Findings Of Fact Prior to convening the final hearing in this cause, the parties stipulated to the following statements of fact and law: Lawnwood's letter of intent is the letter dated June 29, 1982 from Phil Unger to Mr. Tom Konrad. This letter was received by the Department on June 30, 1982. Lawnwood never furnished a copy of its letter of intent to either the local Health Systems Agency (HSA)(known as the Health Planning Council, Inc.) or to the Local Health Council. Lawnwood's application for certificate of need to expand its oncology department by acquiring a second linear accelerator was filed with the Department on August 16, 1982. A copy of this application was not furnished to the Local Health Council. Martin Memorial first received actual notice of Lawnwood's application for certificate of need to acquire a second linear accelerator when its Associate Administrator, R. M. Harman, was contacted by a newspaper reporter on or about October 22, 1982. Martin Memorial's Executive Vice President, Guy Cromwell, was on notice of a certificate of need application by Lawnwood to expand its oncology center when this item was discussed at the July 29, 1982 HSA Board meeting. Martin Memorial first received construc- tive notice of Lawnwood's application for certificate of need when the Department's "Notice of Completeness" was published in the October 15, 1982 edition of the Florida Administrative Weekly. On June 30, 1982, the Health Facilities and Health Services Planning Act required that: "The Department, by rule, shall provide for applications to be submitted on a timetable or cycle basis; provide for application review on a timely basis; and provide for all completed appli- cations pertaining to similar types of services, facilities or equipment affecting the same health service area to be considered in relation to each other no less often than twice a year. At least 30 days prior to filing an appli- cation, a letter of intent shall be submitted by the applicant to the health systems agency and the department respecting the develop- ment of a proposal subject to review." (Emphasis added.) On June 30, 1982 the Department's rules, implementing the above-cited statu- tory provision, provided that: "10-5.08 Certificate of Need Applications [sic] Procedure. In order that applications pertaining to similar types of service, facilities, or equip- ment affecting the same health service area may be considered in relation to each other for purposes of competitive review, letters of intent and applications shall be submitted to the appropriate HSA and the Department pursuant to dates prescribed in application schedules (Attachments 1 through 9) developed under the following conditions: Projects shall be categorized as all hospital related projects; all nursing home projects; all end- stage renal dialysis projects; and all other projects; including but not limited to home health agencies, ambulatory surgical centers, health maintenance organizations, hospices, and intermediate care facilities for the mentally retarded. Hospital projects may be sub- categorized, at the option of each HSA, into no more than four reasonably related groups. Each project category or sub- category shall be reviewed not less than three times per calendar year. Each HSA, at its option, may sub-divide its entire area into smaller, distinct health service areas that have a reasonable relation to the actual use of health and medi- cal services on a geographic basis. If such sub-division is accomplished, each project category or sub-category shall be reviewed not less than two times and not more than three times per calendar year. In cases where a letter of intent was filed within five working days of the letter of intent deadline, a grace period of 10 days from the deadline date for receipt of letters of intent shall be established to provide an opportunity for a competing applicant to file a letter of intent. Effective July 1, 1982, the Health Facili ties and Health Services Planing [sic] Act was amended by Ch. 82-182 (Laws of Florida) to read as follows: "S381.494(5) Notice to the local health council and the department" - The department, by rule, shall pro- vide for applications to be sub- mitted on a timetable or cycle basis, provide for review on a timely basis; and provide for all completed appli- cations pertaining to similar types of services, facilities, or equipment affecting the same health service area to be considered in relation to each other no less often than four times a year. At least 30 days prior to filing an application, a letter of intent shall be submitted by the appli- cant to the local health council and the department respecting the develop- ment of a proposal subject to review. At the time of filing an application with the department the applicant shall send a copy of the application to the local health council." The Department's rule, implementing the amended statutory provision cited above, was adopted effective July 29, 1982 and reads as follows: "In order that applications pertaining to similar types of service, facili- ties, or equipment affecting the same service district may be considered in relation to each other for purposes of competitive review, letters of intent and applications shall be filed with the Department no later than dates prescribed in the following schedule under the following conditions: Month for Types of Projects Application Filed By Application Complete By Final Dept. Action All Hos- pital Projects Jun 15 Aug 15 Nov 15 Mar 15 Aug 15 Oct 15 Jan 15 May 15 Sep Nov Feb Jun All Nur- Jul 15 Sep 15 Oct sing Home Oct 15 Dec 15 Jan Projects Jan 15 Mar 15 Apr Apr 15 Jun 15 Jul All May 15 Jul 15 Aug Other Sep 15 Nov 15 Dec Projects Dec 15 Feb 15 Mar Feb 15 Apr 15 May All other projects includes, but is not limited to, home health agencies, ambulatory surgical centers, health main- tenance organizations, hospices and inter- mediate care facilities for the mentally retarded. At least 30 days prior to filing an application, a letter of intent respecting the development of a proposal must be actually received by the Local Health Council and by the Department. Letters of intent filed with the Department before July 1, 1982, will be accepted for use in conjunction with the foregoing schedule. Letters of intent filed after July 1, 1982, must indicate the batching cycle for which the appli- cant intends to file an application. If an application is not filed during the time period indicated in the letter of intent, the letter of intent will be considered invalid and a new letter of intent must be timely filed before an application may be filed. Because letters of intent give applicants a right of entry into the Certificate of Need process, failure to file a timely letter of intent and to have it actually received by the Department and by the local health council at least 30 days prior to the filing of an application will prevent the Depart- ment from accepting an application. Failure to timely file a letter of intent or to timely file an applica- tion will cause a delay in a Certificate of Need project until the next avail- able review cycle. The Department's acknowledgement of receipt of Lawnwood's letter of intent is the letter dated July 7, 1982 from Herbert E. Straughn to Mr. Philip Unger. . .The Department erroneously furnished a copy of this acknowledgment letter to a Mike Boggs, who was the Executive Director of the Pan handle HSA. The Department intended to furnish this copy of its acknowledgement letter to Mr. Richard Warfield, the Executive Director of the HSA serving Plam [sic] Beach, Martin, St. Lucie, Okeechobee, and Indian River Counties. The Health Planning Council, Inc. (the HSA serving Palm Beach, Martin, St. Lucie, Okee- chobee, and Indian River Counties) did not receive the Department's acknowledgement letter until July 19, 1982 after Mike Boggs of the Panhandle HSA noticed the Department's error and mailed the acknowledgment letter to Mr. Warfield in West Palm Beach. The actual letter of intent was never received by the Health Planning Council, Inc. The Department did not provide public notice, until the publication of its Notice of Completeness in the October 15, 1982 F.A.W., of either the filing of Lawnwood's letter of intent or of Lawnwood's application for certificate of need. Lawnwood's application for certificate of need was considered by the Department in the cycle for "All Hospital Projects" that required that the application be filed by August 15, 1982 and that the application be deemed com- plete by October 15, 1982. In order to be considered in the same batching cycle as Lawnwood's application, an applicant would have had to file a letter of intent on or prior to July 16, 1982, a date which is 30 days prior to the August 15, 1982 deadline for the filing of the application. Mr. Dick Harmon, the Associate Adminis- trator at Martin Memorial, would testify that had Martin Memorial known on/prior to July 16, 1982 that Lawnwood had filed a letter of intent to apply for a certificate of need to acquire a second linear accelerator, Martin Memorial would have filed a letter of intent and an appli- cation for certificate of need in the same batch- ing cycle as Lawnwood's. Martin Memorial and Lawnwood are in the same "health service area", as defined by statute and rule, and if both of these hospitals had filed applications for a certificate of need to acquire a linear accelerator in the same batching cycle, the Department would have re- viewed these two applications on a comparative basis. Martin Memorial filed with the Depart- ment a letter of intent to apply for a Certificate of Need to acquire a linear acceleration [sic] on/about October 28, 1983 [sic] and has further filed an application for same on March 15, 1982 [sic] which was the next available review cycle it could enter upon such filing of its letter of intent. Mr. Guy Cromwell, the Executive Vice- President of Martin Memorial, was a member of the Board of Directors of the Health Planning Council, Inc. (HSA) during June through October of 1982. The local Health Council for HRS service district #9 held its first organizational meeting sometime in September, 1982. This local Health Council occupied, and continues to occupy, the same office space as the Health Planning Council, Inc. (the HSA) and, with the exception of Mr. Richard Warfield, the local Health Council employed all the former staff members of the Health Planning Council, Inc. (the HSA). Applications for certificate of need filed in the August 15, 1982 batching cycle, and deemed complete by the Department on/before October 15, 1982, were not reviewed by the HSA. The Division of Administrative Hearings has jurisdiction of the parties and of the sub- ject matter in this administrative proceeding.
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1, The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $16,000.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 3. Conditional licensure status is imposed on the Respondent beginning on November 30, 2012, and ending December 3, 2012. Filed August 12, 2013 8:57 AM Division of Administrative Hearings ORDERED at Tallahassee, Florida, on this y day of Ausaat 2013. RA Elizabgth \ es Agent for Health Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct_copy of this Final Order was seryed on the below-named persons by the method designated on this eeu ot Sk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Thomas J. Walsh II Margaret A. Chamberlain, Esquire Office of the General Counsel Kitch Drutchas et al Agency for Health Care Administration 2379 Woodlake Drive (Electronic Mail) Suite 400 Okemos, Michigan 48864 (U.S. Mail) J. D. Parrish Administrative Law Judge Division of Administrative Hearing (Electronic Mail)
Conclusions Having reviewed the Amended Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Amended Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $1,500.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 Filed October 16, 2014 3:44 PM Division of Admin\strative Hearings ORDERED at Tallahassee, Florida, on this 22 day of Kpfubee , 2014. (ne fel retary vare Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE 1 CERTIFY that a true and correct co f this Final Order was served_on the below-named persons by the method designated on this Ee of KM » 2014. Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) John E Bradley Ted Mack Office of the General Counsel Counsel for Petitioner Agency for Health Care Administration Powell and Mack (Electronic Mail) 3700 Bellwood Drive Tallahassee, Florida 32303 (U.S. Mail)
Conclusions Having reviewed the Amended Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Amended Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1, The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $500.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed February 20, 2014 10:02 AM Division of Administrative Hearings ORDERED at Tallahassee, Florida, on this | 4 day of Fehon eng , 2014. he. Elizab¢th ae Agen for Health Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correc. y of this Final Order was served on the below-named persons by the method designated on this /7day of 7 , 2014. Richard Shoop, Agency Cler Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Deborah E. Leoci Blake J. Delaney, Esquire Office of the General Counsel Buchanan Ingersoll & Rooney PC Agency for Health Care Administration 401 East Jackson Street, Suite 400 (Electronic Mail) Tampa, Florida 33602 Thomas P. Crapps Administrative Law Judge Division of Administrative Hearing (Electronic Mail)
The Issue The issues are (a) whether petitioners' budget letters for fiscal year 1991-1992 should be accepted by respondent, and (b) whether the agency has utilized a non-rule policy in rejecting the letters, and if so, whether the policy has been adequately explained and justified.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioners are hospitals subject to the regulatory jurisdiction of respondent, Health Care Cost Containment Board (Board). As such, they are required to annually file their projected budgets with the Board for review and approval. This controversy relates to petitioners' fiscal year 1991-1992 budgets (1992 budget) and whether such filings conformed with the Board's requirements and should have been accepted. Budget letters for the fiscal year 1992 were filed by petitioners with the Board in May 1991. After the documents were reviewed by the Board's staff, on June 21, 1991, the Board issued virtually identical proposed agency action to each hospital advising the hospital that its budget letter was "nonconforming for the following reason: The hospital's maximum GRAA should be $ , instead of $ , ", with the appropriate dollar amounts inserted in the blanks. The letter went on to advise the hospital that it should resubmit a corrected budget document and until it did so, its submission would be considered incomplete. As provided for by agency rule, the hospitals then filed general and specific objections to this preliminary determination. After such objections were reviewed by the Board and presumably found to be without merit, petitioners requested a formal hearing to contest the proposed agency action. The Parties Petitioners are fourteen hospitals located throughout the State of Florida. Intervenor, Florida League of Hospitals, Inc., is a non-profit organization which is organized and maintained for the benefit of the proprietary hospitals which comprise its membership. The Board is a state agency charged with the responsibility of annually reviewing hospital budgets to insure that a hospital's charges do not exceed certain established thresholds. This is accomplished by an annual review of the budgets of all regulated hospitals. Intervenor, Citizens of the State of Florida, is represented by the Office of the Public Counsel. That office is charged with the responsibility of representing the citizens in all proceedings before the Board. The parties have stipulated that petitioners and the two intervenors have standing to initiate or participate in this proceeding. The Review Process As noted above, budgets must be filed on an annual basis at least ninety days prior to the beginning of a hospital's fiscal year. In these cases, all petitioners have fiscal years ending on August 31 and thus their budgets are due no later than June 1 of each year. There are two types of budget filings authorized by law. First, a hospital may file what is known as a budget letter, which is a one-page submission on a form provided by the Board. In the letter, the hospitals are required to acknowledge and certify to certain information contained in Subsection 407.50(2), Florida Statutes (1989). Secondly, a hospital may file a detailed budget which is more complicated than the budget letter and requires the completion of a twenty-seven page form. In a detailed filing, a hospital must provide, at a minimum, detailed information regarding the hospital's unit and hospital statistics, related party transactions, patient rates and discount policies, explanation of increases in revenue and expense, and prospective payment arrangements. The detailed budget filing is obviously a more expensive, complicated and time-consuming process than is the filing of a budget letter. It should be noted here that the current filing process was created by the legislature in 1988 when substantial amendments to the law were enacted. Those amendments provided, inter alia, that budget letters could be used for the first time beginning with fiscal year 1990. Prior to that time, all hospitals filed detailed budgets. Given the technical language which governs the Board's budget review process, a brief discussion regarding that process is appropriate. In very broad terms, the Board's principal function is to ensure that the revenues (charges) received by a hospital are not excessive or unreasonable. It performs this function by reviewing the budgets of each hospital during the annual budget review process. As is relevant to this controversy, the Board uses two major financial indicators in the review process. They are the gross revenues per adjusted admission and the maximum allowable rate of return, also known in regulatory parlance as the "GRAA" and "MARI", respectively. 1/ In order to measure the reasonableness of a hospital's charges, the Board requires each hospital to calculate a GRAA, which is the result of dividing the gross operating revenues of the hospital during a fiscal year by adjusted admissions. This financial indicator is basically a measure of revenue per case after adjusting for outpatient admissions and represents an average of all gross revenues per case. Except when authorized by the Board, a hospital may not increase its charges (GRAA) from one year to the next by more than its maximum allowable rate of increase. This percentage limitation, more commonly known as the MARI, is calculated pursuant to a statutorily defined formula. It is important to note that a budget letter is used when a hospital does not intend to increase its charges by more than the percentage amount specified in its approved MARI. Thus, in return for the hospital agreeing to operate within its MARI during the next fiscal year, the Board allows the hospital to have its budget approved through the less complicated budget letter process. Conversely, when a hospital intends to increase its charges from one fiscal year to the next by a greater percentage amount, it is obliged to file a detailed budget and subject itself to this more time-consuming process. In each budget letter filing, a "base GRAA" must be calculated. After that calculation is made, the base GRAA is then inflated by the hospital's MARI plus one, which produces what is known as the "budget letter GRAA". Thus, where a base GRAA is $10,000 and the MARI is 10%, the budget letter GRAA is $11,000, which is derived by multiplying the base GRAA ($10,000) by one plus the MARI (1 plus .10%, or 1.10). The budget letter GRAA represents the maximum projected gross revenues per adjusted admission the hospital can receive during the next fiscal year without having to justify the excess charges to the Board. The principal point of contention in these cases is the appropriate manner in which the base GRAA for each of petitioners' budget letters should be calculated. This in turn bears directly on the issue of whether petitioners are eligible to file a budget letter. There is no dispute as to the appropriate MARI, and the parties have agreed that the dollar figures and percentages applicable under each party's proposed calculations are accurately reflected in joint composite exhibit 1 received in evidence. Calculation of the Base GRAA Petitioners and supporting intervenor contend that the appropriate base GRAA should be calculated so as to most accurately reflect the GRAA from the previous fiscal year. In this vein, they have proposed three methodologies which are described on page 2 of joint composite exhibit 1 and are also discussed in greater detail in a subsequent portion of these findings. Petitioners cite the language in Subsection 407.50(2)(a), Florida Statutes (1989) as the authority for these approaches. On the other hand, the Board and its supporting intervenor assert that the GRAA base must be calculated by using the methodology identified as alternative 5 on page two of joint exhibit 1 and also described in Subsection 407.50(3), Florida Statutes (1989). In every case, this produced a smaller base GRAA than was proposed by petitioners, and unless they accede to the Board's calculation, they will be required to file detailed budgets. Like the petitioners, the Board and supporting intervenor also rely upon the language in Section 407.50, Florida Statutes (1989) as authority for their position. Even so, petitioners contend that respondent's methodology is actually a rule, not duly promulgated, and thus it must be justified and explained in this proceeding as is required of any non-rule policy. In a separate final order issued this same date in Case Nos. 91-4762R through 91- 4776R, the undersigned has determined that the methodology is in fact a policy having all of the attributes of a rule and thus it must be defended and explicated in a section 120.57(1) proceeding. Pursuant to a statutory amendment enacted in 1988, existing subsection 407.50(1) provided a so-called phase-in period for calculating a budget letter GRAA in fiscal years 1990 and 1991, and the manner for doing so was spelled out rather clearly in the law. The problem here lies in the fact that other provisions within section 407.50, which are not as clear as subsection 407.50(1), govern the filing of budget letters for fiscal year 1992 and beyond. The problem was recognized by the Board as early as July 1988 when its general counsel prepared a memorandum for Board members which compared the then existing law with amendments just adopted by the 1988 legislature. At that time, the Board was advised that for fiscal year 1992 and beyond, the base GRAA would be calculated in a manner generally consistent with the methodology proposed by the Board in these cases. This memorandum was placed in what is known as the "Board Book", a compilation of all documents considered by the Board at its meetings, and copies of the memorandum were later distributed to virtually all regulated hospitals in the State. The memorandum read in pertinent part as follows: For FY 1992 and beyond, will be determined as in following 1992 example. Base for 1992 budget will be 1990 actual GRAA unless 1990 actual GRAA exceeded 1989 actual GRAA by more than Board-approved MARI, 1991 base will be 1989 actual GRAA inflated by Board-approved rate of increase for 1990. In addition, at a technical advisory panel meeting held on November 7, 1990, hospital representatives were advised that while subsection 407.50(1) provided a phase-in period with a specified procedure for calculating a budget letter GRAA, the Board staff was in the process of developing a calculation of budget letter GRAA for fiscal year 1992 and beyond. Testimony at hearing established that the Board staff conveyed a description of the methodology to hospital representatives at that time. These actions suggested that the Board intended for the base GRAA for fiscal year 1992 to be calculated differently than the methodology used during the phase-in period. Not surprisingly, there is no agency precedent on this matter since these cases represent the first occasion on which 1992 budget letters were filed and reviewed. As noted earlier, a budget letter is appropriate when a hospital does not seek a rate of increase in GRAA in excess of the MARI for the hospital's next fiscal year. Whether the rate of increase in the GRAA is of such magnitude as to require detailed review is directly dependent on the manner in which the base GRAA is calculated, and this issue lies at the heart of the dispute. This is because the Board uses the results of the calculation (base GRAA x applicable rate of return) solely for the purpose of creating a so-called threshold GRAA, which if exceeded by the hospital's requested GRAA, triggers the need for detailed review. Thus, the calculation simply provides the Board with a means for determining whether the proposed increase in the GRAA falls within budget letter guidelines. 2/ In every case here, petitioners' GRAA exceeded the Board's threshold GRAA so as to trigger the need for a detailed budget. The Board's calculation of the base is done in a manner consistent with subsection 407.50(3). That subsection reads in pertinent part as follows: In determining the base, the hospital's prior year audited actual experience shall be used unless the hospital's prior year audited actual experience exceeded the applicable rate of increase in which case the base shall be the gross revenue per adjusted admission from the year before the prior year, increased by the applicable rate of increase for the prior year, and then inflated by the applicable rate of increase for the current year. Thus, the methodology requires that the prior year audited actual experience be used as the starting point unless such charges exceeded the applicable (approved) rate of increase. Although the parties agree that 1991 actual data would be the most desirable to use, that data is unavailable. Therefore, fiscal year 1990 results of operation, which are the most current audited actual experience, must necessarily constitute "the prior year audited actual experience" within the meaning of the statute. To determine whether the 1990 actual experience exceeded the applicable rate of increase, the Board measured the increase in the actual GRAA from 1989 to 1990. If the actual rate of increase did not exceed the approved rate of increase, the Board took the 1990 actual GRAA, inflated that amount by the applicable rate of increase for the current year (1991), and used the resulting number as the base GRAA. Conversely, if the 1990 actual GRAA exceeded the 1989 approved GRAA by more than the authorized rate, the Board used the 1989 actual GRAA (the gross revenues from the year before the prior year) inflated by the 1990 MARI, as further increased by the applicable rate of increase for the current year (1991) to produce the GRAA base. The Board has used the above described methodology for several reasons. First, it found nothing in subsection 407.50(2) which calculated a base for budget letter submissions. Indeed, the word "base" is found only in subsections 407.50(1) and (3), and by its own terms the former subsection does not apply to 1992 budget letter filings. Thus, the Board calculated the base in accordance with the method prescribed in subsection (3). Second, prior to the change in the law in 1988, the budget review process was "budget-based" in contrast to the present process which is tied to actual rates of increase. In other words, under the "old" process, the Board compared a budget under review with a prior budget number while the "new" process compares the budget under review with prior actual numbers. The Board's methodology is consistent with this philosophy and ties the base measurement to actual experience rather than estimated or budget figures. Third, for budget years 1990 and 1991, hospitals did not incur a penalty for exceeding their GRAA. The Board now intends to impose a penalty should this threshold be exceeded by hospitals in 1992 budget year and beyond. The Board's methodology is obviously geared toward this type of review process. Fourth, if a hospital's actual charges are less than its budgeted GRAA, by increasing the budgeted GRAA by the MARI as petitioners propose, a hospital's actual rate of increase would be greater than the MARI. Under the Board's methodology, a hospital would be required to justify such an increase. Similarly, if the Board's methodology was not used, a hospital could file a budget letter certifying a maximum GRAA which exceeds the threshold GRAA under subsection 407.50(3), thereby circumventing the detailed review process. Such a result should be avoided since to do otherwise would create an internal conflict within the terms of section 407.50 and would be contrary to the Board's mission under the law, as expressed in subsection 407.003(3)(a), which is to "contain hospital charges that exceed certain thresholds". Finally, Board experience shows that it is not unusual for a hospital to have a wide variance between actual experience and budget. Indeed, as many as one half of all hospitals have a marked variation between actual results and budget projections. Because of this, the Board methodology is a reasonable way in which to take these variances into account in the budget review process. Collectively, these considerations support a finding that, while not perfect or ideal in every respect, the Board methodology is logical, reasonable and appropriate. Petitioners have lodged several objections to the methodology. First, they point out that seven of the fourteen petitioners went through detailed budget review during their last budget filing and were required to justify all matters in their 1991 budgets. Thus, they contend that if they do not agree with the Board imposed budget letter GRAA, they must undergo detailed review a second time for some items that were already reviewed and approved in the prior budget year. However, the greater part of the review here will be of new projections for 1992 which were not included in the 1991 budget. Therefore, there will be little, if any, redundancy in the process. Moreover, detailed review is called for whenever a hospital seeks a rate of increase greater than its MARI even if this occurs in consecutive budget years. Secondly, petitioners contend that two hospitals were penalized by the use of the methodology simply because they had less charges than were budgeted. In other words, when actual results of operations became available, two hospitals learned that their actual charges were less than their budgeted charges. 3/ This resulted in at least one hospital receiving a smaller budget letter GRAA in 1992 than it had in 1991. Petitioners characterize this as a "perverse incentive" since the Board's methodology seemingly encourages a hospital to increase its charges to the budgeted level to avoid having its charges reduced in future years. However, the legislature recognized this anomaly by providing that if a hospital's GRAA increased at a rate of increase lower than its MARI, it would receive "banked" percentage points which it could carry forward in the form of credits to subsequent budget years. In these cases, no hospital elected to use banked credits. Then, too, if a hospital desires a greater rate of increase (and concomitant larger GRAA), it has the statutory mechanism to justify that increase through the detailed budget review process. Similarly, for those hospitals that exceed their budget, and under the Board's methodology are faced with a future reduction in revenue caps, they need only justify those excess charges in the detailed review process in order to avoid this dilemna. Petitioners also criticize the methodology because it does not consider the budget GRAA from the previous fiscal year even though a hospital has already gained approval to operate at the prior year budget level. However, this argument fails to recognize that the use of actual data over budget data is preferred since budgets are merely projections that are often times not attained. Petitioners next point out that the current detailed budget review scheme now codified in Chapter 10N-5, Florida Administrative Code, was not adopted until after subsection 407.50(3) became law in 1988. Thus, they suggest that the word "base" in subsection (3) represents a statutory directive to use a GRAA base specific to detailed budget review. However, the rules in question implement subsections 407.05(6) and 407.50(6) rather than subsection 407.50(3), and the challenged base GRAA calculation is not used during that subsequent detailed budget review process. In other words, even though subsection (3) pertains generally to detailed budget review and provides a calculation of a "base", the Board has opted to use a different methodology found in chapter 10N- 5 in the detailed review process. Although the legislature amended the law in both 1989 and 1991, it chose not to disturb this process or otherwise limit the Board's authority to continue to apply those rules. Therefore, the Board's rejection of petitioners' interpretation is found to be persuasive. Finally, it should be recognized that fiscal years 1990 - 1992 are so-called transition years after the major substantive changes in the law in 1988 and it is not unexpected to have some unusual cases arise. While petitioners have cited a few such cases occurring in budget year 1992, the appropriate remedy is to explain and justify these abnormalities through the detailed review process. Accordingly, these criticisms are found to be without merit. Alternative Proposals Petitioners have proposed three alternative methodologies to calculate the base. They are identified as alternatives 2, 3 and 4 on page 2 of joint composite exhibit 1. 4/ Petitioners assert their alternatives most accurately reflect the GRAA from the previous fiscal year and thus are in compliance with the language in subsection 407.50(2)(a) that requires a hospital to acknowledge its applicable rate of increase in its GRAA "from the previous fiscal year". Accordingly, in formulating their methodologies, petitioners have relied heavily on the words "previous fiscal year" and in some form or fashion have tied all of their calculations to the year 1991. Under petitioners' proposal, a hospital could presumably choose from one of the three alternatives depending on which one was best suited to that hospital's financial circumstances. Petitioners have first proposed to calculate the base by taking the 1990 actual GRAA and inflating it by the 1991 MARI. They contend that this alternative is reasonable because it uses the most recent actual data (1990) as well as reliable numbers (1991 MARI). While this methodology is the same as the Board's methodology for those hospitals whose 1990 actual GRAA did not exceed their 1990 budget GRAA, petitioners do not propose to use it in that manner. Rather, they intend to use it to calculate the base GRAA for two hospitals whose 1990 actual results exceeded budget projections. By doing so, however, those hospitals would be allowed to circumvent the otherwise required detailed review process. Secondly, petitioners suggest that the 1991 budget GRAA be used as the base for calculating a 1992 budget GRAA. This methodology was apparently designed for seven hospitals which underwent detailed budget review during the last fiscal year. Petitioners contend this formula is reasonable because the 1991 budget GRAA has already been approved by the Board, and the seven hospitals had extensive review of last year's budgets. Even so, there is nothing that prohibits detailed review, if warranted, in consecutive budget years, and in any event, actual data is generally preferred over budget projections. Lastly, petitioners propose that the same methodology described in subsection 407.50(1) and used for budget years 1990 and 1991 be used again on the theory that if it was reasonable in those years, it is still reasonable to use now. This methodology calls for the higher of fiscal year 1990 actual GRAA inflated by the 1991 MARI or 1991 budget GRAA to be used as the 1992 base GRAA. Pursuant to the methodology, five hospitals have used the 1991 budget letter GRAA as their 1992 base GRAA. However, by its own terms the methodology used in subsection 407.50(1) is specifically limited to budget years 1990 and 1991, and the law contemplates a change in the calculation of the base in all subsequent budget years. Moreover, the use of actual versus projected numbers is to be favored. In short, then, while the three methods arguably have some beneficial features, they still do not have all of the favorable attributes found in the Board's methodology.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by the Board confirming that petitioners' budget letters should be rejected as being non-conforming. DONE and ORDERED this 16th day of October, 1991, at Tallahassee, Florida. DONALD R. ALEXANDER 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 16th day of October, 1991.
The Issue Whether Respondent's proposed amendment of Rule 59G-6.040, Florida Administrative Code, and Respondent's proposed new Rule 59G-6.045, Florida Administrative Code, would be invalid exercises of delegated legislative authority, within the meaning of Chapter 120, Florida Statutes, for the reasons asserted by Petitioner.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: Petitioner Petitioner is a nonprofit Florida corporation. It operates as a charity providing services to individuals (both children and adults) with developmental disabilities in Florida and elsewhere. It provides services to Florida residents in various Intermediate Care Facilities for the Developmentally Disabled (ICF/DDs6) that it owns and/or operates, including state-owned "cluster" facilities each consisting of three eight-bed buildings sharing a common campus. These "cluster" facilities were created by the state as an alternative to the large state-owned and operated institutions.7 Petitioner renders services in these "cluster" facilities pursuant to contracts it has entered into with the state. All of the facilities that Petitioner operates in the state, regardless of size, are located in residential neighborhoods. The residents of these facilities suffer from mental retardation and various other disabilities, including cerebral palsy, autism, spina bifida and epilepsy. Many require constant supervision, attention, and care, as well as aggressive intervention and treatment. The services that Petitioner provides are designed to assist these individuals in reaching their full potential. All of the residents of Petitioner's ICF/DDs in Florida are Medicaid-eligible.8 Petitioner receives Medicaid payments for providing services to these residents. These Medicaid payments have been insufficient to cover Petitioner's costs. (Other private ICF/DD providers9 in Florida have experienced similar funding shortfalls.10 From 1991 to 1996, private ICF/DD providers in Florida, as a group, received $4,652,312.00 less in Medicaid payments than they spent to provide services.) Petitioner has engaged in fund-raising activities to supplement the Medicaid payments it receives. While these fund-raising activities have generated additional monies, Petitioner, nonetheless, to the detriment of residents, has had to make reductions in the amount it spends for their treatment and care. Recently, Petitioner experienced significant difficulty meeting its payroll, and was forced to obtain a bank loan to pay its employees the monies it owed them. Current Medicaid Reimbursement Methodology Petitioner and all other ICF/DD providers, including the state, are currently reimbursed for providing Medicaid- covered services at their facilities in accordance with the methodology set forth in "Florida Title XIX Intermediate Care Facility for the Mentally Retarded and Developmentally Disabled Reimbursement Plan, Version VI, November 15, 1994" (Version VI of the Plan). Version VI of the Plan is incorporated by reference in Rule 59G-6.040, Florida Administrative Code,11 which provides as follows: 59G-6.040 Payment Methodology for ICF/MR-DD Services. Reimbursement to participating ICF/MR-DD facilities for services provided shall be in accord with the Florida Title XIX ICF/MR-DD Reimbursement Plan Version VI, November 15, 1994, and incorporated herein by reference. A copy of the Plan as revised may be obtained by writing to the Office of the Medicaid Director, P.O. Box 13000, Tallahassee, Florida 32399-0700. Specific Authority 409.919 FS. Law Implemented 409.908 FS. History--New 7-1-85, Amended 2-25-86, Formerly 10C-7.491, Amended 11-19-89, 8-14- 90, 12-26-90, 9-17-91, 1-27-94, Formerly 10C- 7.0491, Amended 11-15-94. Pursuant to Version VI of the Plan, "[r]eimbursement rates [are] established prospectively for each individual provider based on the most historic costs, but historic costs [are] limited to allowable percentage increases from period to period." "Reimbursement rates [are] calculated separately for two classes . . . based on the four levels of ICF/MR-DD care," Developmental Residential, Developmental Institutional, Developmental Non-ambulatory, and Developmental Medical, with the former two (Developmental Residential and Developmental Institutional) constituting one class and the latter two (Developmental Non-ambulatory and Developmental Medical) constituting the other class. "The four components [of a provider's reimbursement rate] are operating costs, resident care costs, property costs, and return on equity costs or use allowance, if applicable. Inflation allowances used in the rate setting process [are] applied to the operating and resident care cost components independently for the two reimbursement classes." Section V.M. of Version VI of the Plan, which provides as follows, describes the "target rate of inflation" feature of the reimbursement methodology, which is a cost containment feature designed to promote economy and efficiency: The use of a target rate of inflation for cost increases shall be used as a measure of efficient operation for purposes of this reimbursement plan. The target rate of inflation principle is that a provider's operating and resident care per diems by reimbursement class should not increase from one fiscal period, that is, year, to the next by a percentage amount with exceeds 1.786 times the average percentage of increase in the Florida ICF/MR-DD Cost Inflation Index for the same period. If a provider's per diem costs for either reimbursement class for operation or resident care exceeds the target rate of inflation, then the allowable per diem costs of the period in which the excessive costs occurred shall be limited to a level equal to the prior period's allowable per diem costs inflated by the target rate percentage. Only allowable per diem cost shall be used for prospective rate setting purposes and for future target rate comparisons. Notwithstanding its name, the "Florida ICF/MR-DD Cost Inflation Index" is based upon a national (rather than a Florida- specific) market basket index.12 Section IV.K. of Version VI of the Plan provides for "incentive payments" to be made to providers who are not "out of compliance with any Condition of Participation" and "whose annual rates of cost increase for operating cost or resident care costs from one cost reporting period to the next are less than 1.786 times the average cost increase for the applicable period documented by the ICF/MR-DD Cost Inflation Index." According to the language contained in this section, its provisions are designed to "encourage high quality care while containing costs." Version VI of the Plan also has a "rebasing" feature, which operates to increase reimbursement rates periodically (no less than once every five years). This "rebasing" feature is described in Section V.B.9 as follows: Rebasing of the operating and resident care component per diems shall occur every five (5) years or whenever fifty percent (50%) of private providers are reimbursed less than reported, allowable costs (whichever occurs first). In detail, rebasing will occur in the rate semester in which fifty percent (50%) or more of the private providers' operating and resident care per diem rate (combined) are less than the operating and resident care inflated costs (combined)(inflated at 1xNational DRI as Florida weighted) based upon eligible cost reports, or each five (5) years counting from October 1, 1991 (1.e, the first rebasing occurring on October 1, 1996) whichever occurs first. The rebasing calculation methodology shall be identical to that used for the October 1, 1989 rate semester rebasing (Section V.A.1.5.) except that rebasing shall occur only for providers whose inflated combined operating and resident care rate does not cover one hundred (100%) of their combined operating and resident care inflated costs. Individual providers which would qualify for rebasing based on April 1, 1991 rates shall be rebased effective July 1, 1991. Version VI of the Plan also provides for "interim changes in component reimbursement rates, other than through the routine semi-annual rate setting process . . ., as well as changes in a provider's allowable cost basis." These provisions promote quality of care inasmuch as they authorize reimbursement for certain costs "necessary to meet existing state or federal requirements," notwithstanding the cost containment features contained elsewhere in the Plan. They are found in Section through 6, which provide as follows: Requests for rate adjustments for increases in property-related costs due to capital additions, expansion, replacements, or repairs shall not be considered in the interim between cost report submissions, except for the addition of new beds or if the cost of the specific expansion, addition, repair, or replacement would cause a change of 1 percent or more in the provider's total per diem reimbursement rate. Requests for interim rate changes reflecting increased costs occurring as a result of resident care or administration changes or capital replacement other than that specified in (1) above shall be considered only if such changes were made to comply with existing state or federal rules, laws, or standards, and if the change in cost to the provider is at least $5000 and would cause a change of 1.0 percent or more in the provider's current total per diem rate. The provider must submit documentation showing that the changes were necessary to meet existing state or federal requirements. In the event that new state or federal laws, rules regulations, or licensure and certification requirements require all affected providers to make changes that result in increased or decreased resident care, operating, or capital cost, request for component interim rate shall be considered for each provider based on the budget submitted by the provider. All affected providers' budgets submitted shall be reviewed by the agency and shall be the basis for establishing reasonable cost parameters. Interim rate requests resulting from (1), (2), and (3) above must be submitted within 60 days after costs are incurred, and must be accompanied by a 12-month budget which reflects changes in services and costs. An interim reimbursement rate, if approved, shall be established for estimated additional costs retroactive to the time of the change in services or the time the costs are incurred, but not to exceed 60 days before the date AHCA receives the interim rate request. The interim per diem rate shall reflect only the estimated additional costs, and the total reimbursement rate paid to the provider shall be the sum of the previously established prospective rates plus the interim rate. A discontinued service would offset the appropriate components of the prospective per diem rates currently in effect for the provider. Upon receipt of a valid interim rate request subsequent to June 30, 1984, the AHCA Office of Medicaid must determine whether additional information is needed from the provider and request such information within 30 days. Upon receipt of the complete, legible additional information as requested, the AHCA Office of Medicaid must approve or disapprove the interim rate within 60 days. If the Office of Medicaid does not make such determination within the 60 days, the interim rate shall be deemed approved. Interim Rate Settlement. Overpayment as a result of the difference between the approved budgeted interim rate and the actual costs of the budgeted item shall be refunded to AHCA. Under-payment as a result of the difference between the budgeted interim rate and actual allowable costs shall be refunded to the provider. After the interim rate is settled, a provider's cost basis shall be restricted to the same limits as those of a new provider . . . . The right to request interim rates shall not be granted for fiscal periods that have ended. Sections VI. and VII. of Version VI of the Plan are entitled "Payment Assurance" and "Provider Participation," respectively, and provide as follows: Payment Assurance The state shall pay each provider for services provided in accordance with the requirements of the Florida Title XIX state plan and applicable state or federal rules and regulations. The payment amount shall be determined for each provider according to the standards and methods set forth in the Florida Title XIX ICF/MR-DD Reimbursement Plan. Provider Participation The plan is designed to assure adequate participation of ICF/MR-DD providers in the Medicaid Program, the availability of high- quality services for recipients, and for services which are comparable to those available to the general public. ICF/DD Reimbursement Prior to 1989 Originally, ICF/DD providers in Florida were reimbursed for providing services to the Medicaid beneficiaries in their facilities pursuant to the same methodology used to reimburse nursing home operators. It subsequently was determined, however, that, because of the differences between ICF/DDs and nursing homes and their respective populations,13 a separate methodology for ICF/DDs was warranted in order to ensure that reimbursement rates for ICF/DD providers were adequate. Such a separate methodology for ICF/DDs (ICF/DD Methodology) was created in 1984. The new ICF/DD Methodology did not include a rebasing provision, and its implementation did not result in an elimination of ICF/DD underfunding. In fact, from 1984 to 1989, most ICF/DD providers, including the state, suffered "tremendous losses." In 1989, a rebasing provision was added to the ICF/DD Methodology. In less than 24 months after the addition of this provision, however, more than half of the ICF/DD providers were spending more on providing ICF/DD services than they were being reimbursed. United States District Court for the Southern District Court of Florida Case No. 89-0984 Petitioner is now, and has been at all times material to the instant case, a member of the Florida Association of Rehabilitation Facilities, Inc. (FARF), a trade association representing non-profit corporations that own and/or operate intermediate care facilities for the developmentally disabled. In 1989, FARF and its members (Plaintiffs), including Petitioner, filed suit in the United States District Court for the Southern District Court of Florida (Case No. 89-0984) challenging the manner in which Florida reimbursed FARF members for the provision of Medicaid-covered services. In May of 1991, Respondent's predecessor, in an effort to address the issues raised in the FARF lawsuit, announced that it was making revisions in the ICF/DD Methodology. These revisions took effect July 1, 1991. On September 11, 1991, United States District Court Judge Lenore C. Nesbitt, acting upon the Plaintiffs' motion, issued an Order Granting Preliminary Injunction in Case No 89- 0984. Judge Nesbitt's order contained the following "findings of facts": Plaintiffs are a group of non-profit corporations providing health care services to mentally retarded individuals in intermediate care facilities ("ICF/MR"), and a trade association representing that group. Defendants are the Florida Department of Health and Rehabilitative Services ("HRS") and two of its officials. At the request of the State of Florida, Plaintiffs provide treatment for mentally retarded individuals, 99%-100% of whom are Medicaid-eligible, in numerous facilities in the state. Certain Plaintiffs both own and operate the ICF/MRs. Others only operate the facilities, which are on land owned by the State. This latter group of facilities are known as "cluster facilities." Because the State of Florida has chosen to receive federal funds by participating in the Medicaid program, it must comply with the requirements of the federal act. One requirement is that the State develop a reimbursement plan for providers of ICF/MR services. As described below, the state need not reimburse all actual costs of the providers; it must only pay rates which are "reasonable and adequate" for an efficient provider to provide care in compliance with applicable state and federal laws and quality and safety standards. HRS reimburses Plaintiffs in the following manner: Operators of cluster facilities are paid pursuant to a fixed-rate contract, not pursuant to any reimbursement plan. Also, HRS' obligations under the contract are expressly made conditional on sufficient appropriations by the state legislature. Operators of non-cluster facilities are reimbursed pursuant to a plan formulated by the state. As is true with most state plans, and is permitted by the Medicaid Act, HRS' plan determines cost on a prospective basis. That is Plaintiffs are paid based on what their services should cost not on what they have actually spent. See Wilder v. Virginia Hosp. Assn., 110 S.Ct 2510, 2516 n.7 (1990). The plan reimburses non-cluster providers as follows: Providers get either last year's actual costs or last year's "target limit cost" (i.e. the previous year's costs plus allowed inflation plus 1.5%), whichever is lower, plus one times the "Modified DRI Nationwide Nursing Home Costs Index." By contrast, operators of "skilled nursing facilities" were provided an inflation increase equivalent to two times the DRI Index. Significantly, there is no periodic readjustment of the target limit. As a result, efficient providers whose necessary costs are consistently greater than their target limit will continue to be under- reimbursed. Further, providers who keep their costs below the target limit are rewarded with a penalty: their target limit for the following year is reduced.14 Plaintiffs assert three challenges to Florida's medicaid reimbursement system. In count I, the substantive challenge to the state's plan, Plaintiffs allege that HRS' plan does not meet the substantive requirement of the Boren Amendment to the Medicaid Act. That is, it does not provide for rates which are "adequate and reasonable" to meet those costs which must be incurred by efficient providers of services in conformity with applicable federal and state laws, regulations, and quality and safety standards. In support of this count, Plaintiffs have submitted several affidavits stating that they and every other provider in the state, except one, continually operate at a large loss because their costs substantially exceed the amounts reimbursed under the plan.15 Neither is it genuinely disputed that the current situation impacts on quality of care.16 Count II, the equal protection claim, alleges that the state's decision to reimburse "skilled nursing facilities" at two times the DRI inflation rate while reimbursing ICF/MR providers at just one times the DRI rate is arbitrary, without justification, and hence violative of the Constitution. Count III alleges and it is undisputed that HRS payment to cluster providers via a fixed- rate contract instead of pursuant to a plan, while at the same time receiving federal funds under the Medicaid Act, violates federal law. Further, Plaintiffs challenge HRS' refusal, prior to the filing of the pending motion, to amend the cluster contracts to cover unexpected and unavoidable interim cost increases, such as increases in worker's compensation insurance rates. As a result of these refusals, Plaintiffs have suffered financially relative to those reimbursed pursuant to a plan. Plaintiffs' evidence also indicates that, because of these consistent and substantial unreimbursed costs, operators of cluster facilities may be unable to continue providing care in the future.17 Defendants' evidence consists of allegations that Plaintiffs' financial difficulties have resulted from past poor management decisions, specifically from their past failure to devote sufficient resources to the wages of their direct care staff. Defendants' evidence also raises a factual dispute as to the financial loss to cluster providers as a result of being paid pursuant to a fixed-rate contract. Otherwise, Defendants do not seriously dispute most of the facts set forth in Plaintiffs' affidavits. Instead, Defendants' submissions consist primarily of argument: they comment on Plaintiffs' evidence and ask the Court to draw the conclusion that (1) their plan reasonably and adequately reimburses the truly efficient provider, and that (2) Plaintiffs' problems are the result of inefficiencies and management mistakes unrelated to deficiencies in the plan. After setting forth these "findings of fact," Judge Nesbitt, in her order, engaged in a discussion explaining why it appeared that Plaintiffs were entitled to a preliminary injunction as to Counts I and III of their complaint. In "conclusion," Judge Nesbitt stated the following: For these reasons, Plaintiffs' Motion for Preliminary Injunction is GRANTED as to Counts I and III. Accordingly, effective September 4, 1991, Defendants are hereby ENJOINED from inadequately reimbursing providers of care in the ICF/MR program. Defendants are further ENJOINED from paying providers for services at ICF/MR cluster facilities in a manner other than as provided for in a rate plan, and shall commence paying each provider of ICF/MR services at cluster facilities the full Medicaid rate for that facility, and shall afford each provider at cluster facilities all rights and protections accompanying a rate plan governing ICF/MR facilities. Though the Court may make interim modifications to the state's current plan, . . . the Court shall not do so at this time. In the spirit of the Boren Amendment's goal of permitting states maximum flexibility in formulating plans for reimbursement, Defendant shall be permitted to file, on or before October 4, 1991, a plan which complies with the substantive requirements of 42 U.S.C. Section 1396a(a)(13). See Wilder v. Virginia Hosp. Assn., 110 S.Ct. 2510, 2517 & 2525 (1990). The rates of reimbursement established under the plan ultimately approved by the Court shall be retroactive to September 4, 1991. The parties are directed to cooperate in formulating an acceptable plan to be presented to this court.18 The Order Granting Preliminary Injunction entered by Judge Nesbitt has not been vacated, rescinded, set aside or modified. On November 14, 1991, Judge Nesbitt issued an Order on Motion for Civil Contempt and Sanctions in Case No. 89-0984, which provided as follows: THIS CAUSE came on before the Court on Plaintiffs' Motion for Civil Contempt and Sanctions and after agreement of counsel for the respective parties before Magistrate Judge Turnoff and submission by all parties of the attached joint proposal, IT IS ORDERED AND ADJUDGED that the attached document is adopted and approved by the Court as its Order on Motion for Civil Contempt and Sanctions and the parties and their agents and successors are hereby ordered to comply with the terms hereof commencing on November 1, 1991. The "attached joint proposal" which Judge Nesbitt "adopted and approved" provided as follows: BASIS FOR AGREEMENT TO DISMISS MOTION FOR CONTEMPT Interim rates for Sunrise OK (Weeks attachment) Depreciation and Maintenance HRS agrees to pay the full Medicaid rate in the current Medicaid rate plan to cluster operators. Cluster operators agree to use amounts in the full rate devoted to depreciation for repair of the facility and replacement (if necessary) of the equipment of facility. HRS and clusters shall agree on said repairs and replacements and shall prioritize any licensure deficiencies for replacement or repair. To the extent there is no necessity for repair of the facility or replacement of equipment, all funds shall revert to HRS/Developmental Services. The amount of depreciation in any given year shall be as computed in the cost report and in accordance with the rate Plan. HRS agrees to retain all liability for repair of the facility and replacement equipment (if any) in excess of those items handled under section 2. Cluster operators and HRS agree that maintenance funds in the full rate, which are attributable to HRS costs incurred in the facility, shall be sent to HRS for continuation of maintenance, or may be retained by cluster and HRS relieved of responsibility for maintenance. Cluster operators are not obligated to assume duties and obligations/ responsibilities in their contracts with HRS district offices that are in excess of those required of an ordinary ICF/MR provider. Pay 6+% retroactive to July 1 by November 30. Agree to pay minimum of May 17 agreement or full rate, whichever is higher, for 1 year, ending June 30, 1992. Agree to pay minimum of May 17 agreement or full rate, whichever is higher, for 1 year, ending June 30, 1992. Agree to pay minimum of May 17 or full rate, whichever is higher, for an additional 4 year period, ending June 30, 1996 subject to legislative appropriation each year. Absent legislative approval, cluster entitled to full rate without depreciation and expense deduction or restrictions contained herein. HRS agrees to seek legislative appropriations, for additional funds, if necessary, in excess of total Medicaid rate, to fund those additional revenues, required per #5 for each year until 1996. These term[s] supplement and do not abrogate May 17 except annual renewal replaced with 5 year contract. Each subsequent contract shall be for 5 years. Defendants shall be entitled in that year to renegotiate the contract or bid-out the contract. Under 2B. Right to Renewal of the Stipulation of Settlement lines 8 through 12 beginning with "Cluster" and ending with "Stipulation" shall be stricken. In additions lines 6 through 19 on Page 7 shall be stricken beginning with "Defendants" and ending with "1991." See attached. (Sic. #8 now included in running text.) If depreciation of funds are available after expenditures have been made for necessary repairs and replacement, HRS and cluster operator shall agree to deposit such funds into a reserve fund, to be held by the operator, to fund necessary repairs and replacement in future years, particularly long term repairs unlikely to appear on a regular basis. Funds held in reserve by the operator for long term repair or replacement which are not expended by the end on the 5 year contract period shall revert to the Department, unless the Department renews the contract with the same operator, or funds are transferred to new provider. At the end of each 5 year contract with cluster, the contract may be renewed with the current cluster operator, or bid out. When contracts are renewed or bid out, the terms shall be for the full Medicaid rates. Funds appropriated in F.Y, 1991-92 for repairs and replacement shall be promptly disbursed. (Note: The numbering system on my original copy reflects changes made after copying had taken place, but before signature. Thus the copy shows an 8. and 9., which have been deleted on the original signed agreement. Also the copy shows number 10.-14 which have been renumbered on the original 8.-12.) (Weeks Attachment) 1. The interim rate request filed for the McCauley, Mahan, Dorchester, Bayshore, Green Tree Court and St. Petersburg on June 17, 1991 will be approved for all six clusters. Reimbursement for the interim rate increase shall be paid to Sunrise beginning 60 days prior to the date of filing and the interim shall be settled based on the June 30, 1991 cost reports for each of these clusters. The level of interim rate increase shall be per data and calculations provided the Department with Sunrise's July 31, 1991 letter to Ms. Joyce Barrington. Procedure used for this interim shall be in compliance with the current Florida Title XIX ICF/MR-DD Reimbursement Plan and current procedures for interim rates to include inflation on the interim rate component effective 7/1/91 through 3/30/92. Case No. 89-0984 is still pending (but before Judge Michael Moore). Doe v. Chiles In March of 1992, FARF became involved in another federal lawsuit against the state, when it, along with United Cerebral Palsy, Inc., and various Florida residents who had been placed on waiting lists for entry into an ICF/DD, filed a 1983 action in the United States Court for the Southern District of Florida (styled Doe v. Chiles) claiming that the state was causing unreasonable delays in the provision of ICF/DD services. In December of 1992, FARF and United Cerebral Palsy, Inc., were dismissed as plaintiffs. On July 22, 1996, Judge Wilkie D. Ferguson, Jr., granted the remaining plaintiffs' motion for summary judgment, holding: Section 1396a(a)(8) of the Medicaid (A)ct, specifically the reasonable promptness clause, is enforceable under 42 U.S.C. Section 1983. "Medical assistance under the plan" has been defined as medical services. The (S)tate is obliged to furnish medical services, however, only to the extent that such placements are offered in the Federal Health Care Financing Agency ("HCFA") approved State plan. Once a state elects to provide a service, that service becomes part of the state Medicaid plan and is subject to the requirements of Federal law. At oral argument on this issue, Defendants conceded that Florida's [HCFA] State approved plan does provide for placement in ICF/MR facilities. Further, Defendants have not disputed the facts alleging the [S]tate's failure to conform with the provisions set forth in that statute, which the Court construes as an admission of unreasonable delays in placing developmentally disabled persons into ICF/MR facilities. On August 26, 1996, a magistrate judge signed a report recommending that Judge Ferguson grant the plaintiffs' motion to certify as a class "all those developmentally disabled persons who have not received prompt [ICF/DD] placement." After conducting a hearing on August 28, 1996, Judge Ferguson entered a final judgment, ordering that the state "shall, within 60 days of the date of this Order, establish within the State's Medicaid Plan a reasonable waiting list time period, not to exceed ninety days, for individuals who are eligible for placement in [an ICF/DD]." The state appealed the final judgment. On February 26, 1998, the Eleventh Circuit, in an opinion reported at 136 F.2d 709 (11th Cir. 1998), affirmed the judgment. Chapter 96-417, Laws of Florida In 1996, the Florida Legislature passed House Bill No. 1621 (Chapter 96-417, Laws of Florida), Sections 4, 6, 11, 12, 13, 14, 15, 16 and 17 of which provided, in pertinent part, as follows: Section 4. Subsections (8) and (14) of section 409.906, Florida Statutes, are amended to read: 409.906 Optional Medicaid services. --- Subject to specific appropriations, the agency may make payments for services which are optional to the state under Title XIX of the Social Security Act and are furnished by Medicaid providers to recipients who are determined to be eligible on the dates on which the services were provided. Any optional service that is provided shall be provided only when medically necessary and in accordance with state and federal law. Nothing in this section shall be construed to prevent or limit the agency from adjusting fees, reimbursement rates, lengths of stay, number of visits, or number of services, or making any other adjustments necessary to comply with the availability of moneys and any limitations or directions provided for in the General Appropriations Act or chapter 216. Optional services may include: . . . (14) INTERMEDIATE CARE FACILITY FOR THE DEVELOPMENTALLY DISABLED MENTALLY RETARDED SERVICES. For the purposes of Medicaid reimbursement, "intermediate care facility for the developmentally disabled services" means services provided by a facility which is owned and operated by the state and to which the agency may pay for health-related care and services provided on a 24-hour-a-day basis, for a recipient who needs such care because of a developmental disability or related condition. The agency may pay for health related care and services provided on a 24-hour a day basis by a facility licensed under chapter 393, to a recipient who needs such care because of his mental or physical condition.19 . . . Section 6. Section 409.908, Florida Statutes is amended to read: 409.908 Reimbursement of Medicaid providers. Subject to specific appropriations, the agency shall reimburse Medicaid providers, in accordance with state and federal law, according to methodologies set forth in the rules of the agency and in policy manuals and handbooks incorporated by reference therein. These methodologies may include fee schedules, reimbursement methods based on cost reporting, negotiated fees, competitive bidding pursuant to s. 287.057, and other mechanisms the agency considers efficient and effective for purchasing services or goods on behalf of recipients. Payment for Medicaid compensable services made on behalf of Medicaid eligible persons is subject to the availability of moneys and any limitations or directions provided for in the General Appropriations Act or chapter 216. Further, nothing in this section shall be construed to prevent or limit the agency from adjusting fees, reimbursement rates, lengths of stay, number of visits, or number of services, or making any other adjustments necessary to comply with the availability of moneys and any limitations or directions provided for in the General Appropriations Act, provided the adjustment is consistent with legislative intent. (2)(a)1. Reimbursement to nursing homes licensed under part II of chapter 400 and state-owned-and-operated intermediate care facilities for the developmentally disabled mentally retarded licensed under chapter 393 must be made prospectively. . . . Section 11. (1) The Legislature finds: That noninstitutional home and community-based services are a cost-effective and appropriate alternative to institutional care for many individuals who would otherwise be served in institutional settings; That the Intermediate Care Facility for the Developmentally Disabled program is an optional institutional service authorized by Title XIX of the Social Security Act and that this act encourages states to develop and utilize alternatives to optional institutional services for Medicaid clients through authorization of waivers that allow for federal financial participation in the provision of services in noninstitutional settings for clients who are eligible for Medicaid-reimbursed institutional services; That utilization of noninstitutional funding mechanisms for individuals residing outside of state-owned-and-operated institutions allows individuals to be appropriately served at less cost than is possible through the Intermediate Care Facility for the Developmentally Disabled program; That federal regulations diminish the ability of the state to manage resources currently used to reimburse privately owned or operated intermediate care facilities for the developmentally disabled to enable the most cost-effective utilization of resources appropriated to programs that serve individuals with developmental disabilities; That there are fundamental differences in the respective roles of private and public facilities that serve individuals with developmental disabilities and that these differences justify funding private and public facilities through different funding mechanisms; That there is a critical state need to continue financing institutional services provided in state-owned-and-operated facilities for the developmentally disabled through the Intermediate Care Facility for the Developmentally Disabled program to provide for the adequate care of the clients who reside in these facilities; and That the most appropriate and cost- effective care for state-supported clients who reside in privately owned or operated residential facilities for individuals with developmental disabilities is provided through community-based, noninstitutional service delivery models that are financed through noninstitutional financing mechanisms. (2) In accordance with the findings in subsection (1), it is the intent of the Legislature that, in order to both reduce the cost of serving individuals with developmental disabilities and provide appropriate alternative services to institutional care, privately owned or operated facilities authorized to receive reimbursement through the Medicaid Intermediate Care Facility for the Developmentally Disabled program on June 30, 1996, shall no longer be reimbursed through that program but may continue to serve clients through noninstitutional service arrangements that are financed through noninstitutional funding mechanisms. It is further the intent of the Legislature that individuals who reside in state-owned-and- operated intermediate care facilities for the developmentally disabled shall continue to receive services financed through the Medicaid Intermediate Care Facility for the Developmentally Disabled program. Section 12. The Agency for Health Care Administration shall issue a license as a home for special services to each facility desiring such licensure, if the facility was eligible to receive reimbursement through the Intermediate Care Facility for the Developmentally Disabled program on June 30, 1996. Individuals with developmental disabilities who reside in homes for special services licensed pursuant to this section may receive services reimbursed through the home and community-based services waiver, provided all other Medicaid eligibility criteria are satisfied. A license granted pursuant to this section shall be valid until the expiration of the facility's Intermediate Care Facility for the Developmentally Disabled license. The Agency for Health Care Administration shall develop standards for facilities licensed pursuant to this section which shall include appropriate sanctions for noncompliance with the standards and shall specify the terms for renewal of licenses. Any license granted pursuant to this section shall be contingent upon the facility allowing access to the Agency for Health Care Administration to conduct inspections to ensure compliance with standards. Section 13. Subsection (29) of section 393.063, Florida Statutes, is amended to read: 393.063 Definitions.- For purposes of this chapter: (29) "Intermediate care facility for the developmentally disabled" or "ICF/DD" means a state-owned-and-operated residential facility licensed in accordance with state law, and certified by the Federal Government pursuant to the Social Security Act, as a provider of Medicaid services to persons who are mentally retarded or who have related conditions. The capacity of such a facility shall not be more than 120 clients. Section 14. Section 393.067, Florida Statutes, is amended to read: 393.067 Licensure of residential facilities and comprehensive educational programs.- In addition to the requirements in subsection (4), the initial license application for an intermediate care facility for the developmentally disabled of six beds or less shall also include: The provider's proposal, on forms provided by the department, including a pro forma budget which shall also serve as the basis for establishing an initial interim Medicaid reimbursement rate. Approval and selection of the provider's proposal by the district and the Developmental Services Program in accordance with paragraph (20)(c). The initial license application shall be valid while the provider develops the facility in compliance with the conditions of the approved proposal. The department shall only accept proposals for intermediate care facilities for the developmentally disabled of six beds or less in response to the publication of projected bed need. Projected bed need shall be published by the department and shall identify: The district in which the beds are to be located. The maximum per diem cost which shall be in accordance with the Florida Title XIX ICF/MR Reimbursement Plan. The maximum size of the facility. The level of care of clients to be served, including demographic and programmatic characteristics of the client population. Projected bed need shall be directed towards clients who have severe disabilities, who have extensive service needs, who require extensive active treatment services, and who can only be adequately served in a cost-effective manner in an intermediate care facility for the developmentally disabled. Projected bed need shall be determined by the department on the basis of client need for extensive active treatment services that can only be delivered in a cost-effective manner in an intermediate care facility for the developmentally disabled. The department shall approve and select from provider proposals that respond to published projected bed need, based on the following weighted criteria in order of importance: Adequacy and quality of services that address the published bed need projections, especially the client demographic and programmatic characteristics. Completeness of the proposal and adherence to timeframes. Demonstration of financial ability to operate the facility in relation to published bed need projections. Appropriateness of per diem cost to provide quality services. Any license granted for intermediate care facilities for the developmentally disabled under the provisions of subsections (18) and (20) shall be valid only while the provider operates the facility in compliance with the conditions in the proposal that were approved by the department, as well as with all other applicable laws, rules, and regulations related to the operation of such facilities. Section 15. (1) Section 393.16, Florida Statutes, is hereby repealed.20 (2) Any cash balance remaining in the Intermediate Care Facilities Trust Fund shall be transferred to the Community Resources Development Trust Fund. Section 16. Notwithstanding any other provision of law, or this act to the contrary, the Agency for Health Care Administration may continue to reimburse private intermediate care facilities for the developmentally disabled through the Intermediate Care Facility for the Developmentally Disabled program through August 30, 1996, if requested by the Secretary of Health and Rehabilitative Services to ensure the safety and well-being of clients. Section 17. This act shall take effect July 1, 1996, or upon becoming a law, whichever is later; however, if this act becomes a law after July 1, 1996, it shall operate retroactively to July 1, 1996. Chapter 96-417, Law of Florida, became a law without the Governor's approval on June 7, 1996. Cramer v. Chiles Chapter 96-417, Florida Statutes, was challenged in the United States District Court for the Southern District of Florida in the case of Cramer v. Chiles, Case No 96-6619, which was assigned to Judge Ferguson. On August 28, 1996, Judge Ferguson issued an Order on Motion for Preliminary Injunction in Case No. 96-6619, which provided as follows: THIS CAUSE came before the Court for oral argument August 28, 1996 on Plaintiffs' Emergency Motion for Preliminary Injunction. Plaintiffs request the Court stay the effective date of Chapter 96-417, Public Laws, which is scheduled to go into effect August 30, 1996. The enactment would eliminate all private intermediate care facilities for the developmentally disabled21 ("ICF/DDs") in Florida, reducing the number of ICF/DD placements available by nearly 2,200. This Court previously determined in Doe v. Chiles, Case No. 92-589-CIV-Ferguson, that the State of Florida is obligated to provide placement of eligible individuals in ICF/DDs. Accordingly, in the absence of a transitional plan and showing that the State's proposed revised plan, under the new legislation, will adequately provide ICF/DD placements for eligible persons in Florida, there is a likelihood that Plaintiffs will succeed on the merits. To allow the substantial change scheduled for August 30, 1996, prior to the submission to, and approval by, the Federal Health Care Financing Agency ("HCFA") of an alternative plan which satisfies the State's obligations to beneficiaries under the existing plan, would cause irreparable harm to individuals currently provided care in those facilities. There must be a period and a plan for transition which will insure that services to the entitled recipients are not substantially impaired. The Plaintiffs have made a sufficient showing that there is no adequate legal remedy. Accordingly, it is ORDERED AND ADJUDGED that the Plaintiffs' motion for preliminary injunction is GRANTED, and the State shall continue to provide the current funding for 100% of cost reimbursements to private ICF/DD facilities until such time as a revised plan is presented and approved by HCFA. The new plan, for fairness considerations, shall disclose criteria to be used by the State in its reassessments for continued institutional care eligibility. Time is of the essence, as budgetary constraints dictate that a plan must be approved well before the end of the fiscal year, June 30, 1997. It is thus incumbent on all parties to move expeditiously. On October 13, 1998, Judge Ferguson issued an Order on Defendants' Ore Tenus Agreed Motion to Revive Statutory Scheme, which provided as follows: THIS MATTER came before the Court upon Defendants' Ore Tenus Agreed Motion to Revive Statutory language in Chapters 393 and 409, FLORIDA STATUTES (1995), as they existed prior to the enactment of Chapter 96-417, LAWS OF FLORIDA, and the Court being fully advised in the premises and having considered the entire record of the case, for good cause shown, it is hereby ORDERED AND ADJUDGED the Motion is Granted nunc pro tunc to the date of the entry of oral Order on Summary Judgment on January 9, 1998. Chapter 97-260, Florida Statutes Following the initiation of the challenge to Chapter 96-417, Laws of Florida, the Florida Legislature further addressed the "transition from funding through the Intermediate Care Facility for Developmentally Disabled Program to noninstitutional funding" by enacting Chapter 97-260, Laws of Florida, section 4 of which provided as follows: Report required; department to notify Legislature and develop plan if judicial decisions result in spending requirements in excess of appropriations.– The Department of Children and Family Services shall develop individual support plans for the approximately 2,176 persons directly affected by the transition from funding through the Intermediate Care Facility for Developmentally Disabled Program to noninstitutional funding. The individual plans shall provide for appropriate services to each affected individual in the most cost- effective manner possible. The department shall report the projected aggregate cost of providing services by fund source through the individual plans to the Office of Planning and Budgeting, the Senate Ways and Means Committee, and the House Health and Human Services Appropriations Committee by September 30, 1997. The aggregate costs reported shall be based on typical industry rates and shall not include special adjustments for property costs or other additional costs unique to any individual provider or type of provider. The department may, however, report any such costs separately. The report must further provide detailed information on department efforts to maximize Medicare and other funding available outside the Developmental Services Program and the use of generic community resources along with a calculation of the value of such resources. The report must also include a summary of the department's progress in recruiting alternative providers in the event that any current providers decide to discontinue services to clients or cannot provide quality services within the anticipated rate structure. If judicial decisions are continued or rendered that the Department of Children and Family Services feels will require spending in excess of the amounts budgeted for Developmental Services, the department shall immediately notify the Chairs of the Senate Ways and Means Committee, the House Fiscal Responsibility Council, and the House Health and Human Services Appropriations Committee. Within 1 week after providing notification pursuant to this subsection, the department shall submit a spending plan that addresses the projected deficit. This section is repealed July 1, 1999. Boren Amendment Repeal In the Balanced Budget Amendment of 1997 (more specifically, Section 4711(a)(1) thereof), the United States Congress repealed the Boren Amendment to the Medicaid Act, which Judge Nesbitt had referred to in her Order Granting Preliminary Injunction in United State District Court for the Southern District of Florida Case No. 89-0984. The Boren Amendment required, in pertinent part, that a state plan for medical assistance22 provide for "payment of . . . the hospital services, nursing facility services, and services in an intermediate care facility for the mentally retarded provided under the plan through the use of rates . . . which the State finds, and makes assurances to the Secretary, are reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide care and services in conformity with applicable State and Federal laws, regulations, and quality and safety standards." Section 4711(a)(1) of the Balanced Budget Amendment of 1997 eliminated this requirement (which was codified in 42 U.S.C. 1396a(a)(13)) and replaced it with the requirement that a state plan: (13) provide-- for a public process for determination of rates of payment under the plan for hospital services, nursing facility services, and services of intermediate care facilities for the mentally retarded under which-- proposed rates, the methodologies underlying the establishment of such rates, and justifications for the proposed rates are published, providers, beneficiaries and their representatives, and other concerned State residents are given a reasonable opportunity for review and comment on the proposed rates, methodologies, and justifications, final rates, the methodologies underlying the establishment of such rates, and justifications for such final rates are published, and in the case of hospitals, such rates take into account (in a manner consistent with section 1923) the situation of hospitals which serve a disproportionate number of low- income patients with special needs. Subsection (b) of Section 4711 of the Balanced Budget Amendment of 1997 provided as follows: STUDY.--The Secretary of Health and Human Services shall study the effect on access to, and the quality of, services provided to beneficiaries of the rate-setting methods used by States pursuant to section 1902(a)(13)(A) of the Social Security Act (42 U.S.C. 1396a(a)(13)(A)), as amended by subsection (a). REPORT.--Not later than 4 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall submit a report to the appropriate committees of Congress on the conclusions of the study conducted under paragraph (1), together with any recommendations for legislation as a result of such conclusions. Subsection (d) of Section 4711 of the Balanced Budget Amendment of 1997 provided as follows:: EFFECTIVE DATE.--This section shall take effect on the date of the enactment of this Act and the amendments made by subsections (a) and (c) shall apply to payment for items and services furnished on or after October 1, 1997. Following the passage of the Balanced Budget Act of 1997, the Health Care Finance Agency (HCFA), a federal agency which assists in the administration of the federal Medicaid program,23 sent the following letter, dated December 10, 1997, to state Medicaid directors concerning the repeal of the Boren Amendment: This letter is one of a series that provides guidance on the implementation of the Balanced Budget Act of 1997 (BBA). Section 4711 of BBA repeals Sections 1902(a)(13)(A), (B), and (C) of the Social Security Act (the Act), requires states to implement a public process when changes in payment rates or payment methodologies are proposed, and applies to payments for items and services furnished on or after October 1, 1997. (See Enclosure 1 for background on Section 4711.) Section 4711 of BBA replaced the Boren requirements with a new section 1902(a)(13)(A) of the Act, which requires states to (a) use a public process for determining rates, (b) publish proposed and final rates, the methodologies underlying the rates, and justifications for the rates, and (c) give interested parties a reasonable opportunity for review and comment on the proposed rates, methodologies, and justifications. In the case of hospitals, such rates must take into account the situation of hospitals which serve disproportionate number of low-income patients with special needs. The intent of Section 4711 is to provide states with maximum flexibility, as well as to minimize HCFA's role in reviewing inpatient and long-term care state plan amendments involving payment rate changes. HCFA would consider the state to be in compliance with this provision if it elected to use a general administrative process similar to the Federal Administrative Procedures Act that satisfies the requirements for a public process in developing and inviting comment in Section 4711. This will allow states the flexibility to follow current state procedures. If a state's public process is not currently being applied to rate setting, or does not currently include a comment period, then the state would need to modify the process. (See Enclosure 2 for public process options.) The repeal of the Boren amendment cannot be interpreted to be retroactively effective; the Boren amendment still applies to payment for items and services furnished before October 1, 1997. Thus, inpatient hospital and long-term state plan amendments that are currently pending approval by HCFA, including those where Boren requirement questions are the only outstanding issues, need to have these issues resolved before amendment can be approved. However, we recognize that the intent in repealing the Boren amendment was to reduce HCFA's role in the institutional payment rate setting process and to increase state latitude in this area. In light of the less restrictive requirements now in place, HCFA is committed to working with states to expedite resolution of outstanding Boren issues in existing pending amendments. States that are not proposing changes in their payment methods and standards, or changes in rates for items and services furnished on or after October 1, 1997, need not immediately implement a BBA public process. States need only publish proposed rates, methodologies, and justification prior to the proposed effective date of any changes in payment rates or payment methodologies. In other words, states are not required to subject their existing rates to a public process to the extent that those existing rates were validly determined in accordance with legal standards in effect prior to October 1, 1997. In the event changes are already underway, states are to submit the preprint page (or comparable language inserted elsewhere in the hospital and long- term care payment sections of the plan) with the next proposed amendment. (See Enclosures 3 and 4 for preprint pages.) We envision a streamlined Federal review process due to the fact that state plan amendments previously submitted under the Boren requirements were subjected to more rigorous statutory standard both in terms of Federal review of their substance and the review of the process itself. Chapter 98-46, Laws of Florida. The 1998 Florida Legislature passed legislation directing Respondent to make changes to the ICF/DD Methodology. The directive was contained in Chapter 98-46, Laws of Florida, Sections 13 and 40 of which provided as follows: Section 13. In order to implement Specific Appropriation 243 of the 1998-1999 General Appropriations Act, subsection (22) is added to section 409.908, Florida Statutes, to read: 409.908 Reimbursement of Medicaid providers.- Subject to specific appropriations, the agency shall reimburse Medicaid providers, in accordance with state and federal law, according to methodologies set forth in the rules of the agency and in policy manuals and handbooks incorporated by reference therein. These methodologies may include fee schedules, reimbursement methods based on cost reporting, negotiated fees, competitive bidding pursuant to s. 287.057, and other mechanisms the agency considers efficient and effective for purchasing services or goods on behalf of recipients. Payment for Medicaid compensable services made on behalf of Medicaid eligible persons is subject to the availability of moneys and any limitations or directions provided for in the General Appropriations Act or chapter 216. Further, nothing in this section shall be construed to prevent or limit the agency from adjusting fees, reimbursement rates, lengths of stay, number of visits, or number of services, or making any other adjustments necessary to comply with the availability of moneys and any limitations or directions provided for in the General Appropriations Act, provided the adjustment is consistent with legislative intent. (22) The agency is directed to implement changes in the Medicaid reimbursement methodology, as soon as feasible, to contain the growth in expenditures in facilities formerly known as ICF/DD facilities.24 In light of the repeal of the federal Boren Amendment, the agency shall consider, but is not limited to, the following changes in methodology: Reduction in the target rate of inflation. Reduction in the calculation of incentive payments. Ceiling limitations by component of reimbursement. Elimination of rebase provisions. Elimination of component interim rate provisions. Separate reimbursement plans for facilities that are government operated versus facilities that are privately owned. The agency may contract with an independent consultant in considering any changes to the reimbursement methodology for these facilities. This subsection is repealed on July 1, 1999. Section 40. This act shall take effect July 1, 1998, or in the event this act fails to become a law until after that date, it shall operate retroactively thereto. Chapter 98-46, Laws of Florida, became a law without the Governor's approval on April 30, 1998. Respondent's Response to Chapter 98-46, Laws of Florida Becoming a Law The task of taking the necessary steps to comply with the legislative directive contained in Chapter 98-46, Laws of Florida, was the responsibility of John Owens, a Regulatory Analyst Supervisor with Respondent, whose job duties include "overseeing the various reimbursement plans for Medicaid and their application." Mr. Owens' training is primarily in accounting and finance, not health care. Mr. Owens acted in consultation with his immediate supervisor, Carlton Snipes, as well as the Director of Respondent's Division of Health Purchasing and agency counsel. He did not employ any independent consultants to assist him. After formulating revisions to the ICF/DD Methodology that he preliminarily determined should be made in light of legislative mandate in Section 13 of Chapter 98-46, Laws of Florida, Mr. Owens had published in the August 14, 1998, edition of the Florida Administrative Weekly the following notices of proposed rule development:
The Issue Whether the challenged portion of Rule 10N-5.015(15), Florida Administrative Code, as proposed by the Respondent, the Health Care Cost Containment Board, is an invalid exercise of delegated legislative authority?
Findings Of Fact The parties stipulated to the following facts: The Retreat is a 100 bed short-term psychiatric specialty and substance abuse hospital located at 555 S.W. 148th Avenue, Sunrise, Broward County, Florida. The Retreat admitted its first patient on September 12, 1988. The Retreat operates on a fiscal year from September 1, through August 31. Therefore, The Retreat's 1989 fiscal year was for the period beginning when The Retreat opened on September 12, 1988, through August 31, 1989. The Retreat filed its 1989 budget with the Respondent on June 3, 1988. The Retreat's 1989 budget was approved by the Respondent on August 25, 1988 with an approved gross revenue per adjusted admission (hereinafter referred to as "GRAA"), of $20,323.00, and a net revenue per adjusted admission (hereinafter referred to as "NRAA"), of $17,973.00. The Retreat's 1990 fiscal year is from September 1, 1989, through August 31, 1990. Pursuant to Section 407.50(2)(a), Florida Statutes (1988 Supp.), The Retreat submitted a budget letter described in Section 407.50(2)(a), Florida Statutes, to the Respondent on May 24, 1989, for its 1990 fiscal year. The budget letter submitted by The Retreat certified that its FY 1990 maximum allowable rate of increase in GRAA over its budgeted GRAA in FY 1989 would be 7.8% and that its GRAA would not exceed $21,908.00 in FY 1990. Said rate of increase stated in The Retreat's budget letter represented the National Hospital Input Price Index (hereinafter referred to as the "NHIPI"), for the 1990 fiscal year plus two percentage points. At the time the Respondent received said budget letter, no administrative rule had yet been adopted that required a hospital entering into its second fiscal year of operation to file a full budget subject to detailed budget review. By letter dated June 5, 1989, the Respondent's staff advised The Retreat that, based on staff's interpretation of the controlling statute, staff could not accept said budget letter filed by The Retreat and a detailed budget would be required for The Retreat's 1990 fiscal year. The June 5, 1989, letter enunciated a non-rule agency policy based upon staff's interpretation of Section 407.50, Florida Statutes (1988 Supp.), that a hospital filing a budget for its second fiscal year is not eligible to file a budget letter and must file a budget subject to detailed review. On June 29, 1989, The Retreat filed a Petition to determine the invalidity of the non-rule policy explicated in said June 5, 1989, letter. Also on June 29, 1989, The Retreat filed a Petition for Formal Administrative Hearing regarding the decision by HCCCB to reject its budget letter. Said Petition was assigned DOAH Case No. 89-3579H. On May 25, 1989, proposed Rule 10N-5.015 was approved by the HCCCB. Said proposed rule was published in the Florida Administrative Weekly, in Volume 15, No. 27, Florida Administrative Weekly (July 7, 1989). The last sentence of proposed Rule 10N-5.015(15), Florida Administrative Code, provides as follows: A new hospital or replacement hospital relocated to a different medical services area shall submit a budget report for review in the first two years of operation, but may submit a budget letter for its third year of operation if it does not require an increase in GRAA in excess of its hospital specific MARI calculated pursuant to Rule 10N-5.013. The last sentence of proposed Rule 10N-5.015(15), Florida Administrative Code, codifies, in rule form, the non-rule policy set forth in the HCCCB letter of June 5, 1989. The Retreat filed a Petition to Determine the Invalidity of Proposed Rule 10N-5.015(15), Florida Administrative Code, on July 28, 1989. Said Petition was assigned DOAH Case No. 89-4219RP. DOAH Case No. 89-3436RU, 89-3579H and 89-4219RP were subsequently consolidated for a single final hearing. The Retreat has standing in each of the three above-styled causes. Florida hospitals subject to Section 395.509(1), Florida Statutes (1985), were required to file detailed budgets before the start of each fiscal year prior to 1990. The Respondent reviewed each budget, including the hospital's GRAA. Depending upon the rank of a hospital's GRAA among the hospitals it was assigned to for budget review, the hospital's budget would either be automatically approved or subjected to detailed review. During the 1988 legislative session, Chapter 88-394, Laws of Florida, was enacted. Chapter 88-394, which was codified in Chapter 407, Florida Statutes (1988 Supp.), applies to a hospital's 1990 fiscal year and to later fiscal years. Section 407.50, Florida Statutes (1988 Supp.), provides that a hospital is required to file either a detailed budget or a "budget letter". In particular, Section 407.50(2)(a), Florida Statutes (1988 Supp.), provides that each hospital, "[e]xcept for hospitals filing a budget pursuant to subsection (3) . . . shall file with the board a certified statement, hereafter known as the 'budget letter' . . . ." If a budget letter is filed the hospital must acknowledge its maximum rate of increase in its GRAA from the previous year "as calculated pursuant to s. 407.002(17) . . ." and its maximum rate of increase for the next fiscal year, and it must affirm that it will not exceed the applicable maximum allowable rate of increase. If a budget letter is filed by a hospital the hospital's base for budget review is governed by Section 407.50(1), Florida Statutes (1988 Supp.): The base for hospital budget review for fiscal year 1990-1991 shall be the hospital's prior year actual gross revenues per adjusted admission inflated forward by the hospital's applicable current year's maximum allowable rate of increase or the board- approved budgeted gross revenues per adjusted admission, whichever is higher; provided that, in cases where the board has approved a rate of increase below the MARI, the board-approved maximum allowable rate of increase shall apply. For a 1990-1991 budget, a hospital's base is the greater of the hospital's GRAA for its 1988 fiscal year increased by its 1989 MARI or its 1989 budgeted GRAA. Section 407.50(3), Florida Statutes (1988 Supp.), requires the submission of a detailed budget for "each hospital requesting a rate of increase in gross revenue per adjusted admission in excess of the maximum allowable rate of increase for the hospital's next fiscal year . . . ." [Emphasis added]. If a detailed budget is filed, Section 407.50(3), Florida Statutes (1988 Supp.), provides that the hospital's "base" shall be determined as follows: In determining the base, the hospital's prior year audited actual experience shall be used unless the hospital's prior year audited actual experience exceeded the applicable rate of increase in which case the base shall be the gross revenue per adjusted admission from the year before the prior year, increased by the applicable rate of increase for the prior year, and then inflated by the applicable rate of increase for the current year. . . . The "maximum allowable rate of increase" for budget letters or detailed budget requests is defined by Section 407.002(17), Florida Statutes (1988 Supp.), as follows: (17) "Maximum allowable rate of increase" or "MARI" means the maximum rate at which a hospital is normally expected to increase its average gross revenues per adjusted admission for a given period. The board, using the most recent audited actual experience for each hospital, shall calculate the MARI for each hospital as follows: the projected rate of increase in the market basket index shall be divided by a number which is determined by subtracting the sum of one-half of the proportion of Medicare days plus the proportion of Medicaid days and the proportion of charity days from the number one. Two percentage points shall be added to this quotient. The formula to be employed by the board to calculate the MARI shall take the following form: MARI = NHIPI +2 1-[(Me x .5) + Md +Cc] where: MARI = maximum allowable rate of increase applied to gross revenue. NHIPI = national hospital input price index which shall be the projected rate of change in the market basket index. Me = proportion of Medicare days, including when available and reported to the board Medicare HMO days, to total days. Md = proportion of Medicaid days, including when available and reported to the board Medicaid HMO days, to total days. Cc = proportion of charity care days to total days with a 50-percent offset for restricted grants for charity care and unrestricted grants form local governments. Pursuant to this definition of "maximum allowable rate of increase" hospitals are entitled to a base of the NHIPI plus two percentage points inflated by the hospital's prior year Medicare, Medicaid and charity care days, if any. The Respondent has suggested that calculation of the MARI in accordance with Section 407.002(17), Florida Statutes, is a prerequisite to filing a budget letter and that Section 407.002(17), Florida Statutes, requires that audited actual experience be available in order for the Respondent to calculate the MARI for a hospital. In support of the Proposed Rule, the Respondent has suggested that it cannot "certify that a budget letter is correct pursuant to s. 407.50(2)(a) . . . ." This argument is rejected because there is no requirement in Section 407.50, Florida Statutes, that the Respondent provide such a certification. Additionally, the Respondent has not adequately explained why it is only concerned about its calculation of the MARI for hospitals in their first or second years of operation and not all hospitals. The problem with the Respondent's position is that, while Section 407.002(17), Florida Statutes, does require that the Respondent use audited actual experience to calculate the MARI, Sections 407.50(1) and (2), Florida Statutes (1988 Supp.), do not require that the Respondent calculate the MARI. If a budget letter is filed by a hospital, the Respondent is only required to "determine if the gross revenues per adjusted admission submitted by the hospital are within the maximum allowable rate of increase for that hospital." The Respondent can accomplish this task without calculating the MARI; it can rely upon the MARI acknowledged by the hospital. If a hospital files a budget letter, only the hospital is required to calculate its MARI. The hospital, unlike the Respondent, is not required by Section 407.002(17), Florida Statutes to use audited actual experience in its calculation of the MARI. All of the elements of the MARI may be obtained by the hospital from unaudited experience. The NHIPI is a national standard that is not hospital specific. The two percentage points are also not hospital specific. The only hospital specific information taken into account is the number of Medicare, Medicaid and charity care days. Even the Respondent agrees that audited actuarial experience is not necessary to calculate Medicare, Medicaid and charity care days. Therefore, hospitals may calculate the MARI for purposes of Section 407.50(2), Florida Statutes (1988 Supp.), without audited actual experience. In further support of the Proposed Rule, the Respondent has characterized the action of The Retreat as using a "zero" in lieu of audited actual 1988 GRAA for purposes of calculating its budget letter base for 1990. The Respondent suggests that Section 407.50(1), Florida Statutes (1988 Supp.), requires a "comparison" of the two values which may be used as a hospital's base and that The Retreat's action circumvents such a comparison. The plain language of Section 407.50(1), Florida Statutes (1988 Supp.), does not require any comparison of the two values which may be used as a hospital's base. Section 407.50(1), Florida Statutes (1988 Supp.), simply provides that a hospital's base for 1990-1991 shall be the greater of the two values. If a hospital only has one of the values, that is obviously the greater value and should be used as the hospital's base.
The Issue Whether Florida Administrative Code Rule 59C-1.012(2)(a) is an invalid exercise of delegated legislative authority in violation of section 120.52(8) because the rule exceeds the Agency for Health Care Administration’s (“AHCA”) grant of rulemaking authority; Whether rule 59C-1.012(2)(a) is an invalid exercise of delegated legislative authority under section 120.52(8), because the rule enlarges, modifies, or contravenes the law purported to be implemented; and Whether section 408.0455, Florida Statutes, prevents a determination that rule 59C-1.012(2)(a) is invalid.
Findings Of Fact Respondent, AHCA, is the state agency responsible for administering the Certificate of Need ("CON") laws and rules as codified at sections 408.031 through 408.045, and chapter 59C-1. The CON program is the method AHCA uses to determine whether there is a community need for regulated health care facilities as a prerequisite for licensure and operation in Florida. Petitioner, Orlando Health, holds the license for Health Central Hospital, a not-for-profit, full-service, Class I general hospital located in Ocoee, Orange County, Florida. Intervenor, Florida Hospital, is a not-for-profit, full-service, Class I general hospital with seven campuses located throughout the greater Orlando area and various outpatient locations, including a free-standing emergency department and outpatient facility located in Winter Garden, Florida. Intervenor, CFHS, is a developmental stage entity affiliated with Hospital Corporation of America, North Florida Division. On or about September 7, 2016, Florida Hospital submitted CON Application No. 10450 to establish a new hospital in Orange County, Florida, State Health Services Planning District 7, Acute Care Subdistrict 7-2. On or about September 7, 2016, CFHS submitted CON Application No. 10451 to establish a new hospital in Orange County, Florida, State Health Services Planning District 7, Acute Care Subdistrict 7-2. On September 7, 2016, Orlando Health submitted CON Application No. 10454 to establish a new hospital in Orange County, Florida, State Health Services Planning District 7, Acute Care Subdistrict 7-2. Under section 408.039(1), all three CON applications, i.e., the Orlando Health, Florida Hospital, and CFHS CON applications, were comparatively reviewed by AHCA as a part of the August 2016 co-batching cycle. On December 2, 2016, AHCA issued its State Agency Action Report (“SAAR”) and Notice of Intent to simultaneously approve: 1) Florida Hospital’s CON Application No. 10450; 2) CFHS’ CON Application No. 10451; and 3) Orlando Health’s CON Application No. 10454. Challenged Rule Rule 59C-1.012, the challenged rule, states in paragraph (a) of subsection (2): If a valid request for administrative hearing is timely filed challenging the noticed intended award of any certificate of need application in the batch, that challenged granted applicant shall have ten days from the date the notice of litigation is published in the Florida Administrative Weekly to file a petition challenging any or all other cobatched applications. Rule 59C-1.012 is entitled "Administrative Hearing Procedures." It is one of two chapters of AHCA rules in Volume 59C of the Florida Administrative Code that appear under the caption, "CERTIFICATE OF NEED." The first chapter, 59C-1, which includes the challenged rule, is entitled: "Procedures for the Administration of Sections 408.031 -- 408.045, Florida Statutes, Health Facility and Services Development Act." The purpose of rule 59C-2.012(2)(a) is to provide the process for a party to exercise its right to a comparative review. Thus, it is commonly known as the “comparative review rule.” Rule 59C-1.012 was originally adopted on January 1, 1977, as Florida Administrative Code Rule 10-5.12, and was amended four times including: September 1, 1978; June 4, 1979; October 24, 1979; and April 24, 1980. Rule 10-5.12 was amended and renumbered as rule 10-5.012, on November 24, 1986. Rule 10-5.012 was amended on November 17, 1987. The rule was amended and renumbered as rule 59C-1.012, on November 24, 1992. The challenged rule 59C-1.012(2)(a) was adopted as part of the November 24, 1992, amendments to rule 10-5.012. Although parts of rule 59C-1.012 were amended on April 21, 2010, the language of rule 59C-1.012(2)(a) has not been amended since its inclusion in rule 59C-1.012, on November 24, 1992. “Rulemaking Authority” for rule 59C-1.012 is listed as sections 408.15(8) and 408.34(8). "Law Implemented” for the challenged rule is listed as section 408.039(5). Substantial Interests Orlando Health is substantially affected by rule 59C-1.012(2)(a), and has standing to seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority. Specifically as it relates to Orlando Health, Florida Hospital seeks to prevent issuance of Orlando Health’s CON No. 10454 and to contest Orlando Health’s entitlement to issuance of its CON. Orlando Health’s substantial interests are affected by the delay in issuance of its CON. Intervenors Florida Hospital and CFHS (collectively “Intervenors”) are substantially affected by the implementation of rule 59C-1.012(2)(a), and have standing to intervene in this rule challenge proceeding. Florida Hospital’s substantial interests are affected by rule 59C-1.012(2)(a) in that, if rule 59C-1.012(2)(a) is determined to be invalid, then Florida Hospital's challenge to Orlando Health’s CON may also be determined to be invalid. Florida Hospital is an existing provider in the same district and subdistrict as that applied for by Orlando Health. Thus, without the rule in effect, Florida Hospital would be faced with potentially harmful competition with no meaningful avenue of redress. Finally, Florida Hospital was also a competing, cobatched applicant in the same batching cycle for the same service in the same service area as that applied for by Orlando Health. Regarding CFHS’s substantial interests affected by rule 59C-1.012(2)(a), if rule 59C-1.012(2)(a) is determined to be invalid, Florida Hospital will likely use that ruling as a basis for seeking dismissal of CFHS's petition contesting AHCA's approval of Florida Hospital’s CON application. CFHS was also a competing cobatched applicant, and thus, without the rule in effect, CFHS would also be faced with potentially harmful competition with no meaningful avenue of redress. On December 5, 2016, AHCA’s Notice of Intent was published in the Florida Administrative Register. Florida Hospital timely filed, within the 21-day period established by section 408.039(5)(a), a request for hearing to contest AHCA's intended approval of CFHS’ CON application. Orlando Health timely filed, within the 21-day period established by section 408.039(5)(a), a request for an administrative hearing to contest AHCA's intended approval of Florida Hospital’s CON application. No request for an administrative hearing to contest AHCA's intended approval of Orlando Health's CON application was filed within the 21-day period established by section 408.039(5)(a). On January 5, 2017, CFHS, as a challenged granted applicant and within the 10-day period established by rule 59C-1.012(2)(a), filed a petition contesting AHCA’s approval of Florida Hospital’s CON Application No. 10450. On January 11, 2017, Florida Hospital, as a challenged granted applicant and within the 10-day period established by rule 59C-1.012(2)(a), filed a petition challenging Orlando Health’s CON Application No. 10454. All parties to this stipulation have sufficient substantial interests affected that standing is established in this case and for appellate purposes. Comparative Review/Law Implemented Under the statutory scheme for administration of the CON program, a CON is required for the establishment of certain types of health care facilities (such as a hospital or nursing home), for the establishment of additional beds at an existing facility, and for the establishment of certain services. Persons seeking a CON must file an application in what is known as a "batching cycle." In a “batching cycle,” all applications seeking approval for the same type of facility, beds, or services undergo "comparative review" by AHCA. Applications submitted within the same batching cycle are commonly referred to as “cobatched” applications. "Comparative review" is defined as follows: "Comparative review" means the process by which CON applications, submitted in the same batching cycle for beds, services or programs for the same planning area, as defined by applicable rules, are competitively evaluated by the agency through final agency action for purposes of awarding a Certificate of Need. AHCA proposes a decision to approve or deny a CON application and then approved and denied applicants are afforded rights to further administrative proceedings pursuant to section 408.039. Specifically, section 408.039(5) contains the statutory provisions related to a request for administrative hearings regarding CON decisions: Within 21 days after publication of notice of the State Agency Action Report and Notice of Intent, any person authorized under paragraph (c) to participate in a hearing may file a request for an administrative hearing; failure to file a request for hearing within 21 days of publication of notice shall constitute a waiver of any right to a hearing and a waiver of the right to contest the final decision of the agency. A copy of the request for hearing shall be served on the applicant. The right to a comparative hearing related to CONs is set forth in paragraph (c), which states: (c) In administrative proceedings challenging the issuance or denial of a certificate of need, only applicants considered by the agency in the same batching cycle are entitled to a comparative hearing on their applications. Existing health care facilities may initiate or intervene in an administrative hearing upon a showing that an established program will be substantially affected by the issuance of any certificate of need, whether reviewed under s. 408.036(1) or (2), to a competing proposed facility or program within the same district. Pursuant to rule 59C-1.002(10), comparative hearing is defined to mean: (10) "Comparative hearing" means a single hearing, conducted pursuant to s. 120.57, F.S., and s. 59C-1.012, F.A.C., held to review all pending applications in the same batching cycle and comparatively reviewed by the agency. Comparative Review Proceedings Approved applicants in a batched cycle may challenge other applicants as an approved applicant. Once a cobatched applicant has challenged an approved application, the proceedings related to the comparative hearing commence. But under the rule, if each challenge to an approval is subsequently voluntarily dismissed, the approved applicant would be severed from the batch. The severed applicant then receives a CON separately from action with regard to its cobatched applicants by final agency action. (This was the scenario with regard to Orlando Health prior to CFHS’s request for a comparative hearing.) Likewise, an approved unchallenged applicant is severed from the batch and receives the CON awarded by the SAAR by separate final agency action. These processes are not at issue in this matter, but are codified in subparagraphs (b) and (c) of section (2) of the rule. Savings Statute In 1997, the Florida Legislature recognized all of AHCA's rules, including the CON Administrative Hearings Procedure rule, declaring the rules implementing CON statutes effective and enforceable. In 1997, section 408.0455 provided: The rules of the agency in effect on June 30, 1997 shall remain in effect and shall be enforceable by the agency with respect to ss. 408.031-408.045 until such rules are repealed or amended by the agency, . . . . In 2004, section 408.0455 was amended to state: The rules of the agency in effect on June 30, 2004 shall remain in effect and shall be enforceable by the agency with respect to ss. 408.031-408.045 until such rules are repealed or amended by the agency. Section 408.0455 has not been amended since 2004.
