because they are familiar with him, staff or the quality of care provided. Residents of Greenlin Villa, owned by Mr. Franklin, frequently chose Care First when in need of home health agency services. Mr. Franklin's civic, church, and community involvement is impressive. He is president of the Florida Health Care Association, chairman of the board of the Tallahassee Urban League, superintendent of the Wakulla County Union Church Group, and serves on the advisory board for the Allied Health Department for Florida A&M University. In the past, he has served on the Board of Trustees of Tallahassee Community College. He was accepted as an expert in long-term care administration in this proceeding based in part on his service on the Governor's Long Term Care Commission. Miracle Hill has held a "Superior" licensure rating for the last ten consecutive years. It is the highest rating awarded by the AHCA licensure office and is intended to blazon the high quality of care provided by the facility. Although reported through Calhoun-Liberty, very few of D. Anthony's and Care First's past referrals have been generated through that affiliation. Rather, they have come through community contacts and getting the referrals from "talking with physicians," (Tr. 922), in Tallahassee and the surrounding areas, many of whom Mr. Franklin has gotten to know through his post as Administrator of Miracle Hill Nursing Home. By far, it is through physician referrals that Care First receives most of its patients. Care First's physician referral list includes 47 doctors who referred patients to D. G. Anthony since May, 1995. These doctors practice in urban areas and some have rural clinic offices which they staff on certain days of the week. Physicians are willing to refer patients to Care First because of the quality of care which has been provided by Care First, as well as the reputation of its owners. The Care First application included letters of support from eight physicians who have referred patients to Care First in the past and state that they will continue to support Care First with referrals in the future. Among the letters included are those from Dr. Earl Britt, a practitioner of internal medicine and cardiology in Tallahassee, and Dr. Joseph Webster, who practices internal medicine and gastroenterolgy in Tallahassee. Many of the patients of these two physicians are elderly. Dr. Britt's patients often have chronic hypertension or heart disease, are diabetic or suffer strokes. These two physicians provided over half the total number of patient referrals to D.B. Anthony and Care First. Dr. Britt and Dr. Webster established through testimony that Freddie Franklin and Care First have an excellent reputation for provision of quality of care and enjoy significant support among physicians within the service area. Moreover, Dr. Britt, although based in Tallahassee, stressed the importance of Care First's proven ability to provide home health services in the rural setting both from the standpoint of understanding the needs of the rural patient and from being able to travel over rural terrain in order to deliver services. (Tr. 1151, 1152, 1154). Approximately 11,500 visits were performed by D. G. Anthony staff from the period of May 1995, through April 1996, before they became the staff of Care First. Since the agency has established a presence in the district and has physician and other referral mechanisms in place, it is reasonable to project that Care First will continue to grow and will experience between 18,000 and 20,000 visits in its first year and 28,000 to 31,000 visits in year two as a Medicare-certified home health agency. These projections stem from the historical and very recent monthly growth of D. G. Anthony, as well as demand it is experiencing from Franklin and Jefferson Counties, two counties it does not serve regularly at present but plans to serve regularly in the future. The reasonableness of Care First's projections is bolstered by the conservative number of visits per patient the projections assume, 35, when typically Medicare-certified agencies average at least 35 visits and as many as 60 visits per patient. Care First's utilization projections are reasonable. It enjoys an excellent reputation for quality of care and ability to deliver services. Together with its predecessor, D. G. Anthony, it has a proven track record and has benefited from a referral network that remains in place. These factors, together with the conservative assumptions upon which its projected utilization is based demonstrate that its projected utilization is reasonable. Financial Feasibility of Care First The total project cost for the Care First agency is projected to be $25,808. The majority of the costs are reasonable for this type of health care project. The majority of the project development costs, the application fee and much of the cost of the consultant and legal fees, have already been paid by Care First. Care First's Schedule 2 was prepared in conformance with the requirements of the agency and accurately lists all anticipated capital projects of Care First. The necessary funding for the Care First project will come from Care First's existing $60,000 line of credit with Premier Bank, in Tallahassee. This method of funding the project is reasonable, appropriate, and adequate. Care First has demonstrated the short term financial feasibility of its project. Care First's schedule 6 presents the anticipated staffing requirements for its home health agency. The staffing projections are based upon the historical experience of D. G. Anthony and Care First, taking into consideration the projected start-up and utilization of the agency. The projected salaries are based upon current wages being paid to Care First employees, adjusted for future inflation. Care First's schedule 6 assumptions and projections are reasonable, and adequate for the provision of high quality care. The staffing proposed by Care First is sufficient to provide an RN or an LPN and an aide in each of the eight counties Care First proposes to serve in District 2. Care First's schedule 7 includes the payor mix assumptions and projected revenue for the first two years of operation. Medicare reimburses for home health agency services based upon the allowable cost for providing services, with certain caps. The Care First revenues by payor type were based upon the historical experience of D. G. Anthony and Care First, as well as the preparation of an actual Medicare cost report. The Care First payor mix assumptions and revenue assumptions are reasonable. Care First's projection of operating expenses in Schedule 8A is also based on the historical experience of D. G. Anthony and Care First, as modified for the mix of services to be offered and the projected staffing requirements. The use of historical data to project future expenses adds credibility to the projections. Care First's projected expenses for the project are reasonable. The Care First application presents a reasonable projection of the revenues and expenses likely to be experienced by the project. Care First has reasonably projected a profit of $8,315 for the first two year of operation. Care First's proposal is financially feasible in the long term. As the result of its community contacts, Care First has been offered the use of donated office space in Franklin, Jefferson, Wakulla, and Gadsden counties. The use of donated office space will decrease the cost of establishing a physical presence and providing services in those counties since Care First will not have a lease cost for a business office and a place to keep supplies. Quality of Care Through the experience of D. G. Anthony, Care First has identified the particular needs of the community it served. This experience has been carried over into Care First's provision of services. In the 9 months of Care First's existence at the time of hearing, it provided quality of care. Its predecessor, D. G. Anthony, also provided quality of care. While Care First's experience is relatively limited, there is no reason to expect, based on the experience of both Care First and its predecessor D. G. Anthony, that quality of care will not continue should its application be granted. IHS of Florida The Application IHS of Florida is a wholly-owned subsidiary of Integrated Health Services, Inc. ("IHS") formed for the specific purpose of filing CON applications. IHS operates other home health agencies under other subsidiary names. Pernille Ostberg is a senior vice president of the Eastern Home Care Division of Symphony Home Care Services, Integrated Health Services. In that capacity she oversees nearly 195 operations in six states, including Florida. Her operations include home health agencies, durable and medical equipment distributions, and infusion therapy offered by pharmacists. Under Ms. Ostberg's guidance, IHS has grown to its current roster of 195 agencies in only three years, from a beginning of only five agencies. IHS first acquired Central Park Lodges, primarily a nursing home company which also owned five home health agencies. Once these agencies became Medicare certified, IHS made a corporate decision to acquire additional Medicare certified home health agencies. Beginning approximately three years ago, IHS undertook a series of acquisitions which included Central Health Services, Care Team, ProCare/ProMed, and Partners Home Health. More recently, IHS has acquired the Signature Home Health and Century Home Health Companies. And, immediately prior to the final hearing in this matter, IHS acquired First American Home Health Care, making IHS the fourth largest provider of home health services in America. Of all the home health agencies overseen by IHS, 95% are Medicare certified, and 62-63 are located in Florida. IHS now has a presence in all districts except District 1 and 2. IHS personnel also have extensive experience in starting up new home health agencies. IHS personnel have opened over 40 locations across the United States. IHS employees have extensive experience bringing new home health agencies through successful surveys by the Joint Commission on the Accreditation of Hospital Organizations ("JCAHO") recommendations. Of 18 branches personally taken through initial survey by IHS's Pernille Ostberg, none were recommended to change their operations and none were cited for a deficiency. IHS has recently opened, licensed, and certified new home health agencies in AHCA Service District 5, 6, and 10. They have also received licensure in District 7, 8, and 11. Based on the extensive expensive of IHS personnel, a start up home health agency typically experiences 8,000 - 15,000 visits per first year. Opening a new program requires two months for licensure. It will require a registered nurse for three months to make certain all manuals are in place and that quality personnel are recruited. After achieving licensure, one must wait for a certification survey, which may take as long as six months. The three IHS home health agencies that became certified recently have experienced 200 visits in the first month, a good sign of growth. IHS' umbrella organization for home health organizations is Symphony. Most of their home health companies retained their original names. Other IHS home health companies include ProCare, Central Health Services, Partners Home Health, Nurse Registry, and First American. IHS of Florida has applied for applications in other districts. This applicant filed applications in District 7, 8 and 10 and each were approved. IHS of Florida's CON application number 8382 was prepared by Patti Greenberg with the significant input of IHS and IHS of Florida's operational experts. Ms. Greenberg has prepared 75-100 CON applications, 20-25 of which sought approval for Medicare Certified Home Health Agencies. Each of these prior applications had been approved or otherwise reached settlement before litigation. The Proposed Project Once the needs analysis was complete, IHS examined geographic issues within the 14 county district. IHS examined where the populations required home health agencies and what niche of the market IHS could expect to achieve. Projected visits were determined by examining month by month, how this agency would grow. This projected utilization was subdivided among sub-visit types. Existing IHS home health agencies visit mix (skilled nursing as opposed to home health aide or therapy visits) was used to estimate skill type of the projected total volume. The projected utilization was also subdivided by payor class. This payor class projection was derived specifically for District 2, its poverty levels and its managed care penetration. In the aggregate, IHS projects 7,650 visits in year one and 17,100 visits in year two. This projection is reasonable and achievable. Witnesses for the Agency agreed that IHS of Florida's projected number of visits was "definitely attainable". Past and Proposed Service to Medicaid Patients and for Medically Indigent The payor class analysis allowed IHS to conclude it should condition its approval of its application under the performance of 5% Medicaid and 1% charity care. The balance of the population served by an IHS Medicare Certified Home Health agency would be covered by Medicare. The condition is important as it is a requirement which, if not achieved, will subject IHS of Florida to fines and penalties by the agency. Improved Accessibility The applicant will improve the efficacy, appropriateness, accessibility, effectiveness and efficiency of home health services in District 2 if approved. IHS of Florida will provide good quality of care, should its application be granted. Quality of Care Through competitive forces, the applicant's approval will also improve the quality of care offered by home health agencies in District 2. The approval of IHS of Florida's application will also comply with the need evidenced by the extent of utilization of like and existing services in District 2. Economies from Joint Operations Certain economies derived from the operation of joint projects are achieved by IHS of Florida's proposal. IHS has a home office and corporate umbrella which oversees all of its operations for home health services. This master office offers economies of sale by sharing resources across a wide array of home health agencies in Florida and other states. Thus, the incremental expense for corporate overhead is reduced as compared to a free-standing home health agency. Additionally, this national oversight provides better economies to provide the most recent policies and procedures, billing systems, and other systems of business operation. Financial Feasibility IHS of Florida has the resources to accomplish the proposed project. As demonstrated on schedule 1, and schedule 3 of IHS exhibit 1, the budget for the project is only $144,000. This budget includes all appropriate equipment for both the initial and satellite offices. Budgeted amounts include all required lease expenses, equipment costs and even start-up costs such as salaries for the recruitment of training and staff prior to opening. In total, $52,000 of pre-opening expenses are projected, which is reasonable. IHS of Florida filed applications for other home health agency start-ups in three different districts. The applicant had more than $180,000 in cash on hand and an additional $226,000 assured from a commitment letter from IHS which was also contained in the application. A letter of commitment from Mark Levine, a director and executive vice president of IHS, indicated IHS will provide $250,000 in capital for this specific project. Additionally, IHS will provide up to $1 million in working capital loan to assure no cash flow problems ever arise. A similar letter of commitment appears in each of the CON applications which IHS of Florida has filed. IHS has committed to fund each of the CON applications applied for by IHS of Florida. Each of these letters of commitment for the various CON applications sought by this applicant are on file with the AHCA. In total, the applicant projects $600,000 in capital commitments assured. IHS' balance sheet, reveals access to $60 million in cash and cash equivalent. The record clearly demonstrates an ability of IHS to fund all capital contributions required by the applicant. The current assets of IHS approximate $240 million. In addition to having cash in the bank, IHS is a growing concern and is, in fact, a Fortune 500 company that is publicly traded on the New York Stock Exchange. IHS generates revenues which exceed its annual expenses. In the last year, IHS derived $30 million more than it experienced in expenses. The application is financially feasible in the short- term. IHS' application is also feasible in the long-term. IHS of Florida's utilization projections are reasonable. Budgeted staffing and salaries are reasonable. The cost limit calculation and reimbursement calculation by payor source, which is provided in great detail in Schedule 5 of IHS of Florida's application, is reasonable. Projected expenses associated with this project were reasonably calculated based on the actual experience of other IHS Home Health operations. The reasonableness of these costs are also demonstrated when compared with the cost per visit by existing agencies in District 2. In fact, IHS of Florida predicted it would be a lower cost provider than the expected cost of existing agencies at the time IHS of Florida's operations would begin. IHS of Florida's proposal will have a healthy, competitive effect on the cost of providing services by other providers. Putnam The Proposal Putnam proposes to establish a Medicare-certified home health agency with its primary office located in Bay County. Bay County was selected as the primary office based upon the locations of existing and approved agencies in District 2, the aggregate utilization of each, and the number of individuals aged 65 and over distributed among the existing District 2 counties and agencies. Mr. Alan Anderson is Putnam's sole stockholder, Director, and President. Under the ownership and administration of Alan Anderson, Putnam has provided Medicare-certified home health services in AHCA District 3 continuously since 1986. Mr. Anderson is also the sole owner, director, and president of Anderson Home Health, Inc., a Medicare-certified home health agency serving AHCA District 4 since 1992. Anderson Home Health's CON was obtained by Putnam through the same process undertaken by the prospective applicants in this proceeding. Putnam's District 3 agency has successfully served District 3 residents since 1986 at first through its Palatka office, then growing to its current size of four offices. In District 4, Anderson Home Health, Inc. has also experienced successful operations having grown from its principal office in Duval County to a total of four offices. Putnam's District 3 home health agency began with the original office located in Palatka, followed by offices opened in Gainesville, Ocala and Crystal River. Anderson Home Health, Inc.'s District 4 operation began with the original office located in Jacksonville; the second office was opened in Daytona Beach, followed by the opening of the third office in Orange Park; and the fourth office was opened in Macclenny. Putnam's District 3 agency is JCAHO accredited "with commendation." As part of CON application No. 8383, Putnam has agreed to certain conditions upon award. First, the proposed project will locate its primary office in Bay County. Putnam also conditions its approval with the provision that 0.25% of its admissions will be persons infected with the HIV virus. Four percent of its patients will be Medicaid or indigent patients. Finally, Putnam has conditioned its approval upon the provision of various special programs such as high tech home health services, a volunteer program, and the establishment of a rural health care clinic. History or Commitment to Provide Services to Medicaid and Indigent Patients For Medicare reimbursement purposes, Putnam proposes to maintain a Medicare-only agency and private sister agency which provides services to non-Medicare patients. The private sister agency will provide service to the Medicaid and indigent patients. The costs of providing services to these non-paying or partial paying patients will be absorbed by the agency as a contribution to the community. The establishment of a private sister agency to handle the non-Medicare patients is common in the home health industry. As a condition in the application, Putnam will accept up to 3.0% Medicaid patients. Although it stated in its application that it would accept between .5%-1.0% indigent patients, its conditioning of the application on 4.0% Medicaid and indigent patients would necessitate that it accept at least 1.0% indigent (if not more, should the Medicaid patients fall below 3%) in order to meet the 4.0% Medicaid and indigent care condition. The percentages proposed by Putnam are consistent with the statewide average (approximately 95% Medicare) and the District average (approximately 92.1% Medicare). Bay County's average of Medicare patients is approximately 96.4% Medicare. To meet the 4.0% Medicaid and indigent condition, Putnam's average of Medicare patients might have to be less than the Bay County average but not by much. Certainly, meeting the condition is achievable. The agency's position is that Putnam's Medicaid/indigent commitment is not a ground for denial of the application. Quality of Care Putnam has continuously owned and operated a licensed Medicare-certified home health agency in District 3 since 1986 and has been JCAHO accredited with commendation status since 1994. In an effort to continuously provide quality care, Putnam has developed a comprehensive set of policies and procedures to guide its staff, its physicians, volunteers, patients, as well as patients families. No evidence was presented to suggest that Putnam does not have a history or ability to provide quality care. Availability of Resources, Including Health Manpower, Management Personnel and Funds for Capital and Operating Expenditures Putnam has provided Medicare-certified home health service to the residents of District 3 for ten years. Putnam will be able to share its existing personnel and operations expertise with the proposed District 2 agency. Administrative, Managerial, and Operational Personnel Putnam intends to utilize existing administrative personnel in the start up and overall operation of the proposed agency. These management personnel include the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Data Processing Director, Director of Volunteers, Personnel Director. These experienced personnel will be available to provide valuable management support to the proposed agency. The proposed agency will be operated by an administrator who will report directly to Putnam's CEO, Alan Anderson. The agency's administrator will be actively involved in budget preparation, physician relations, community education, and preparation for regulatory agency surveys. The proposed agency will rely upon the demonstrated experience of key personnel in its initiation. Ms. Nora Rowsey, experienced in the start-up phases of home health agencies, will personally supervise and implement the start up phase of the proposed District 2 agency. Putnam intends to hire individuals to work within the proposed agency who already have experience in the provision of the necessary services. Current employees of Putnam's as well as contract personnel of the District 3 agency have indicated a willingness to provide services in Bay County once the application is approve. Funding and Capital Resources Putnam projects the total costs of initiating the proposed agency to be approximately $70,000. Putnam has simultaneously applied for two other Medicare-certified home health agencies, in Districts 6 and 7. Each of these projects area also projected to cost approximately $70,000. Putnam, therefore, has projected costs associated with all three projects of approximately $210,000. Additionally, there is a $10,000 contingency cost related to the District 3 offices bringing the total expenditure for all capital projects of $220,000. Putnam's application includes two letters from First Union National Bank of Florida which substantiate that there are funds on hand to finance all of Putnam's capital expenditures, including the District 2 proposed agency. As of April 18, 1996, Putnam's bank account had a twelve month average balance of $245,949.02. As of April 18, 1996 the accounts of both Putnam and Anderson Home Care Inc., had a combined twelve month average balance of $676,656.93. The evidence established that these funds exist and are available for all proposed capital projects. In the two years prior to hearing, Putnam showed sound management, significant growth, and a strong financial position. It continues to do so. In an interoffice memorandum dated May 28, 1996, from Roger L. Bell to Richard Kelly, Health Services and Facilities Consultant, Putnams' financial position was described as follows: The current ratio of .62 indicates the current assets are not adequate to cover short term liabilities. The long term debt to equity and equity to assets ratios are very weak. This, along with the negative equity make a weak financial position. The profit margin at .1% is also very weak, and raises some concern with the applicant's ability to cover operating expenses . Putnam Ex. No. 4. This criticism was answered by Putnam. The agency may not have considered certain factors applicable to a predominantly Medicare-reimbursed home health agency. Putnam's current liabilities are payable in a longer term than the receivables are collectible. Furthermore, with provision of 98% Medicare services, which is solely cost reimbursed, there remains only two percent of the operation left to make a profit. A .1% profit from the small amount of insurance and private pay patients indicated financial health. Putnam, moreover, is a viable operation because of its historical success, its knowledge of the industry, its expansion to six locations, its growth in staff, and its growth in patient visits. Putnam has the resources available to provide the necessary administrative, managerial, and operational manpower needed by the proposed home health agency. AHCA's financial criticisms are unfounded; Putnam has on hand the capital necessary for the accomplishment of the proposed project. Putnam has the experience and know-how to make the proposed project work in District 2's rural areas. Financial Feasibility Putnam has the resources to implement this project if approved. Putnam has the same capability that existed when three offices were opened during the period from April 1992 through February 1993, and the same resources when four offices were opened in 1995. In every instance, the new offices were started up with cash on hand from operation. Mr. Anderson, Putnam's President and sole shareholder and director, testified that he spends much time in the financial area of the operations. As of November 29, 1996, after deducting all accounts payable, Putnam has a cash balance of approximately $390,000. Anderson Home Health, Inc. had a balance of approximately $425,000. Mr. Anderson testified that the First Union letters in the application at pages 231 and 232 were correct and that Putnam is in even better shape now than when the letters were written. Putnam is financially feasible in the short term. AHCA contends Putnam's project is not financially feasible in the long term because the projected visits stay the same in the second year and because it does not project a profit in year two of operation. This fails to take into account Putnam's performance over the past ten years which, as the agency conceded at hearing, is an important consideration . Mr. Anderson purchased Putnam in 1986. At that time the agency had a single office in Palatka doing 4,000 visits. Following Mr. Anderson's purchase of the agency it had grown to over 55,000 visits and close to a hundred employees. After the success experienced by Mr. Anderson in Palatka, Putnam filed a CON application for District 4, with a proposed principle site in Jacksonville. The District 4 CON was approved by the agency--without any concerns for financial feasibility nor with any concerns for Putnam's cash flows. Without having any experience or referral sources in Jacksonville, Putnam began doing approximately 7,000 visits. The number of visits jumped to 45,000 in the second fiscal year, 123,000 in the third fiscal year, and as of September 30, 1996 the Jacksonville office performed 158,000 visits. Aside from the extraordinary growth experienced in the Palatka and Jacksonville offices, already discussed, Putnam has opened rural offices also doing very well. The Macclenny office in rural Baker County had over 15,000 visits in the first twelve months and is currently averaging over 1800 visits. The Crystal River office in rural Citrus County made over 12,000 visits in its first year and is currently doing approximately 1400 visits a month. Every new office opened by Putnam or Anderson Home Health since 1991 has been break even or better. Putnam has a proven track record for the successful and profitable operation of new Medicare-certified home health agencies. Putnam's project is financially feasible in the long term. Utilization Projections The application sets forth reasonable utilization projections. Based on Putnam's utilization in the past, there is no reason to believe the projections set forth in the application are or unreasonable or will not be achieved. Impact on Costs Putnam is a high tech provider of home health services and will provide some services not currently available or available only in a limited number of agencies. The impact of approval of Putnam's application on costs in the District will be minimal due to the reimbursement issues associated with Medicare which is cost based. RHA A Not-for-Profit Corporation in District II RHA is not-for-profit corporation whose purpose is to provide a continuum of care to the community. All profits are returned to its nursing homes or agencies as a way of continuing to build the programs. RHA owns two nursing homes in AHCA District II; Riverchase Care Center in Gadsden County and Brynwood Center in Jefferson County. If approved, RHA is proposing to locate its Medicare certified home health agency in existing space within the Riverchase and Brynwood nursing facilities. Both of these facilities are managed and operated by HealthPrime, Inc., a company which operates approximately 40 facilities in 13 states. While RHA is technically the owner and therefore applicant for this CON, HealthPrime would operate the proposed Medicare certified home health agency within the nursing homes. RHA's home health agency would have two offices. The office located in the Riverchase facility would serve Gadsden, Liberty, Franklin, Gulf, Wakulla, Jackson, Calhoun, Washington, Holmes and Bay Counties. The office located in the Brynwood facility would serve Leon, Jefferson, Madison and Taylor Counties. Financial Feasibility The only questions raised by AHCA concerning RHA's financial feasibility went to the ability of RHA to fund this project in conjunction with other CON projects listed on Schedule 2 of its CON application. The largest project on Schedule 2 of RHA's application was a CON application for a 20 bed addition to Riverchase Care Center. At hearing it was determined that since the filing of the instant home health CON application, the 20 bed application had been withdrawn, was no longer viable, and was not being pursued by RHA. Once AHCA's financial expert learned that the 20 bed addition to the Riverchase Care Center had been administratively withdrawn and that its costs should therefore no longer appear on Schedule 2, questions about the financial feasibility of the project were resolved. RHA's project was shown to be financially feasible in the short term based upon the financing commitment of HealthPrime. RHA proved that its assumptions and projections made in its financial analysis are reasonable. These assumptions were based on actual experience in the operation of similar skilled nursing facility based home health agencies, as well as prior experience of other home health agencies in their first two years of operation. RHA's proposed project shows a net income in years one and two and is financially feasible in both the short and long term. Availability and Access of Services To the extent that the number of people needing home health care will increase in the future, there is need for new providers of home health services to provide such availability and access. RHA's willingness to condition its application on service to AIDS, indigent and Medicaid patients can only improve the availability and access to services in the district. In addition, RHA's approval to provide nursing home based home health services is unique to the provision of home health services in District II. Efficiency RHA's proposal, which would place its home health agency within its nursing homes, is unique among the applicants in this proceeding. Such an arrangement provides not only an efficient continuum of care to the patients, it also provides efficiencies and cost savings in the sharing of resources. RHA's proposed project is cost effective because it utilizes existing space and equipment in its nursing homes. Skilled nursing home based Medicare certified home health agencies are specifically recognized by the Federal Medicare program in their cost reports. Home health reports are filed as a part of the nursing home cost report and there is an allocation of the nursing home's cost to the home health agency. This benefits both the provider and the Medicare program through cost savings. RHA's cost per visit to the Medicare program of $48 will be substantially less than the District II average of $66 per visit projected for the time RHA will be operational under the applied- for CON. RHA's proposed project will have no impact on its costs of providing other health care services. Appropriateness and Adequacy RHA proposes to provide the entire range of home health services throughout the district. Given the project need in the planning horizon, RHA's proposal is more than adequate to meet the demand for such services. Quality of Care An applicant's ability to provide quality care is another important factor in statutory and rule criteria. RHA and HealthPrime have shown, through operation of their nursing homes in Florida, all of which have superior ratings, that they have the ability to provide quality health care. In addition, HealthPrime, which will actually operate the home health agency, has experience operating four other nursing home based home health agencies. HealthPrime will utilize its quality assurance programs already in place in its other home health agencies and will seek JCAHO accreditation of this proposed agency. By combining a home health agency with its existing nursing homes, RHA will improve the case management of its patients by providing vertical integration of its services in a continuum of care. Such continuum of care provides a stability in personnel and providers that are working with the patient. Economies and Improvements from Joint or Shared Services As previously discussed, RHA's unique proposal to operate a nursing home based home health agency not only offers a continuum of care for the patient, it also provides fiscal economies to the agency as well as the Medicare program. Resource Availability Based on RHA's experience of hiring personnel for its existing nursing homes in the district, there will be no problem in hiring sufficient personnel for RHA's agency. Fostering Competition The addition of other Medicare certified home health agencies in a district consisting of 10 counties and only 23 providers will promote increased competition and more options for patients. Findings Applicable to All Four Applicants No Fixed Need Pool The agency has no rule methodology to determine the need for Medicare-certified home health agencies. The agency's most recent home health need methodology was invalidated in Principal Nursing vs. Agency for Health Care Administration, DOAH Case No. 93-5711RX, reversed in part, 650 So.2d 1113 (Fla. 1st DCA 1995). There is, therefore, no numeric need determination, or "fixed need pool", established by the agency applicable in this proceeding. District 2 AHCA District 2 is composed of 14 counties. The applicants propose to concentrate their service in various, different parts of the district. Local and State Health Plan Preferences District 2 Health Plan Services to Medicaid and Medically Indigent The first preference under the District 2 Health Plan provides a preference to applicants with a history of providing services to Medicaid or medically indigent patients or commitment to provide such services in the future. Mr. Franklin of Care First has such a history. He is an owner of Wakulla Manor, which had a Medicaid occupancy rate of 88.09% for the period of July-December, and the administrator of Miracle Hill Nursing Home which had a Medicaid occupancy rate of 95.74% for the same period. In the face of such a record, Care First’s commitment of 7% Medicaid and 1% uncompensated/charity patients might seem to pale. But it is a significant commitment, given the nature of the home health agency business, and one upon which Care First agrees its application should be conditioned. IHS conditioned its application on 5% Medicaid and 1% charity care. Putnam conditioned its application on an “Indigent and Medicaid participation equal[ling] 4.0%.” Putnam Ex. No. 1, pg. 51. Putnam, moreover, proposes a Medicare-only agency. Establishment of a private sister agency, a practice common in the home health care industry, will allow Putnam to provide service to the Medicaid and indigent patients separate from its Medicare-only agency. RHA has provided a high percentage of Medicaid/charity days at its Riverchase facility (92.10%) and at its Brynwood facility (90.24%). In addition, RHA is willing to condition its CON on the provision of a minimum of 1% of annual visits to indigent care and 5% to Medicaid. Service to Unserved Counties. Preference 2 states that “[p]reference should be given to any home health services CON applicant seeking to provide home health care services in any county within the District which is not presently served by a home health agency.” There are no counties within District 2 that are not presently served by a home health agency. Service Through a County Public Health Unit Preference 3 states that “[p]reference should be given to a home health services CON applicant seeking to develop home health care services to be provided through a county public health unit in the district in order to more adequately serve the elderly and medically indigent patients who are isolated or unable to travel to permanent health care sites." Of the four applicants, only IHS of Florida’s application is conditioned on working with public health units. IHS has experience working with public health units, working with them currently in Martin County, Manatee County and Broward County. Nonetheless, IHS of Florida will not be providing its services “through” a public health unit. Public Marketing Program Preference 4 states, “[p]reference should be given to a home health services applicant who has a history of providing, or will commit to provide, a public marketing program for services which included pamphlets, public service announcements, and various other community awareness activities. These commitments should be included on the granted CON as a condition of that CON.” Care First currently markets its services to the community and commits to a public marketing program in the future as a condition of its CON. IHS of Florida committed to performing at least one community awareness activity per calendar quarter as a condition of its application. It also indicated, moreover, that it would work to develop public service announcements and marketing programs with the help of public health units or any other appropriate vehicle. The latter indication, however, was not made a condition of the application. Putnam provides educational services to the community, its employees, patients and patients’ families, including the provision of pamphlets, and presenting audio and video tapes as appropriate to the patient and their families. Putnam, however, did not condition its application on a commitment to a public marketing program or commit to such a program in any other way in its application. RHA stated it would accept a condition on its CON to provide a public marketing program for services, including pamphlets, public service announcements and other community awareness activities. It did not reflect such a condition on the “Conditions” page of the application, but, given its statement that it would accept such a condition, there is nothing to prevent the agency from imposing such a condition should it grant RHA’s application. Access Requirements Preference 5 is, “[p]reference should be given to a home health services CON applicant who agrees, as a condition of the CON, to meet the following access requirements for each county in which services are provided: 1) 24 hour local telephone call (or toll-free) contact. 2) 24 hour call/response capability. 3) Maximum on one (1) hour response time following call. Care First currently meets the requirements of Preference 5 in the counties in which it now provides services, and has committed to continue to meet these requirements as a Medicare certified home health agency in all counties in which it will provide services. Care First has made as conditions of its CON, provision for 24-hour accessibility by answering service and installation of a toll-free access line and maintenance of a log of calls during the hours the agency is closed, including documenting of response time to each call. IHS of Florida conditioned grant of its CON on a 30 minute response time, and 24-hour phone availability on a toll-free hot line. Putnam presently provides the services in this preference in its District 3 Medicare certified home health agency and agrees to meet this preference within 90 days of initiating services. It did not, however, make a commitment to meet this preference on the “conditions,” page of its application. There is nothing to prevent the agency from making Putnam’s CON, if granted, conditional upon compliance with this preference. RHA has agreed to have its CON conditioned to meet the access requirements of Preference 5. 2. State Health Plan Service to Patients with AIDS The first preference under the State Health Plan is that “[p]reference shall be given to an applicant proposing to serve AIDS patients.” All four applicants are committed to serving AIDS patients. Full Range of Services. Preference 2 of the State Health Plan is “[p]reference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area." There are currently 11 hospital-based Medicare certified home health agencies in District 2. Several of them provide the high tech services which are sometimes needed by discharged hospital patients. Very few referrals for high tech care have been received by D. G. Anthony or Care First since May, 1995, and there is no indication such services are not available in District 2. Care First has identified, however, an unmet need for the pediatric and pre-hospice home health agency services and has conditioned its application on the provision of those services to the community. IHS of Florida proposes, among other high tech services, infusion therapies, pain management therapies and chemotherapy. There is no evidence, however, that these therapies are not available in District 2. The same is true of Putnam as to the high tech therapies it proposes to provide. There is no evidence that they are not available in District 2. Although RHA indicated in its application that it intended to provide the entire range of services that a home health agency can provide, again, there is not evidence that they are not available in District 2. Disproportionate Share Provider History Preference 3 is “[p]reference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same AHCA service district and proposing to serve such patients within its market area." Care First, having been formed in March, 1996, did not have a history of providing Medicaid and indigent patients. Care First has committed to 7% of its visits to Medicaid patients, well above the average of existing District 2 agencies of 2-3% Medicaid. Care First has committed to 1% of its visits to charity/uncompensated care. IHS of Florida has committed to 5% Medicaid and 1% charity care. Like Care First, IHS of Florida, as a newly formed corporation, does not have a history of serving a disproportionate share of Medicaid/indigent care patients. Putnam’s commitment is 3% to Medicaid and 1% to charity care. This commitment will be met through its sister home health agency and not the Medicare-certified home health agency for which the CON is sought. RHA has committed to set aside 5% total annual visits to Medicaid patients and 1% of annual visits to indigent care. It has a history of providing a disproportionate share of services to Medicaid patients at its two skilled nursing facilities in District 2, Riverchase Care Center in Quincy and Brynwood Center in Monticello. Underserved Counties Preference 4 is [p]reference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies. The rural areas of District 2 are traditionally underserved. Putnam will serve Bay County, an underserved county; the three other applicants will serve rural areas of more than one county in District 2. Consumer Survey Data Preference 5 is "[p]reference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction." Care First has committed to providing such data to the agency. IHS of Florida will maintain a data base of results of patient satisfaction surveys and make them available to the agency, just as it already does. Putnam will make available to the agency the results of surveys similar to surveys measuring patient satisfaction Putnam has already developed. Putnam has conditioned its application on providing these surveys to the agencies as well as surveys measuring physician satisfaction. RHA has cited on its “Conditions” page, “. . . (it) will provide the Agency for Health Care Administration with consumer survey data.” Quality Assurance Program and Accreditation The State Health Plan’s Sixth Preference is “[p]reference shall be given to an applicant proposing a comprehensive quality-assurance program and proposing to be accredited by either the National League for Nursing or the Joint Commission on Accreditation of Healthcare Organizations." Care First included in its application a copy of its Quality Assurance Program which has been in use since May, 1995. The program meets the state and federal licensure and certification requirement and the stringent requirements of JCAHO. Moreover, Care First has conditioned its application upon JCAHO accreditation. IHS of Florida submitted documentation regarding its Quality Assurance Program through initiatives such as Total Quality Management and Continuous Quality Improvement. It will seek accreditation from JCAHO within one year of receiving its CON. Putnam, an existing home health agency in District 3 since 1986, has over the years developed and refined a comprehensive quality assurance program which is above the industry standard. The District 3 agency, using its quality assurance program, has attained its JCAHO accreditation “with commendation,” a distinction received by less than 4% of all applicants. Putnam will seek accreditation from JCAHO for its District 2 operation within one year of receiving its CON. RHA is willing to condition its CON on the provision of a comprehensive quality assurance program and accreditation by the JCAHO. Need 1. Numeric Need Since there is no published fixed need pool applicable to this proceeding, the parties, other than the agency, developed their own methodologies for determining numeric need. Each of the methodologies employed by the parties was reasonable. After taking note of the statistics for actual patient visit growth in District 2 from 1991 to 1994, Michael Schwartz began with a conservative number of 60,000 new patient visits per year, a number half of the growth for the lowest growth year of that time period. Multiplying that number times the three horizon years of 1994-97 equals 180,000 new patient visits from 1994 which yields a need for 5.2 agencies. The reasonableness of numeric need in excess of four is supported by other factors. After the filing of the four applications at issue in this proceeding, there are two fewer Medicare-certified home health agencies with certificates of need in District 2. At the same time, home health care visits have been on the increase not only in the district as discussed, above, but in the state as well. Statewide, home health care visits grew from 18 million to 22 million between 1991 and 1994. The utilization of home health care agencies is increasing because of population growth and an increase in the number of visits per patient. The amount of time spent by patients in the hospital is decreasing. The decrease translates into increased need by patients for visits from home health agencies. The need for home health is going to continue to increase because it is a cost-effective alternative to nursing home placement and hospital care. From 1991 to 1994, the number of home health visits more than doubled: from 369,396 to 869,893. This trend continued in 1995. The recent significant growth in the utilization of home health agencies in District 2 is expected to continue. The growth is attributable not only to a population increase in the district but to increase in the use rate for home health agency services as well. The growth in use rates can be explained, in part, by the increase in the senior population (65 and older) and the pressure exerted by managed care for earlier hospital discharges and home health agency services as a viable alternative in some cases to inpatient treatment. The senior population in District 2 is reasonably expected to grow approximately 8% in the five years after 1996, with 15% growth expected reasonably in the 75 to 84 year old population and even higher growth, 25%, in the population over 84 years old. 2. Other Indications of Need Local physicians have experienced difficulty arranging for the existing home health agencies to provide services to patients located in remote areas of District 2. Specialized groups, such as AIDS patients, would, in all likelihood, benefit from additional home health agencies in District 2. Furthermore, a study conducted by IHS of Florida showed that the district has an unusually high rate of diabetes and in four counties has a diabetes death rate 100% greater than the statewide average. Well Springs home health agency is one of the two Medicare-certified home health agencies to cease providing Medicare-certified home health services after the four applicants in this proceeding filed the applications at issue here. Well Springs was licensed in all 14 counties of District 2 and had physical locations in Franklin, Gadsden, Bay, Leon, Liberty, Taylor and Madison Counties. It had a significant share of the District 2 Medicare certified home health agency market with 13.1% of the 1994 visits, the second highest in the District. With Well Springs discontinuing Medicare-certified home health agency services, a void was left for such services in District 2, particularly in those counties in which Well Springs had a physical presence.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter its final order granting CON Nos. 8380, 8381, 8382 and 8384 to RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., and Putnam Home Health Services, Inc., respectively. DONE AND ENTERED this 9th day of June, 1997, in Tallahassee, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1997. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5408 Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5403 Richard Ellis, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5408 W. David Watkins, Esquire Watkins, Tomasello & Caleen, P.A. 1315 East Lafayette Street, Suite B Tallahassee, Florida 32301 Mark Emanuel, Esquire Panza, Maurer, Maynard & Neel NationsBank Building, Third Floor 3600 North Federal Highway Fort Lauderdale, Florida 33308 Paul Amundsen, Esquire Amundsen & Moore 502 East Park Avenue Tallahassee, Florida 32301 Theodore E. Mack, Esquire Cobb Cole & Bell 131 North Gadsden Street Tallahassee, Florida 32301
Findings Of Fact Lakeview Terrace Christian Retirement Center is a licensed adult congregate living facility located in Altoona, Lake County, Florida (hereafter referred to as Lakeview Terrace) Lakeview Terrace is also licensed to operate a 20-bed skilled nursing facility at the same location. In February, 1982, Lakeview Terrace applied for a license to operate a home health agency to serve only the residents of its facility. The application was referred to the North Central Florida Health Planning Council, Inc., for review and comment pursuant to Sections 381.493-499, Florida Statutes. The North Central Florida Health Planning Council supported Lakeview Terrace's application and recommended a certificate of need be issued by the Department of Health and Rehabilitative Services (hereafter the Department). The staff report of the council contained the following recommended findings of fact: The proposed project is reasonably consistent with the Health Systems Plan. The proposed project would improve continuity of care to residents of Lakeview Terrace and provide a cost-effective alternative to nursing home care at the Center. The proposed project would have no impact on existing home health agencies in Lake County. The proposed project would be financially feasible without altering life care contract charges or levying additional charges. Staff recommends issuance of a Certificate of Need with the following conditions: The council recommended that the certificate of need be issued with the following conditions: The applicant will restrict the proposed service to residents of Lakeview Terrace "Christian Retirement Center" under the life care contract. The applicant will not seek third party financing of the proposed service. The applicant will not levy a separate charge for home health services. On July 14, 1982, the Department, by letter, notified Lakeview Terrace that its proposal to establish a home health care agency was denied. The sole basis for the denial was that the proposed home health agency did not satisfy the requirements of the "Rule of 300" set forth in Subsection (14) of Rule 10- 5.11, Florida Administrative Code, in that existing home health agencies in the area were operating below the 300 average daily census level specified by that rule. The Department also determined that the proposal did not meet the requirements set forth in Rule 10-5.11(14)(b), Florida Administrative Code. (Section 10-5.11(14)(h) sets forth two exceptions to the "Rule of 300"). Lakeview Terrace is presently licensed for 400 residents. It anticipates having between 600 and 700 residents by 1985. The residents are retired individuals and couples. The vast majority of the residents lived outside of Florida prior to retiring and moving to Lakeview Terrace. Ninety- five (95 percent) percent of the residents are over 65 years of age. The residents live in apartment units for which they pay an initial fee or endowment and a monthly maintenance fee. As a part of the agreement entered into between Lakeview Terrace and its residents, each resident receives a full range of services including medical care at a skilled nursing facility. Lakeview Terrace is located in a rural area approximately 15 miles from the nearest home health agency. A home health agency on site would permit many residents who must now be moved to the skilled nursing facility for treatment to remain in their homes with their spouses while receiving treatment. This is beneficial to the patients in that it is not necessary to remove them from their family and familiar surroundings. The patients are then better able to cope with their particular disease. Medically, it is beneficial to an elderly patient to keep them in their homes as long as possible during treatment. There are presently three (3) home health agencies serving Lake County. They are: Central Florida Home Health Agency, Inc. Leesburg Office Park, Suite 406 Leesburg, Florida 32748; Home Health Professional Service, Inc. Post Office Box 750 Leesburg, Florida 32748; Waterman Memorial Hospital 116 MacDonald Avenue Post Office Box 1836 Eustis, Florida 32726. Waterman Memorial Hospital has served less than 12 persons at Lakeview Terrace over the past five to six years. The minimum charge for a one hour visit is $45.00. Over 90 percent of the patients served by Waterman are recipients of Medicare. Waterman's average daily census over the past year has been between 70 and 80 patients. Waterman has no objection to the issuance of a conditional certificate of need to Lakeview Terrace for home health services. Home Health Professional Service has not provided services to any residents at Lakeview Terrace over the past year. Home Health charges $50.00 per visit and 96 percent of its patients receive Medicare. Its average daily census is presently approximately 102. Home Health Professional Service, Inc., does not feel a conditional certificate of need issued to Lakeview Terrace would have any impact on it and does not object to the issuance of such a conditional certificate of need. The third home health agency providing services to Lake County is Central Florida Home Health Agency, Inc. (hereafter Central Florida). Over 90 percent of its patients receive Medicare and its charge per visit is $,40.00. Central Florida has never cared for a patient at Lakeview Terrace and its average daily census for the last calendar quarter preceding the hearing was slightly less than 100. Central Florida opposes the application of Lakeview Terrace for a conditional certificate of need. The three existing home health agencies described above have the present capacity and ability to provide home health services to the residents of Lakeview Terrace. Lakeview Terrace proposes to provide the full range of home health services on site at no additional cost to the residents of Lakeview Terrace. The cost of the services would be funded from the endowments paid by residents at the time they enter Lakeview Terrace. Lakeview Terrace would not be reimbursed by Medicare or Medicaid for the cost of the services and the certificate of need sought would be conditioned upon Lakeview Terrace not applying for a Medicare or Medicaid provider number. This means that no state or federal funds will be involved in bearing the cost of the home health services at Lakeview Terrace. Although the residents of Lakeview Terrace are aware of the services available from the other three home health service providers in Lake County, they have utilized these services very rarely. Many of the residents who would be treated under the conditional certificate of need sought by Lakeview Terrace would not qualify for the service offered by the other three providers in that these persons are not homebound. Only two or three of the residents of Lakeview Terrace are homebound. The existing providers provide home health services only to homebound patients. The issuance of the conditional certificate of need would have no adverse financial impact on the existing providers in the service area and will reduce the number of patients potentially utilizing Medicare and Medicaid benefits in the service area in the future. The staff report of the North Central Florida Health Planning Council concludes that Rule 10-5.11(14), Florida Administrative Code, is not intended for nor relevant to this application for the following reasons: Home health services would be provided as part of a life care contract and would be limited to residents of the life care center. No third party financing would be involved. There would be no impact on existing home health agencies in Lake County. Residents of the life care center currently obtain inpatient nursing care at the center, rather than purchase services from existing agencies.
Recommendation Based upon the above Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department grant the Petitioner's application and issue a certificate of need upon the following conditions: The area serviced by this home health agency be limited to the geographical area of Lakeview Terrace. There would be no additional charge to the patients for services rendered directly by the Lakeview Terrace staff. All charges would be covered by the endowment fee. Lakeview Terrace will not apply for a Medicare or Medicaid provider number. DONE and ENTERED this 4th day of August, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of August, 1983. COPIES FURNISHED: Karen L. Goldsmith, Esquire 605 East Robinson Street Suite 610 Orlando, Florida 32801 James M. Barclay, Esquire 1317 Winewood Boulevard Building 2, Suite 256 Tallahassee, Florida 32301 Mr. David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
Conclusions Having reviewed the Notice of Intent to Deny the renewal license application for a home health agency, attached hereto and incorporated herein (Ex. 1), and other matters of records, the Agency for Health Care Administration ("Agency") finds and concludes as follows: By Order dated August 26, 2008, the Administrative Law Judge closed its files in the above-styled case. Petitioner filed a status report withdrawing the application for renewal oflicense on August 20, 2009, attached hereto and incorporated herein (Ex. 2). The denial of the renewal application for Petitioner home health agency is upheld and the application for license renewal has been withdrawn. Upon consideration of the foregoing, it is ORDERED that the Agency's file is hereby closed. DONE and ORDERED at Tallahassee, Leon County, Florida this ffj day of ,2009. 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 PROCEEDING SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN THIRTY (30) DAYS OF THE RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Monica L. Rodriguez Attorney for Petitioner Dresnick & Rodriguez, P.A. One Datran Center 91 South Dadeland Blvd, Suite 1610 Miami, Florida 33156 (U.S. Mail) Nelson E. Rodney Assistant General Counsel Agency for Health Care Administration 8350 NW 52nd Terrace, Suite #103 Miami, Florida 33166 (Interoffice Mail) Home Care Unit Agency for Health Care Administration' 2727 Mahan Drive, MS #34 Tallahassee, Florida 32308 (Interoffice Mail) Stuart M. Lerner Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (U.S. Mail) Jan Mills Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 2 (Interoffice Mail) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true copy of the foregoing was sent to the above-named addressees by U.S. Mail, or the method designated, on thisLday of s5xpf 009. Richard Shoop. Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308-5403 (850) 922-5873 3 CHARLIE CRIST GOVERNOR June 23, 2008 Kelly Marie Damas, Admin istrator- 1 / / ·.:;, '. TEHC LLC '- -...· , .. ' ' 3317NW10thTerrSte404 i' r:;_'.'./fl Fort Lauderdale, Fl 33309 J:.:·:>r 1.< \ ii{;;_ License Number: 204390961 Case#: 2008007748 NefltE't)iKIN1'ENT:·q,oDENY It is the decision of this Agency that the application for renewal licensure as a home health agency, for TEHC, LLC., located at 3317 NW 10th Terrace, Suite 404, Fort Lauderdale, Fl 33309, is DENIED. The basis for this action is pursuant to authority of Section 120.60 Florida Statutes (F.S.) and Section 408.815 (1), (c) and (d), F.S. which states as follows: (1) In addition to the grounds provided in authorizing statutes, grounds that may be used by the agency for denying and revoking a license ... include any of the following actions by a controlling interest: A violation of this part, authorizing statutes, or applicable rules. A demonstrated pattern of deficient performance. The home health agency did not demonstrate compliance with Chapter 400, Part III, F.S. and the state home health agency rules, Chapter 59A-8, Florida Administrative Code (F.A.C.) at the home health agency licensure survey conducted Mr..y 5 through May 8, 2008. The plan of correction due June 7, 2008 as submitted to the Agency's Field Office was not acceptable. Non compliance was found in the following areas: The home health agency failed to ensure the Director of Nursing established and conducted an on-going quality assurance _program that evaluated the effectiveness of all the provided service for consistency with professional standards and anticipated outcomes. (H 224) The pertinent statutes and rules that apply include the following: 59A-8.0095(2) (c), F.A.C. "Director of Nursing: (c) The director of nursing shall establish and conduct an ongoing quality assurance program which assures: 2727 Mahan Drive,MS#34 Tallahassee, Florida 32308 EXHIBIT j Visit AHCA Online at http://ahca.myflo rida.com 'Tehc LLC Page 2 · ·-:June 23;·2008· Case assignment and management is appropriate, adequate, and consistent with the plan of care, medical regimen and patient needs; Nursing and other services provided to the patient are coordinated, appropriate, adequate, and consistent with plans of care; All services and outcomes are completely and legibly documented, dated and signed in the clinical service record; Confidentiality of patient data is maintained; and Findings of the quality assurance program are used to improve services." The home health agency failed to ensure that the Registered Nurse (RN)provide case management for 5 of 17 nursing and therapy patients. This was evidenced by: failure to provide an assessment prior to documenting a start of care comprehensive assessment for one patient; failure to provide supervision for the Licensed Practical Nurse (LPN) in the performance of duties for two patients and failure to assure progress reports were made to the physician for patients receiving nursing services when the patient's condition changed for two patients. The pertinent statutes and rules that apply include the following: 59A-8.0095 (3) (a), F.A.C. "Registered Nurse. A registered nurse shall be currently licensed in the state, pursuant to Chapter 464, F.S., and: Be the case manager in all cases involving nursing or both nursing and therapy care. Be responsible for the clinical record for each patient receiving nursing care; and Assure that progress reports are made to the physician for patients receiving nursing services when the patient's condition changes or there are deviations from the plan of care." The home health agency failed to ensure that the RN retained full responsibility for the care given and making supervisory visits to the patient's home for 3 of 17 sampled patients as evidenced by failure to provide supervision for the LPN in the performance of duties for two patients; failure to provide supervision for the Home Health Aide (Aide) and failed to prepare a written Aide assignment/instructions for services to be provided to the patient for 3 patients. (H 231) The pertinent statutes and rules that apply include the following: 59A-8.0095 (3) (b), F.A.C., "Registered Nurse. A registered nurse may assign selected portions of patient care to licensed practical nurses and home health aides but always retains the full responsibility for the care given and for making supervisory visits to the patient's home." The home health agency failed to provide supervision for the LPN in the perfonnance of duties for 2 of 17 patients. (H 235) Tebc LLC Page 3 --+---- ----:June-23--;-2008·--------- ·-- --------- --- The pertinent statutes and rules that apply include the following: 59A-8.0095 (4) (a), F.A.C., "Licensed Practical Nurse. A licensed practical nurse shall be currently licensed in the state, pursuant to Chapter 464, F.S., and provide nursing care assigned by and under the direction of a registered nurse who provides on-site supervision as needed, based upon the severity of patients medical condition and the nurse's training and experience. Supervisory visits will be documented in patient files. Provision shall be made in agency policies and procedures for annual evaluation of the LPN's performance of duties by the registered nurse." The home health agency failed to ensure the LPN reported any changes in the patient's condition to the RN and document the changes in the patient's clinical record for 1 of 17 sampled patients. (H 236) The pertinent statutes and rules that apply include the following: 59A-8.0095 (4) (b), F.A.C., "Licensed Practical Nurse A licensed practical nurse shall: Prepare and record clinical notes for the clinical record; Report any changes in the patient's condition to the registered nurse with the reports documented in the clinical record; Provide care to the patient including the administration of treatments and medications; -------and --- , ---------------- , -------------, ------------------ -------------·· Other duties assigned by the registered nurse, pursuant to Chapter 464, F.S." The home health agency failed to ensure that the care provided followed the plan of treatment for 11 of 17 sampled patients. The home health agency also failed to ensure a verbal order obtained by a home health agency nurse was put into writing and signed by the attending physician for 1 of 17 sampled patients. (H 302) The pertinent statutes and rules that apply include the following: Section 400.487 (2) F.S., "When required by the provisions of chapter 464; part I, part III, or part V of chapter 468; or chapter 486, the attending physician, physician assistant, or advanced registered nurse practitioner, acting within his or her respective scope of practice, shall establish treatment orders for a patient who is to receive skilled care. The treatment orders must be signed by the physician, physician assistant, or advanced registered nurse practitioner before a claim for payment for the skilled services is submitted by the home health agency. If the claim is submitted to a managed care organization, the treatment orders must be signed within the time allowed under the provider agreement. The treatment orders shall be reviewed, as frequently as the patient's illness requires, by the physician, physician assistant, or advanced registered nurse practitioner in consultation with the home health agency." 'Tehc LLC Page 4 _June 2},-200&------- ----- Chapter 59A-8.0215(2), F.A.C., "Home health agency staff must follow the physician, physician assistant, or advanced registered nurse practitioner's treatment orders that are contained in the plan of care. If the orders cannot be followed and must be altered in some way, the patient's physician, physician assistant, or advanced registered nurse practitioner must be notified and must approve of the change. Any verbal changes are put in writing and signed and dated with the date of receipt by the nurse or therapist who talked with the physician, physician assistant, or advanced registered nurse practitioner's office." The home health agency failed to ensure 9 of 17 patients were advised of the payment for home health agency services before care was started and were clear about the payor source and any charges required from the patient. (H 304) The pertinent statutes and rules that apply include the following: Section 400.487 (1), F.S., "Services provided by a home health agency must be covered by an agreement between the home health agency and the patient or the patient's legal representative specifying the home health services to be provided, the rates or charges for services paid with private funds, and the sources of payment, which may include Medicare, Medicaid, private insurance, personal funds, or a combination thereof. A home health agency providing skilled care must make an assessment of the patient's needs within 48 hours after the start of services." Chapter 59A-8.020 (2), F.A.C., "At the start of services a home health agency must establish a written agreement between the agency and the patient or client or the patient's or client's legal representative, including the information described in Section 400.487(1), F.S. This written agreement must be signed and dated by a representative of the home health agency and the patient or client or the patient's or client's legal representative. A copy of the agreement must be given to the patient or client and the original must be placed in the patient's or client's file." Chapter 59A-8.020 (3), F.A.C., "The written agreement, as specified in subsection (2) above, shall serve as the home health agency's service provision plan, pursuant to Section 400.491(2), F.S., for clients who receive homemaker and companion services or home health aide services which do not require a physician, physician assistant, or advanced registered nurse practitioner's treatment order. The written agreement for these clients shall be maintained for one year after termination of services." The home health agency failed to demonstrate effective communication between interdisciplinary team members to coordinate services as outlined in the plan of care for 3 of 17 'patients and failed to ensure that 8 of 17 sampled patients received the skilled nursing services in accordance with the physician's VvTitten plan of care. (H 306) The pertinent statutes and rules that apply include the following: 'Tehc LLC Page 5 --·-- June 23, 20-08 ··· - ----- Section 400.487 (6), F.S., "Tl1e skilled care services provided by a home health agency, directly or under contract, must be supervised and coordinated in accordance with the plan of care." The home health agency failed to ensure the registered nurse completed the initial evaluation visit for 1 of 17 patients. The Director of Nursing who signed the initial evaluation visit never made a home visit to the patient. (H 307) The pertinent statutes and rules that apply include the following: 59A-8.008 (1), F.A.C.., "In cases of patients requiring only nursing, or in cases requiring nursing and physical, respiratory, occupational or speech therapy services, or nursing and dietetic and nutrition services, the agency shall provide case management by a licensed registered nurse directly employed by the agency.'' The home health agency failed to provide written notice for tenninating home health services to 1 of 3 sampled patients. There was no written notification regarding the date of termination; reason for termination or a referral to another agency with a plan for continued services prior to the termination. (H 316) The pertinent statutes and rules that apply include the following: Chapter 59A-8.020 (4), F.A.C., "When the agency terminates services for a patient or client needing continuing home health care, as determined by the patient's physician, physician assistant, or advanced registered nurse practitioner, for patients receiving care under a physician, physician assistant, or advanced registered nurse practitioner's treatment order, or as determined by the client or caregiver, for clients receiving care without a physician, physician assistant, or advanced registered nurse practitioner's treatment order, a plan must be developed and a referral made by home health agency staff to another home health agency or service provider prior to termination. The patient or client must be notified in writing of the date of termination, the reason for termination, pursuant to Section 400.491, F.S., and the plan for continued services by the agency or service provider to which the patient or client has been referred, pursuant to Section 400.497(6), F.S. This requirement does not apply to patients paying through personal funds or private insurance who default on their contract through non-payment. The home health agency should provide social work assistance to patients to help them determine their eligibility for assistance from government funded programs if their private funds have been depleted or will be depleted." The home health agency failed to develop a plan of care for 6 of 17 sampled patients that included all of the required items needed to appropriately serve patients including goals to support the physician's treatment orders, level of staff to provide the services to reach the goals, and the frequency of visits to conduct the services by appropriate home health agency staff. (H 320) Tehc LLC Page 6 -June 23, 2008 The pertinent statutes and rules that apply include the following: Section 400.487 (2). f.S., "When required by the provisions of chapter 464; part I, part III, or part V of chapter 468; or chapter 486, the attending physician, physician assistant, or advanced regis1ered nurse practitioner, acting within his or her respective scope of practice, shalJ establish treatment orders for a patient who is to receive skilled care " Chapter 59A-8.0215 (1), F.A.C., "A plan of care shall be established in consultation with the physician, physician assistant, or advanced registered nurse practitioner, pursuant to Section 400.487, F.S., and the home health agency staff who are involved in providing the care and services required to carry out the physician, physician assistant, or advanced registered nurse practitioner's treatment orders. The plan must be jncluded in the clinical record and available for review by all staff involved in providing care to the patient. The plan of care shall contain a list of individualized specific goals for each skilled discipline that provides patient care, with implementation plans addressing the level of staff who will provide care, the frequency of home visits to provide direct care and case management." The home health agency failed to demonstrate evidence that patients were informed in advance about any changes to the plan of care prior to implementation of the changes for 1 of 17 patients. (H 321) The pertinent statutes and rules that apply include the following: Chapter 59A-8.0215 (3), F.A.C., "The patient, caregiver or guardian must be informed by the home health agency personnel that: He has the right to be informed of the plan of care; He has the right to participate in the development of the plan of care; and He may have a copy of the plan if requested." The home health agency failed to maintain a clinical record in accordance with accepted professional standards for 12 of 17 patients. (H 350) The pertinent statutes and rules that apply include the following: Section 400.491 (1), F.S,, "The home health agency must maintain for each patient who receives skilled care a clinical record that includes pertinent past and current medical, nursing, social and other therapeutic information, the treatment orders, and other such information as is necessary for the safe and adequate care of the patient. When home health services are terminated, the record must show the date and reason for termination " 'Tehc LLC Page 7 June 23,-2008 The home health agency failed to include all of the required items in the discharged patient clinicai records for 3 of 3 patients. There were no tem1ination summaries as required. (H 356) The pertinent statutes and rules that apply include the following: Chapter 59A-8.022(5), F.A.C., "Clinical records must contain the following: Source ofreferral; Physician, physician assistant, or advanced registered nurse practitioner's verbal orders initiated by the physician, physician assistant, or advanced registered nurse practitioner prior to start of care and signed by the physician, physician assistant, or advanced registered nurse practitioner as required in Section 400.487(2), F.S. Assessment of the patient's needs; Statement of patient or caregiver problems; Statement of patient's and caregiver's ability to provide interim services; Identification sheet for the patient with name, address, telephone number, date of birth, sex, agency case number, caregiver, next of kin or guardian; Plan of care or service provision plan and all subsequent updates and changes; Clinical and service notes, signed and dated by the staff member providing the service which shall include: Initial assessments and progress notes with changes in the person's condition; Services rendered; Observations; Instructions to the patient and caregiver or guardian, including administration of and adverse reactions to medications; (i) Home visits to patients for supervision of staff providing services; G) Reports of case conferences; (k) Reports to physicians, physician assistants, or advanced registered nurse practitioners; (1) Termination summary including the date of first and last visit, the reason for termination of service, an evaluation of established goals at time of tennination, the condition of the patient on discharge and the disposition of the patient." The home health agency failed to submit their comprehensive emergency management plan to the local county health department for review and approval. (H 376) The pertinent statutes and rules that apply include the following: Section 400.497(8) (c), F.S. "Preparation of a comprehensive emergency management plan pursuant to s. 400.492. (c) The plan is subject to review and approval by the county health department. During its review, the county health department shall contact state and local health and medical stakeholders when necessary. The county health department shall complete its review to . Tehc LLC Page 8 - --June 23.1008 ensure that the plan is in accordance with the criteria in the Agency for Health Care Administration rules within 90 days after receipt of the plan and shall approve the plan or advise the home health agency of necessary revisions. If the home health agency fails to submit a plan or fails to submit the requested information or revisions to the county health department within 30 days after vvTitten notification from the county health department, the county health department shall notify the Agency for Health Care Administration. The agency shall notify the home health agency that its failure constitutes a deficiency, subject to a fine of $5,000 per occurrence. If the plan is not submitted, information is not provided, or revisions are not made as requested, the agency may impose the fine." Chapter 59A-8.027 (2), F.A.C., "The plan, once completed, will be forwarded electronically for approval to the contact designated by the Department of Health." Section 400.492, F.S., "Each home health agency shall prepare and maintain a comprehensive emergency management plan that is consistent with the standards adopted by national or state accreditation organizations and consistent with the local special needs plan. The plan shall be updated annually ... " Chapter 59A-8.027(3) and (4), F.S., "The agency shall review its emergency management plan on an annual basis and make any substantive changes. (4) Changes in the telephone numbers of those staff who are coordinating the agency's emergency response must be reported to the agency's county office of Emergency Management and to the local County Health Department. For agencies with multiple counties on their license, the changes must be reported to each County Health Department ap.d each county Emergency Management office. The telephone numbers must include numbers where the coordinating staff can be contacted outside of the agency's regular office hours. All home health agencies must report these changes, whether their plan has been previously reviewed or not, as defined in subsection (2) above." · The home health agency failed to renew the application for a Certificate of Exemption that authorizes the performance of waived laboratory tests. (H 390) The pertinent statutes and rules that apply include the following: Section 483.091,F.S. "Clinical laboratory license.--A person may not conduct, maintain, or operate a clinical laboratory in this state, except a laboratory that is exempt under s. 483.031, unless the clinical laboratory has obtained a license from the agency A license is valid only for the person or persons to whom it is issued and may not be sold, assigned, or transferred, voluntarily or involuntarily, and is not valid for any premises other than those for which the license is issued. 483.031 Application of part; exemptions.--This part applies to all clinical laboratories within this state, except: (1) A clinical laboratory operated by the United States Government. (2) A clinical laboratory . Tehc LLC Page 9 · - · June 23;-2008 that performs only waived tests and has received a certificate of exemption from the agency under s. 483.106. (3) A clinical laboratory operated and maintained exclusively for research and teaching purposes that do not involve patient or public health service. 483. l 06 Application for a certificate of exemption.--An application for a cenificate of exemption must be made under oath by the owner or director of a clinical laboratory that performs only waived tests as defined ins. 483.041. A certificate of exemption authorizes a clinical laboratory to perform waived tests. Laboratories maintained on separate premises and operated under the same management may apply for a single certificate of exemption or multiple certificates of exemption ... EXPLANATION OF RIGHTS Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Anne Menard, Manager Home Care Unit cc: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 Arlene Mayo-David, AHCA Delray Beach Field Office Manager Track & Confirm Search Resuhs Label/Receipt Number: 7160 3901 9845 4743 6663 Status: Delivered Your item was delivered at 11:36 AM on June 26, 2008 in FORT LAUDERDALE, FL 33309. Track.& Confirm FAQs Enter Label/Receipt Number. Options Track & Confirm by email Get current event information or updates for your item sent to you or others by email. ( /,h,>) fgnns Oov'I Services .Jobs Priv11.c;y Policy Tenns_ofUse • Nation;il_&.Premier Accounts Copyright© 1999-2007 USPS. All Rights Reserved. No FEAR Act EEO Data FOIA http://trkcnfrm l .smi.usps.com/PTSintemetWeb/Inter Labellnquiry .do 7/21/2008 STATE OF FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION Agency ,i' ., :, In RE: Licensure Renewal Application of Care Admi :i: : TEHC,LLC AHCA No. 2008007748 License No. 204390961 I REQUEST FOR FORMAL HEARING The law firm of Dresnick & Rodriguez, P.A., notices its appearance as counsel for TEHC, LLC, in conjunction with the above-referenced matter. All pleadings, documents, and other communications should be provided to TEHC's counsel at the address below. TEHC disputes the allegations of fact contained in the Notice oflntent to Deny and requests that this pleading be considered a demand for a formal hearing, pursuant to Sections 120.569 and 120.57(1), Florida Statutes, and pursuant to Rule 28-106.2015,. Florida Administrative Code, before an Administrative Law Judge appointed by the Division of Administrative Hearings. In support of this Petition, TEHC states the following: The Petitioner is TEHC, TLC, 3317 NW 10th Terrace. Suite 404. Fort Lauderdale, FL 33309. TEHC's telephone number is 954-351-1895, and the facsimile number is 954-351-1820. TEHC's counsel should be contacted at the address and fax number below. TEHC disputes allegations of fact including, but not limited to, those in paragraphs 1, 6, 7, 8, 9, 11, 12, 15 and 16 of the Notice oflntent to Deny, and requests an Administrative Hearing regarding these allegations. In addition, TEHC disputes that they DRESNICK & RODRIGUEZ, P.A., ONEDATRAN CENTER, SUITE 1610, 9100 SOUTH DADELAND BOULEVARD, MIAMI, F'L 33156-7817 • (305) 670-9800 AHCA No. 2008007748 License No. 204390961 have demonstrated a pattern of deficient performance, and that the plan of correction submitted in June, 2008 was not acceptable. TEHC received the Notice oflntent to Deny on June 26, 2008. The Agency's file number in this case is 2008007748. Respectfully submitted, DRESNICK & RODRIGUEZ, P.A. Attorneys for TEHC, LLC One Datran Center 9100 South Dadeland Blvd, Suite 1610 Miami, FL 33156 Off: (305) 670-9800 Fax: (305) 670-9933 '£' Monica L. Rodriguez) Florida Bar No. 986283 2 DRESNICK & RODRIGUEZ, P.A., ONE DATRAN CENTER, SUITE 1610, 9100 SOUTH DADELAND BOULEVARD, MIAMI, FL 33156-7817 • (305) 670-9800 AHCA No. 2008007748 License No. 204390961 CERTIFICATE OF SERVICE I HEREBY CERTIFY that the original of the foregoing has been furnished by telefax and U.S. Mail on July 16, 2008 to: Nelson Rodney, Assistant General Counsel, Agency for Health Care Administration, 8350 N.W. 52nd Terrace, Suite 103, Miami, FL 33166, with a copy via telefax and U.S. Mail to Richard Shoop, Agency Clerk, 2727 Mahan Drive, Mail Stop # 3, Tallahassee, Florida 32308. '-<:;.., )...f?. .c..,...:_ Monica L. Rodriguez O ') 3 DRESNICK & RODRIGUEZ. P.A., ONEDATRAN CENTER, SUITE 1610, 9100 SOUTH DADELAND BOULEVARD, MIAMI, FL 33156-7817 • (305) 670-9800 08/20/2009 15 51 FAX 305 870 9933 ?RESN ICK & RODRIGUEZ, PA 002/003 STATE OF FLORJDA
