Findings Of Fact On October 15, 1985, Petitioner, Mercy Hospital, Inc. (Mercy), filed an application with Respondent, Department of Health and Rehabilitative Services (Department) for a certificate of need (CON) to convert 29 medical/surgical beds into 29 long-term substance abuse beds. On February 27, 1986, the Department denied Mercy's application, and Mercy timely petitioned for formal administrative review. Mercy is a 538-bed acute care hospital located in Miami, Dade County, Florida. Due to a declining patient census, Mercy is, however, operating only 360 of its 530 licensed beds. Mercy currently offers services in medicine, surgery, psychiatry, obstetrics, gynecology, emergency medical services and outpatient services. Need The predicate for the Department's denial of Mercy's application was a perceived lack of need for long-term substance abuse beds in District XI (Dade and Monroe Counties), and the impact such lack of need would exert on the other statutory and rule criteria. Resolution of the need issue is dispositive of Mercy's application. There currently exists no numeric need methodology for determining the need for long-term substance abuse beds. The Department has, however, adopted Rule 10-5.11(27)(h)1, Florida Administrative Code, which establishes the following occupancy standard: No additional or new hospital inpatient substance abuse beds shall normally be approved in a Department service district unless the average occupancy rate for all existing hospital based substance abuse impatient beds is at or exceeds 80 percent for the preceding 12 month period. District XI has 190 approved long-term hospital impatient substance abuse beds; however, only 30 of those beds are currently licensed. The licensed beds are located in Monroe County at Florida Keys Memorial Hospital (Florida Keys), and are operating well below the 80 percent occupancy standard established by rule. 1/ The remaining beds are to be located in Dade County where Intervenor, Management Advisory and Research Center, Inc., d/b/a Glenbeigh Hospital (Glenbeigh) holds a CON for a 100-bed unit and Mount Sinai Medical Center (Mount Sinai) holds a CON for a 60-bed unit. Glenbeigh's facility is currently under construction, and Mount Sinai is seeking licensure. While not licensed, Mount Sinai has operated its 60-bed unit under its acute care license, and for the first three quarters of 1985 reported occupancy rates of 49.7 percent, 62 percent, and 48.9 percent. While the beds approved for District XI do not demonstrate an 80 percent occupancy rate, only one unit, Florida Keys, is licensed and operational. That unit is located in Key West, serves the middle and lower keys, and is not accessible to Dade County residents. The remaining units are not licensed, and their occupancy figures are not representative of a functional substance abuse unit. Accordingly, a failure to demonstrate compliance with the 80 percent occupancy standard is not necessarily dispositive of the question of need. There currently exists, however, no recognized methodology to calculate need for long-term substance abuse services. Accordingly, to demonstrate a need in 1990 for such services, Mercy relied on a numeric need methodology devised by its health planning expert, Daniel Sullivan 2/ (Petitioner's exhibit 4). Sullivan's methodology was not, however, persuasive. The First Step in Sullivan's Methodology The first step in Sullivan's methodology was to derive an estimate of the number of substance abusers in District XI who would seek treatment in an inpatient setting. The figure he calculated (a,170) was derived-through a four- stage refinement process. Initially, Sullivan estimated the number of problem drinkers within the district for the horizon year by applying the Marden methodology. That methodology, routinely relied upon by health planners, identifies the number of problem drinkers in a given population by multiplying a probability factor to age and sex groupings. By applying the Marden methodology to the age and sex demographics of District XI, Sullivan calculated that an estimated 148,541 problem drinkers would reside within the district in 1998. Sullivan then strove to estimate the number of problem drinkers who would seek treatment in some formal setting (network treatment). To establish that estimate, Sullivan relied on a report prepared for the National Institute on Alcohol Abuse and Alcoholism (NIAAA) entitled "Current Practices in Alcoholism Treatment Needs Estimation: A State-of-the-Art Report". According to Sullivan, that report estimates the percentage of problem drinkers who will seek network treatment to be 20 percent. Therefore, he calculated that an estimated 29,788 problem drinkers in District XI would seek such treatment in 1990. Sullivan then strove to estimate the number of problem drinkers who would seek treatment in an inpatient setting. To establish that estimate, Sullivan relied on a survey conducted in 1982 by the NIAAA entitled National Drug and Alcoholism Treatment Utilization Survey". According to Sullivan, that survey indicated that approximately 78 percent of all problem drinkers who sought treatment did 50 on an outpatient basis. Therefore, using a factor of 22 percent, he calculated that an estimated 6,536 problem drinkers in District XI would seek such treatment in 1990. Sullivan's methodology, at stage two and three of his refinement process, was not persuasive. While Sullivan relied on the factors presented in the reports, there was no proof that health planning experts routinely relied on the reports. More importantly, there was no evidence of the type of survey conducted, the reliability of the percentage factors (i.e.: + 1 percent, 10 percent, 50 percent, etc.), or their statistical validity. In sum, Sullivan's conclusions are not credited. The final stage at step one of Sullivan's methodology, was to estimate the number of substance abusers (alcohol and drugs) who would seek treatment in an inpatient setting. To derive that estimate, Sullivan relied on a report prepared by the Department's Alcohol, Drug Abuse and Metal Health Office, contained in a draft of its 1987 state plan, which reported that 80 percent of substance abusers abuse alcohol and 20 percent abuse other drugs. Applying the assumption that 80 percent of substance abusers abuse alcohol, Sullivan estimated that 8,170 substance abusers in District XI would seek inpatient treatment in 1990. Sullivan's conclusion is again not persuasive. To credit Sullivan's methodology, one must assume that substance abusers (alcohol and drugs) seek treatments at the same rate as alcohol abusers. The record is devoid of such proof. Accordingly, for that reason and the reasons appearing in paragraph 12 supra, Sullivan's conclusions are not credited. The Second Step in Sullivan's Methodology. The second step in Sullivan's methodology was to estimate the number of hospital admissions, as opposed to other residential facility admissions, that would result from the need for substance abuse services. To quantify this number, Sullivan relied on one 1982 survey conducted by NIAAA. According to that survey, the distribution of inpatient substance abuse clients by treatment setting in 1982 was as follows: Facility Location Number Percent of Total Hospital 17,584 34.1 Quarterway House 1,410 2.7 Halfway Housed/ Recovery Home 14,648 28.4 Other Residential Facility 15,980 31.0 Correctional Facility 1,985 3.8 TOTAL 51,607 100.0 percent Therefore, using a factor of 34.1 percent, Sullivan estimated the number of substance abuse hospital admissions to be 2,784 for 1990. For the reasons set forth in paragraph 12 supra, Sullivan's conclusions are, again, not credited. The Third and Fourth Steps in Sullivan's Methodology. The third step in Sullivan's methodology was to estimate the number of substance abuse hospital admissions that would require long-term, as opposed to short-term, services. To derive this estimate, Sullivan calculated admissions to short-term beds by applying a 28-day length of stay and an 80 percent occupancy standard to the Department's short-term bed need methodology (.06 beds per 1,000 population) contained in Rule 10-5.11(27)(f)1, Florida Administrative Code. Sullivan then subtracted that number (1,182) from the estimated number of substance abuse hospital admissions for 1990 (2,784), and concluded that the estimated number of hospital admissions in 1990 that would result from the need for long-term substance abuse services would be 1,602. The final step in Sullivan's methodology was to calculate the need for long-term hospital substance abuse beds. To derive this estimate, Sullivan multiplied the estimated number of long-term substance abuse admissions (1,602) by an average length of stay of 37 days, and divided that total by an occupancy standard of 292 days (80 percent of 365 days). Under Sullivan's methodology, a gross need exists for 203 long-term substance abuse beds in District XI. To establish net need, Sullivan would reduce the 203 bed district need by the 160 beds approved for Dade County, but ignore the 30-bed unit at Florida Keys because of its geographic inaccessibility. By Sullivan's calculation, a net need exists for 43 beds in Dade County. Sullivan's analysis, at steps three and four of his methodology, is not credited. Throughout his methodology Sullivan utilized District XI population figures (Dade and Monroe Counties) to develop a bed need for Dade County. Although Monroe County accounts for only 4 percent of the district's population, the inclusion of that population inflated Dade County's bed need. More demonstrative of the lack of reliability in steps three and four of Sullivan's analysis are, however, the methodologies by which he chose to calculate short- term admissions and long-term substance abuse bed need. Sullivan calculated admissions to short-term beds by applying a 28-day length of stay and an 80 percent occupancy standard to the Department's short- term bed need methodology (.06 beds per 1,000 population) contained in Rule 10- 5.11(27)(f)1, Florida Administrative Code. 3/ By using a 28-day length of stay, the maximum average admission permitted for short-term beds, as opposed to the district's demonstrated average of 24-days, Sullivan inappropriately minimized the number of estimated short-term admissions and maximized the number of estimated long-term admissions. 4/ Sullivan sought to justify his use of a 28-day standard by reference to testimony he overheard in a separate proceeding. According to Sullivan, a Department representative testified that the 28-day standard was used in developing the Department's .06 short-term beds per 1,000 population rule. Sullivan's rationalization is not, however, persuasive. First, Sullivan's recitation of testimony he overheard in a separate proceeding was not competent proof of the truth of those matters in this case. Second, Sullivan offered no rational explanation of how a 28-day standard was used in developing the rule. Finally, the proof demonstrated that the average short-term length of stay in District XI is 24 days, not 28 days. The difference between a 24-day and 28-day average short-term length of stay is dramatic. Application of Sullivan's methodology to the population of Dade County, and utilizing a 24-day average, would demonstrate a need for 170 long-term beds, as opposed to Sullivan's calculated need of 203 beds. In addition to the average short-term length of stay factor, long-term bed need is also dependent on an average length of long-term admissions factor. Under Sullivan's approach, the higher the average, the higher the bed need. Accordingly, to derive a meaningful bed need requires that a reliable average length of stay be established. The data chosen by Sullivan to calculate such an average was not, however, reliable. Sullivan used a 37-day average length of stay to develop his long-term bed need. This average was developed from the CON applications of Mercy, Glenbeigh and Mount Sinai. In the applications, Mercy estimated an expected length of stay of 30-37 days, Glenbeigh 36-38 days, and Mount Sinai 28-49 days. Use of a simple average, of the expected lengths of stay contained in Mercy's, Glenbeigh's and Mount Sinai's applications, to develop an average long- term length of stay is not persuasive. The figures contained in the applications are "expected length of stay", a minimum/maximum figure. Mercy failed to demonstrate that a simple average of those figures was a reliable indicator of average length of stay. Indeed, Mercy presented evidence at hearing that its average length of stay would be 30-31 days; a figure that is clearly not a simple average of the 30-37 day expected length of stay contained in its application. Mercy's failure to demonstrate a meaningful average length of stay renders its calculated bed need unreliable. Sullivan's Methodology - An Overview Each step of Sullivan's methodology was inextricably linked to the other. Consequently, a failure of any step in his analysis would invalidate his ultimata conclusion. Notwithstanding this fundamental fact Mercy, with the exception of the Marden methodology, failed to present a reasonable evidentiary basis to demonstrate the reliability and validity of Sullivan's methodology or any of its parts. Since his methodology was not validated, or each of its inextricably linked parts validated, Sullivan's conclusions are not persuasive or credited. Other Considerations If Mercy receives a CON, it will enter into a management contract with Comprehensive Care Corporation (CompCare) to operate the substance abuse unit. The parties anticipate that Mercy will provide its existing physical plant, custodial services, support services, dietary services, complimentary medical services, medical records and pharmacy services, and that CompCare will provide the treatment team, quality assurance, public information, promotion and operational management. Under its proposed agreement with CompCare, Mercy would pay CompCare on a per patient day basis. This fee was not, however, disclosed at hearing nor were the other expenses for patient care established. 5/ Consequently, Mercy failed to establish that its proposal was financially feasible on either a short or long term basis. Mercy also proposes to provide bilingual staff, and dedicate a portion of its patient days to indigent and Medicaid patients. There was no competent proof to establish, however, that such needs were not met, or would not be met, by the existing facilities.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the application of Mercy for a certificate of need to convert 29 medical/surgical beds to 29 long-term substance abuse beds be DENIED. DONE AND ORDERED this 4th day of February, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK 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 February, 1987.
Findings Of Fact The Application West Florida Regional Medical Center is a 400-bed acute care hospital in Pensacola, Escambia County, Florida. The hospital is located in a subdistrict which has the greatest population aged 65 and over who are living in poverty. That group constitutes the population qualified for Medicare. Some 17 percent of Escambia County's population falls into the medicare category. Prior to October, 1987, HRS had determined that there was a fixed pool need in the Escambia County area for 120 nursing home or extended care beds. Several hospitals in the Escambia County area applied for the 120 nursing home beds. Those beds were granted to Advocare (60 beds) and Baptist Manor (60 beds). The award of the 120 beds to Baptist Manor and Advocare is not being challenged in this action. West Florida, likewise, filed an application for an award of nursing home beds in the same batch as Advocare and Baptist Manor. However, Petitioner's application sought to convert 8 acute care beds to nursing home or extended care beds. West Florida's claim to these beds was not based on the 120 bed need established under the fixed need pool formula. West Florida's application was based on the unavailability of appropriately designated bed space for patients who no longer required acute care, but who continued to require a high skill level of care and/or medicare patients. The whole purpose behind West Florida's CON application stems from the fact that the federal Medicare system will not reimburse a hospital beyond the amount established for acute care needs as long as that bed space is designated as acute care. However, if the patient no longer requires acute care the patient may be re-designated to a skilled care category which includes nursing home or extended care beds. If the patient is appropriately reclassified to a skilled care category, the hospital can receive additional reimbursement from Medicare above its acute care reimbursement as long as a designated ECF bed is available for the patient. Designation or re-designation of beds in a facility requires a Certificate of Need. Petitioner's application for the 8 beds was denied. When the application at issue in this proceeding was filed Petitioner's 13-bed ECF unit had been approved but not yet opened. At the time the State Agency Action Report was written, the unit had just opened. Therefore, historical data on the 13 bed unit was not available at the time the application was filed. Reasons given for denying West Florida's application was that there was low occupancy at Baptist Hospital's ECF unit, that Sacred Heart Hospital had 10 approved ECF beds and that there was no historical utilization of West Florida 13 beds. At the hearing the HRS witness, Elizabeth Dudek stated that it was assumed that Baptist Hospital and Sacred Heart Hospital beds were available for West Florida patients. In 1985 West Florida applied for a CON to establish a 21-bed ECF unit. HRS granted West Florida 13 of those 21 beds. The 8 beds being sought by West Florida in CON 5319 are the remaining beds which were not granted to West Florida in its 1985 CON application. In order to support its 1985 CON application the hospital conducted a survey of its patient records to determine an estimate of the number of patients and patient days which were non acute but still occupied acute care beds. The hospital utilized its regularly kept records of Medicare patients whose length of stay or charges exceeded the Medicare averages by at least two standard deviations for reimbursement and records of Medicare patients whose charges exceed Medicare reimbursement by at least $5,000. These excess days or charges are known as cost outliers and, if the charge exceeds the Medicare reimbursement by $5000 or more, the excess charge is additionally known as a contractual adjustment. The survey conducted by the hospital consisted of the above records for the calendar year 1986. The hospital assumed that if the charges or length of stay for patients were excessive, then there was a probability that the patient was difficult to place. The above inference is reasonable since, under the Medicare system, a hospital's records are regularly reviewed by the Professional Review Organization to determine if appropriate care is rendered. If a patient does not meet criteria for acute care, but remains in the hospital, the hospital is required to document efforts to place the patient in a nursing home. Sanctions are imposed if a hospital misuses resources by keeping patients who did not need acute care in acute care bed spaces even if the amount of reimbursement is not at issue. The hospital, therefore goes to extraordinary lengths to place patients in nursing home facilities outside the hospital. Additionally, the inference is reasonable since the review of hospital records did not capture all non-acute patient days. Only Medicare records were used. Medicare only constitutes about half of all of West Florida's admissions. Therefore, it is likely that the number of excess patient days or charges was underestimated in 1986 for the 1985 CON application. The review of the hospital's records was completed in March, 1987, and showed that 485 patients experienced an average of 10.8 excess non-acute days at the hospital for a total of 5,259 patient days. The hospital was not receiving reimbursement from Medicare for those excess days. West Florida maintained that the above numbers demonstrated a "not normal need" for 21 additional ECF beds at West Florida. However as indicated earlier, HRS agreed to certify only 13 of those beds. The 13 beds were certified in 1987. The 13-bed unit opened in February, 1988. Since West Florida had planned for 21 beds, all renovations necessary to obtain the 8-bed certification were accomplished when the 13- bed unit was certified in 1987. Therefore, no capital expenditures will be required for the additional 8 beds under review here. The space and beds are already available. The same study was submitted with the application for the additional eight beds at issue in these proceedings. In the present application it was assumed that the average length of stay in the extended care unit would be 14 days. However, since the 13 bed unit opened, the average length of stay experienced by the 13-bed unit has been approximately 15 days and corroborates the data found in the earlier records survey. Such corroboration would indicate that the study's data and assumptions are still valid in reference to the problem placements. However, the 15- day figure reflects only those patients who were appropriately placed in West Florida's ECF unit. The 15-day figure does not shed any light on those patients who have not been appropriately placed and remain in acute care beds. That light comes from two additional factors: The problems West Florida experiences in placing sub-acute, high skill, medicare patients; and the fact that West Florida continues to have a waiting list for its 13 bed unit. Problem Placements Problem placements particularly occur with Medicare patients who require a high skill level of care but who no longer require an acute level of care. The problem is created by the fact that Medicare does not reimburse medical facilities based on the costs of a particular patients level of care. Generally, the higher the level of care a patient requires the more costs a facility will incur on behalf of that patient. The higher costs in and of themselves limit some facilities in the services that facility can or is willing to offer from a profitability standpoint. Medicare exacerbates the problem since its reimbursement does not cover the cost of care. The profitability of a facility is even more affected by the number of high skill Medicare patients resident at the facility. Therefore, availability of particular services at a facility and patient mix of Medicare to other private payors becomes important considerations on whether other facilities will accept West Florida' s patients. As indicated earlier, the hospital goes to extraordinary lengths to place non- acute patients in area nursing homes, including providing nurses and covering costs at area nursing homes. Discharge planning is thorough at West Florida and begins when the patient is admitted. Only area nursing homes are used as referrals. West Florida's has attempted to place patients at Bluff's and Bay Breeze nursing homes operated by Advocare. Patients have regularly been refused admission to those facilities due to acuity level or patient mix. West Florida also has attempted to place patients at Baptist Manor and Baptist Specialty Care operated by Baptist Hospital. Patients have also been refused admission to those facilities due to acuity level and patient mix. 16 The beds originally rented to Sacred Heart Hospital have been relinquished by that hospital and apparently will not come on line. Moreover the evidence showed that these screening practices would continue into the future in regard to the 120 beds granted to Advocare and Baptist Manor. The president of Advocare testified that his new facility would accept some acute patients. However, his policies on screening would not change. Moreover, Advocare's CON proposes an 85 percent medicaid level which will not allow for reimbursement of much skilled care. The staffing ratio and charges proposed by Advocare are not at levels at which more severe sub-acute care can be provided. Baptist Manor likewise screens for acuity and does not provide treatment for extensive decubitus ulcers, or new tracheostomies, or IV feeding or therapy seven days a week. Its policies would not change with the possible exception of ventilated patients, but then, only if additional funding can be obtained. There is no requirement imposed by HRS that these applicants accept the sub-acute-patients which West Florida is unable to place. These efforts have continued subsequent to the 13-bed unit's opening. However, the evidence showed that certain types of patients could not be placed in area nursing homes. The difficulty was with those who need central lines (subclavian) for hyperalimentation; whirlpool therapy such as a Hubbard tank; physical therapy dither twice a day or seven days a week; respiratory or ventilator care; frequent suctioning for a recent tracheostomy; skeletal traction; or a Clinitron bed, either due to severe dicubiti or a recent skin graft. The 13-bed unit was used only when a patient could not be placed outside the hospital. The skill or care level in the unit at West Florida is considerably higher than that found at a nursing home. This is reflected in the staffing level and cost of operating the unit. Finally, both Advocare and Baptist Manor involve new construction and will take approximately two years to open. West Florida's special need is current and will carry into the future. The Waiting List Because of such placement problems, West Florida currently has a waiting list of approximately five patients, who are no longer acute care but who cannot be placed in a community nursing home. The 13-bed unit has operated at full occupancy for the last several months and is the placement of last resort. The evidence showed that the patients on the waiting list are actually subacute patients awaiting an ECF bed. The historical screening for acuity and patient mix along with the waiting list demonstrates that currently at least five patients currently have needs which are unmet by other facilities even though those facilities may have empty beds. West Florida has therefore demonstrated a special unmet need for five ECF beds. Moreover, the appropriate designation and placement of patients as to care level is considered by HRS to be a desirable goal when considering CON applications because the level of care provided in an ECF unit is less intense than the level of care required in an acute care unit. Thus, theoretically, better skill level placement results in more efficient bed use which results in greater cost savings to the hospital. In this case, Petitioner offers a multi-disciplinary approach to care in its ECF unit. The approach concentrates on rehabilitation and independence which is more appropriate for patients at a sub-acute level of care. For the patients on the awaiting proper placement on the waiting list quality of care would be improved by the expansion of the ECF unit by five beds. Finally, there are no capital costs associated with the conversion of these five beds and no increase in licensed bed capacity. There are approximately five patients on any given day who could be better served in an ECF unit, but who are forced to remain in an acute care unit because no space is available for them. This misallocation of resources will cost nothing to correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services issue a CON to Petitioner for five ECF beds. DONE and ORDERED this 30th day of March, 1989, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 1989. APPENDIX The facts contained in paragraph 1-29 of Petitioner's proposed Findings of Fact are adopted in substance, insofar as material. The facts contained in paragraph 1, 2, 3, 4, 5, 6, 8, 12, 15, 16, 20, 27, 28, 29, 31 and 33 of Respondent's Proposed Findings of Fact are subordinate. The first sentence of paragraph 7 of Respondent's Proposed Findings of Fact was not shown to be the evidence. Strict compliance with the local health plan was not shown to be an absolute requirement for CON certification. The remainder of paragraph 7 is subordinate. The facts contained in paragraph 9, 10, 11 and 30 of Respondent's Proposed Findings of Fact were not shown by the evidence. The first part of the first sentence of paragraph 13 of Respondent's Proposed Findings of Fact before the semicolon is adopted. The remainder of the sentence and paragraph is rejected. The first sentence of paragraph 14 of Respondent's Proposed Findings of Fact was not shown by the evidence. The remainder of the paragraph is subordinate. The facts contained in paragraph 17, 26 and 32 of Respondent's Proposed Findings of Fact are adopted in substance, insofar as material. The acts contained in paragraph 18 are rejected as supportive of the conclusion contained therein. The first (4) sentences of paragraph 19 are subordinate. The remainder of the paragraph was not shown by the evidence. The first (2) sentences of paragraph 21 are adopted. The remainder of the paragraph is rejected. The facts contained in paragraph 22 of Respondent's Proposed Findings of Fact are irrelevant. The first sentence of paragraph 23 is adopted. The remainder of paragraph 23 is subordinate. The first sentence of paragraph 24 is rejected. The second, third, and fourth sentences are subordinate. The remainder of the paragraph is rejected. The first sentence of paragraph 25 is subordinate. The remainder of the paragraph is rejected. COPIES FURNISHED: Lesley Mendelson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 Donna H. Stinson, Esquire MOYLE, FLANIGAN, KATZ, FITZGERALD & SHEEHAN, P.A. The Perkins House - Suite 100 118 North Gadsden Street Tallahassee, Florida 32301 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue Whether Petitioner is entitled under Florida’s workers’ compensation laws to payment for professional services to an injured worker for the billings identified by the three notices of disallowance at issue in this consolidated proceeding.
Findings Of Fact The claimant, a male, was born July 21, 1961. On February 17, 1995, the claimant sustained a severe traumatic brain injury (TBI) and other injuries during the course of his employment with the City of Hollywood, Florida. At all times relevant to these proceedings, the claimant has been receiving benefits pursuant to the Florida workers’ compensation laws. At all times relevant to this proceeding, the carrier has been the workers’ compensation carrier for the employer. At all times relevant to this proceeding, the claimant has lived in a home purchased for him by the carrier. The claimant has a life estate in the home and the carrier has the remainder interest. The claimant lives in the home with his mother and has 24-hour attendant services paid for by the carrier. The carrier has purchased a van for the claimant, which his attendant uses to transport the claimant to therapy and other appointments. The claimant has a history of mental illness dating to his teenage years, when he was diagnosed with schizophrenia. As a result of his injury and his illness, the claimant acts out periodically and becomes physically resistive to those trying to care for him. At all times relevant to this proceeding, Petitioner has been a provider of rehabilitation services to various patients, including those with TBI. Dr. Marie DiCowden, a psychologist, is the founder and director of Petitioner. Dr. DiCowden described Petitioner as being a health care community that provides an integrated administration for a long continuum of care post acute rehabilitation through community reintegration using health promotion, prevention, and integrated primary care. Petitioner is accredited by two national accrediting organizations referred to by the acronyms CARF (Commission on Accreditation of Rehabilitation Facilities) and CORF (Commission on Outpatient Rehabilitation Facilities). Petitioner is also certified by the Florida Division of Vocational Rehabilitation (formerly housed in the Department of Labor and now housed in the Department of Education), the Florida Division of Workers’ Compensation, and by the Florida Brain and Spinal Cord Injury Program.4 As a result of his accident, the claimant was in a coma for several weeks. He was hospitalized (first in an acute care facility and subsequently in two different rehabilitation hospitals) until December 28, 1995, when he was placed in Whitehall Nursing Home. Whitehall was not an appropriate placement for the claimant because of his behavior and his need for rehabilitation services. On March 27, 1996, Yvonne Beckman, a rehabilitation nurse consultant employed by the carrier, referred the claimant to Petitioner for an evaluation. Shortly before that referral, the claimant had been evaluated by two neuropsychologists (Dr. Jorge A. Herra and Dr. Lee. H. Bukstel), who had opined that the claimant would benefit from rehabilitation services. Ms. Beckman asked Dr. DiCowden to recommend a neurologist who practiced in South Florida. In response, Dr. DiCowden gave Ms. Beckman the names of three neurologists, one of whom was Dr. Paul Wand. Ms. Beckman authorized Dr. Wand to provide services to the claimant. Dr. Wand prescribed continued rehabilitation services for the claimant at Petitioner’s facility. The services at issue in this proceeding were provided by Petitioner pursuant to prescriptions from Dr. Wand.5 Prior to accepting the claimant, Dr. DiCowden informed a representative of the carrier that Petitioner would accept the claimant as a patient in its brain injury program and estimated the annual costs to be $200,000.00. The claimant began receiving rehabilitation services from Petitioner five days a week beginning August 1, 1996. The claimant received from Petitioner’s staff physical therapy, occupational therapy, cognitive retraining, speech training, language training, psychological services, art therapy, music therapy, and yoga therapy. The claimant continued to receive those rehabilitation services from Petitioner (five days a week) from August 1996 to the date of the hearing (and presumably to date). The authorization for the provision of rehabilitation services to the claimant was periodically reviewed by the carrier. In November 1998, the carrier had the claimant examined by Dr. Richard Bailyn (a neurologist) and by Dr. Kevin Lapinski (a neuropsychologist). Those doctors opined that the claimant was not benefiting from cognitive retraining, occupational therapy, speech therapy, or language therapy at Petitioner’s facility. They further opined that the claimant required an activity program to satisfy his recreational and stimulation needs, but that such a program did not require Petitioner’s facility since the claimant’s aide could be trained to provide those services. Dr. Bailyn was of the opinion that as of November 1998 the various therapies provided by Petitioner’s facility to the claimant were not reasonable and were not medically necessary. Section 440.13(6), Florida Statutes, requires a carrier to review bills by providers of medical services as follows: (6) UTILIZATION REVIEW.--Carriers shall review all bills, invoices, and other claims for payment submitted by health care providers in order to identify overutilization and billing errors, including compliance with practice parameters and protocols of treatment established in accordance with this chapter, and may hire peer review consultants or conduct independent medical evaluations. Such consultants, including peer review organizations, are immune from liability in the execution of their functions under this subsection to the extent provided in s. 766.101. If a carrier finds that overutilization of medical services or a billing error has occurred, or there is a violation of the practice parameters and protocols of treatment established in accordance with this chapter, it must disallow or adjust payment for such services or error without order of a judge of compensation claims or the agency, if the carrier, in making its determination, has complied with this section and rules adopted by the agency. As required by Section 440.13(6), Florida Statutes, the carrier conducted a utilization review of the services provided by Petitioner to the claimant beginning in late 1999. The carrier retained Dr. Thomas G. Hoffman to review the claimant’s medical records and to express opinions pertaining to the services provided to him by Petitioner. On April 10, 2000, Dr. Hoffman submitted a report that included several conclusions, including those that follow. The claimant has severe, residual deficits as a result of his accident. He requires 24-hour attendant care. There is no reasonable expectation for further improvement. The therapy he was receiving at that time (and still receives) was not reasonable or medically necessary. The therapy was excessive in frequency and duration. Dr. Hoffman’s deposition testimony was consistent with his written report. The carrier retained Dr. Victor B. Robert to review the claimant’s medical records and to express opinions pertaining to the services provided to him by Petitioner. On June 19, 2000, Dr. Robert submitted a report that included several conclusions, including those that follow. The treatment rendered by Petitioner was excessive in frequency and duration. The claimant reached an improvement plateau in early 1997 and therapy was thereafter needed only for maintenance reasons. Dr. Robert’s testimony was consistent with his written report. The carrier retained International Assessment Systems, Inc. (IAS), a professional association of various medical practitioners, to conduct an independent neurological, neuropsychological, and psychological examination of the claimant. On September 22, 2000, IAS submitted a report (Intervenors’ Exhibit 8) based on the examinations of claimant and the review of his medical records by Dr. Kenneth C. Fischer, Dr. Alan J. Raphael, and Dr. Charles J. Golden. The report included several observations and conclusions, including those that follow. The testimony of Drs. Fischer, Raphael, and Golden was consistent with the written report they prepared for IAS. Pages 12-13 of the IAS report contain the following: [The claimant] was oriented to person, but not to place or time. He did not know the current day, date, month, or year. His sensorium was significantly impaired. His mood was volatile, ranging from normal to agitated. His affect was similarly labile, at times he was placid, laughing, and able to converse at a basic level, however he was also quite violent. Attention and concentration were significantly impaired. His receptive, expressive and fluency language capabilities were similarly impaired, although, as noted, he was capable of basic/functional [sic] communication. There were no direct indications of hallucinatory or delusional phenomena, however, based on his behavior, it is likely that some hallucinatory or delusional phenomena were present. His reality testing and insight were significantly impaired. During his repeated fits of anger, he often uttered suicidal and homicidal threats, however there was no evidence of actual intent or plan. He showed no ability to monitor his own safety. Page 15 of the IAS report contains the following: From a neuropsychological and psychological perspective, there were gross impairments noted in his cognitive abilities and emotional functioning. . . . He has been afforded considerable time to maximize his cognitive recovery at this point. It is clear that he has plateaued with regard to cognitive improvement. He will not benefit from continued rehabilitation efforts, although he will require continued stimulation to avoid further cognitive decline. His mood and labile affect may also be benefited by continued stimulation in terms of recreational activities to provide appropriate quality of life.6 Page 17 of the IAS report contains the following under the heading “Neurologic Impression”: . . . I [Dr. Fischer] would recommend that he be placed in a supervised residential setting which will give better protection for him and his caregivers than his present home setting. As the patient is four and a half years status post-injury, specific rehabilitative and therapeutic endeavors will have no benefit and are unwarranted. This would relate to hyperbaric oxygen and cognitive rehabilitation was well as any form of physical, occupational, or speech therapies. Page 19 of the IAS report contains the following: [The claimant] was certainly aided by initial removal from the nursing home and receiving cognitive and physical therapies at Biscayne. However, he has long since reached a plateau in his improvement and no further improvement can be expected at this time. Maximum medical improvement should have been reached within 18 to 24 months post-injury. Any treatment after that time would be palliative or maintenance-oriented (sic). Therefore, the treatment prescribed by Dr. Wand became unreasonable and medically unnecessary several years ago. Page 20 of the IAS report reflects the opinion that while the treatments at Petitioner’s facility were excessive in all respects, the claimant does require maintenance rehabilitation services. It is opined that cognitive retraining is no longer appropriate, but that cognitive tasks and games are appropriate in a recreational setting. By letter dated October 27, 2000, the carrier, through its counsel, advised Petitioner that based on its Utilization Review investigation, it had concluded that as to the identified dates of service “. . . there has been overutilization and/or misutilization since the treatment has been excessive and not medically necessary.” This Letter of Disallowance was the first of a series of letters sent by counsel for the carrier to Petitioner, and frames the issues for all of the disallowances at issue in this proceeding. Thereafter, Petitioner timely disputed the carrier’s basis for disallowing its services to the claimant and petitioned the Respondent to resolve the dispute. The total amount disallowed and at issue in this consolidated proceeding is $615,587.00. Respondent employed four Expert Medical Advisors (EMAs) to perform peer review and assist it in resolving the dispute involving the rehabilitation services provided the claimant by Petitioner. Respondent employed Dr. Fernando G. Miranda, Dr. Jorge Villalba, Dr. Gerard P. Garcia, and Dr. David McCraney to serve as EMAs.7 Each of these doctors prepared a report following his review and each sat for deposition. Dr. Miranda’s report, dated September 17, 2001, is attached to his deposition (Intervenors’ Exhibit 17). The report included several conclusions, including those that follow. The referral for intensive multi-disciplinary treatment at Petitioner’s facility is no longer medically necessary. The services provided by Petitioner are excessive in frequency and duration and he will not further improve with speech therapy, cognitive retraining, occupational therapy, or individual psychotherapy. Maintenance physical therapy is recommended. Dr. Miranda testified in his deposition that the recommended physical therapy could be performed by the claimant’s attendant. Dr. Miranda’s deposition testimony was consistent with his written report. Dr. Villalba’s report dated October 15, 2001, is attached to his deposition (Intervenors’ Exhibit 19). The report included several conclusions, including those that follow. The claimant reached maximum medical improvement between February 1996 and October 1997. Dr. Villalba described the services provided by Petitioner to claimant “clearly not medically necessary” after October 1997. He also opined that the claimant will require maintenance physical therapy, occupational therapy, and speech and language therapy on a continuing basis. Dr. Villalba’s deposition testimony was consistent with his written report. Dr. Garcia’s undated report was prepared during the second week of October, 2001, and is attached to his deposition (Intervenors’ Exhibit 16). The report included several conclusions, including those that follow. The claimant should be on a maintenance program and Petitioner’s treatment was excessive. The claimant is unlikely to make further neuropsychological improvement, but he should be treated by a psychiatrist for his schizophrenia. Dr. Garcia’s deposition testimony was consistent with his written report. Dr. McCraney’s report dated November 18, 2001, is attached to his deposition (Intervenors’ Exhibit 18). The report included several conclusions, including those that follow. While the care provided Petitioner appears to be excellent, the claimant is far beyond the point where Petitioner’s therapies would be reasonable or medically necessary. Dr. McCraney’s deposition testimony was consistent with his written report. Dr. DiCowden testified at length about the various services her facility provides the claimant and the records her staff generates as a result of those services. Dr. DiCowden testified that her staff is well-trained in assessing the functional status of rehabilitation patients using nationally recognized assessment methodologies. FIN-FAM, acronyms for “Functional Independence Measures” and “Functional Assessment Measures” is one assessment measure used by Petitioner’s staff. The FIN-FAM measure purports to quantify a patient’s progress or lack thereof and can be used by staff as a tool in developing treatment strategies. Dr. DiCowden presented a chart of the FIN-FAM scores for the claimant for the periods at issue in this proceeding. The chart, prepared for this litigation, reflects steady functional improvement of the claimant. Dr. DiCowden further testified that Petitioner’s staff uses a scale of cognitive functioning developed by a rehabilitation facility known as Rancho Los Amigos Hospital, which measures a patient’s response to stimuli on a scale of Ranch Level I (no response) to Ranch Level VII (appropriate response). She asserts that the measurement of the claimant’s status using the Rancho methodology reflect that the claimant has improved over the years. In support of its position that the claimant steadily progressed while undergoing therapy at its facility, Petitioner presented the testimony of Drs. Antonio Puente, Vernando Batas, and Richard Kishner who observed the claimant at Petitioner’s facility on June 23, 2003, September 13, 2003, and February 24, 2004, respectively. Each of these witnesses had the subjective impression that the claimant was benefiting from therapy at Petitioner’s facility. Petitioner asserts that the FIN-FAM scores, the Rancho Levels, and the testimony of its experts establish that the claimant is benefiting from therapy. That assertion is rejected as being contrary to the greater weight of the credible evidence. The FIN-FAM scoring and the Rancho scale depend on the subjective impressions of the various therapists who treat the claimant at Petitioner’s facility and the record reflects that the scoring was done on an irregular basis.8 Dr. DiCowden adamantly disagreed with the contention that the rehabilitation services provided by her facility is not reasonable or medically necessary. All evidence presented by Petitioner, including Dr. DiCowden’s testimony, has been carefully considered by the undersigned in resolving the conflicts in the evidence. At best, Petitioner established that the claimant made some unquantified amount of progress in the highly structured therapeutic setting at Petitioner’s facility. Intervenors’ experts clearly established that any progress made by the claimant in therapy did not transcend that therapeutic setting to the real world. Petitioner failed to establish by a preponderance of the evidence that the rehabilitation services it provided the claimant were appropriate and medically necessary. To the contrary, the greater weight of the credible evidence established that at all times relevant to this proceeding the rehabilitation services provided by Petitioner to the claimant have been excessive and that those excessive services have been neither reasonable nor medically necessary.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration issue a final order that sustains the disallowances at issue in this consolidated proceeding. DONE AND ENTERED this 15th day of June, 2004, in Tallahassee, Leon County, Florida. S CLAUDE B. ARRINGTON 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 15th day of June, 2004.
Findings Of Fact Crisis Stabilization Units The Legislature dealt comprehensively with the subject of mental health when it enacted Chapter 394, Florida Statutes, in 1971. The Act is officially known as the Florida Mental Health Act, and popularly known as the Baker Act. The Act established programs in the Department to reduce the occurrence, severity, duration and disabling aspects of mental, emotional, and behavioral illness or disorders. The Department was directed to "coordinate the development, maintenance, and improvement of [mental health] receiving and community treatment facilities within the programs" of HRS districts in Florida. The Legislature also required that "the least restrictive means of intervention [i.e., treatment] be employed based on the individual needs of each patient within the scope of available services." Sections 394.451 and 394.453, Florida Statutes (1971). 1/ Mental health services provided by community treatment facilities under the Baker Act may include emergency screening services, mobile crisis response teams, crisis stabilization units, short-term residential treatment centers which provide inpatient care and short-term hospitalization in a psychiatric hospital or psychiatric unit. Long term psychiatric hospitalization is not funded with Baker Act appropriations. Community treatment facilities provided most of their care by purchasing services from hospitals prior to 1979. The rates paid for those hospitalization services had been increasing constantly. Most inpatient psychiatric hospitals now charge patients $300-400 per day. Crisis stabilization units (CSU) were developed as a less costly alternative to psychiatric hospitalization. A CSU was designed to provide treatment to help the individual through an immediate psychiatric crisis, to provide a rapid assessment of the client's needs, and direct the client to appropriate programs, which could include inpatient pay hospital care, if necessary. The time required to stabilize a patient in a psychiatric crisis, to evaluate the patient and determine the most appropriate and least restrictive treatment program is generally about 14-15 days. Short-term residential treatment is provided as an alternative to psychiatric hospitalization for those needing therapy for up to 90 days. Some community treatment facilities established their own inpatient hospital programs about the time CSUs were first established. These psychiatric hospitals are regulated in the same manner as other specialty hospitals under Chapter 395, Florida Statutes. Once a community treatment facility had the approval to establish a hospital, that hospital obtained the ability to bill "third parties," usually insurance companies, for the psychiatric crisis stabilization services they provided. These facilities are able to use that reimbursement to offset, to some extent, any losses incurred in treating Baker Act patients. Most policies of health insurance will not provide reimbursement for crisis stabilization care provided by a CSU, such as South County. On the other hand, Medicaid will not reimburse a free-standing psychiatric hospital such as 45th Street for its services. When CSUs were first organized, they were not regulated by the state. As with hospitals, the size of a CSU is measured by its number of approved beds. Sections 394.878(4) and 395.003(4), Florida Statutes. After their establishment, some units sacrificed quality of care in order to minimize costs, and as a result the Legislature established a program of departmental licensure and regulation for CSUs in 1985. Under those statutes, a CSU may not be licensed for more than 30 beds. South County is licensed as a CSU. HRS District IX includes Palm Beach County. The 45th Street Mental Health Center operates in a portion of Palm Beach County. It was one of the community treatment facilities which established a hospital under Chapter 395, which had 44 beds. It can treat psychiatric patients as inpatients, but as a matter of fact it operates almost solely as a CSU. It takes all indigent patients in psychiatric crises who are brought to them by the police or others, without regard to the patient's ability to pay for the services it renders to them. Licensed CSU facilities, such as South County, also take all patients bought to them. Recently, 45th Street Mental Health Center also licensed a CSU at its hospital with 16 beds. The Legislature has recognized the value of crisis stabilization beds in providing quality, low-cost treatment to citizens suffering from acute bouts of mental illness. It has not, however, directed or specifically funded the establishment of crisis stabilization beds in every HRS district. The Legislature has funded and directed the establishment of a specific number of crisis stabilization unit beds in some HRS districts. These are known as "appropriated beds." The Department also has had the authority to devote some of the money generally appropriated for Baker Act services to establish crisis stabilization beds where it believes they are needed. These are generally known as "unappropriated beds," because they have not been established by specific legislative direction and funding. The Department usually distinguishes between in-patient psychiatric treatment and CSU treatment. CSU beds, short-term residential treatment beds, and in-patient psychiatric hospital beds are usually treated as separate points on the continuum of services available to those with psychiatric problems. Ordinarily, hospital beds are used for longer-term care of patients whose psychiatric illness is such that confinement is the least restrictive means to provide the patient necessary mental health services. A CSU ordinarily limits itself to helping the patient get over his current crisis, evaluating a patient after stabilization, and referring the patient to some other provider for long- term care. The referral may be to out-patient counseling for mild cases of mental illness, to day treatment, to a short-term residential treatment facility, up to hospitalization in a psychiatric unit for serious mental illness. Legislatively appropriated CSU beds are licensed as CSU beds, and not as inpatient psychiatric hospital beds. Appropriated and unappropriated CSU beds are funded at different rates depending on whether or not they were legislatively established, and when they came into existence. The price level adjustment made available in specific appropriation 895 was a legislative effort to reduce the disparity in funding of CSU beds around Florida, since all provide similar services. The Florida Council for Community Mental Health (Florida Council) represents most community treatment facilities before the Legislature. Increased funding for acute Baker Act services, which include CSU beds and inpatient hospital beds, has been a high priority issue for the Florida Council for several years. In 1987, the Florida Council surveyed CSUs to determine their costs for providing services, as distinct from their reimbursement rates. The Florida Council did not obtain additional funding in the 1987 legislative session. In preparation for the 1988 legislative session, the Florida Council conducted a second survey. This survey also distinguished between CSU and in- patient hospital beds, and was intended to gather information on both of those Baker Act services for use in its lobbying activities. The Florida Council summarized the survey results in a chart identified as "Crisis Stabilization Unit Deficiency Distribution" and "Inpatient Baker Act Hospital Deficiency Distribution" (Exhibit 30). The Florida Council's survey results categorized 45th Street as an inpatient hospital, and calculated its reimbursement as $59 per bed per day, but its costs as $160 per bed per day. The reimbursement rate was so low that it was incurring an operating deficit. Independent of the Florida Council's efforts, the Department wanted to identify the Baker Act services that it purchased with public funds throughout the state, and to determine what the Department was paying for those services. The program office in Tallahassee conducted a telephone inventory of CSU beds, by contacting each of the Department's district offices. In response to the survey, the Department's District IX reported sixteen unappropriated CSU beds at South County and no CSU beds, appropriated or unappropriated, at 45th Street. All of 45th Street's inpatient services were reported as "other Baker Act services" in that survey. The survey did not ask District IX officials whether the beds at 45th Street functioned as CSU beds rather than as psychiatric hospital beds. Departmental administrators ultimately produced a spread sheet based on the information derived from its informal, internal telephone survey. It showed 52 unappropriated CSU beds in District IX, which included beds at South County, but none at 45th Street's inpatient psychiatric hospital. 45th Street's beds were shown in a spreadsheet column entitled "number [of] mental health center in-patient beds". (Exhibit 1, Attachment 1, Col. 23.). No funding deficiency was identified by the Department for 45th Street's beds on the spreadsheet. During 1989, the Department's central office was notified that the Legislature might be able to appropriate as much as $2.2 million more for Baker Act services, and the Department was requested to suggest appropriate uses for those funds. The administrators in the Department's central office created a document entitled "Funds needed to increase all CSU beds to $113 per day, Baker Act Funds" (Exhibit 8). The methodology employed by the administrator to produce that spreadsheet did not include any data for inpatient hospital beds; it included only licensed CSU beds. It therefore did not include any of 45th Street's inpatient beds but did include money to increase reimbursement for the 52 unappropriated CSU beds at South County. The Department based its calculations on an estimated split of 75 percent/25 percent in the use of Baker Act funds for the state as a whole between CSU services (75 percent), and other services, including emergency screening, mobile crisis response teams, short- term residential services and inpatient services (25 percent), for fiscal year 1987-88 (the most recent data available). The 25 percent includes inpatient psychiatric hospitalization services which can be provided to clients needing them after stabilization in a CSU. In its calculations, the Department's central office reduced the $2.2 million which the appropriations committee staff had indicated might be available by $717,590 which was needed to increase the funding level for previously appropriated CSU beds to the target level of $1i3 per bed per day. The remaining funds would not be enough to fund all unappropriated CSU beds in the state at the target level of $113 per bed per day, so a plan was devised to prorate the remaining amount over the unappropriated CSU beds. The prorated share for District IX was .2723 of the available funds, which would equal $403,636. These internal calculations made by the Department's central office included no money for 45th Street's inpatient beds. The Department's calculations were ultimately delivered to appropriations staff at the Legislature. This information was not broken down by agency within each district (Tr. 55). The 1989-90 General Appropriations Act appropriated $2 million (not the anticipated $2.2 million) in specific appropriation 895 for crisis stabilization unit beds. $717,590 was allocated for appropriated CSU beds in the same manner suggested by the Department to legislative staff. The remaining $1,282,410 was divided among unappropriated CSU beds. This is 29 percent of the money needed to bring all unappropriated beds up to $113 per bed per day. While the allocations made in the General Appropriations Act are similar to those suggested by the Department (Finding 17), it is impossible to determine from the language in specific appropriation 895 whether the members of the Legislature intended to adopt the methodology implicit in the Department's suggested pro rata distribution. The text of the appropriation proviso does not speak to the distribution of funds within a district. The application of the Department's pro rata formula does yield the same increases specifically allocated by the proviso language to each HRS district. It is by no means clear, however, that the use of that suggested percentage figure for each district was also meant to serve as an appropriation to each CSU provider in each district of the amount of money which can be found in the workpapers prepared by the HRS central office, but which were never sent to the Legislature. For District IX, the pro rata share of .2723 would yield $349,179, the amount which is contained in the proviso language for District IX. The evidence offered fails to prove that the Legislature had any specific will as to the distribution of the monies among providers within a district. The Legislature's focus, to the extent it can be discerned from the proviso language itself, appears to have been the funding of CSU services, without regard to licensure status of those providing the services. The beds at 45th Street provide CSU services. Proviso language for specific appropriation 895 states that the entire $2 million would be used for a "price level increase directly relating to the operation of CSU beds, and not to other Baker Act support services". The proviso language requires the Department to insure that the contracts with providers identify the amounts associated with the operation of CSU beds, as opposed to emergency screening and "other Baker Act services". Chapter 89-253, Law of Florida, specific appropriation 895. Specific appropriation 895 also allocated $291,404 to "community mental health centers that operate licensed psychiatric hospital beds" from general revenue to reimburse them for assessments paid to the Public Medical Assistance Trust Fund. That portion of the proviso language was vetoed by the Governor, and is not significant here. The meaning of the proviso language actually included in specific appropriation 895 has been subjected to varying interpretations, and as would be expected, South County advances the interpretation which would grant it the greatest funding. Actual Distribution of Funds in District IX After the Department received the proviso language for specific appropriation 895, all districts were sent a memorandum (including attachments) which required them to establish a plan for spending the funds made available under specific appropriation 895. The plan each district submitted to the Department was known as its "CSU -Deficiency Funding Distribution Plan". In the Department's memo, Assistant Secretary Ivor Groves stated "this analysis addresses only the funding levels of CSU beds and does not speak to increasing the funding levels of SRT [short-term residential treatment] beds or inpatient beds operated by community mental health centers". (Exhibit 1, pg. 3). The memo noted that funds would be allocated based upon the 75/25 ratio of CSU bed funding to funding for other services, and the memorandum specifically requested information on each district's suggested formula for the equitable distribution of funds to providers which operated unappropriated CSU beds. Each district was asked to identify the amount of money it paid to contractors providing CSU beds. The districts reported separately amounts paid to contractors for "other Baker Act services," which would have encompassed inpatient services. After receiving the Department's memorandum about the CSU price level increase, the program supervisor for District IX handling mental health programs was concerned that the memorandum did not appear to permit funding for inpatient beds from the $2 million special appropriation. She consulted with the Department's program office and local legislators, 2/ and determined that the distinction between CSU beds, and the in- patient beds operated by 45th Street was irrelevant in District IX. This was so because although 45th Street was licensed as an inpatient psychiatric hospital, the beds located at 45th Street functioned as crisis stabilization beds. There is no crisis stabilization unit in the catchment area for District IX other than the 45th Street Mental Health Center. The police and others bring people suffering acute psychiatric crisis to 45th Street for the purpose of crisis stabilization, and ultimate referral to appropriate psychiatric treatment. Generally, 45th Street does not utilize its beds as inpatient short-term psychiatric hospital beds. Instead, they operate exactly as the crisis stabilization unit beds operated by other providers, such as South County, under their CSU licensure under Chapter 394. 45th Street's Baker Act-funded inpatient hospital beds serve as crisis stabilization unit beds. 45th Street was also in need of the special price level increase monies to permit it to continue to operate those beds as the crisis stabilization beds for its catchment area. 45th Street is not the only facility which operates short-term psychiatric beds as crisis stabilization unit beds. It is, however, the only facility licensed as a short-term psychiatric hospital whose reimbursement rates were so low that it already did not recover at least $113 per patient per day for crisis stabilization services. Thus, it is the only facility licensed as a short-term psychiatric hospital under Chapter 395 which would stand to gain any additional funding under specific appropriation 895. In order to deal with this unique circumstance in District IX, a district program supervisor struck out the term "CSU beds" in the form attached in Assistant Secretary Ivor Groves' memorandum (Finding 22), and substituted the all- encompassing term "Baker Act beds" when calculating the CSU deficiency funding distribution plan for District IX. She included in that calculation the funding of the short-term psychiatric inpatient beds at 45th Street, as well as other licensed CSU beds operated by other providers in District IX. In order to determine the increases necessary to bring all "Baker Act" beds up to the same reimbursement rate per bed per day, the District IX mental health program supervisor had to determine the rate at which District IX reimbursed each provider for the CSU services it made available to the Department. She did so by dividing the number of Baker Act patient days for each agency for the previous year into 75 percent of the Baker Act funds the agency received from the Department that year. The .75 multiplier was used to reflect the statewide 75/25 split in the use of Baker Act funds (see Finding 16 above). In performing this calculation for South County, the Department included all Baker Act funds South County had received. When performing the calculation for 45th Street, the Department did not include all funds that 45th Street had received that year; this had the effect of lowering the rate of reimbursement per bed per day computed under the formula, which in turn had the effect of requiring greater allocations of the deficiency appropriation to 45th Street for fiscal year 1989-90 in order to bring it up to the same reimbursement rate received by other providers, such as South County. The funds excluded from 45th Street's calculation were: a special allocation the Department made to it to reduce the $150,000 operating deficit incurred in a prior period. This was not money used to provide Baker Act services during 1988-89, was not recurring money and was properly excluded; $258,776 45th Street had received for CSU beds newly appropriated for 45th Street that year, even though those beds had not yet been opened, (only $59,000 actually was used for start-up costs, the rest also was applied toward 45th Street's operating deficit). The start-up costs were not recurring, and were properly excluded; and any "profits" from third party reimbursement that may have been paid to 45th Street due to its ability to be reimbursed by third party insurers. The amount of such reimbursement, if any, was not proven at the hearing. 45th Street had provided 10,845 days of CSU services for eligible Baker Act patients in 1988-89; its total reimbursement was $619,326. This was multiplied by .75 (see finding 16), to estimate the total CSU reimbursement it had received. This in turn was divided by the 10,845 patient days to yield a reimbursement rate of $42.42 per bed per day in fiscal year 1988- 89. This is obviously a rough approximation of the reimbursement rate, but the methodology used is reasonable. When District IX calculated its distribution of the $349,179 available to providers of CSU services, the District included 30 beds at 45th Street in the formula, even though 45th Street had 44 beds. The volume of its services was such that 45th Street did fill 30 beds all year with Baker Act CSU patients. The Department's distribution of the CSU deficiency money in District IX does permit patients treated in licensed psychiatric inpatient beds at 45th Street to be billed for in- patient services if they have insurance, but will also consider them CSU patients if they are receiving treatment under the Baker Act. There is no proof, however, that any significant number of patients the police or others bring to 45th Street for crisis stabilization have private insurers which 45th Street can bill. No evidence of any such reimbursement was introduced at the hearing. South County complains that the Department's "functional" interpretation, which treats 45th Street's beds as CSU beds, is improper because it did not use this interpretation when it provided data to legislative staff, and that the Department has never utilized this interpretation in any rule, policy or procedure. The record does not indicate that any other CSU deficiency appropriations have been made, however, so there has been no occasion for the Department to face this question before. It is not surprising that no prior rule, policy or procedure dealt with this issue. In addition, the data provided to legislative staff was necessarily general data. Legislative staff sought and received a suggested plan for distribution of funds among districts, not among providers. The Department's suggestion was never intended to account for special or unique situations, such as that in District IX, where 45th Street, while licensed as an inpatient psychiatric hospital, functions as a crisis stabilization unit, but received such a low reimbursement rate per patient per day that it was operating in a deficit. The Department's interpretation means that South County, which has 31 percent of the CSU beds in District IX, will receive only 7 percent of the deficiency appropriation, while 45th Street will receive 83 percent of the deficiency funding. This results from the low reimbursement rate which 45th Street has been receiving, and is consistent with the legislative intent to try to raise all providers of CSU services toward the goal of reimbursement at the rate of $113 per bed per day. 45th Street will receive $68.83 per bed per day under the Department's distribution plan. The Indian River Community Mental Health Center received none of the CSU deficiency distribution funds, because it already was receiving more than $86 per bed per day. After the issue of the Department's interpretation of the proviso language came up, both parties attempted to obtain correspondence from the members of the appropriations committees in the House and Senate giving their view of the proper interpretation of the proviso language. The positions expressed in these letters are irreconcilable. These after-the-fact statements from individual legislators lack evidentiary value.
Recommendation It is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order dismissing the Petitioner's challenge to the disbursement of monies in District IX under Specific Appropriation 895 of the 1989-90 General Appropriations Act for lack of jurisdiction. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 28th day of March, 1990. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of March, 1990.
The Issue Whether Petitioner's stay at The Rehabilitation Center at Hollywood Hills LLC ("Rehab Center"), a skilled nursing facility, is a covered benefit pursuant to the State of Florida Employees' HMO Plan ("Plan") administered by AvMed.
Findings Of Fact Respondent is the state agency charged with administering the state employee health insurance program pursuant to section 110.123, Florida Statutes. At all times material hereto, Petitioner was a member of the Plan. AvMed is the third party administrator for the Plan at issue in this cause. As the third party administrator, AvMed provides utilization and benefit management services. On or about September 21, 2016, Petitioner suffered a hemorrhagic cerebral vascular accident, commonly referred to as a stroke, while in her home. Petitioner was transported to Jackson Memorial Hospital for treatment. Petitioner was discharged from Jackson Memorial Hospital on October 17, 2016. Upon discharge on October 17, 2016, Petitioner was admitted to the Rehab Center. On October 11, 2016, AvMed received a pre-authorization request for inpatient admission for rehabilitative services at the Rehab Center from Petitioner's medical provider. On the same day, AvMed denied the request for pre-authorization on the basis that an inpatient admission to the skilled nursing facility for the purpose of rehabilitation is not a covered benefit. A copy of the denial letter was sent to Petitioner, the physician that made the request for coverage, the Rehab Center, and was provided to the family at the hospital by a case manager. Despite notice of the denied pre-authorization by AvMed, six days later, on October 17, 2016, Petitioner was admitted into the Rehab Center. Petitioner remained at the facility until November 11, 2016. While at the facility, Petitioner experienced pain and swelling in her right leg and was transferred to Memorial Hospital on November 11, 2016, on an emergency basis. Petitioner had a deep vein thrombosis ("DVT") blood clot and had a DVT filter inserted. Petitioner remained at the hospital until November 15, 2016. Although Petitioner was not actually "discharged" from the Rehab Center prior to her emergency admission to Memorial Hospital, Memorial Hospital submitted a pre-authorization request to return Petitioner to the Rehab Center for the purpose of rehabilitation. On November 15, 2016, AvMed denied the request on the basis that inpatient stays for the purpose of rehabilitation are not a covered benefit. A copy of the denial letter was provided to Petitioner, the requesting physician, the Rehab Center, and was provided to the family by the case manager at the hospital. Despite being provided notice of the denial by AvMed, on November 15, 2016, Petitioner transferred back to the Rehab Center where she remained until discharge on January 14, 2017. On November 30, 2016, Petitioner, by and through her daughter, submitted a request for a Level I Appeal to AvMed. In the request for the Level I Appeal, Petitioner's daughter stated it is "very important that [Petitioner] gets proper rehabilitation care . . . [p]lease advise if rehab treatment will be covered." The Level I Appeal request only included an attachment of the denial of pre-authorization for the stay commencing in November 2016. There was no indication that Petitioner was appealing the pre-authorization denial from October. However, Petitioner referenced both denials in the Level II Appeal request; therefore, both stays were considered on the Level II Appeal, and both stays are being addressed in this action. Pursuant to the plan document, rehabilitative services is a covered benefit but is subject to certain restrictions. Specifically, the Plan states, in pertinent part: Rehabilitative services shall not be covered when: The Health Plan member was admitted to a Hospital or other facility primarily for the purpose of providing rehabilitative services; or The rehabilitative services maintain rather than improve a level of physical function, or where it has been determined that the services shall not result in significant improvement in the Health Plan Member's condition within a 60-day period. Resp. Ex. 1, at 46 (emphasis added). The Plan defines "Other Health Care Facility" as follows: Any licensed facility, other than acute care Hospitals and those facilities providing services to ventilator dependent patients, which provides inpatient services such as skilled nursing care and rehabilitative services. Resp. Ex. 1, at 9. The Rehab Center is an "other health care facility" pursuant to the terms of the Plan. The Rehab Center provides skilled care, including skilled nursing and rehabilitation services. Skilled nursing facilities provide two types of services. The first type of service is custodial care. Custodial care is when a person lives in the facility for reasons other than healthcare needs. The second type of service is skilled care. There are two types of skilled care: skilled nursing services and rehabilitation services. Skilled nursing is applicable when a patient needs the services of someone with medical licensure equal to or greater than a licensed registered nurse, and those services are needed on a daily basis. An example of skilled nursing services is administration of intravenous medication, wound care, tracheotomy care, and assistance with a ventilator. On the other hand, rehabilitation services do not require the services of a medical professional with a minimum licensure of registered nurse. Rather, rehabilitation services are comprised of physical therapy, occupational therapy, and speech therapy. Occupational therapy is a covered benefit per the Plan only if the therapy is provided as a home health service, a hospice service, or as treatment for Autism Spectrum Disorder. The occupational therapy services received by Petitioner were in a skilled nursing facility and were not for the purpose of treatment of Autism; therefore, the therapy would not be a covered service under the Plan. The Level I Appeal was reviewed by Edwin Rodriguez, M.D., a Medical Director at AvMed. Dr. Rodriguez specializes in internal medicine, the practice of medical care for the adult population. Approximately 60 to 65 percent of the practice of internal medicine is geriatric medicine, which is the specialty that focuses on medical care for the elderly. As a practicing physician, Dr. Rodriguez has worked in a skilled nursing facility. A primary function of Dr. Rodriguez's current position is utilization management. Utilization management includes the process of reviewing a request for coverage to determine whether the service is a covered benefit pursuant to the Plan and, if it is a covered benefit, reviewing the service for medical appropriateness. In Dr. Rodriguez's opinion, Petitioner's stays at the Rehab Center commencing in October and in November were primarily for the purpose of rehabilitation, and therefore, not a covered benefit. Dr. Rodriguez testified that the discharge summary from Jackson Memorial Hospital indicated that Petitioner needed rehabilitation services. Specifically, the discharge summary recommended a "protracted rehab course in the setting of a skilled nursing facility." The discharge summary also recommended physical therapy, occupational therapy, and speech therapy as follow-up care. Dr. Rodriguez testified that the Jackson Memorial Hospital discharge summary did not indicate any need for skilled nursing. The discharge summary indicated that at the time of discharge, Petitioner had a new onset of Atrial Fibrillation ("AFib"), a resolved urinary tract infection, and a Foley catheter. Dr. Rodriguez testified that none of these conditions required skilled nursing. Dr. Rodriguez testified that Petitioner's AFib was rate-controlled, meaning it was stabilized, and therefore, did not require skilled nursing care. The discharge summary indicated Petitioner had a urinary tract infection, which had resolved at the time of discharge. Dr. Rodriguez testified that a urinary tract infection does not require skilled nursing unless intravenous antibiotics are required. There was no evidence that Petitioner was taking any intravenous medications. All of the medications listed in the medical records from Jackson Memorial Hospital, Memorial Hospital, and the Rehab Center were oral medications that did not require any skilled care. Dr. Rodriguez further testified that although the discharge summary indicated that Petitioner had dysphagia, or difficulty swallowing, that Petitioner passed a swallow test prior to discharge from Jackson Memorial Hospital. Dr. Rodriguez testified that Petitioner's Foley catheter did not require skilled nursing. A Foley catheter is a thin tube that goes directly into the bladder through the urethra. A Foley catheter does not require skilled care, in fact, many people leave skilled nursing facilities with Foley catheters. Dr. Rodriguez testified that Petitioner's specific medical conditions and physical limitations did not require skilled care for the Foley catheter. Petitioner's catheter was to be changed once per month, and according to the Rehab Center records, the catheter was changed on an outpatient basis by a physician located outside of the Rehab Center. Furthermore, pursuant to the Plan, catheter care is considered "custodial care" and is excluded from coverage. Dr. Rodriguez testified that the records from the Rehab Center for the stay commencing in October indicate Petitioner's stay was for rehabilitation services, specifically occupational therapy, speech therapy, and physical therapy. The records include an occupational therapy care plan, occupational therapy progress notes, and a speech therapy plan for treatment. The records further include progress notes that include an "assessment and plan" to address the hemorrhagic cerebral vascular accident to include physical therapy and occupational therapy. Dr. Rodriguez testified that the records did not indicate any need for skilled nursing care. Dr. Rodriquez testified that the records from the Rehab Center for the stay commencing in November also evidence that Petitioner was primarily receiving rehabilitative services, specifically physical therapy and occupational therapy services. Petitioner presented to the Rehab Center with motor control deficits, right-side balance hemiplegia, balance deficits, impaired coordination, poor functional activity tolerance, and poor safety awareness. A physical therapy plan was completed in order to address these issues. Petitioner also presented with a decline in her functioning activities of daily living, such as self-feeding and functional mobility. An occupational therapy plan was completed in order to address these issues. Dr. Rodriguez testified that there was no documentation as to the need for skilled nursing care. The claim forms submitted by the Rehab Center to AvMed also indicate that Petitioner was primarily receiving rehabilitation services, specifically physical therapy, occupational therapy, and speech therapy. On December 1, 2016, AvMed denied the Level I Appeal on the basis that the inpatient stay commencing in November for the purpose of rehabilitation is not a covered benefit. By letter dated December 5, 2016, a request for a Level II Appeal was submitted by Petitioner's daughter, Marie Wright. The letter requests coverage for acute rehabilitation. The letter specifically alleged that AvMed refused to "grant [Petitioner] acute and skilled rehabilitation to put [Petitioner] on her feet again." Ms. Wright states that she wants Petitioner to "receive the Acute Rehabilitation [Petitioner] so desperately needs and deserves." As supportive documentation for the Level II Appeal request, Ms. Wright attached a physical therapy evaluation from Memorial Hospital. Kathy Flippo, a registered nurse and employee of Respondent, reviewed the Level II Appeal. Ms. Flippo's opinion was that the stays at the Rehab Center were primarily for purposes of rehabilitation. Ms. Flippo testified that the focus of the treatment at the Rehab Center for both stays was rehabilitation services to provide assistance and/or training with activities of daily living, such as moving in bed, getting out of bed, and feeding. Ms. Flippo testified that she reviewed the records from Jackson Memorial Hospital, the Rehab Center, and Memorial Hospital, and there was no indication that Petitioner needed skilled nursing services. Ms. Flippo testified that Petitioner's medications were all oral and the Foley catheter did not require skilled care. Ms. Flippo testified that the statements of Petitioner's representative, Ms. Wright, further confirmed that the intent was for Petitioner to receive rehabilitation at the Rehab Center. By letter dated December 21, 2016, Respondent notified Petitioner of the decision to deny the claim as a non-covered service. Ms. Wright testified that her mother needed total care for all of her needs and was not in need of rehabilitation services until after Petitioner's discharge from the Rehab Center on January 14, 2017. Ms. Wright testified that she did call PeopleFirst to request a change in Petitioner's health plan as rehabilitation services were not covered under the current AvMed plan. Ms. Wright stated that she did not recall the timeframe of the call but that she was asking about the possibility of changing the plan, not because Petitioner needed rehabilitation "right then and there," but that she was looking at "options for down the road." However, the call records from PeopleFirst evidence that Ms. Wright contacted PeopleFirst on October 19, 2016, in an effort to "upgrade" Petitioner's insurance to a plan that covers rehabilitation services. During the call, Ms. Wright was informed that any changes to the plan would not take effect until January 1, 2017. In response, Ms. Wright stated, "Ok, so that won't help us, I mean it could help us for her second step of rehab but it is not going to help us now. Right now we are you know stuck in the middle between acute rehab and Avmed and Medicare so I was hoping that I could just fix it by upgrading her plan if it was going to work immediately." Furthermore, Ms. Wright's own statements in the Level I Appeal request dated November 30, 2016, and the Level II Appeal request dated December 5, 2016, both indicate that Ms. Wright's intent was to secure coverage for rehabilitation services well before Petitioner's discharge on January 14, 2017. Petitioner's sister, Lorraine Simpson's, call to PeopleFirst also confirms that Petitioner was placed in the Rehab Center for the purpose of obtaining rehabilitation services. Ms. Simpson called PeopleFirst on December 27, 2016, in order to upgrade Petitioner's policy. Ms. Simpson stated Petitioner "needs rehab and no one is able to give it to her because she hasn't got the coverage." Additionally, the family placed calls to AvMed regarding coverage of inpatient rehabilitation at a Rehab Center. On October 8, 2016, three days prior to the pre-authorization denial and seven days prior to admission to the Rehab Center, Ms. Simpson was notified that inpatient rehabilitation services at a skilled nursing facility are not a covered benefit. On October 14, 2016, three days before Petitioner was admitted to the Rehab Center, Ms. Simpson again contacted AvMed and was notified that the Plan does not cover inpatient admissions for the purpose of rehabilitation. At no time was Petitioner or her family advised that either stay at the Rehab Center would be covered. While Ms. Wright and Ms. Simpson testified that Claudia Martinez with AvMed notified them that the stay commencing in October would be covered, Ms. Martinez testified that she did not tell Petitioner or her family that the stay would be covered and that, in fact, she told them that the request for pre-authorization was denied.2/ Ms. Martinez further testified that Ms. Wright asked her about changing the health plan since rehabilitation services were not covered, and Ms. Martinez informed Ms. Wright to contact member services. Ms. Martinez confirmed that AvMed does not have any authorizations on file for the stays in question. Ms. Wright testified that AvMed's approval of 100 days at the facility was documented in Petitioner's Exhibit 2. However, the form entitled "Insurance Co-Payment" is not a document generated or used by AvMed. The document itself has the name of the skilled nursing facility, The Rehabilitation Center at Hollywood Hills LLC, on the bottom. Furthermore, the document states that the policy covers up to 100 days at a skilled nursing facility, which corresponds with Medicare's maximum for coverage as opposed to the State of Florida coverage for skilled nursing which covers a maximum of 60 days in a skilled nursing facility. Due to Petitioner's age, she was eligible for Medicare. The Plan provides for coordination of benefits when a member is Medicare eligible. When the member is an active employee, the Plan is typically the primary payor while Medicare is the secondary payor.3/ In a case for which the Plan is a primary payor, and the medical claim at issue is not a covered benefit, Medicare is able to provide coverage for the claim. In this case, Medicare covered a portion of Petitioner's stay at the Rehab Center. Unlike the Plan at issue in this action, Medicare does not limit or exclude coverage for rehabilitation stays in a skilled nursing facility. Medicare covers up to 100 days in a skilled nursing facility. Medicare typically covers 100 percent of the inpatient stay for the first 20 days. For days 21 through 100, the member is responsible for a co-payment of $161.00 per day.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, issue a final order denying Petitioner's claim for coverage of the stays at The Rehabilitation Center at Hollywood Hills LLC, and further, denying Petitioner's request for attorney's fees and costs. DONE AND ENTERED this 11th day of August, 2017, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 2017.
The Issue Whether the Agency for Health Care Administration (AHCA or the Agency) should approve the application for certificate of need (CON) 7700 filed by Miami Beach Healthcare Group, LTD. d/b/a Miami Heart Institute (Miami Heart or MH).
Findings Of Fact The Agency is the state agency charged with the responsibility of reviewing and taking action on CON applications pursuant to Chapter 408, Florida Statutes. The applicant, Miami Heart, operates a hospital facility known as Miami Heart Institute which, at the time of hearing, was comprised of a north campus (consisting of 273 licensed beds) and a south campus (consisting of 258 beds) in Miami, Florida. The two campuses operate under a single license which consolidated the operation of the two facilities. The consolidation of the license was approved by CON 7399 which was issued by the Agency prior to the hearing of this case. The Petitioner, Mount Sinai, is an existing health care facility doing business in the same service district. On February 4, 1994, AHCA published a fixed need pool of zero adult inpatient psychiatric beds for the planning horizon applicable to this batching cycle. The fixed need pool was not challenged. On February 18, 1994, Miami Heart submitted its letter of intent for the first hospital batching cycle of 1994, and sought to add twenty adult general inpatient psychiatric beds at the Miami Heart Institute south campus. Such facility is located in the Agency's district 11 and is approximately two (2) miles from the north campus. Notice of that letter was published in the March 11, 1994, Florida Administrative Weekly. Miami Heart's letter of intent provided, in pertinent part: By this letter, Miami Beach Healthcare Group, Ltd., d/b/a Miami Heart Institute announces its intent to file a Certificate of Need Application on or before March 23, 1994 for approval to establish 20 hospital inpatient general psychiatric beds for adults at Miami Heart Institute. Thus, the applicant seeks approval for this project pursuant to Sections 408.036(1)(h), Florida Statutes. The proposed capital expenditure for this project shall not exceed $1,000,000 and will include new construction and the renovation of existing space. Miami Heart Institute is located in Local Health Council District 11. There are no subsdistricts for Hospital Inpatient General Psychiatric Beds for Adults in District 11. The applicable need formula for Hospital General Psychiatric Beds for Adults is contained within Rule 59C-1.040(4)(c), F.A.C. The Agency published a fixed need of "0" for Hospital General Psychiatric Beds for Adults in District 11 for this batching cycle. However, "not normal" circumstances exist within District which justify approval of this project. These circumstances are that Miami Beach Community Hospital, which is also owned by Miami Beach Healthcare Group, Ltd., and which has an approved Certificate of Need Application to consol- idate its license with that of the Miami Heart Institute, has pending a Certificate of Need Application to delicense up to 20 hospital inpatient general psychiatric beds for adults. The effect of the application, which is the subject of this Letter of Intent, will be to relocate 20 of the delicensed adult psychiatric beds to the Miami Heart Institute. Because of the "not normal" circumstances alleged in the Miami Heart letter of intent, the Agency extended a grace period to allow competing letters of intent to be filed. No additional letters of intent were submitted during the grace period. On March 23, 1994, Miami Heart timely submitted its CON application for the project at issue, CON no. 7700. Notice of the application was published in the April 8, 1994, Florida Administrative Weekly. Such application was deemed complete by the Agency and was considered to be a companion to the delicensure of the north campus beds. On July 22, 1994, the Agency published in the Florida Administrative Weekly its preliminary decision to approve CON no. 7700. In the same batch as the instant case, Cedars Healthcare Group (Cedars), also in district 11, applied to add adult psychiatric beds to Cedars Medical Center through the delicensure of an equal number of adult psychiatric beds at Victoria Pavilion. Cedars holds a single license for the operation of both Cedars Medical Center and Victoria Pavilion. As in this case, the Agency gave notice of its intent to grant the CON application. Although this "transfer" was initially challenged, it was subsequently dismissed. Although filed at the same time (and, therefore, theoretically within the same batch), the Cedars CON application and the Miami Heart CON application were not comparatively reviewed by the Agency. The Agency determined the applicants were merely seeking to relocate their own licensed beds. Based upon that determination, MH's application was evaluated in the context of the statutory criteria, the adult psychiatric beds and services rule (Rule 59C-1.040, Florida Administrative Code), the district 11 local health plan, and the 1993 state health plan. Ms. Dudek also considered the utilization data for district 11 facilities. Mount Sinai timely filed a petition challenging the proposed approval of CON 7700 and, for purposes of this proceeding only, the parties stipulated that MS has standing to raise the issues remaining in this cause. Mount Sinai's existing psychiatric unit utilization is presently at or near full capacity, and MS' existing unit would not provide an adequate, available, or accessible alternative to Miami Heart's proposal, unless additional bed capacity were available to MS in the future through approval of additional beds or changes in existing utilization. Miami Heart's proposal to establish twenty adult general inpatient psychiatric beds at its Miami Heart Institute south campus was made in connection with its application to delicense twenty adult general inpatient psychiatric beds at its north campus. The Agency advised MH to submit two CON applications: one for the delicensure (CON no. 7474) and one for the establishment of the twenty beds at the south campus (CON no. 7700). The application to delicense the north campus beds was expeditiously approved and has not been challenged. As to the application to establish the twenty beds at the south campus, the following statutory criteria are not at issue: Section 408.035(1)(c), (e), (f), (g), (h), (i), (j), (k), (m), (n), (o) and (2)(b) and (e), Florida Statutes. The parties have stipulated that Miami Heart meets, at least minimally, those criteria. During 1993, Miami Heart made the business decision to cease operations at its north campus and to seek the Agency's approval to relocate beds and services from that facility to other facilities owned by MH, including the south campus. Miami Heart does not intend to delicense the twenty beds at the north campus until the twenty beds are licensed at the south campus. The goal is merely to transfer the existing program with its services to the south campus. Miami Heart did not seek beds from a fixed need pool. Since approximately April, 1993, the Miami Heart north campus has operated with the twenty bed adult psychiatric unit and with a limited number of obstetrical beds. The approval of CON no. 7700 will not change the overall total number of adult general inpatient psychiatric beds within the district. The adult psychiatric program at MH experiences the highest utilization of any program in district 11, with an average length of stay that is consistent with other adult programs around the state. Miami Heart's existing psychiatric program was instituted in 1978. Since 1984, there has been little change in nursing and other staff. The program provides a full continuum of care, with outpatient programs, aftercare, and support programs. Nearly ninety-nine percent of the program's inpatient patient days are attributable to patients diagnosed with serious mental disorders. The Miami Heart program specializes in a biological approach to psychiatric cases in the diagnosis and treatment of affective disorders, including a variety of mood disorders and related conditions. The Miami Heart program is distinctive from other psychiatric programs in the district. If the MH program were discontinued, the patients would have limited alternatives for access to the same diagnostic and treatment services in the district. There are no statutes or rules promulgated which specifically address the transfer of psychiatric beds or services from one facility owned by a health care entity to another facility also owned by the same entity. In reviewing the instant CON application, the Agency determined it has the discretion to evaluate each transfer case based upon the review criteria and to consider the appropriate weight factors should be given. Factors which may affect the review include the change of location, the utilization of the existing services, the quality of the existing programs and services, the financial feasibility, architectural issues, and any other factor critical to the review process. In this case, the weight given to the numeric need criteria was not significant. The Agency determined that because the transfer would not result in a change to the overall bed inventory, the calculated fixed need pool did not apply to the instant application. In effect, because the calculation of numeric need was inapplicable, this case must be considered "not normal" pursuant to Rule 59C-1.040(4)(a), Florida Administrative Code. The Agency determined that other criteria were to be given greater consideration. Such factors were the reasonableness of the proposal, the ability to afford access, the applicant's ability to provide a quality program, and the project's financial feasibility. The Agency determined that, on balance, this application should be approved as the statutory and other review criteria were met. Although put on notice of the other CON applications, Mount Sinai did not file an application for psychiatric beds at the same time as Miami Heart or Cedars. Mount Sinai did not claim that the proposed delicensures and transfers made beds available for competitive review. The Agency has interpreted Rule 59C-1.040, Florida Administrative Code, to mean that it will not normally approve an application for beds or services unless the statutory and rule criteria are met, including the need determination criteria. There is no list of circumstances which are routinely considered "not normal" by the Agency. In this case, the proposed transfer of beds was, in itself, considered "not normal." The approval of Miami Heart's application would allow an existing program to continue. As a result, the overhead to maintain two campuses would be reduced. Further, the relocation would allow the program to continue to provide access, both geographically and financially, to the same patient service area. And, since the program has the highest utilization rate of any adult program in the district, its continuation would be beneficial to the area. The program has an established referral base for admissions to the facility. The transfer is reasonable for providing access to the medically under-served. The quality of care, while not in issue, would be expected to continue at its existing level or improve. The transfer would allow better access to ancillary hospital departments and consulting specialists who may be needed even though the primary diagnosis is psychiatric. The cost of the transfer when compared to the costs to be incurred if the transfer is not approved make the approval a benefit to the service area. If the program is not relocated, Medicaid access could change if the hospital is reclassified from a general facility to a specialty facility. The proposed cost for the project does not exceed one million dollars. If the north campus must be renovated, a greater capital expenditure would be expected. The expected impact on competition for other providers is limited due to the high utilization for all programs in the vicinity. The subject proposal is consistent with the district and state health care plans and the need for health care facilities and services. The services being transferred is an existing program which is highly utilized and which is not creating "new beds." As such, the proposal complies with Section 408.035(1)(a), Florida Statutes. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing services in the district will not be adversely affected by the approval of the subject application. The proposed transfer is consistent with, and appropriate, in light of these criteria. Therefore, the proposal complies with Section 408.035(1)(b), Florida Statutes. The subject application demonstrates a full continuum of care with safeguards to assure that alternatives to inpatient care are fully utilized when appropriate. Therefore, the availability and adequacy of other services, such as outpatient care, has been demonstrated and would deter unnecessary utilization. Thus, Miami Heart has shown its application complies with Section 408.035(1)(d), Florida Statutes. Miami Heart has also demonstrated that the probable impact of its proposal is in compliance with Section 408.035(1)(l), Florida Statutes. The proposed transfer will not adversely impact the costs of providing services, the competition on the supply of services, or the improvements or innovations in the financing and delivery of services which foster competition, promote quality assurance, and cost-effectiveness. Miami Heart has taken an innovative approach to promote quality assurance and cost effectiveness. Its purpose, to close a facility and relocate beds (removing unnecessary acute care beds in the process), represents a departure from the traditional approach to providing health care services. By approving Miami Heart's application, overhead costs associated with the unnecessary facility will be eliminated. There is no less costly, more efficient alternative which would allow the continuation of the services and program Miami Heart has established at the north campus than the approval of transfer to the south campus. The MH proposal is most practical and readily available solution which will allow the north campus to close and the beds and services to remain available and accessible. The renovation of the medical surgical space at the south campus to afford a location for the psychiatric unit is the most practical and readily available solution which will allow the north campus to close and the beds and services to remain available and accessible. In totality, the circumstances of this case make the approval of Miami Heart's application for CON no. 7700 the most reasonable and practical solution given the "not normal" conditions of this application.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Agency for Health Care Administration enter a final order approving CON 7700 as recommended in the SAAR. DONE AND RECOMMENDED this 5th day of April, 1995, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-4755 Note: Proposed findings of fact are to contain one essential fact per numbered paragraph. Proposed findings of fact paragraphs containing multiple sentences with more than one statement of fact are difficult to review. In reviewing for this case, where all sentences were accurate and supported by the recorded cited, the paragraph has been accepted. If the paragraph contained mixed statements where one sentence was an accurate statement of fact but the others were not, the paragraph has been rejected. Similarly, if one sentence was editorial comment, argument, or an unsupported statement to a statement of fact, the paragraph has been rejected. Proposed findings of fact should not include argument, editorial comments, or statements of fact mixed with such comments. Rulings on the proposed findings of fact submitted by Petitioner, Mount Sinai: Paragraphs 1 through 13 were cited as stipulated facts. Paragraph 14 is rejected as irrelevant. With regard to paragraph 15 it is accepted that Miami Heart made the business decision to move the psychiatric beds beds from the north campus to the south campus. Any inference created by the remainder of the paragraph is rejected as irrelevant. Paragraph 16 is rejected as irrelevant. Paragraph 17 is rejected as irrelevant. Paragraph 18 is accepted. Paragraph 19 is rejected as irrelevant. Paragraph 20 is rejected as contrary to the weight of the credible evidence. Paragraph 21 is rejected as contrary to the weight of the credible evidence. Paragraph 22 is accepted. Paragraph 23 is rejected as irrelevant. Paragraph 24 is accepted. Paragraph 25 is rejected as repetitive, or immaterial, unnecessary to the resolution of the issues. Paragraph 26 is rejected as irrelevant or contrary to the weight of the credible evidence. Paragraph 27 is rejected as comment or conclusion of law, not fact. Paragraph 28 is accepted but not relevant. Paragraphs 29 and 30 are accepted. Paragraphs 31 through 33 are rejected as argument, comment or irrelevant. Paragraph 34 is rejected as comment or conclusion of law, not fact. Paragraph 35 is rejected as comment or conclusion of law, not fact, or irrelevant as the FNP was not in dispute. Paragraph 36 is rejected as irrelevant. Paragraph 37 is rejected as repetitive, or comment. Paragraph 38 is rejected as repetitive, comment or conclusion of law, not fact, or irrelevant. Paragraph 39 is rejected as argument or contrary to the weight of credible evidence. Paragraph 40 is accepted. Paragraph 41, 42, and 43 are rejected as contrary to the weight of the credible evidence and/or argument. Paragraph 44 is rejected as argument and comment on the testimony. Paragraph 45 is rejected as argument, irrelevant, and/or not supported by the weight of the credible evidence. Paragraph 46 is rejected as argument. Paragraph 47 is rejected as comment or conclusion of law, not fact. Paragraph 48 is rejected as comment, argument or irrelevant. Paragraph 49 is rejected as comment on testimony. It is accepted that the proposed relocation or transfer of beds is a "not normal" circumstance. Paragraph 50 is rejected as argument or irrelevant. Paragraph 51 is rejected as argument or contrary to the weight of credible evidence. Paragraph 52 is rejected as argument or contrary to the weight of credible evidence. Paragraph 53 is rejected as argument, comment or recitation of testimony, or contrary to the weight of credible evidence. Paragraph 54 is rejected as irrelevant or contrary to the weight of credible evidence. Paragraph 55 is rejected as irrelevant, comment, or contrary to the weight of credible evidence. Paragraph 56 is rejected as irrelevant or argument. Paragraph 57 is rejected as irrelevant or argument. Paragraph 58 is rejected as contrary to the weight of credible evidence. Paragraph 59 is rejected as irrelevant. Paragraph 60 is rejected as contrary to the weight of credible evidence. Paragraph 61 is rejected as argument or contrary to the weight of credible evidence. Paragraph 62 is rejected as argument or contrary to the weight of credible evidence. Paragraph 63 is accepted. Paragraph 64 is rejected as irrelevant. Mount Sinai could have filed in this batch given the not normal circumstances disclosed in the Miami Heart notice. Paragraph 65 is rejected as irrelevant. Paragraph 66 is rejected as comment or irrelevant. Paragraph 67 is rejected as argument or contrary to the weight of credible evidence. Paragraph 68 is rejected as argument or irrelevant. Paragraph 69 is rejected as argument, comment or irrelevant. Paragraph 70 is rejected as argument or contrary to the weight of credible evidence. Rulings on the proposed findings of fact submitted by the Respondent, Agency: Paragraphs 1 through 6 are accepted. With the deletion of the words "cardiac catheterization" and the inclusion of the word "psychiatric beds" in place, paragraph 7 is accepted. Cardiac catheterization is rejected as irrelevant. Paragraph 8 is accepted. The second sentence of paragraph 9 is rejected as contrary to the weight of credible evidence or an error of law, otherwise, the paragraph is accepted. Paragraph 10 is accepted. Paragraphs 11 through 17 are accepted. Paragraph 18 is rejected as conclusion of law, not fact. Paragraphs 19 and 20 are accepted. The first two sentences of paragraph 21 are accepted; the remainder rejected as conclusion of law, not fact. Paragraph 22 is rejected as comment or argument. Paragraph 23 is accepted. Paragraph 24 is rejected as argument, speculation, or irrelevant. Paragraph 25 is accepted. Rulings on the proposed findings of fact submitted by the Respondent, Miami Heart: Paragraphs 1 through 13 are accepted. The first sentence of paragraph 14 is accepted; the remainder is rejected as contrary to law or irrelevant since MS did not file in the batch when it could have. Paragraph 15 is accepted. Paragraph 16 is accepted as the Agency's statement of its authority or policy in this case, not fact. Paragraphs 17 through 20 are accepted. Paragraph 21 is rejected as irrelevant. Paragraph 22 is rejected as irrelevant. Paragraphs 23 through 35 are accepted. Paragraph 36 is rejected as repetitive. Paragraphs 37 through 40 are accepted. Paragraph 41 is rejected as contrary to the weight of the credible evidence to the extent that it concludes the distance to be one mile; evidence deemed credible placed the distance at two miles. Paragraphs 42 through 47 are accepted. Paragraph 48 is rejected as comment. Paragraphs 49 through 57 are accepted. COPIES FURNISHED: Tom Wallace, Assistant Director Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 R. Terry Rigsby Geoffrey D. Smith Wendy Delvecchio Blank, Rigsby & Meenan, P.A. 204 S. Monroe Street Tallahassee, Florida 32302 Lesley Mendelson Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Stephen Ecenia Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. 215 South Monroe Street Suite 420 Tallahassee, Florida 32302-0551
The Issue Whether there is a need for an additional 31 short-term psychiatric beds for Broward County?
Findings Of Fact I. General. History of Case. In June of 1984, the Petitioner filed an application with the Respondent for a certificate of need to add 31 short- term psychiatric beds to its existing facility. The certificate of need sought by the Petitioner was assigned certificate of need #3372 by the Respondent. The Respondent denied the Petitioner's application for certificate of need #3372. On October 25, 1984, the Petitioner filed a Petition for Formal Administrative Hearing with the Respondent challenging its proposed denial of the Petitioner's application. The Petition was filed with the Division of Administrative Hearings by the Respondent and was assigned case number 84-4037. Biscayne, Memorial and Charter were granted leave to intervene by Orders dated January 28, 1985, April 26, 1985 and July 9, 1985, respectively. The final hearing was held on November 19 and 21, 1985 in Ft. Lauderdale, Florida and February 24 and 25, 1986 in Tallahassee, Florida. The Petitioner's Proposal. The Petitioner originally sought to add 31 short-term psychiatric beds to its existing facility. If approved, the additional beds would have increased its current licensed beds from 334 to 365 beds. The Petitioner proposed to meet projected need for short-term psychiatric beds in Broward County for 1989. In its original application, the Petitioner proposed to provide services to children, adolescents, adults and the elderly. No distinct psychiatric units were proposed. The total cost of the original proposal was estimated to be $209,368.00. At the final hearing, the Petitioner proposed to relinquish 31 medical/surgical beds and to add 31 short-term psychiatric beds to meet projected need for short-term psychiatric beds in Broward County for 1989. The Petitioner will end up with a total of 334 licensed beds, the same number it now has, if its application is approved. The total cost of the proposal presented at the final hearing was $337,169.00, which is accurate and reasonable. The 31 proposed beds will be divided into a 15-bed dedicated adolescent unit and a 16-bed dedicated geropsychiatric unit. Adults will generally not be treated by the Petitioner. Involuntary admissions will be treated by the Petitioner, although there was some evidence to the contrary. The sixth floor of the Petitioner's existing facility will be converted into space for the new psychiatric units. The Petitioner changed the estimated staffing for its proposal between the time it filed its original application and the final hearing. The changes were not significant. During the 1985 legislative session, the Florida Legislature enacted Section 394.4785(1)(b), Florida Statutes (1985). This,, Section requires that most adolescents be separated from other patients for purposes of psychiatric treatment. Some of the modifications of the Petitioner's application which were made at the final hearing were made in order to conform with this Section. The changes in the Petitioner's proposal which were made between the time it filed its original application with the Respondent and the time of the final hearing are not substantial enough to require that the Petitioner's application, as modified, be remanded to the Respondent for further consideration. The Parties; Standing. The Petitioner is a 334-bed, for-profit, general acute-care hospital. The Petitioner is a full service hospital providing general medical services. The Petitioner has a medical staff of more than 400 physicians, including a department of psychiatry. The Petitioner is owned by National Medical Enterprises, one of the largest health care providers in the country. The Petitioner is located in Hollywood, Florida, which is located in the southern portion of Broward County, Florida. Broward County is the only County in the Respondent's service district 10. The Petitioner's primary service area consist of the southern portion of Broward County from State Road 84 in the North to the Broward-Dade County line in the South. Memorial is a not-for-profit general acute care hospital located in southern Broward County. Memorial holds License #1737, issued on June 1, 1985, which authorizes Memorial to operate 74 short-term psychiatric beds. This license is valid for the period June 1, 1985 to May 31, 1987. Memorial was also authorized to operate 74 short-term psychiatric beds in its license issued for the 2-year period prior to June 1, 1985. Memorial is located a short distance from where the Petitioner is located in southern Broward County. Memorial and the Petitioner share the same general primary service area. Most of the physicians on the staff at Memorial are also on the Petitioner's staff. Memorial is subsidized by tax revenues for providing indigent care for southern Broward County. About 17 percent of Memorial's revenue is attributable to bad debt and indigent care. If the Petitioner's application is approved it is likely that the Petitioner will take patients from Memorial. It is also likely that the patients taken from Memorial will be other than indigent patients. If the Petitioner were to achieve a 75 percent occupancy rate and 50 percent of its patients come from Memorial, Memorial would lose a little over $1,000,000.00 in terms of 1985 dollars. It is unlikely, however, that the Petitioner will achieve an occupancy rate of 75 percent and, more importantly, it is unlikely that 50 percent of the Petitioner's patients will come from Memorial. The loss of patients from Memorial which would be caused by approval of the Petitioner's application will, however, result in a financial loss to Memorial which may effect its ability to provide quality care. Additionally, the loss in paying patients could increase the percentage of indigent patients at Memorial and, because a portion of the cost of caring for indigents is covered by paying patients at Memorial, could result in a further loss in revenue and an increase in tax support. The public may have difficulty accepting a public hospital, such as Memorial, as a high-quality hospital if the public hospital is perceived to be a charity hospital. It is therefore important for a public hospital to attract a significant number of paying patients to its facility to avoid such an image. It is unlikely that the number of patients which may be lost to the Petitioner by Memorial is sufficient to cause the public to perceive that Memorial is a charity hospital. Biscayne is a 458-bed, general acute-care hospital located on U.S. 1 in northern Dade County, Florida, just south of the Broward County line. Biscayne's facility is located within about 5 miles of the Petitioner's facility. Biscayne is about a 5 to 10 minute drive from the Petitioner. Dade County is not in service district 10. It is in service district 11. Of the 458 licensed beds at Biscayne, 24 are licensed as short-term psychiatric beds and 24 are licensed as substance abuse beds. The rest are licensed as medical/surgical beds. Ten of the medical/surgical beds at Biscayne are used as a dedicated 10-bed eating disorder (anoxeria nervosa and bulimirexia) unit. These 10 beds are not licensed for such use. A separate support staff is used for the 10-bed eating disorder unit. Approximately 60 percent of Biscayne's medical staff of approximately 400 physicians are residents of Broward County. Most of these physicians are also on the medical staff of other hospitals, principally the Petitioner, Memorial and Parkway Regional Medical Center, which is located in northern Dade County. Most of its staff have their business offices in southern Broward County. Biscayne's service area includes southern Broward County and northern Dade County. Approximately 60 percent of Biscayne's patients are residents of southern Broward County. Biscayne markets its services in southern Broward County. Eighty percent of Biscayne's psychiatric patients are elderly. Many types of psychotic and psychiatric disorders are treated at Biscayne. Biscayne offers psycho-diagnostic services, crisis stabilization services, shock therapy services, individual therapy services and group therapy services. Biscayne has had difficulty in recruiting qualified staff for its psychiatric unit. Biscayne currently has 4 vacancies for registered nurses, 4 vacancies for mental health assistants and 1 vacancy for an occupational therapist in its psychiatric unit. Biscayne recruits nurses who are certified in mental health nursing. They have not always been successful in finding such nurses. Therefore, Biscayne provides educational programs to help train its nursing staff. These programs are necessary because of the unavailability of experienced nurses for its psychiatric unit. The Petitioner has projected that most of its patients for its proposed psychiatric units will come from southern Broward County, where Biscayne gets approximately 60 percent of its patients. The Petitioner plans to try to convince psychiatrists currently using existing providers, except Hollywood Pavilion, to refer their patients to the proposed psychiatric units. Since Biscayne and the Petitioner share some of the same physicians, it is likely that many of the patients cared-for by the Petitioner will come form Biscayne and other providers in southern Broward County, including Memorial. The loss of patients at Biscayne, if the Petitioner's proposal is approved, will result in a loss of revenue to Biscayne which may affect its ability to provide quality care. Charter was an applicant for a certificate of need to construct a free-standing psychiatric facility in Broward County. In its application Charter sought approval of long-term and short-term psychiatric beds. Charter's application was filed with the Respondent in August of 1983. It was filed for review by the Respondent in a batching cycle which preceded the batching cycle in which the Petitioner's application was filed. In December of 1983, the Respondent proposed to approve Charter's application and authorize a project consisting of 16 short-term adolescent psychiatric beds, 16 long-term adolescent psychiatric beds, 16 long-term substance abuse beds and 12 long-term children's psychiatric beds. The Respondent's proposed approval of Charter's application was challenged. Following an administrative hearing, it was recommended that Charter's application be denied. Final agency action had not been taken as of the commencement of the hearing in this case. Subsequent to the date on which the final hearing of this case commenced, the Respondent issued a Final Order denying Charter's certificate of need application. This Final Order is presently pending on appeal to the First District Court of Appeal. Charter does not have an existing facility offering services similar to those proposed by the Petitioner in Broward County or anywhere near the Petitioner's facility. When the Orders allowing Memorial, Biscayne and Charter to intervene were issued by Hearing Officer Sherrill, Mr. Sherrill determined that if the Intervenor's could prove the facts alleged in their Petition to Intervene they would have standing to participate in this case. Memorial and Biscayne have in fact proved the allegations contained in their Petitions to Intervene. Based upon all of the evidence, it is therefore concluded that Memorial and Biscayne have standing to participate in this proceeding. Both Memorial and Biscayne will probably lose patients to the Petitioner if its proposal is approved resulting in a loss of revenue. This loss could affect quality of care at Memorial and Biscayne. Also, it is possible that both would lose some of their specialized nursing personnel to ;the Petitioner to staff its proposed psychiatric units. Charter has failed to establish that it has standing to participate in this proceeding. The potential injury to Charter is too speculative. II. Rule 10-5.11(25), F.A.C. A. General. Whether a certificate of need for short-term psychiatric beds should be approved for Broward County is to be determined under the provisions of Section 381.494(6)(c), Florida Statutes (1985), and the Respondent's rules promulgated thereunder. In particular, Rule 10-5.11(25), F.A.C., governs this case. Under Rule 10-5.11(25)(c), F.A.C., a favorable determination will "not normally" be given on applications for short-term psychiatric care facilities unless bed need exists under Rule 10-5.11(25)(d), F.A.C. B. Rule 10-5.11(25)(d) , F.A.C. Pursuant to Rule 10-5.11(25)(d)3, F.A.C., bed need is determined 5 years into the future. In this case, the Petitioner filed its application with the Respondent in 1984, seeking approval of additional short-term psychiatric beds for 1989. The Petitioner did not change this position prior to or during the final hearing. Therefore, the planning horizon for purposes of this case is 1989. Under Rule 10-5.11(25)(d)3, F.A.C., bed need is determined by subtracting the number of "existing and approved" beds in the service district from the number of beds for the planning year based upon a ratio of .35 beds per 1,000 population projected for the planning year in the service district. The population projection is to be based on the latest mid-range projections published by the Bureau of Economic and Business Research at the University of Florida. Bed need is determined under the Respondent's rules on a district-wide basis unless the service district has been sub- divided by the Respondent. District 10 has not been subdivided by the Respondent. Therefore, bed need for purposes of this case under Rule 10-5.11(25)(d), F.A.C., is to be determined based upon the population projections for all of Broward County for 1989. The projected population for Broward County for 1989 is 1,228,334 people. Based upon the projected population for Broward County for 1989, there will be a need for 430 short-term psychiatric beds in Broward County in 1989. The evidence at the final hearing proved that there are currently 427 licensed short-term psychiatric beds in Broward County. During the portion of the final hearing held in November of 1985, evidence was offered that proved that there were also 16 approved short-term psychiatric beds for Broward County. These short-term beds were part of the application for the certificate of need sought by Charter. Subsequently, however, a Final Order was issued by the Respondent denying Charter's application. Therefore, the 16 short-term psychiatric beds sought by Charter do not constitute "existing and approved" short-term psychiatric beds in Broward County for purposes of this case. Subsequent to the conclusion of the final hearing in this case, the First District Court of Appeal reversed a Final Order of the Respondent denying an application for a certificate of need for a free-standing 10 -bed psychiatric facility, including 80 additional short-term psychiatric beds, for Broward County. Balsam v. Department of Health and Rehabilitative Services, So.2d (Fla. 1st DCA 1986). As indicated in Finding of Fact 23, Memorial is licensed to operate 74 short-term psychiatric beds. Memorial is in fact operating all 74 of these licensed beds. Memorial filed an application with the Respondent for certificate of need #1953 in October of 1981 in which Memorial indicated that it planned to reduce the number of short-term psychiatric beds it had available by 24 beds. Memorial's certificate of need application involved an expenditure of capital and did not specifically involve an application for a change in bed inventory at Memorial. Memorial also represented that it would reduce the number of its available short-term psychiatric beds by 24 in a bond prospectus it issued in September of 1983. The Respondent approved Memorial's certificate of need application. Despite Memorial's representations that it would reduce its short-term psychiatric bed inventory, the beds are still in use in Broward County. Memorial has no plans to close any beds and the Respondent does not plan to take any action against Memorial to require it to stop using 24 of its short-term psychiatric beds. Hollywood Pavilion is licensed to operate 46 short- term psychiatric beds in Broward County. In 1985, 475 patients were admitted to Hollywood Pavilion and its occupancy rate was 62.3 percent. In fact, Hollywood Pavilion had more admissions than Florida Medical Center had to its psychiatric unit. It therefore appears that other physicians find Hollywood Pavilion acceptable. Hollywood Pavilion is accredited by the Joint Commission on Accreditation of Hospitals. The Petitioner presented the testimony of a few physicians who questioned the quality of care at Hollywood Pavilion. These physicians indicated that they did not use Hollywood Pavilion. At least one of the physicians indicated, however, that he did refer patients to other physicians whom he knew admitted patients to Hollywood Pavilion despite his feeling that the quality of care at Hollywood Pavilion was poor. This action is inconsistent with that physician's opinion as to the lack of quality of care at Hollywood Pavilion. His opinion is therefore rejected. The other physicians' opinions are also rejected because very little evidence was offered in support of their opinions and because of the contrary evidence. Based upon a consideration of all of the evidence concerning the quality of care at Hollywood Pavilion, it is concluded that the Petitioner failed to prove that the 46 short-term psychiatric beds licensed for use and available for use at Hollywood Pavilion should not be counted as existing short- term psychiatric beds in Broward County. Coral Ridge Hospital is licensed to operate 74 short- term psychiatric beds in Broward County. The average length of stay at Coral Ridge Hospital during 1984 and 1985 was almost 80 days. The average length of stay at Coral Ridge Hospital has been in excess of 40 days since 1980 and in excess of 60 days since 1983. The average length of stay at Coral Ridge Hospital is in excess of the average length of stay for which short-term psychiatric beds are to be used under the Respondent's rules. Rule 10-5.11(25)(a), F.A.C., provides that short-term beds are those used for an average length of stay of 30 days or less for adults and 60 days or less for children and adolescents under 18 years of age. Rule 10-5.11(26)(a), F.A.C., provides that long-term beds are those used for an average length of stay of 90 days or more. The psychiatric beds at Coral Ridge Hospital, based upon an average length of stay for all of its beds, falls between the average length of stay for short-term beds and long-term beds. The occupancy rate at Coral Ridge Hospital for 1985 was between 40 percent and 50 percent. Therefore, it is possible that a few patients at Coral Ridge Hospital with a very long length of stay could cause the overall average length of stay of the facility to be as long as it is. Coral Ridge Hospital will probably take short-term psychiatric patients because of its low occupancy rate. Therefore, there are at least 29 to 37 short-term psychiatric beds available for use as short-term psychiatric beds at Coral Ridge Hospital. The Petitioner failed to prove how many of the licensed short-term psychiatric beds at Coral Ridge Hospital are not being used for, and are not available for use by, short-term psychiatric patients in Broward County. It cannot, therefore, be determined how many, if any, of the licensed short-term beds at Coral Ridge Hospital should not be treated as existing short-term psychiatric beds in Broward County. Based upon the foregoing, the 427 licensed short-term psychiatric beds in Broward County should be treated as "existing" beds for purposes of determining the need for short- term psychiatric beds under Rule 10-5.11(25)(d), F.A.C. There is a net need for short-term psychiatric beds in Broward County for 1989 of only 3 additional beds under Rule 10- 5.11(25)(d)3, F.A.C. If the 80 short-term psychiatric beds approved by the First District Court of Appeal in Balsam are taken into account, there will be a surplus of 77 short-term psychiatric beds in Broward County for 1989 under Rule 10- 5.11(25)(d)3, F.A.C. Based upon an application of Rule 10-5.11(25)(d)3, F.A.C., there is no need for the additional 31 short-term psychiatric beds sought by the Petitioner. Rule 10-5.11(25)(d)1, F.A.C., provides that a minimum of .15 beds per 1,000 population should be located in hospitals holding a general license to ensure access to needed services for persons with multiple health problems. Some patients who need psychiatric care also need other medical services which can better be obtained in an acute care hospital. This fact is taken into account by the requirement of Rule 10-5.11(25)(d)1, F.A.C. Based upon the projected population for Broward County in 1989, there should be a minimum of 184-short-term psychiatric beds in hospitals holding a general license in Broward County. There are currently 243 short-term psychiatric beds in hospitals holding a general license in Broward County. Therefore, the standard of Rule 10-5.11(25)(d)1, F.A.C., has been met without approval of the Petitioner's proposal. There is no need for additional short-term psychiatric beds in general hospitals in Broward County for 1989. Rule 10-5.11(25)(d)4, F.A.C., provides that applicants for short-term psychiatric beds must be able to project an occupancy rate of 70 percent for its adult psychiatric beds and 60 percent for its adolescent and children's psychiatric beds in the second year of operation. For the third year of operation, the applicant must be able to project an 80 percent adult occupancy rate and a 70 percent adolescent and children's occupancy rate. The beds sought by the Petitioner will be managed by a professional psychiatric management company: Psychiatric Management Services (hereinafter referred to as "PMS"). PMS is owned by Psychiatric Institutes of America, a subsidiary of National Medical Enterprises. Because of the lack of need for additional short-term psychiatric beds in Broward County, it is doubtful that the Petitioner can achieve its projected occupancy rates as required by Rule 10-5.11(25)(d)4, F.A.C. Rules 10-5.11(25)(d)5 and 6, F.A.C., require that certain occupancy rates normally must have been met in the preceding 12 months before additional short-term psychiatric beds will be approved. The facts do not prove whether the occupancy rates provided by Rule 10-5.11(25)(d)5, F.A.C., have been met because the statistics necessary to make such a determination are not available. The evidence failed to prove that the occupancy rates of Rule 10- 5.11(25)(d)6, F.A.C. have been met. The average occupancy rate for short-term psychiatric beds in Broward County for 1985 was between 64.8 percent and 68.4 percent. Occupancy rates in Broward County for short-term psychiatric beds have not reached 71 percent since 1982. These rates are well below the 75 percent occupancy rate provided for in Rule 10-5.11(25)(d)6, F.A.C. This finding is not refuted by the fact that Florida Medical Center added 59 beds in 1984 and the fact that occupancy rates at most general hospitals exceeded 75 percent in 1985. Based upon the average occupancy rate in Broward County for 1985, there were approximately 100 empty short-term psychiatric beds in Broward County on any day. Rule 10-5.11(25)(d)7, F.A.C. requires that short-term psychiatric services provided at an inpatient psychiatric hospital should have at least 15 designated beds in order to assure specialized staff and services at a reasonable cost. The Petitioner's proposal to add 31 short-term psychiatric beds meets this requirement of the rule. C. Rule 10-5.11(25)(e), F.A.C. Rule 1O-5.11(25)(e)1, F.A.C., requires that an applicant prove that its proposal is consistent with the needs in the community as set out in the Local Health Council plans, local Mental Health District Board plans, State Mental Health Plan and needs assessment data. The Petitioner has failed to meet this requirement. The Petitioner's proposal is inconsistent with the District 10 Local Health Plan, the Florida State Health Plan and State and Local Mental Health Plans. In particular, the Petitioner's proposal is inconsistent with the following: The District 10 Local Health Plan's recommendation that applications not be approved if approval would result in an excess number of beds under the Respondent's bed need methodology; The District 10 Local Health Plan's recommendation concerning occupancy standards for the district (75 percent during the past 12 months); The position of the Florida State Health Plan that inpatient psychiatric services are a setting of last resort; The recommendation of the District 10 Mental Health Plan that alternatives to hospitalization for psychiatric services should be encouraged; and The recommendation of the Florida State Mental Health Plan that less restrictive treatment alternatives should be encouraged. Rule 10-5.11(25)(e)3, F.A.C., requires that applicants indicate the amount of care to be provided to underserved groups. The Petitioner's representations concerning its plans to provide indigent care contained in its application are misleading, in that the Petitioner represented that it would not turn away indigents. At the final hearing, the Petitioner indicated that it will generally provide care to indigents only on an emergency basis. Patients who need indigent care on a non-emergency basis will be referred to Memorial. Also, once an indigent patient who needs emergency care has stabilized, that patient will be transferred to Memorial for care. The Petitioner accepts few Medicaid and indigent patients. During 1985, the Petitioner treated 21 Medicaid patients out of a total of 6,800 patients. Only 1.5 percent of its total revenue was for uncompensated care. During 1984, the Petitioner treated 22 Medicaid patients out of a total of 7,321 patients. Only 1.2 percent of its total gross revenue was for uncompensated care. Memorial is subsidized by tax revenues for providing indigent care, or southern Broward County. Because Memorial provides indigent care, indigent patients are usually referred to Memorial if they do not need emergency care or are transferred to Memorial after they stabilize if they do need emergency care. There are other hospitals in northern Broward County which provide similar indigent care. It is therefore common practice to refer patients to those hospitals. Rule 10-5.11(25)(e)5, F.A.C., provides that development of new short- term psychiatric beds should be through the conversion of underutilized beds in other hospital services. The Petitioner's proposal to convert 31 medical/surgical beds for use as short-term psychiatric beds meets this provision. Rule 10-5.11(25)(e)7, F.A.C., provides that short- term psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90 percent of the service area's population. There is no geographic access problem in Broward County. At least 90 percent of the population of Broward County is within a maximum of 45 minutes driving time under average driving conditions to existing short-term psychiatric services in Broward County. The Petitioner's proposal will not significantly enhance geographic access in Broward County. III. Statutory Criteria. Need for Services. The Respondent has approved two certificates of need authorizing the addition of a total of 135 long-term psychiatric beds for Broward County. The addition of 135 long-term beds probably means that additional short-term beds in Broward County which have been used for patients requiring longer treatment will be available. If the additional long-term beds free up short-term beds, the occupancy rate of short-term psychiatric beds in Broward County would be even less than it has been during the past 12 months, if other things remain equal. Both Memorial and Florida Medical Center have been using short-term psychiatric beds for the care of long-term patients. Once the new long-term psychiatric beds are operational, more short-term psychiatric beds will be available in Broward County. Existing Providers. In addition to the short-term psychiatric beds available at Coral Ridge Hospital and Hollywood Pavilion, short- term psychiatric beds are available at the following existing facilities in the service district: Ft. Lauderdale Hospital: 64 beds Florida Medical Center: 74 beds Imperial Point: 47 beds Broward General Medical Center: 48 beds There is no geographic distribution problem in district 10. Generally, the Petitioner did not prove that existing short-term psychiatric beds in Broward County are not available, efficient, appropriate, accessible, adequate or providing quality of care. The Petitioner also did not prove that existing facilities are over-utilized. No new services are proposed by the Petitioner. The evidence did prove that there is usually a waiting list for short-term psychiatric beds at Memorial and that physicians have resorted to various devices to get their patients into short-term psychiatric beds at Memorial. Specialized adolescent psychiatric services are available in the service district at Ft. Lauderdale Hospital and at Florida Medical Center. Ft. Lauderdale Hospital has 24 short- term psychiatric beds dedicated to the treatment of adolescents. Florida Medical Center has 20 short-term psychiatric beds dedicated to the treatment of adolescents. Broward General Medical Center and Imperial Point also provide children/adolescent services. Treatment for eating disorders is provided and available at Imperial Point and Florida Medical Center. Florida Medical Center solicits patients from all parts of the service district. Geropsychiatric short-term psychiatric beds are available in the service district at Hollywood Pavilion, Imperial Point and Ft. Lauderdale Hospital. Florida Medical Center has a closed adult psychiatric unit and often treats persons over 60 years of age. It also has a 26-bed adult short-term psychiatric unit with 2 specialized treatment programs: one for eating disorders and the other for stress and pain management. The Petitioner has proposed to provide a dedicated geropsychiatric unit to meet the needs of geriatric patients which are different from those of adults generally. Although there are no such dedicated geropsychiatric units in the service district, the Petitioner failed to prove that geriatrics are not receiving adequate care from existing providers. Quality of Care. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals. The Petitioner has established adequate quality control procedures, including educational programs and a quality assurance department. These quality control procedures will also be used to insure quality of care in the proposed psychiatric units. The psychiatric units will be managed by PMS. PMS specializes in the management of psychiatric units in acute care hospitals. PMS has programs for adolescents and geriatrics. These programs will be available for use in the proposed psychiatric units. PMS also has a large variety of programs, services and specialists available to establish and maintain quality of care at the Petitioner. The Petitioner will be able to provide quality of care. Alternatives. The Petitioner did not prove that available and adequate facilities which may serve as an alternative to the services it is proposing do not exist in Broward County. Economies of Scale. The Petitioner's parent corporation, National Medical Enterprises has purchasing contracts available for use by the Petitioner in purchasing items needed for the proposed psychiatric units. These contracts can result in a reduction of costs for the proposed project. Staff Resources. PMS will help in recruiting staff for the proposed psychiatric units. Recruiting will be done locally but the Petitioner also has the ability to recruit specialized staff on a broader geographic scale. There is a shortage of nursing personnel for psychiatric services in southern Broward County and northern Dade County. Since the Petitioner plans to recruit locally, this could cause existing providers to lose specialized nursing personnel to the Petitioner. If the Petitioner causes vacancies at existing facilities, this could adversely affect quality of care. Financial Feasibility. The total projected cost of the project ($337,169.00) can easily be provided by National Medical Enterprises, the parent corporation of the Petitioner. The Petitioner's financial projections are unrealistic to the extent of the projected utilization and revenue for the proposed psychiatric units. Based upon the projected need of only 3 short-term psychiatric beds (or possibly a surplus of 77 beds) for 1989, the Petitioner's projected utilization and revenue for its proposal is rejected. The Petitioner has proved immediate financial feasibility but has failed to prove the proposal is financially feasible in the long-term. Impact of Proposal. The Petitioner's proposal could adversely effect the costs of providing health services in Broward County. This is especially true in light of the lack of need for additional short-term psychiatric beds in Broward County. Because of the high quality of the services the Petitioner proposes to provide, competition in Broward County could be enhanced and ultimately benefit consumers, if there was a need for the proposed additional beds. If a hospital has an image of being a charity hospital serving the needs of underserved groups, the hospital can experience difficulty in attracting paying patients and have difficulty in getting consumers to accept the high quality of the services of the hospital. Although it is likely that the Petitioner will take paying patients away from Memorial, it is unlikely that the number of patients lost could substantially affect the public's image of Memorial. The effect the Petitioner's proposal will have on Memorial is limited by the fact that the Petitioner is only seeking 31 beds and they are only short-term psychiatric beds. Memorial provides a variety of services and psychiatric services are only a small part of those services. I. Construction. It the Petitioner's proposal is approved, 11,500 square feet on the sixth floor of the Petitioner's hospital will be renovated and converted for use for the two proposed psychiatric units. The renovations can be made quickly. There will be space for 16 beds in a geropsychiatric unit and 15 beds in an adolescent unit. There will be a separate lobby for the psychiatric units and the elevators to the lobby will be strictly controlled. The two units will be separated and adequate security precautions will be taken to keep the two units separate. The ceilings in both units will be modified to insure security. Nurse stations will be provided for both units. Visibility from the nurse stations will be fair. Space is provided for a dayroom for each unit and there will be a class room and four rooms for therapy. These spaces will barely be adequate to meet the various needs of patients. With adequate planning and coordination, patients' needs can be met. There is inadequate space in the proposed facility for physical activities for patients.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the certificate of need application filed by the Petitioner for certificate of need #3372 should be denied. DONE and ENTERED this 15th day of May, 1986, in Tallahassee, Florida. LARRY J. SARTIN 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 15th day of May, 1986. COPIES FURNISHED: Michael J. Glazer, Esquire AUSLEY, McMULLEN, McGEHEE, CAROTHERS & PROCTOR Post Office Box 391 Tallahassee, Florida 32302 Lesley Mendelson, Esquire Assistant General Counsel Department of Health and Rehabilitative Services Building One, Suite 407 1323 Winewood Boulevard Tallahassee, Florida 32301 James C. Hauser, Esquire MESSER, VICHERS, CAPARELLO, FRENCH & MADSEN Post Office Box 1876 Tallahassee, Florida 32302 Kenneth G. Oertel, Esquire Eleanor A. Joseph, Esquire OERTEL & HOFFMAN, P.A. Post Office Box 6507 Tallahassee, Florida 32313-6507 Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL SMITH & CUTLER, P.A. Post Office Drawer 190 Tallahassee, Florida 32302 Mr. William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact Based on the stipulations 3/ and admissions of the parties, the exhibits received in evidence, and the testimony of the witnesses at hearing, I make the following findings of fact: FIRST HOSPITAL's address is the World Trade Center, Suite 870, Norfolk, Virginia 23510. CHARTER GLADE HOSPITAL is a freestanding psychiatric hospital located in Fort Myers, Lee County, Florida. CHARTER GLADE has (80) licensed psychiatric beds, and twenty-four (24) licensed substance-abuse beds. The service area served by CHARTER GLADE includes Collier, Lee, and Charlotte Counties. The address of HRS is 1317 Winewood Boulevard, Tallahassee, Florida 32301. HRS is responsible for the administration of the "Health Facilities and Health Services Planning Act," Section 381.493, et seq., Florida Statutes (the Act), and has implemented its provisions through the adoption of rules set forth in Chapter 10, Florida Administrative Code. FIRST HOSPITAL applied to HRS for a certificate of need (CON) for the establishment of a freestanding specialty hospital in Naples, Florida. Pursuant to the Act, a CON is required before FIRST HOSPITAL can establish its specialty hospital. FIRST HOSPITAL's application was denied by HRS. FIRST HOSPITAL appealed the denial of its application to the Division of Administrative Hearings, DOAH Case No. 84-1835. CHARTER GLADE has intervened in DOAH Case No. 84-1835. In this proceeding, Petitioner has challenged the validity of Rule 10- 5.11(25) and (26), Florida Administrative Code, asserting that the rule is arbitrary and capricious and, therefore, invalid. By virtue of the fact that CHARTER GLADE is an existing facility located in the same service area in which Petitioner proposes to construct and operate its facility, and further by virtue of its participation in DOAH Case No. 84-1835, at least in part, on the basis of the provisions of Rule 10 15.11(25) and (26), Florida Administrative Code, CHARTER GLADE is substantially affected by the issues presented for determination in this cause and should be allowed to participate as a party. The Act contemplates rule adoption by HRS of specialty bed-need methodologies for psychiatric services. See, e.g., Subsection 381.494(8)(g), Florida Statutes (1983). Toward this end, HRS has adopted Rules 10-5.11(25) and (26), Florida Administrative Code. Rule 10-5.11(25), cited as the basis for denying FIRST HOSPITAL's CON application, addresses need for short-term psychiatric beds; Rule 10-5.11(26) purports to address need for long-term psychiatric beds. FIRST HOSPITAL's substantial interest in establishing its proposed specialty hospital has been determined by both of these rules. In particular, Rule 10-5.11(25), Florida Administrative Code, was applied by HRS in the denial of FIRST HOSPITAL's CON application. In addition, FIRST HOSPITAL alleges that Rules 10-5.11(25) and (26) combined fail to assess the need for intermediate inpatient specialty psychiatric services, one of the types of psychiatric services proposed by FIRST HOSPITAL. FIRST HOSPITAL's CON application proposes intermediate inpatient specialty psychiatric services. Rules 10-5.11(25) and (26), Florida Administrative Code, were adopted in early 1983. The adoption process began in the summer of 1982 when HRS assigned to one of its employees, Elfie Stamm, the task of developing a bed-need rule for psychiatric services. Ms. Stamm, at that time, was a planner in the Office of Comprehensive Health Planning of HRS. Ms. Stamm has been a planner with HRS for several years and had been responsible for the development of the State Health Plan and for the development of various rules used in the CON process. She had also been employed in the Mental Health Program Office of HRS, where her responsibilities included the development of a state plan with regard to alcoholism and mental health. She was also responsible for monitoring statewide mental health programs. Upon being assigned the task of developing the subject rules, Ms. Stamm made a thorough review of all information available to HRS with regard to the number of existing psychiatric beds and programs throughout Florida. She also evaluated all available local health plans and spoke with various individuals who had been involved in health planning, particularly those with interest in mental health planning. Ms. Stamm surveyed the available literature on health planning emphasizing mental health planning and bed-need methodologies for psychiatric beds. Ms. Stamm wrote the initial draft of Rule 10-5.11(25) based upon her collection and evaluation of data regarding existing and approved psychiatric beds in Florida and her review of literature, both Florida specific and national. A primary feature of the drafts, as well as of the adopted version, of Rule 10-5.11(25) is a fixed bed-to-population ratio of .35/1000, meaning that normally there should be no more than .35 short-term psychiatric beds for each 1,000 persons. Ms. Stamm was instructed to develop rules to assess the need for inpatient psychiatric services. As finally adopted, short-term care is defined in Rule 10-5.11(25) as care not exceeding three months and averaging a length of stay of 30 days or less for adults and 60 days or less for children and adolescents, and long-term care is defined in Rule 10-5.11(26) as care averaging a length of stay of 90 days. Neither rule defines the term "intermediate care." The documents contained in HRS Composite Exhibit IX and reviewed by Ms. Stamm are a representative sample of the literature available in the field and the level of knowledge among health planners as of the date of the promulgation of the subject rules. The documents are a reasonable cross-section of the literature available in the area of psychiatric bed-need assessment. In terms of the literature that was available at the time of the rule adoption in the area of psychiatric bed-need assessment, there is nothing missing from these documents which would have been important to a health planner in developing a psychiatric bed-need methodology. There is discussion in those documents of all the basic methodologies for determining psychiatric bed need. After reviewing all of the available materials, the HRS established a range of from .35 to .37 beds per 1,000 population and from that point made a policy decision to establish a figure of .35 to use in the bed-need formula. In promulgating the subject rules HRS invited and received comment from a broad cross-section of the public, with particular emphasis on those persons and organizations with special knowledge and interest in the provision of mental health services and the determination of psychiatric bed need. HRS conducted a workshop to which it invited a broad cross-section of individuals and organizations with particular knowledge about psychiatric bed need, including representatives of the Florida Hospital Association, Florida Psychiatric Association, Florida Council for Community Mental Health, Florida State Association of District Mental Health Boards, Florida League of Hospitals, Florida Association of Voluntary Hospitals, and the Florida Alcohol and Drug Abuse Association. The comments and results of the workshop were considered by Ms. Stamm and HRS in the promulgation of the subject rules. In response to several requests, HRS conducted a public hearing in accordance with Section 120.54(3), Florida Statutes, to receive comments from interested persons on the subject rules. More than fifteen (15) people representing various hospitals and organizations concerned with psychiatric services entered appearances and made comments at the public hearing. In addition to the oral comment presented at the public hearing, various persons and organizations submitted numerous written comments expressing their opinion with regard to the proposed rules. The comments, both oral and written, were all considered by Ms. Stamm and HRS prior to the promulgation of the subject rules. The process engaged in by HRS, primarily through Ms. Stamm, in the development of the subject rules was extensive and reasonably calculated to invite substantive public comment and to procure the knowledge on the part of HRS necessary to write workable and rational rules concerning psychiatric bed need. The knowledge acquired by HRS through this process with regard to the assessment of psychiatric bed-need methodologies was reasonably sufficient to allow it to knowledgeably draft and promulgate the subject rules. Consideration of this substantive public comment led to several changes in the subject rules as originally drafted. As originally promulgated, Rules 10-5.11(25) and (26) were challenged pursuant to Section 120.54, Florida Statutes, in various petitions filed with the Division of Administrative Hearings. In settling these proposed rule challenges, HRS modified the rules to provide for even greater flexibility in their application. HRS Composite Exhibits I through XII constitute all written matters considered or produced by HRS in the rule adoption process with regard to the subject rules. All of those documents and papers have been maintained in the records of HRS since the promulgation of the subject rules. The statutory criteria for reviewing CON applications are set out in Sections 381.494(6)(c) and (d), Florida Statutes. Rule 10-5.11, Florida Administrative Code, sets forth the rule criteria against which CON applications are evaluated. Subsections (1) through (12) and (25) of Rule 10-5.11 are the rule criteria against which applications for CONs for short-term hospital inpatient psychiatric services are to be evaluated. Subsections (1) through and (26) of Rule 10-5.11 are rule criteria against which applications for CONs for long-term psychiatric services are to be evaluated. Rule 10-5.11(25) sets forth certain criteria specifically for the evaluation of CON applications for short term hospital inpatient psychiatric services. Short-term services are in part defined as services averaging a length of stay of thirty (30) days or less for adults and a stay of sixty (60) days or less for children and adolescents under eighteen (18) years. Rule 10- 5.11(25) in its adopted form provides in relevant part as follows: Short Term Hospital Inpatient Psychiatric Services. Short term hospital inpatient psychiatric services means a category of services which provides a 24-hour a day therapeutic milieu for persons suffering from mental health problems which are so severe and acute that they need intensive, full-time care. Acute psychiatric inpatient care is defined as a service not exceeding three months and averaging a length of stay of 30 days or less for adults and a stay of 60 days or less for children and adolescents under 18 years. Short term hospital inpatient psychiatric services may be provided in specifically designated beds in a hospital holding a general license, or in a facility holding a specialty hospital license. Applications for proposed short term hospital inpatient psychiatric services will be reviewed according to relevant statutory and rule criteria. A favorable need determination for proposed general acute care psychiatric inpatient services will not normally be given to an applicant unless a bed need exists according to paragraph (25)(d) of this rule. A favorable Certificate of Need determination may be made when the criteria, other than as specified in (25)(d), as provided for in Section 381.494(6)(c), Florida Statutes, and paragraph (25)(e) of this rule, demonstrate need. Bed allocations for acute care short term general psychiatric services shall be based on the following standards: A minimum of .15 beds per 1,000 population should be located in hospitals holding a general license to ensure access to needed services for persons with multiple health problems. These beds shall be designated as short term inpatient hospital psychiatric beds. .20 short term inpatient hospital beds per 1,000 population may be located in specialty hospitals, or hospitals holding a general license. The distribution of these beds shall be based on local need, cost effectiveness, and quality of care considerations. The short term inpatient psychiatric bed need for a Department service district five years into the future shall be calculated by subtracting the number of existing and approved beds from the number of beds calculated for year x based on a bed need ratio of .35 beds per 1,000 population projected for year and based on latest mid-range projections published by the Bureau of Economic and Business Research at the University of Florida. These beds are allocated in addition to the total number of general and acute care hospital beds allocated to each Department District established in Rule 10-5.11(23). Occupancy Standards. New facilities must be able to project an average 70 percent occupancy rate for adult psychiatric beds and 60 percent for children and adolescent beds in the second year of operation, and must be able to project an average 80 percent occupancy rate for adult beds and 70 percent for children and adolescent short term psychiatric inpatient hospital beds for the third year of operation. No additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult short term inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period. No additional beds for adolescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children short term hospital inpatient psychiatric beds in the Department district is at or exceeds 70 percent for the preceding 12 2 month period. Hospitals seeking additional short term inpatient psychiatric beds must show evidence that the occupancy standard defined in paragraph six is met and that the number of designated short term psychiatric beds have had an occupancy rate of 75 percent or greater for the preceding year. Unit size. In order to assure specialized staff and services at a reasonable cost, short term inpatient psychiatric hospital based services should have at least 15 designated beds. Applicants proposing to build a new but separate psychiatric acute care facility and intending to apply for a specialty hospital license should have a minimum of 50 beds. Other standards and criteria to be considered in determining approval of a Certificate of Need application for short term hospital inpatient psychiatric beds are as follows: . . . . 7. Access standard. Short term inpatient hospital psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90 percent of the service area's population. There are three basic types of methodologies generally accepted in the field of health planning as valid for determining the need for psychiatric hospital beds. The first type is a need-based methodology which evaluates the need for services. The second is a demand or utilization-based method, which utilizes current or projected utilization statistics for a particular service. The third is a fixed-ratio method which involves the use of a ratio, or rate, of service to population to determine projected need for that service in the future. All three of these methodologies are generally accepted and utilized by health planners throughout the United States. Each has its advantages and disadvantages, but all are valid. The fixed ratio methodology is that which HRS has employed in Rule 10 5.11(25). The ratio of .35 beds per thousand population is a reasonable ratio with a rational basis in fact. It is not arbitrary and capricious as a measure of short-term psychiatric bed need. The National Institute of Mental Health developed draft guidelines in the late 197Os suggesting a range of .15 beds to .40 beds per thousand population as an appropriate fixed-bed ratio program for psychiatric short-term acute-care programs. At least four other states presently or in the past have utilized a fixed bed-need ratio in planning for health care needs. They are Massachusetts, Indiana, Michigan and Georgia. Some of those states used fixed-bed ratios less than .35 per thousand. Ms. Stamm, in developing this rule methodology for HRS, considered and balanced the different approaches relating to the establishment of need. One of her concerns on behalf of HRS, in developing the methodology was to strike a proper balance between need and demand since not everyone who needs psychiatric care will choose to seek that care or can afford to seek that care. In 1982, during the time of the rule adoption process, the ratio of existing short-term psychiatric beds per thousand population in Florida was .29 per thousand. Ms. Stamm selected .35 per thousand, in part, to allow for growth in the number of psychiatric beds for reasons other than just population growth. The current rate of existing licensed short-term psychiatric beds in Florida in 1985 is .28 beds per thousand. However, the ratio for currently existing short-term psychiatric beds, plus CON approved beds not yet licensed in 1985, is .39 beds per thousand. The fact that the existing and approved inventory of psychiatric beds is greater than the .35 ratio specified in the rule demonstrates that HRS has applied Rule 10-5.11(25) in a flexible manner as envisioned by the "not normally" language in the rule. A theoretically ideal way to determine psychiatric bed need would be for HRS to go into each community and conduct epidemiological surveys to identify the people who actually need mental health care. While such a survey, properly conducted, might produce momentarily reliable date, it is not a realistic method for statewide planning purposes because of several problems attendant to such a methodology. Such a survey would be very expensive and very time-consuming and is not practical for use on a statewide basis in a state the size of Florida. Because of the time-consuming nature of such a methodology, if applied on a statewide basis, some of the data would be stale before all of the data was gathered. Further, the rapidly changing population in Florida would require that such a survey be continually updated. The allocation of short-term beds between general and specialty hospitals set forth in subsections (d)1 and 2 of Rule 10-5.11(25) has a rational basis in fact and is not arbitrary. There are many patients who simultaneously need medical as well as psychiatric care. To have those patients located in a specialty hospital, away from a general hospital, would be inappropriate. There are also patients who have acute episodes of psychiatric illness and who need to be treated very rapidly. Because there are many more general hospitals than there are freestanding psychiatric specialty hospitals, it is appropriate to ensure that psychiatric beds are available to general hospitals to fill the particular episodic acute needs. Further, there are many patients in Florida who can afford health care only through Medicaid. Because Medicaid does not provide funding of mental health inpatient services in psychiatric specialty hospitals, it is appropriate to include in the methodology an incentive for the location of some psychiatric beds in general hospitals where psychiatric services can be funded by Medicaid. The specific allocation of the .35 per thousand bed need ratio set forth in Rule 10-5.11(25)(d)(1) and (2) is that .15 beds per thousand "should" be associated with general hospitals and .20 beds per thousand "may" be associated with specialty hospitals. This allocation was designed to be flexible so that, in any given circumstance, an allocation other than the .15 and .20 guideline could be applied. The occupancy rate standards set forth in Rule 10 5.11(25) specify that normally, additional beds should not be approved unless the average occupancy of all existing beds in a service district exceeds 75 percent for adults and 70 percent for children and adolescents. The occupancy rate standards set forth in Rule 10- 5.11(25) were not arrived at in an arbitrary fashion and are reasonable in themselves. The occupancy rates are designed to ensure that a reasonable number of beds in each facility are filled. Hospitals with a substantial number of empty beds are not cost effective. Therefore, it is reasonable to project occupancy rates in the range of those projected in the subject rule. Indeed, the occupancy rates in the rule are liberal in terms of minimum occupancy levels, compared with those in the past and those recommended by others in the industry. With regard to the travel access standard in the rule, the Task Force for Institutional Care recommended a 60 minute travel standard for 90 percent of the population in the district. The 45 minute standard is reasonable. The rule does not exclude from within the travel standard area other facilities providing the same service. At the time of the final hearing, there were sixty five (65) existing hospital facilities in Florida which had psychiatric bed services. Of those sixty-five (65) facilities, sixty-one (61), or 93 percent, had more than fifteen (15) psychiatric beds, and fifty-five (55), or 84 percent, had more than twenty (20) psychiatric beds. In the exceptional event that the average occupancy rate for a particular district did not accurately reflect the availability of beds, the language of Rule 10-5.11(25)(d)5, which says that no additional beds shall "normally" be approved unless the occupancy rates are met is sufficiently flexible to account for the exceptionality. The methodology set forth in Rule 10-5.11(25) is designed to identify and express a need for short-term psychiatric inpatient beds for the overall population of Florida. The rule was intended to be sufficiently flexible that, when balanced with the other criteria set forth in Rule 10-5.11(1) through (12), it would allow substantive input from the district and community levels with regard to the need for beds by subpopulation groups such as child, adolescent, adult, and geriatric. The "national guidelines" referred to by Ms. Stamm were proposed hut never adopted. They recommended fixed bed ratios between .15/1000 and .40/1000. The guidelines were based on a 1978 survey by the National Institute of Mental Health (NIMH), which indicated that .15/1000 was the 25th percentile and .40/1000 was the 75th percentile of 1978 existing short-term psychiatric beds nationwide. The NIMH report stated that selection of an appropriate ratio for a particular state depended on the development of the state's mental health system and recognized that special consideration was necessary for traditionally underserved groups such as children, adolescents, and geriatrics. In the context of inpatient psychiatric care, there has been a trend over the last twenty years, and more particularly over the last five years, toward the development of specialty treatment programs, separately planned for children, adolescents, adults, and geriatrics. In recent years in Florida there has also been a trend toward the provision of alternatives to inpatient psychiatric services in facilities such as residential care. In 1982, Ms. Stamm considered evidence that children, adolescents, and geriatrics were not being adequately served by Florida's mental health facilities. Nevertheless, she did not plan for these subgroups in the rule because in her judgment decisions about allocation of services to subpopulation groups were best made at the district level by the local health councils.
